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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: November 17, 2000

FROM: Barry McVay, CPCM

SUBJECT: Small Business Administration (SBA); Small Business Size Standards for Health Care Industries

SOURCE: Federal Register, November 17, 2000, Vol. 65, No. 223, page 69432

AGENCIES: Small Business Administration (SBA)

ACTION: Final Rule

SYNOPSIS: The SBA is increasing the small business size standards for 19 health care industries and retaining the existing $5 million size standard for the remaining 11 health care industries. The North American Industry Classification System (NAICS) classifies health care industries under Subsector 621, Ambulatory Health Care Services; Subsector 622, Hospitals; and Subsector 623, Nursing and Residential Care Facilities.

EDITOR'S NOTE: The SBA's regulations are in Title 13 of the Code of Federal Regulations. The SBA small business size regulations are in Chapter 1, Small Business Administration; Part 121, Small Business Size Regulations; Subpart A, Size Eligibility Provisions and Standards; Section 121.201, What size standards has SBA identified by Standards Industrial Classification codes?

For more on the SBA's establishment of NAICS-based small business size standards, see the May 15, 2000, FEDERAL CONTRACTS DISPATCH "Small Business Administration (SBA); North American Industry Classification System (NAICS) Small Business Size Standards."

The SBA maintains its NAICS-based small business size standards at the web site http://www.sba.gov/size/.

The Bureau of the Census maintains an NAICS web site at http://www.census.gov/epcd/www/naics.html. Available on the web site are tables cross-referencing SIC codes to the comparable NAICS codes (http://www.census.gov/epcd/naics/naicstb2.txt) and NAICS codes to the comparable SIC codes (http://www.census.gov/epcd/naics/naicstb1.txt).

EFFECTIVE DATE: December 18, 2000.

FOR FURTHER INFORMATION CONTACT: Gary M. Jackson, Assistant Administrator for Size Standards, 202-205-6618.

SUPPLEMENTAL INFORMATION: On May 4, 1999, SBA proposed to increase the size standards for 11 of the 19 industries under Standard Industrial Classification (SIC) Major Group 80, Health Services. The size standard for Major Group 80 was $5 million in average annual receipts, but SBA proposed to increase the size standards to $7.5 million, $10 million, or $25 million to better define the size of business that should be eligible for federal small business assistance programs.

However, on May 15, 2000, SBA adopted the NAICS as the basis for its small business size standards, effective October 1, 2000. The NAICS makes several noteworthy changes to the health care industries listed in the SIC system. SBA's SIC-based size standards identified 19 separate industries, whereas the NAICS-based size standards now identify 30 separate industries. While most SIC health services industries correspond to a NAICS industry, some health services have been combined with other SIC industries to form a new health care NAICS industry. In most cases, the NAICS size standard is the same as, or higher than, the size standard SBA had proposed for the SIC industry, but two activities in SIC 8099, Health and Allied Services, Not Elsewhere Classified, were reclassified into industries outside of the health care with a size standard lower than proposed for their SIC industries:

• The activity of Medical Artists was combined with SIC 7336, Commercial Art and Graphic Design to form NAICS 541430, Graphic Design Services. The $5.0 million size standard for SIC 7336 was adopted for NAICS 541430 since it accounts for virtually all of the new NAICS industry.
  
  
• The activity of Medical Photography was classified into NAICS 541922, Commercial Photography. That NAICS industry is the same as the SIC 7335 with the addition of Medical Photography. The $5.0 million size standard of SIC 7335 was adopted for NAICS 541922 since it accounts for virtually all the activities within the NAICS industry.

Seventeen comments were received in response to the May 4, 1999, proposed rule. Some of the comments were made moot by the October 1, 2000, conversion from SIC to NAICS, but most of the other comments were not adopted. However, SBA says that it is "researching federal procurement patterns and trends in greater detail" to determine whether further changes should be made to the size standards.

The following are the revised NAICS small business size standards (in millions of dollars) for Sector 62, Health Care and Social Assistance:

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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