[Federal Register Volume 77, Number 235 (Thursday, December 6, 2012)]
[Rules and Regulations]
[Pages 72702-72709]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-29360]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 121

RIN 3245-AG26


Small Business Size Standards: Information

AGENCY: U.S. Small Business Administration.

ACTION: Final rule.

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SUMMARY: The United States Small Business Administration (SBA) is 
increasing the receipts based small business size standards for 15 
industries and retaining the current receipts based size standards for 
five industries in North American Industry Classification System 
(NAICS) Sector 51, Information. As part of its ongoing comprehensive 
review of all size standards, SBA evaluated all receipts based size 
standards for industries in NAICS Sector 51 to determine whether they 
should be retained or revised. SBA did not review the employee based 
standards for industries in NAICS Sector 51 in this rule, but will do 
so at a later date with other employee based size standards.

DATES: This rule is effective January 7, 2013.

FOR FURTHER INFORMATION CONTACT: Jon Haitsuka, Program Analyst, Size 
Standards Division, phone: (202) 205-6618 or sizestandards@sba.gov.

SUPPLEMENTARY INFORMATION: To determine eligibility for Federal small 
business assistance programs, SBA establishes small business size 
definitions (referred to as size standards) for private sector 
industries in the United States. SBA's existing size standards use two 
primary measures of business size--average annual receipts and number 
of employees. Financial assets, electric output, and refining capacity 
are used as size measures for a few specialized industries. In 
addition, SBA's Small Business Investment Company (SBIC), 7(a), and 
Certified

[[Page 72703]]

