Are you a small business? Do you provide goods or services to the federal government or want to? Starting October 24, 2012, you will have over 18,000 new competitors for federal contract opportunities with the potential of even more competitors after November.
According to the Small Business Administration Office Of Advocacy, the Small Business Goaling Report, 2012 reported that in fiscal year 2011, 21.7 % of federal government small business eligible purchases went to small businesses.
Now, contractors will have to work even harder because their competitors are larger and stronger. That’s because effective October 1, 2012, Federal agencies and programs must use the United States Small Business Administration (SBA) small business size standards that are based on “NAICS 2012″. These are modifications adopted by the Office of Management and Budget. They include 76 new industries and changes to 11 sectors. Oddly, the public can comment on this “adopted requirement” until October 19, 2012. This has big implications for federal purchasing, loans, etc.
October 24th, the SBA will officially increase the small business size standards for real estate, rental, leasing, educational services, health care and social assistance (NAICS Sectors 53, 61, and 62). Size increases are already in place for NAICS Sector 54, Professional, Technical, and Scientific Services. Changes are in process in 19 additional Sectors:
- Sector 56 Administrative and Support, Waste Management and Remediation Services
- Sector 11 Agriculture, Forestry, Fishing and Hunting – which includes Logging
- Sector 71 Arts, Entertainment and Recreation
- Sector 23 Construction
- Sector 52 Finance and Insurance
- Sector 51 Information
- Sector 55 Management of Companies and Enterprises
- Sectors 48 and 49 Transportation and Warehousing
- Sector 22 Utilities
The changes would affect more than 39 industries that make up these sectors (including International Trade Financing). The public can comment only on Sectors 52 and 55 because comment is closed on the others. To comment, use the Federal eRulemaking Portal: http://www.regulations.gov/. The deadline is November 15, 2012.
The SBA’s White Paper, “Size Standards Methodology”, is worth reading. It explains how the SBA establishes, reviews, and modifies its receipts-based and employee-based small business size standards.
To keep up with size regulations, I recommend you go to:
- Title 13, Code of Federal Regulations, part 121 (13 CFR 121).
- Federal Acquisition Regulation, 48 CFR part 19 for procurement
- The Electronic Code of Federal Regulations (eCFR), maintained by the U.S. National Archives and Records Administration, includes all changes to the small business size regulations, current as of the date specified at the top of the linked page.
In general, SBA has defined a small business concern as one that is independently owned and operated, is organized for profit, and is not dominant in its field. Depending on the industry, size standard eligibility is based on the average number of employees for the preceding twelve months or on sales volume averaged over a three-year period. The SBA Office of Advocacy has had a different view and states have another.
Examples of SBA general size standards include the following:
- Manufacturing: Maximum number of employees may range from 500 to 1500, depending on the type of product manufactured;
- Wholesaling: Maximum number of employees may range from 100 to 500 depending on the particular product being provided;
- Services: Annual receipts may not exceed $2.5 to $21.5 million, depending on the particular service being provided;
- Retailing: Annual receipts may not exceed $5.0 to $21.0 million, depending on the particular product being provided.
These are pretty big small businesses in my book. What do you think?
This expansion also means more competition for SBA loans and more ways for federal agencies and banks to legitimately say they are supporting small business. In reality, they are really doing business with firms that small business owners would never consider small.
The next time you think the government isn’t doing anything, be aware that it is if only in regulations. Regulations and Presidential Executive Orders are sometimes easy to put in place and often hard to displace. Sometimes they’re appropriate and sometimes they’re a way of further unleveling the playing field.
In 1991, I was honored to be selected by the SBA as Texas’ Small Business Advocate. I still take my role as small business champion seriously.
My advice: stay informed; stay engaged; vote.