DATE: February 3, 2003

SUBJECT: Small Business Administration; Small Business Size Standard for Facilities Support Services (Including Base Maintenance)

SOURCE: Federal Register, February 3, 2003, Vol. 68, No. 22, page 5234

AGENCIES: Small Business Administration (SBA)

ACTION: Proposed Rule

SYNOPSIS: SBA is proposing to increase the size standard for the facilities support services industry (North American Industry Classification System (NAICS) 561210) from $6 million in average annual receipts to $30 million, and the size standard for the sub-category of base maintenance from $23 million to $30 million.

EDITOR'S NOTE: The SBA's regulations are in Title 13 of the Code of Federal Regulations (CFR). 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 North American Industry Classification System codes?

A complete listing of current size standards is available at SBA's Size Standards website at http://www.sba.gov/size/sizetable2002.html, or by calling 202-205-6618 and requesting a copy of the table of size standards.

DATES: Comments must be received no later than April 4, 2003.

ADDRESSES: Comments should be sent to Gary M. Jackson, Assistant Administrator for Size Standards, 409 Third Street, SW, Mail Code 6530, Washington, DC 20416; e-mail: SIZESTANDARDS@sba.gov; or by fax to 202-205-6930.

FOR FURTHER INFORMATION CONTACT: Diane Heal, Office of Size Standards, Office of Government Contracting and Business Development, 202-205-6618.

SUPPLEMENTAL INFORMATION: SBA has received requests from firms in the facilities support services industry to review its $6 million size standard for this industry and the $23 million size standard for base maintenance, a sub-category of the industry. These firms argue that a size standard increase is warranted to reflect the size of federal contracts in this area. These contracts include a broad spectrum of services involving administrative support, custodial services, facilities repair and maintenance, and technical services, which often are $10 million per year or more in value. A small business can lose its small businesses status with only one or two contracts. Costs on these types of contracts have increased greater than the general inflation rate, especially due to changes in the mandated labor rates under the Service Contract Act and increased health insurance costs. The requestors believe that to help develop small businesses to be competitive with large businesses in this industry, the size standard should be increased to the $25 million to $30 million range.

When determining a small business size standard, SBA evaluates five factors: (1) average firm size in the industry; (2) distribution of firms by size; (3) start-up costs; (4) competition within the industry; and (5) competition for federal procurements and SBA financial assistance (SBA's small business size standards methodology is in Standard Operating Procedure (SOP) 90 01 3, "Size Determination Program," which is available on SBA's website at http://www.sba.gov/library/soproom.html). Much of the information SBA evaluates comes from data collected by the Bureau of the Census.

Based on the analysis of each evaluation factor, SBA is proposing a $30 million size standard for facilities support services. Two evaluation factors support a size standard of $29 million or higher (average firm size and distribution of firms by size), one factor supports a size standard within the $21 to $29 million range of SBA's higher-level size standards (start-up costs), and one factor supports an intermediate range size standard between $6 million and $21 million (competition within the industry). The assessment of small business participation in federal procurements supports a size standard higher than the current base maintenance size standard of $23 million. (EDITOR'S NOTE: Since most SBA guaranteed loans to firms in this industry go to firms with less than $2 million in receipts, and the proposed size change is unlikely to have any significant affect on future guaranteed loans, SBA financial assistance was not a factor in the assessment).

Based on this review of data on the facilities support services industry, SBA concludes that a $30 million size standard for all activities in the facilities support services industry is supportable.

SBA considered an alternative size standard $35 million. As the evaluation showed, some of the factors might support a size standard at this level, but the industry data also show that firms earning $35 million in receipts tend to have more establishments than firms between $10 million to $30 million in size. This finding suggests that firms with $35 million in receipts have developed competitive capabilities that enable them to successfully expand operations.

SBA welcomes public comments on its proposed $30 million size standard for the facilities support services industry. Comments on alternatives to the proposal, including the option of retaining the current size standards at $6 million and $23 million, should present the reasons that would make them preferable to the proposed size standard.

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

Copyright 2003 by Panoptic Enterprises. All Rights Reserved.

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