Development Company (CDC or 504) Loan Programs determine small business 
eligibility using either the industry based size standards or net worth 
and net income size based standards. At the start of the current 
comprehensive review of SBA's small business size standards, there were 
41 different size standards levels, covering 1,141 NAICS industries and 
18 sub-industry activities (i.e., ``exceptions'' in SBA's table of size 
standards). Of these, 31 were based on average annual receipts, seven 
based on number of employees, and three based on other measures.
    Over the years, SBA has received comments that its size standards 
have not kept up with changes in the economy, in particular the changes 
in the Federal contracting marketplace and industry structure. SBA last 
conducted a comprehensive review of size standards during the late 
1970s and early 1980s. Since then, most reviews of size standards have 
been limited to a few specific industries in response to requests from 
the public and Federal agencies. SBA also makes periodic inflation 
adjustments to its monetary based size standards. The latest inflation 
adjustment to size standards was published in the Federal Register on 
July 18, 2008 (73 FR 41237).
    SBA recognizes that changes in industry structure and the Federal 
marketplace since the last overall review have rendered existing size 
standards for some industries no longer supportable by current data. 
Accordingly, in 2007, SBA began a comprehensive review of its size 
standards to determine whether existing size standards have supportable 
bases relative to the current data, and to revise them, where 
necessary.
    In addition, on September 27, 2010, the President of the United 
States signed the Small Business Jobs Act of 2010 (Jobs Act). The Jobs 
Act directs SBA to conduct a detailed review of all size standards and 
to make appropriate adjustments to reflect market conditions. 
Specifically, the Jobs Act requires SBA to conduct a detailed review of 
at least one-third of all size standards during every 18-month period 
from the date of its enactment and review of all size standards not 
less frequently than once every 5 years thereafter. Reviewing existing 
small business size standards and making appropriate adjustments based 
on current data is also consistent with Executive Order 13563 on 
improving regulation and regulatory review.
    SBA has chosen not to review all size standards at one time. 
Rather, it is reviewing groups of related industries on a Sector by 
Sector basis.
    As part of SBA's comprehensive review of size standards, the Agency 
reviewed all receipts based size standards in NAICS Sector 51, 
Information, to determine whether the existing size standards should be 
retained or revised. On October 12, 2011, SBA published a proposed rule 
in the Federal Register (76 FR 63216) seeking public comment on its 
proposal to increase the receipts based size standards for 15 
industries in NAICS Sector 51. The rule was one of a series of proposed 
rules that examines industries grouped by NAICS Sector.
    SBA has recently developed a ``Size Standards Methodology'' for 
developing, reviewing, and modifying size standards, when necessary. 
SBA has published the document on its Web site at www.sba.gov/size for 
public review and comment and also included it as a supporting document 
in the electronic docket of the October 12, 2011 proposed rule at 
www.regulations.gov.
    In evaluating an industry's size standard, SBA examines its 
characteristics (such as average firm size, startup costs, industry 
competition, and distribution of firms by size) and the level and small 
business share of Federal contract dollars in that industry. SBA also 
examines the potential impact a size standard revision might have on 
its financial assistance programs and whether a business concern under 
a revised size standard would be dominant in its industry. SBA analyzed 
the characteristics of each industry in NAICS Sector 51 that has a 
receipts-based size standard, mostly using a special tabulation 
obtained from the U.S. Bureau of the Census based on its 2007 Economic 
Census (the latest available). SBA also evaluated the level and small 
business share of Federal contracts in each of those industries using 
the data from the Federal Procurement Data System--Next Generation 
(FPDS-NG) for fiscal years 2008 to 2010. To evaluate the impact of 
changes to size standards on its loan programs, SBA analyzed internal 
data on its guaranteed loan programs for fiscal years 2008 to 2010.
    SBA's ``Size Standards Methodology'' provides a detailed 
description of its analyses of various industry and program factors and 
data sources, and how the Agency uses the results to derive size 
standards. In the proposed rule, SBA detailed how it applied its ``Size 
Standards Methodology'' to review and modify, where necessary, the 
existing standards for industries in NAICS Sector 51. SBA sought 
comments from the public on a number of issues concerning its ``Size 
Standards Methodology,'' such as whether there are alternative 
methodologies that SBA should consider; whether there are alternative 
or additional factors or data sources that SBA should evaluate; whether 
SBA's approach to establishing small business size standards makes 
sense in the current economic environment; whether SBA's applications 
of anchor size standards are appropriate in the current economy; 
whether there are gaps in SBA's methodology because of the lack of 
comprehensive data; and whether there are other facts or issues that 
SBA should consider.
    SBA also sought comments on its proposal to increase the size 
standards for 15 industries and retain the existing size standards for 
remaining industries in NAICS Sector 51 (Information) that have 
receipts based size standards. Specifically, SBA requested comments on 
whether the size standards should be revised as proposed and whether 
the proposed revisions are appropriate. SBA also invited comments on 
whether its proposed eight fixed size standard levels are appropriate 
and whether it should adopt common size standards for some industries 
in NAICS Sector 51.
    SBA's analyses supported lowering existing receipts based standards 
for four industries and keeping the current size standard for one 
industry. However, as SBA explained in the proposed rule, lowering size 
standards would reduce the number of firms eligible to participate in 
Federal small business assistance programs and would run counter to 
what the Federal government and SBA are doing to help small businesses 
and create jobs. Therefore, SBA proposed to retain the current size 
standards for those industries and requested comments on whether the 
Agency should lower size standards for those five industries for which 
its analyses might support lowering them.

Summary of Comments

    SBA sought comments on its proposed rule to increase the size 
standard for 15 industries and retain the existing size standards for 
the remaining five industries in NAICS Sector 51 that have receipts 
based size standards. SBA requested comments on whether the size 
standards should be revised as proposed or different size standards 
were appropriate. SBA received two comments to the proposed rule, which 
are summarized below.
    One commenter fully supported SBA's proposed size standards, 
particularly with regard to increasing the size standard for NAICS 
519190, All

[[Page 72704]]

