SBA opens doors to more firms by increasing size limits

Federal agencies soon will have a larger pool to draw from for their small-business procurement programs.

The Small Business Administration increased the size standard for technology companies as well as for 33 other industries under a final rule published Feb. 10 in the Federal Register.

The move means about 8,350 additional companies are now eligible to compete for federal contracts as a small business.

The final rule will increase 37 of the revenue-based size standards in 34 industries and three sub-industries in the "Professional, Scientific and Technical Services" sector. It will also increase one size standard in the "Other Services" sector.

Size standards are used to determine eligibility for federal small-business assistance programs. SBA measures "size" for most industries by receipts and number of employees. It defines receipts as the total income plus cost of goods sold.

The higher revenue limits cover the professional, technical and scientific sectors and will take effect on March 12.

Technology firms offering computer programming, maintenance and design services, for example, can now earn $25.5 million, up from $25 million.

The Management, Scientific and Technical Consulting Services sector received an increase from $7 million to $14 million. Public commenters in this sector, who supported the increase, highlighted that the higher size standard will help small businesses to develop to be able to compete against large businesses for federal contracting opportunities.

"Over the years, SBA has received comments that its size standards have not kept up with the changes in the economy, in particular, that they do not reflect changes in the federal contracting marketplace and industry structure," the final rule noted.

"SBA recognizes that changes in industry structure and the federal marketplace since the last overall review have rendered existing size standards for some industries no longer supportable by current data," it adds. Size standards were last comprehensively reviewed in the early 1980s.

With more than 8,000 newly defined small firms under the revised size standards, there may be some additional administrative costs to the federal government associated with additional bidders for federal small-business procurement opportunities and more companies seeking SBA guaranteed lending programs or eligibility for enrollment in the Central Contractor Registration's Dynamic Small Business Search database, the Federal Register said.

Click here to find a summary of size standard changes.

About the Author

Alysha Sideman is the online content producer for Washington Technology.

Reader Comments

Wed, Feb 15, 2012 Editor

Thanks for the comment. Our understanding is that SBA has been studying this issue for awhile, but I have to agree. $500,000 isn't much of a change.

Tue, Feb 14, 2012 Virginia

Thank you for your article. What it fails to point out is how random these changes truly were. The SBA needs to conduct a comprehensive study to once and for all determine what factors are relevant to small business federal contractors as compared to small businesses operating in the commercial sector only. Increasing a revenue-based size standard by $500,000 is not going to achieve the kind of change that is required. On the other side of the coin, by doubling the size standard for engineering, architecture, etc. the SBA has now put true small businesses in those categories in direct competition with large firms, achieve the opposite of the intended effect. My point is that each industry has vastly different size requirements for a business to become competitively viable in the federal marketplace in the long-term. Only a detailed study can give the SBA and legislators guidance on what size standards should truly be, rather than continuing to fly by the seat of their pants.

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