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Federal Register / Vol. 86, No. 209 / Tuesday, November 2, 2021 / Proposed Rules
TABLE 15CONTRACTIVE IMPACTS FROM CHANGING THE AVERAGING PERIOD FOR EMPLOYEES FROM 12 MONTHS TO 24
MONTHSContinued Small firms losing small status
Impact of proposed change Small firms losing or shortening small status as % of total small firms in the baseline2012 Economic Census
Number of small firms losing or shortening small business eligibility for set-aside contractsFPDSNG 2019
Small business dollars unavailable to small firms losing or shortening small status $
millionFPDSNG 2019
Small business dollars as % of total small business dollars in the baseline
Number of 7a and 504 loans unavailable to small firms losing or shortening small status
7a and 504 loan amount unavailable to small firms losing or shortening $ million
Unavailable 7a and 504 loan amount as % of total loan amount in the baseline baseline = $24.5 billion
Number of disaster loans unavailable to small firms losing or shortening small status Unavailable disaster loan amount to small firms losing or extending small status $
million
Unavailable disaster loan amount as % of total disaster loan amount in the baseline baseline = $1.0 billion

Small firms shortening small status
Total contractive impact
0.1

0.04

0.2

178

20

197

$197.1
0.42

$68.7
0.15

$265.8
0.56

1
$0.01

1
$0.01

2
$0.02

0.0
0.0

0.0
0.0

0.0
0.0

$0.0

$0.0

$0.0

0.0

0.0

0.0

1 Total
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impact represents total unique industries impacted to avoid double counting as some industries have small firms losing small status and small firms shortening small status.
2 Total impact represents total unique firms impacted to avoid double counting as some firms may gain small business status in at least one NAICS code, while extending small business status in at least one other NAICS code.

Based on the contract awards data from FPDSNG for fiscal year 2019, businesses losing or shortening small status would lose access to about $266
million in Federal small business contract collars, which is about a 0.6
percent decrease from the corresponding value in the baseline.
Similarly, based on the SBAs loan data for fiscal years 20182020 and the number of impacted firms from the Economic Census, SBA estimates that businesses losing or shortening small business status would also lose access to about $0.02 million in SBA 7a and 504
loans. Based on the historical trends of the SBAs disaster loan data which shows that firms receiving loans under employee-based size standards are well below the industry size thresholds, SBA
estimates that businesses losing or shortening small business status would not lose access to any additional disaster loans under the proposed change.
Businesses losing small status and those with size status shortened would also be deprived of other Federal benefits available, including reduced fees and exemptions from certain paperwork and compliance requirements. However, there exists no data to quantify this impact.
Additionally, by enabling mid-size businesses to regain small business status and lengthening the small business status of advanced and successful larger small businesses, the proposed rule may disadvantage smaller small businesses in more need of Federal assistance than their larger
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counterparts in competing for Federal opportunities. SBA frequently receives concerns from smaller small businesses that they lack resources, past performance qualifications and expertise to be able to compete against more resourceful, qualified and experienced large small businesses for Federal opportunities for small businesses.
Besides having to register in SAM to be able to participate in Federal contracting and update the SAM profile annually, small businesses incur no direct costs to gain or retain their small business status. All businesses willing to do business with the Federal Government have to register in SAM
and update their SAM profiles annually, regardless of their size status. SBA
believes that a vast majority of businesses that are willing to participate in Federal contracting are already registered in SAM. Furthermore, this proposed rule does not establish the new size standards for the first time;
rather, it merely proposes to modify the calculation of annual average receipts that apply to the existing size standards in accordance with a statutory requirement.
The proposed change may entail some additional administrative costs to the Federal Government because more businesses may qualify as small for Federal small business programs. For example, there will be more firms seeking SBAs loans; more firms eligible for enrollment in the Dynamic Small Business Search DSBS database or in certify.sba.gov; more firms seeking
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certification as 8a/BD or HUBZone firms or qualifying for small business, WOSB, EDWOSB, and SDVOSB status;
and more firms applying for SBAs 8a/
BD and Mentor-Protege programs. With an expanded pool of small businesses, it is likely that Federal agencies will set aside more contracts for small businesses under the proposed change.
One may surmise that this might result in a higher number of small business size protests and additional processing costs to agencies. However, the SBAs historical data on size protests actually show that the number of size protests actually decreased after an increase in the number of businesses qualifying as small as a result of size standards revisions as part of the first 5-year review of size standards. Specifically, on an annual basis, the number of size protests dropped from about 600 during fiscal years 20112013 review of most receipts-based size standards was completed by the end of fiscal year 2013 to less than 500 during fiscal years 20172019. However, with more months of the data to be reviewed, 24month averaging may increase time needed by size specialists to process a size protest. Among those newly defined small businesses seeking SBAs loans, there could be some additional costs associated with compliance and verification of their small business status. However, small business lenders have an option of using the tangible net worth and net income based alternative size standard instead of using the industry-based size standard to establish eligibility for SBAs loans. For these
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