Other Information Services, from $7 million to $25.5 million.
    The second commenter raised a number of issues on SBA's size 
standards. The commenter stated that SBA has not kept up with current 
business practices, making the size standards ``nearly irrelevant.'' 
The comment contended that today's businesses are involved in several 
NAICS industries, including manufacturing, wholesale trade, retail 
trade, and services. The commenter stated further that when a 
manufacturer is also a wholesaler of products manufactured overseas, it 
easily would meet an employee based size standard. The second concern 
the commenter expressed that some manufacturers that meet the 1,000-
employee to 1,500-employee size standards may have several hundred 
million dollars in average annual revenue and are considered small. The 
commenter recommended that SBA's size standards include both number of 
employees and annual receipts.
    SBA agrees that many businesses are involved in industries covering 
more than one NAICS code, but it does not adopt the commenter's 
recommendation for two reasons. First, although a concern might 
participate in multiple industries, a Federal procurement generally 
does not use multiple NAICS codes. SBA regulations provide that NAICS 
codes and their size standards for Wholesale Trade (NAICS Sector 42) 
and Retail Trade (NAICS Sector 44-45) do not apply to Federal 
procurement. To qualify as small for a Federal procurement opportunity, 
a business must meet the size standard for the NAICS code under that 
procurement. A procuring agency's contracting officer must use the 
NAICS code, along with the appropriate size standard, that best 
describes the principal purpose of the procurement. (13 CFR 
121.402(b)). If the procurement is for services, the contracting 
officer will assign a service NAICS code and the associated size 
standard will likely be based on average annual receipts. To qualify as 
small under a receipts based size standard the firm's total annual 
receipts--together with those of its affiliates (see 13 CFR 121.103)--
must meet that size standard, regardless of whether it might qualify as 
small under an employee based size standard for another NAICS code. If 
the procurement is for manufactured products, then, to qualify as 
small, the company must meet the size standard for the NAICS industry 
that manufactures that product. In the event that a company did not 
manufacture the product the government wishes to buy, then it may 
qualify as small by supplying the product as a ``nonmanufacturer.'' 
However, the nonmanufacturer must have 500 or fewer employees 
(regardless of what the size standard is for the manufacturer making 
the product) and provide the product of a small, domestic manufacturer. 
This is provided for in the nonmanufacturer rule. (13 CFR 121.406(b)). 
Second, for the reasons provided in its ``Size Standards Methodology'' 
available at www.sba.gov/size, SBA uses number of employees to measure 
the size of manufacturing industries and average annual receipts to 
measure the size of services industries. SBA believes that using both 
number of employees and average annual receipts for a size standard 
would add tremendous complexity to size standards, and it would run 
counter to SBA's ongoing effort to simplify size standards. For these 
reasons SBA declines to adopt the comment.
    The third issue raised by the commenter was related to publicly 
traded companies bidding on small business Federal contracts. The 
commenter contended that typically the publicly traded companies are 
managed by people formerly associated with large businesses. SBA's 
small business size regulations do not preclude a publicly traded 
company from qualifying as small if it meets the small business size 
requirements. Whether a company is publicly or privately owned or how 
widely a company's stock is held is not a relevant factor in 
determining whether it can qualify small. If a company represents 
itself as a small business concern on a particular procurement, and one 
or more interested parties believe that the entity does not qualify as 
small, SBA has established rules and procedures for protests of the 
small business size status of the company. (See 13 CFR 121.1001 through 
121.1010). If a company is managed by individuals formerly associated 
with large businesses, that may be a relevant fact in determining 
whether the company is affiliated with other firms and qualifies as 
small. (13 CFR 121.103).
    The fourth issue the commenter raised related to mergers and 
acquisitions (M&A) activities. The commenter contended that, without 
regular review of size standards, businesses involved in M&As will be 
considered small. SBA disagrees with this comment. Mergers create 
affiliation (see 13 CFR 121.103) between or among the companies 
involved and their receipts and employees should be aggregated to 
determine if the company qualifies as small after the merger. To 
address this issue, on November 15, 2006, SBA issued a final rule 
requiring small business government contractors to recertify their size 
status on long-term contracts when a contract option is exercised, when 
a small business is involved in an executed merger or purchase with 
another business, or at the end of the first five years of a contract. 
(71 FR 66434). For contract opportunities after a merger has occurred, 
any interested party may protest the size of a small business offeror 
under 13 CFR 121.1001 through 121.1010. SBA would apply its affiliation 
rules during any protest.

Conclusion

    Based on SBA's analyses of relevant industry and program data and 
the public comments it received on the proposed rule, SBA has decided 
to increase the small business size standards for the 15 industries in 
NAICS Sector 51 to the levels it proposed. Those industries and their 
revised size standards are shown in the following Table 1, Summary of 
Revised Size Standards in NAICS Sector 51.

