The U.S. Small Business Administration has proposed to adjust the size definition of small businesses in professional, scientific, and technical sectors, and other service sectors, to expand eligibility for small business programs.
The proposed rule, which was published for comment last Wednesday in the Federal Register, would increase the revenue-based size definition that businesses need to meet to qualify as small businesses. They apply to businesses in 36 industries and one sub-industry in professional, scientific and technical services, and one industry in other service sectors.
The changes would allow some small businesses that are close to exceeding their current size standards to retain small business eligibility under higher size standards, giving federal agencies a larger selection of small businesses to choose from for small business procurement opportunities. SBA estimates that as many as 9,450 additional firms will become eligible for SBA programs as a result of the proposed revisions, if they are adopted.
As part of its ongoing comprehensive review of all size standards, the SBA evaluated 46 industries and three sub-industries in these sectors. Of these, the SBA proposes to increase size standards for 36 industries and one sub-industry and retain the current standards for the remaining 10 industries and two sub-industries. SBA’s size standards vary from industry to industry to account for differences among them.
In 2007, the SBA began the process of reviewing and updating its size standards based on industry-specific data. Before this, the last overall review of size standards occurred more than 25 years ago. Under provisions in the Small Business Jobs Act of 2010, the SBA will continue its comprehensive review of all size standards for the next several years.
The proposed changes take into account the structural characteristics within individual industries, including average firm size, the degree of competition, and federal government contracting trends, to ensure that the size definitions reflect current economic conditions within those industries.
The SBA issued a White Paper entitled, “Size Standards Methodology” on Oct. 21, 2009, which explains how the SBA establishes, reviews and modifies its receipts-based and employee-based small business size standards. It can be viewed at
Comments can be submitted on this proposed rule on or before May 16, 2011, online at
