SBA Expands the Definition of "Small" Business with Regard to Dredging and Land Subdivision Contracts
By: Edward T. DeLisle & Maria L. Panichelli
Yesterday, the U.S. Small Business Administration (“SBA”) proposed certain size standard changes, which could expand the number of contractors eligible for “small” business status in relation to construction contracts under NAICS Code 23.
Specifically, the SBA issued a proposed rule that would increase the size standard associated with NAICS Code 237210 (which relates to contracts dealing with Land Subdivision) from seven million dollars in average annual receipts over three years to twenty-five million dollars. Similarly, the SBA proposed an increase in the size standard for NAICS Code 237990, relating to contracts involving Dredging and Surface Cleanup Activities, from twenty million dollars to thirty million dollars.
The SBA explained that, if adopted, these size standard increases will expand the small business share of total receipts in all industries within NAICS Sector 23, dealing with the construction industry, from about 49.7 percent to 50 percent. The SBA further estimated that these changes would result in an additional 400 contractors being deemed eligible for “small” business set aside contacts under NAIC Codes 237210 and 237990. The SBA stated that these changes would benefit three primary groups: (1) Businesses that are above the current size standards, who may gain small business status under the proposed rule, enabling them to participate in federal small business assistance programs; (2) Growing small businesses that are close to exceeding the current size standards, who will be able to retain their small business status under the proposed higher size standards, thereby enabling them to continue their participation in the programs; and (3) Federal agencies will have a larger pool of small businesses from which to draw for their small business procurement programs.
Under the proposed rule, the remaining NAICS codes relating to the construction industry would retain their current size standards.
The SBA is accepting comments on the proposed rule through September 17, 2012.
Edward T. DeLisle is a Partner in the firm and a member of the Federal Contracting Practice Group. Maria L. Panichelli is an Associate in the firm’s Federal Practice Group.