                          Table 1--Summary of Revised Size Standards in NAICS Sector 51
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                                                                                Current size      Revised size
         NAICS Code                        NAICS Industry title                 standard  ($      standard  ($
                                                                                  million)          million)
----------------------------------------------------------------------------------------------------------------
511210.....................  Software Publishers............................             $25.0             $35.5
512110.....................  Motion Picture and Video Production............              29.5              30.0
512131.....................  Motion Picture Theaters (except Drive[dash]Ins)               7.0              35.5
512199.....................  Other Motion Picture and Video Industries......               7.0              19.0
512290.....................  Other Sound Recording Industries...............               7.0              10.0
515111.....................  Radio Networks.................................               7.0              30.0
515112.....................  Radio Stations.................................               7.0              35.5

[[Page 72705]]

 
515120.....................  Television Broadcasting........................              14.0              35.5
515210.....................  Cable and Other Subscription Programming.......              15.0              35.5
517410.....................  Satellite Telecommunications...................              15.0              30.0
517919.....................  All Other Telecommunications...................              25.0              30.0
518210.....................  Data Processing, Hosting, and Related Services.              25.0              30.0
519110.....................  News Syndicates................................               7.0              25.5
519120.....................  Libraries and Archives.........................               7.0              14.0
519190.....................  All Other Information Services.................               7.0              25.5
----------------------------------------------------------------------------------------------------------------

    For the reasons stated above in this rule and in the proposed rule, 
SBA has decided to retain the current receipts based size standards for 
four industries for which analytical results suggested lowering them. 
Not lowering size standards in NAICS Sector 51 is consistent with SBA's 
recent final rules on NAICS Sector 44-45, Retail Trade (75 FR 61597, 
October 6, 2010); NAICS Sector 72, Accommodation and Food Services (75 
FR 61604, October 6, 2010); and NAICS Sector 81, Other Services (75 FR 
61591,October 6, 2010). In each of those final rules, SBA adopted its 
proposal not to reduce small business size standards for the same 
reasons. SBA is also retaining the existing receipts based size 
standard for one industry for which the results supported it at its 
current level. Accordingly, SBA has retained the existing receipts-
based size standards for five industries in NAICS Sector 51. SBA did 
not review the 12 industries in NAICS Sector 51 that have employee 
based size standards. Therefore, SBA has retained the size standards 
for those industries at their current levels until the Agency reviews 
employee based size standards at a later date.

Compliance With Executive Orders 12866, 13563, 12988, and 13132, the 
Paperwork Reduction Act (44 U.S.C., Ch. 35) and the Regulatory 
Flexibility Act (5 U.S.C. 601-612)

Executive Order 12866

    The Office of Management and Budget (OMB) has determined that this 
final rule is a significant regulatory action for purposes of Executive 
Order 12866. Accordingly, the next section contains SBA's Regulatory 
Impact Analysis. This is not a major rule, however, under the 
Congressional Review Act, 5 U.S.C. 800.

