New Small Business Size Standards

February 5, 2016

SBA Increases Size Standards for Hundreds of Industries; Changes Effective February 26th

APTAC staff article

“New size standards will enable nearly 1,650 more businesses in those industries to obtain or retain small business status, will give federal agencies a larger pool of small businesses from which to choose for their procurement programs; and will make more small businesses eligible for SBA’s loan programs,” announced the SBA, following the publication of two final rules in late January.

As part of a comprehensive review required by the Small Business Jobs Act of 2010, SBA evaluated employee-based size standards for all 364 industries in NAICS Sector 31-33, as well as 57 industries and five exceptions that are not in these NAICS Sectors – or sectors 42, 44-45 – to determine if they needed revision.

In the first final rule, SBA increased size standards for 209 industries in Sector 31-33, as well as increasing the refining capacity component of the Petroleum Refiners (NAICS 324110) size standard to 200,000 barrels per calendar day total capacity for businesses that are primarily engaged in petroleum refining.

In the second final rule, SBA increased the employee-based size standards for 30 industries and three exceptions and decreased them for three industries not in Sectors 31-33, 42, or 44 45.

Also in the second rule, SBA includes the requirement that the supply (i.e., computer hardware and software) component of small business set-aside Information Technology Value Added Resellers (ITVAR) contracts must comply with the nonmanufacturer rule, maintaining the “ITVAR exception” under NAICS 541519 with the 150-employee size standard.

Firms who believe their status with regard to small business programs may be affected by the new size standards are advised to update their System for Award Management (SAM) registration, following the same process used for annual SAM updates. Doing so will trigger an interface between SAM and the SBA system to ensure that the new size status is properly reflected in SAM. Those with questions or needing help with the process can receive free assistance from their local Procurement Technical Assistance Center (PTAC).

The SBA is required by the Small Business Jobs Act of 2010 to review small business size standards every 5 years. In doing so, the agency takes into account the structural characteristics of individual industries (including average firm size, startup cost and entry barriers), the degree of competition, and small business share of federal government contracting dollars. This ensures that small business size definitions reflect current economic conditions and the federal marketplace in those industries. For more information on the process, see “Size Standards Methodology,” a white paper published by the agency.

For specific details on the size standard revisions effective February 26th, see “What’s New with Size Standards” on SBA’s Web site.

Not sure if these size standard changes apply to your business? Have questions about the update process?
Contact your PTAC today for free assistance with SAM registration, size status question and other government contracting issues.