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SBA-proposed size standard increases for real estate and educational services industries

Proposed rules published for comment in The Federal Register by the U.S. Small Business Administration (SBA) would adjust the size definition of small businesses in 29 industries in one sub-industry in two broad categories of businesses, ranging from real estate and property management to colleges, junior colleges and universities.

The proposed adjustments to size standards in 20 industries and one sub-industry in Sector 53 of the North American Industry Classification System (NAICS), “Real Estate and Rental and Leasing,” and in nine industries in Sector 61, “Educational Services,” reflect changes in marketplace conditions in those sectors.

In both sectors, the proposed changes are based on annual gross revenues. The standards delineate how large a business can be and still qualify as small for federal government programs. The dollar limits refer to annual revenues averaged over three years.

As part of the ongoing comprehensive review of all size standards as required under the Small Business Jobs Act of 2010, the SBA is evaluating all industries in these sectors that have revenue-based size standards to determine whether the existing size standards should be adjusted. The last overall review of size standards occurred more than 25 years ago.

The proposed changes take into account the structural characteristics within individual industries, including average firm size, degree of competition, and federal government contracting trends. This ensures that size definitions reflect current economic conditions within those industries. An SBA White Paper entitled “Size Standards Methodology” (Oct. 21, 2009) explains how SBA establishes, reviews and modifies its receipts-based and employee-based small business size standards. It is available for viewing at www.sba.gov/size.

The upward revisions would allow some small businesses that are close to exceeding their current size standards to retain small business eligibility under the proposed higher size standards, and give federal agencies a larger selection of small businesses to choose from for small business procurement opportunities. They also would allow more small businesses to qualify for SBA financial assistance. SBA estimates that up to 13,000 more firms in Sector 53 and 1,500 more companies in Sector 61 will qualify for SBA assistance and other federal programs if the proposed revisions are adopted.

Interested parties can submit comments on these proposed rules on or before Jan. 17, 2012. The SBA recommends that comments be submitted online at www.regulations.gov or mailed to Khem R. Sharma, Chief, Size Standards Division, 409 3rd St., SW, Mail Code 6530, Washington, D.C. 20416. The SBA will post all comments to www.regulations.gov for public review. The SBA does not accept comments submitted by email.

For more information about SBA’s revisions to its small business size standards, click on “What’s New with Size Standards” on SBA’s website at http://www.sba.gov/size.


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