Regulatory Impact Analysis

    1. Is there a need for the regulatory action?
    SBA believes that the revised changes to small business size 
standards for 15 industries in NAICS Sector 51, Information, reflect 
changes in economic characteristics of small businesses in those 
industries and the Federal procurement market. SBA's mission is to aid 
and assist small businesses through a variety of financial, 
procurement, business development, and advocacy programs. To assist the 
intended beneficiaries of these programs effectively, SBA establishes 
distinct definitions to determine which businesses are deemed small 
businesses. The Small Business Act (15 U.S.C. 632(a)) delegates to 
SBA's Administrator the responsibility for establishing small business 
definitions. The Act also requires that small business definitions vary 
to reflect industry differences. The recently enacted Jobs Act requires 
the Administrator to review one-third of all size standards within each 
18-month period from the date of its enactment and to review all size 
standards at least every five years thereafter. The supplementary 
information sections of the October 12, 2011 proposed rule and this 
final rule explained in detail SBA's methodology for analyzing a size 
standard for a particular industry.
    2. What are the potential benefits and costs of this regulatory 
action?
    The most significant benefit to businesses obtaining small business 
status as a result of this rule is gaining eligibility for Federal 
small business assistance programs, including SBA's financial 
assistance programs, economic injury disaster loans, and Federal 
procurement opportunities intended for small businesses. Federal small 
business programs provide targeted opportunities for small businesses 
under SBA's various business development and contracting programs. 
These include the 8(a) Business Development program and programs 
benefiting small businesses located in Historically Underutilized 
Business Zones (HUBZone), women owned small businesses (WOSB), and 
service-disabled veteran-owned small businesses (SDVOSB). Other Federal 
agencies also may use SBA's size standards for a variety of regulatory 
and program purposes. These programs help small businesses become more 
knowledgeable, stable, and competitive. In the 15 industries in NAICS 
Sector 51 for which SBA has decided to increase size standards, SBA 
estimates that more than 500 firms exceeding the current size standards 
will gain small business status and become eligible for these programs. 
That number is 1.2 percent of the total number of firms that are 
classified as small under the current size standards in all 20 
industries in NAICS Sector 51 that are covered by this final rule. SBA 
estimates that this will increase the small business share of total 
industry receipts in those industries from 13 percent under the current 
size standards to 15 percent.
    The benefits of increasing size standards to a more appropriate 
level will accrue to three groups in the following ways: (1) Some 
businesses that are above the current size standards will gain small 
business status under the higher size standards; thereby enabling them 
to participate in Federal small business assistance programs; (2) 
growing small businesses that are close to exceeding the current size 
standards will be able to retain their small business status under the 
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.
    For the October 12, 2011 proposed rule, SBA analyzed FY 2007-2009 
FPDS-NG data and found that, among the industries that SBA examined, 
nearly 98 percent of Federal contracting dollars in Sector 51 were 
accounted for by those 15 industries for which SBA has increased size 
standards. This also held true in SBA's updated analysis using the FY 
2008-2010 FPDS-NG data. SBA estimates that additional firms gaining 
small business status in those industries under the revised size 
standards could potentially obtain

[[Page 72706]]

