SBA Proposes To Fundamentally Redefine “Small Business”

WHAT: The U.S. Small Business Administration (SBA) has proposed a comprehensive rewrite of its small business size standards methodology. Rather than merely modify existing thresholds as it is required to do every five years, SBA proposes to replace the methodology used to determine which businesses are “small.” SBA’s rule would replace nearly 1,000 industry size standards with a consolidated 338 standards at higher industry classification tiers. It would eliminate all 18 subindustry exceptions, such as the IT Value Added Reseller (ITVAR) exception to the North American Industry Classification System (NAICS) code 541519 and the Environmental Remediation Services exception to NAICS code 56291. It would also make employee count, not revenue, the default measure wherever SBA believes the Small Business Act (the Act) permits. Thus, SBA estimates a net increase of approximately 114,541 small businesses, including 37,002 firms that held more than 105,000 federal contracts worth