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Federal Register / Vol. 86, No. 138 / Thursday, July 22, 2021 / Proposed Rules
3. For entities operating under covered contracts on Federal properties or lands see section IV.B.2, the Department applied the national ratio of businesses with less than 500
employees to total businesses, by industry, from the 2017 Statistics of U.S.
Businesses SUSB data. The Department used businesses with fewer than 500 employees as a rough approximation for small businesses.109
Of the 46,500 firms identified, 46,100
are small firms.
4. For territories, the Department used the Contracting Officers Determination of Business Size in USASpending data.
Of the 1,245 firms identified, 841 are small firms.
This estimated number of potentially affected small contractors includes some firms with no current Federal contracts covered by the Executive order. These firms may accrue regulatory
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109 As noted above, the SBA size standard definitions vary by industry, but the Department believes businesses with less than 500 employees is a transparent method that provides a reasonable approximation of the number of firms SBA defines as small businesses. Additionally, to apply the separate definitions by NAICS codes, the most recent data available with the information needed is the 2012 SUSB.

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familiarization costs despite not having employees affected, although their cost will be minimal. However, these firms should be removed when we consider costs per establishment with affected employees. Information was not available to eliminate these firms from the SAM database. Thus, the Department used data from USASpending to estimate a more appropriate number of small contractors with affected employees. Using the 2019
USASpending database, the Department found 64,500 private small prime contracting firms.110 111 Adding in the small subcontractors and the small entities operating under covered contracts on Federal properties or lands, yields an estimated 121,700 small 110 In the USASpending data, small contractors were identified based on the contractingofficerbusinesssizedetermination variable. The description of this variable in the USASpending.gov Data Dictionary is: The Contracting Officers determination of whether the selected contractor meets the small business size standard for award to a small business for the NAICS code that is applicable to the contract. The Data Dictionary is available at: https
www.usaspending.gov/data-dictionary.
111 This number is smaller than the number of small firms listed in SAM because it only includes firms with active covered contracts.

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contractors with active contracts in Year 1.112
The number of employees in small contracting firms is unknown. The Department estimated the share of total Federal contracting expenditures in the USASpending data associated with contractors labeled as small, by industry. The Department then applied these shares to all affected employees to estimate the share of affected employees in small entities by industry, then summed over all industries, to find that 97,900 employees of small contractors would be affected by the rule in Year 1
Table 12.
In industries where the number of affected employees is smaller than the number of affected firms, the Department reduced the number of affected firms to the number of affected employees. This results in an estimated 67,700 small contractors with affected employees in Year 1. The calculations of direct costs and transfers per small contractor with affected employees, shown in Table 14 and Table 15, include only these 67,700 small firms.
112 See Table 14, footnote b for information about subcontractors.

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