Federal contracts totaling between $15 million and $20 million annually 
through the 8(a), HUBZone, WOSB, and SDVOSB programs and other, 
unrestricted procurements. The added competition for many of these 
procurements may also result in lower prices to the Government for 
procurements reserved for small businesses, although SBA cannot 
quantify this benefit.
    Based on the 2008 to 2010 data alone, SBA estimates that 
approximately 5 to 10 more loans totaling $1 million to $2 million 
could be made to newly defined small businesses under its 7(a) and 504 
Loan Programs. However, under the Jobs Act, SBA can now guarantee 
substantially larger loans than in the past. The Jobs Act also 
established an alternative size standard for SBA's 7(a) and 504 Loan 
Programs for those applicants that do not meet the size standards for 
their industries. Under the alternative size standard, if a firm 
applies for a 7(a) or 504 loan but does not meet the size standard for 
its industry, it might still qualify if, including its affiliates, it 
has tangible net worth that does not exceed $15 million and has average 
net income after Federal income taxes (excluding any carry-over losses) 
for its preceding two completed fiscal years that does not exceed $5.0 
million. Thus, increasing the size standards may result in an increase 
in small business guaranteed loans to small businesses in these 
industries, but it is impractical to try to estimate the extent of 
their number and the total amount loaned.
    Newly defined small businesses will also benefit from SBA's 
Economic Injury Disaster Loan (EIDL) Program. Since the EIDL program is 
contingent on the occurrence and severity of a disaster, SBA cannot 
make a meaningful estimate of future EIDL benefits.
    To the extent that those 500 newly defined small firms under the 
revised size standards could become active in Federal procurement 
programs, there may be some additional administrative costs to the 
Federal Government. There will be additional bidders for Federal small 
business procurement opportunities, additional firms applying for SBA 
guaranteed loans, additional firms eligible to enroll in the Central 
Contractor Registration's (CCR) Dynamic Small Business Search database, 
and additional firms seeking certification as 8(a) or HUBZone firms or 
qualifying for small business, WOSB, SDVOSB, and SDB status. Among 
these businesses, there could be some additional costs associated with 
compliance and verification of small business status and protests of 
small business status. These added costs are likely to be minimal 
because mechanisms are already in place to handle these administrative 
requirements.
    The costs to the Federal Government may be higher on some Federal 
contracts under the higher revised size standards. With a greater 
number of businesses defined as small, Federal agencies may choose to 
set aside more contracts for competition among small businesses rather 
than using full and open competition. The movement from unrestricted to 
set-aside contracting will likely result in competition among fewer 
total bidders, although there will be more small businesses eligible to 
submit offers. In addition, higher costs may result when additional 
full and open contracts are awarded to HUBZone businesses because of a 
price evaluation preference. The additional costs associated with fewer 
bidders, however, will likely be minor since, as a matter of law, 
procurements may be set aside for small businesses or reserved for the 
8(a), HUBZone, WOSB, or SDVOSB Programs only if awards are expected to 
be made at fair and reasonable prices.
    The revised size standards may have some distributional effects 
among large and small businesses. Although SBA cannot estimate with 
certainty the actual outcome of gains and losses among small and large 
businesses, there are several likely impacts. There may be a transfer 
of some Federal contracts from large businesses to small businesses. 
Large businesses may have fewer Federal contract opportunities as 
Federal agencies decide to set aside more Federal contracts for small 
businesses. In addition, some agencies may award more Federal contracts 
to HUBZone concerns instead of large businesses since HUBZone concerns 
may be eligible for price evaluation preferences when they compete on 
full and open bidding opportunities. Similarly, currently defined small 
businesses may obtain fewer Federal contracts due to the increased 
competition from more businesses defined as small under the revised 
size standards. This transfer may be offset by more Federal 
procurements set aside for all small businesses. The number of newly 
defined and expanding small businesses that are willing and able to 
sell to the Federal Government will limit the potential transfer of 
contracts away from large and small businesses under the existing size 
standards. The SBA cannot estimate with precision the potential 
distributional impacts of these transfers.
    The revisions to the existing size standards for Information 
industries are consistent with SBA's statutory mandate to assist small 
business. This regulatory action promotes the Administration's 
objectives. One of SBA's goals in support of the Administration's 
objectives is to help individual small businesses succeed through fair 
and equitable access to capital and credit, Government contracts, and 
management and technical assistance. Reviewing and modifying size 
standards, when appropriate, ensures that intended beneficiaries have 
access to small business programs designed to assist them.

Executive Order 13563

    A description of the need for this regulatory action and benefits 
and costs associated with this action including possible distributions 
impacts that relate to Executive Order 13563, Improving Regulation and 
Regulatory Review, are included above in the Regulatory Impact Analysis 
under Executive Order 12866.
    In an effort to engage interested parties in this action, SBA has 
presented its methodology (discussed above under Supplementary 
Information) to various industry associations and trade groups. SBA 
also met with various industry groups to obtain their feedback on its 
methodology and other size standards issues. SBA also presented its 
size standards methodology to businesses in 13 cities in the United 
States and sought their input as part of the Jobs Act tours. The 
presentation also included information on the latest status of the 
comprehensive size standards review and on how interested parties can 
provide SBA with input and feedback on size standards review.
    Additionally, SBA sent letters to the Directors of the Offices of 
Small and Disadvantaged Business Utilization (OSDBU) at several Federal 
agencies with considerable procurement responsibilities requesting 
their feedback on how the agencies use SBA size standards and whether 
current standards meet their programmatic needs (both procurement and 
non-procurement). SBA gave appropriate consideration to all input, 
suggestions, recommendations, and relevant information obtained from 
industry groups, individual businesses, and Federal agencies in 
preparing this proposed rule.
    The review of size standards in NAICS Sector 51, Information, is 
consistent with Executive Order 13563, Sec.  6 calling for 
retrospective analyses of existing rules. The last overall review of 
size standards occurred during the late 1970s and early 1980s. Since 
then, except for periodic adjustments for monetary based size 
standards, most

