Key facts
- The SBA is proposing new size standards for 338 industry groups and industries.
- The changes aim to allow more companies to qualify for federal contracts and loans.
- Employee-based and revenue-based thresholds for small businesses would be significantly increased.
- The agency plans to simplify the NAICS code structure from nearly 1,000 categories to 338.
- The SBA estimates the proposal could make over 114,000 additional companies eligible for federal contracts.
The U.S. Small Business Administration (SBA) has proposed new size standards for 338 industry groups, a move intended to better align with current market conditions and expand access to federal contracts and loans for more businesses. The proposed rule significantly increases revenue and employee thresholds, potentially allowing companies previously considered too large to now qualify as 'small businesses' for government programs.
This initiative aims to address long-standing complaints about how the government determines size standards. The SBA also plans to simplify the North American Industry Classification System (NAICS) codes, reducing the number of categories from nearly 1,000 to 338 broad industry groupings. SBA Administrator Kelly Loeffler stated that this proposal is expected to expand small business eligibility by over 110,000 firms, fostering job creation and economic growth.
However, the proposal has drawn criticism and concern from some industry experts. Concerns have been raised about the simultaneous release of updated size standards and the methodology used to determine them, particularly given a relatively short 30-day comment period. Some experts worry that this approach might overlook crucial feedback on the methodology, which could have significant impacts on federal contracting. One procurement lawyer described the changes, especially to revenue-based standards, as a 'shock to the system' that will affect all aspects of federal contracting.