A bill to require the Administrator of the Small Business Administration to develop a new classification system for small business size determinations and to promulgate rules to eliminate the nonmanufacturer exception to small business size determinations, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Fairness for Small Businesses in 
Federal Contracting Act of 2011''.

SEC. 2. NEW CLASSIFICATION SYSTEM FOR SMALL BUSINESS SIZE 
              DETERMINATIONS.

    (a) In General.--Section 3(a)(2) of the Small Business Act (15 
U.S.C. 632(a)(2)) is amended by adding at the end the following:
                    ``(D) Revision of classification.--
                            ``(i) In general.--Not later than 180 days 
                        after the date of enactment of the Fairness for 
                        Small Businesses in Federal Contracting Act of 
                        2011, and in consultation with the Federal 
                        Acquisition Regulatory Council, the 
                        Administrator shall establish a classification 
                        system for industries for purposes of 
                        determining whether business concerns meet the 
                        size standards established under this paragraph 
                        that replaces the North American Industrial 
                        Classification System.
                            ``(ii) Amendment of far.--The Federal 
                        Acquisition Regulatory Council shall amend the 
                        Federal Acquisition Regulation as appropriate 
                        to integrate the classification system 
                        established under clause (i).
                            ``(iii) Integration of system.--The 
                        Administrator of General Services shall 
                        integrate the classification system established 
                        under clause (i) into the Integrated 
                        Acquisition Environment.
                            ``(iv) Criteria.--The classification system 
                        established under clause (i) shall--
                                    ``(I) consist of not more than 20 
                                industries;
                                    ``(II) include as industries 
                                manufacturing, construction, 
                                professional services, wholesale, and 
                                retail industries; and
                                    ``(III) be based on market 
                                conditions as identified by the most 
                                recent Economic Census of the United 
                                States.
                            ``(v) Reviews.--The Administrator shall 
                        review the classification system established 
                        under clause (i) as part of the review of size 
                        standards under section 1344 of the Small 
                        Business Jobs Act of 2010 (15 U.S.C. 632 note).
                            ``(vi) Report.--Not later than 180 days 
                        after the date on which the Administrator 
                        establishes the classification system under 
                        clause (i), the Administrator shall submit to 
                        Congress a report on the establishment and use 
                        of the classification system.''.
    (b) Technical and Conforming Amendments.--The Small Business 
Investment Act of 1958 (15 U.S.C. 661 et seq.) is amended--
            (1) in section 501(e)(6)(A) (15 U.S.C. 695(e)(6)(A)), by 
        striking ``in sector 31, 32, or 33 of the North American 
        Industrial Classification System'' and inserting ``as 
        `manufacturing' under the classification system established 
        under section 3(a)(2)(D) of the Small Business Act (15 U.S.C. 
        632(a)(2)(D))''; and
            (2) in section 502(2)(B)(i) (15 U.S.C. 696(2)(B)(i)), by 
        striking ``in sector 31, 32, or 33 of the North American 
        Industrial Classification System'' and inserting ``as 
        `manufacturing' under the classification system established 
        under section 3(a)(2)(D) of the Small Business Act (15 U.S.C. 
        632(a)(2)(D))''.

SEC. 3. ELIMINATING THE NONMANUFACTURER EXCEPTION TO SMALL BUSINESS 
              SIZE DETERMINATIONS.

    (a) Definitions.--In this section--
            (1) the term ``manufacturing''--
                    (A) means being engaged in the mechanical, 
                physical, or chemical transformation of materials, 
                substances, or components into new products; and
                    (B) does not include construction; and
            (2) the term ``offeror'' means the bidder on a contract 
        solicitation.
    (b) Regulations.--Not later than 120 days after the date of 
enactment of this Act, the Administrator of the Small Business 
Administration shall promulgate regulations that--
            (1) eliminate the nonmanufacturer exception to small 
        business size determinations under section 121.402(b) of title 
        13 and section 19.102(f) of title 48, Code of Federal 
        Regulations;
            (2) require contracting officers to use the size standards 
        established by the Administrator for retail and wholesale 
        industries in procurements for products and services by the 
        Federal Government that are not manufactured by the offeror; 
        and
            (3) require contracting officers to only use size standards 
        established by the Administrator for manufacturing industries 
        if the Federal Government issues a contract for the purchase of 
        a product or good and the product or good is manufactured by 
        the offeror.

Summary: Fairness for Small Businesses in Federal Contracting Act of 2011 - Amends the Small Business Act to direct the Administrator of the Small Business Administration (SBA) to establish a new classification system for industries for purposes of determining whether businesses meet the small business size standards established herein that replaces the North American Industrial Classification System.

Requires: (1) the Federal Acquisition Regulation to be amended to integrate the new system, and (2) the Administrator of General Services to integrate the new system into the Integrated Acquisition Environment.

Directs the SBA Administrator to: (1) eliminate the nonmanufacturer exception to small business size determinations, (2) require contracting officers to use the size standard established for retail and wholesale industries in federal procurements for products and services that are not manufactured by the offeror, and (3) require such officers to use only SBA size standards for manufacturing industries if the federal government issues a contract for the purchase of a product or good that is manufactured by the offeror.