[[Page 72707]]

reviews of size standards were limited to a few specific industries in 
response to requests from the public and Federal agencies. SBA 
recognizes that changes in industry structure and the Federal 
marketplace over time have rendered existing size standards for some 
industries no longer supportable by current data. Accordingly, in 2007, 
SBA began a comprehensive review of all size standards to ensure that 
existing size standards have supportable bases and to revise them when 
necessary. In addition, the Jobs Act directs SBA to conduct a detailed 
review of all size standards and to make appropriate adjustments to 
reflect market conditions. Specifically, the Jobs Act requires SBA to 
conduct a detailed review of at least one-third of all size standards 
during every 18-month period from the date of its enactment and do a 
complete review of all size standards not less frequently than once 
every 5 years thereafter.

Executive Order 12988

    This action meets applicable standards set forth in Sections 3(a) 
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize 
litigation, eliminate ambiguity, and reduce burden. The action does not 
have retroactive or preemptive effect.

Executive Order 13132

    For purposes of Executive Order 13132, Federalism, SBA has 
determined that this final rule will not have substantial, direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government. Therefore, SBA 
has determined that this final rule has no federalism implications 
warranting preparation of a federalism assessment.

Paperwork Reduction Act

    For the purpose of the Paperwork Reduction Act, 44 U.S.C. Ch. 35, 
SBA has determined that this final rule would not impose any new 
reporting or record keeping requirements.

Final Regulatory Flexibility Analysis

    Under the Regulatory Flexibility Act (RFA), this final rule may 
have a significant impact on a substantial number of small entities in 
NAICS Sector 51, Information. As described above, this final rule may 
affect small entities seeking Federal contracts, SBA's 7(a) and 504 
Guaranteed Loans, SBA's Economic Injury Disaster Loans, and various 
small business benefits under other Federal programs.
    Immediately below, SBA sets forth a final regulatory flexibility 
analysis of this final rule addressing the following questions: (1) 
What are the need for and objective of the rule?; (2) What are SBA's 
description and estimate of the number of small entities to which the 
rule will apply?; (3) What are the projected reporting, record keeping, 
and other compliance requirements of the rule?; (4) What are the 
relevant Federal rules which may duplicate, overlap, or conflict with 
the rule?; and (5) What alternatives will allow the Agency to 
accomplish its regulatory objectives while minimizing the impact on 
small entities?
    (1) What are the need for and objective of the rule?
    Most of SBA's size standards for the Information industries had not 
been reviewed since the 1980s. Technological changes, productivity 
growth, international competition, mergers and acquisitions and updated 
industry definitions may have changed the structure of many industries 
in that Sector. Such changes can be sufficient to support a revision to 
size standards for some industries. Based on the analysis of the latest 
industry and program data available, SBA believes that the revised 
standards in this rule more appropriately reflect the size of 
businesses in those industries that need Federal assistance. 
Additionally, the Jobs Act requires SBA to review all size standards 
and make appropriate adjustments to reflect current data and market 
conditions.
    (2) What are SBA's description and estimate of the number of small 
entities to which the rule will apply?
    SBA estimates that approximately 500 additional firms will become 
small because of increases in size standards in 20 industries in NAICS 
Sector 51. That represents 1.2 percent of the total firms in industries 
in that Sector that have receipts-based size standards. This will 
result in an increase in the small business share of total industry 
receipts in those industries from about 13 percent under the current 
size standards to nearly 15 percent under the revised size standards. 
SBA does not anticipate a significant competitive impact on smaller 
businesses in these industries. The revised size standards will enable 
more small businesses to retain their small business status for a 
longer period. Under current size standards, many small businesses may 
have lost their eligibility or found it difficult to compete with 
companies that are significantly larger than they are, and this final 
rule attempts to correct that impact. SBA believes these changes will 
have a positive impact for existing small businesses and for those that 
have either exceeded or are about to exceed current size standards.
    (3) What are the projected reporting, record keeping, and other 
compliance requirements of the rule?
    Revising size standards does not impose any additional reporting or 
record keeping requirements on small entities. However, qualifying for 
Federal procurement and a number of other Federal programs requires 
that entities register in the Central Contractor Registration (CCR) 
database and certify at least annually that they are small in the 
Online Representations and Certifications Application (ORCA). 
Therefore, businesses opting to participate in those programs must 
comply with CCR and ORCA requirements. There are no costs associated 
with either CCR registration or ORCA certification. Revising size 
standards alters the access to SBA programs that are designed to assist 
small businesses, but does not impose a regulatory burden as they 
neither regulate nor control business behavior.
    (4) What are the relevant Federal rules which may duplicate, 
overlap, or conflict with the rule?
    Under Sec.  3(a)(2)(C) of the Small Business Act, 15 U.S.C. 
632(a)(2)(c), Federal agencies must use SBA's size standards to define 
a small business, unless specifically authorized by statute. In 1995, 
SBA published in the Federal Register a list of statutory and 
regulatory size standards that identified the application of SBA's size 
standards as well as other size standards used by Federal agencies (60 
FR 57988, November 24, 1995). SBA is not aware of any Federal rule that 
would duplicate or conflict with establishing or revising size 
standards.
    However, the Small Business Act and SBA's regulations allow Federal 
agencies to develop different size standards if they believe that SBA's 
size standards are not appropriate for their programs, with the 
approval of SBA's Administrator (13 CFR 121.903). The Regulatory 
Flexibility Act authorizes an agency to establish an alternative small 
business definition after consultation with the Office of Advocacy of 
the U.S. Small Business Administration (5 U.S.C. 601(3)).
    (5) What alternatives will allow the Agency to accomplish its 
regulatory objectives while minimizing the impact on small entities?
    By law, SBA is required to develop numerical size standards for 
establishing eligibility for Federal small business assistance 
programs. Other than varying size standards by industry and changing 
the size measures, no

