Monday, January 13, 2014

SBA Revises Size Standards for Utilities and Construction Sectors

The U.S. Small Business Administration (SBA) issued two final rules in the Federal Register today, revising size standards for firms in two North American Industry Classification System (NAICS) sectors, namely, Utilities (Sector 22) and Construction (Sector 23).

Size standards define the maximum size a firm can be and still be considered a small business.  The revised standards reflect changes in marketplace conditions and public comments that SBA received to its earlier proposed rules. 

New size standards will enable more businesses in these sectors to obtain or retain small business status; will give federal agencies a larger pool of small businesses from which to choose for their procurement programs; and will make more small businesses eligible for SBA’s loan programs.

For industries in Sector 22, Utilities, SBA increased revenue-based size standards for three industries and changed the basis for determining business size from megawatt hours to number of employees in 10 electric power generation, transmission, and distribution industries.  SBA retained the current 500 employee size standard for the one remaining industry (NAICS 221210) in the sector. 

The final rule also removes Footnote 1 from SBA’s Table of Size Standards, which stated that a firm was small if it, including its affiliates, was primarily engaged in the generation, transmission, and/or distribution of electric energy for sale and its total electric output for the preceding fiscal year did not exceed 4 million megawatt hours.

More than 400 additional firms will qualify as small under these new size standards for Utilities and become eligible for SBA’s loan and federal procurement programs. 

Summary of Current and Revised Size Standards in Sector 22, Utilities

 NAICS
Code
U.S. industry title
Current size standards (NAICS 2012)
Revised size standards (NAICS 2012)
221111
Hydroelectric Power Generation
4 million megawatt hours
500 employees
221112
Fossil Fuel Electric Power Generation
4 million megawatt hours
750 employees
221113
Nuclear Electric Power Generation
4 million megawatt hours
750 employees
221114
Solar Electric Power Generation
4 million megawatt hours
250 employees
221115
Wind Electric Power Generation
4 million megawatt hours
250 employees
221116
Geothermal Electric Power Generation
4 million megawatt hours
250 employees
221117
Biomass Electric Power Generation
4 million megawatt hours
250 employees
221118
Other Electric Power Generation
4 million megawatt hours
250 employees
221121
Electric Bulk Power Transmission and Control
4 million megawatt hours
500 employees
221122
Electric Power Distribution
4 million megawatt hours
1,000 employees
221310
 
Water Supply and Irrigation Systems
$7.0 million
$25.5 million
221320
 
Sewage Treatment Facilities
$7.0 million
$19.0 million
221330
 
Steam and Air-Conditioning Supply
$12.5 million
 
$14.0 million

 

The SBA increased two size standards in Sector 23 (Construction) and retained the current size standards for the remaining industries in the sector.  Specifically, SBA increased the size standards from $7 million to $25 million for firms in the Land Subdivision industry, and from $20 million to $25.5 million for businesses engaged in Dredging and Surface Cleanup activities, which is an “exception” to the size standard for NAICS 237990, Other Heavy and Civil Engineering Construction. 

In its originally proposed rule, SBA sought comments on eliminating or otherwise modifying Footnote 2, which requires that, to qualify as small, a firm must perform at least 40 percent of the volume dredged with its own equipment or equipment owned by another small dredging business.  The SBA reconsidered, and based on those comments, the Agency is keeping Footnote 2 without change.

Nearly 500 additional firms will qualify as small under the new construction size standards and become eligible for SBA’s loan and federal procurement programs.
 
 

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