SBA to rethink small biz size standards

The Small Business Administration has halted efforts to redefine what constitutes a small business for the purpose of federal government contracting, the SBA will announce July 1.

In the Federal Register July 1, SBA will announce that it is withdrawing its proposed rule and will ask for more input before deciding what further actions it should take to restructure the small-business size standards.

The SBA proposed in March to reduce the number of size standards from 37 to 10, and base all size standards on the number of employees. Currently, some size standards are based on annual revenue, and others are based on employee count.

The changes would have simplified the size standards and their application to federal programs, according to SBA.

But the more than 3,700 comments on the SBA's proposed rule have raised concerns the SBA needs to address before publishing a final rule. That review may result in substantive changes to the SBA's proposal, according to the July 1 Federal Register notice.

"Although many of those comments support aspects of the proposal, a number have raised concerns about SBA's methodology for developing the proposed size standards, the impact the proposed size standards will have on existing small businesses, the determination of the employee size of a business, and SBA's proposed overall approach to simplifying the size standards," SBA Administrator Hector Barreto wrote in the Federal Register notice.

After publishing the proposed rule in March, the SBA on May 17 announced that it was extending the comment period until July 2. Now, according to the Federal Register notice, the SBA plans to publish an advanced notice of proposed rulemaking to get more information on the issue before publishing another proposed rule.

The SBA had proposed that the new size standards would range between 50 employees and 1,500 employees, depending on the industry or SBA program. Companies that meet the small-business size standard in their industries can qualify for SBA loan programs, contracts set aside for small businesses and other federal business-development programs.