[[Page 72708]]

practical alternative exists to the existing system of numerical size 
standards. The possible alternative size standards considered for the 
individual NAICS Code industries within NAICS Sector 51 are discussed 
in the supplementary information to the proposed rule and this final 
rule.

List of Subjects in 13 CFR Part 121

    Administrative practice and procedure, Government procurement, 
Government property, Grant programs--business, Individuals with 
disabilities, Loan programs--business, Reporting and recordkeeping 
requirements, Small businesses.

    For reasons set forth in the preamble, SBA amends 13 CFR part 121 
as follows:

PART 121--SMALL BUSINESS SIZE REGULATIONS

0
1. The authority citation for part 121 continues to read as follows:

    Authority: 15 U.S.C. 632, 634(b)(6), 636(b), 662, 694a(9).


0
2. In Sec.  121.201, in the table, revise the entries for ``511210'', 
``512110'', ``512131'', ``512199'', ``512290'', ``515111'', ``515112'', 
``515120'', ''515210'', ``517410'', ``517919'', ``518210'', ``519110'', 
``519120'', and ``519190'' to read as follows:


Sec.  121.201  What size standards has SBA identified by North American 
Industry Classification System codes?

* * * * *

                                 Small Business Size Standards by NAICS Industry
----------------------------------------------------------------------------------------------------------------
                                                                               Size standards    Size standards
        NAICS codes                     NAICS U.S. industry title              in millions  of    in number of
                                                                                   dollars          employees
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
511210.....................  Software Publishers............................             $35.5
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
512110.....................  Motion Picture and Video Production............              30.0
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
512131.....................  Motion Picture Theaters (except Drive[dash]Ins)              35.5
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
512199.....................  Other Motion Picture and Video Industries......              19.0
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
512290.....................  Other Sound Recording Industries...............              10.0
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
515111.....................  Radio Networks.................................              30.0
515112.....................  Radio Stations.................................              35.5
515120.....................  Television Broadcasting........................              35.5
515210.....................  Cable and Other Subscription Programming.......              35.5
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
517410.....................  Satellite Telecommunications...................              30.0
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
517919.....................  All Other Telecommunications...................              30.0
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
518210.....................  Data Processing, Hosting, and Related Services.              30.0
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
519110.....................  News Syndicates................................              25.5
519120.....................  Libraries and Archives.........................              14.0
----------------------------------------------------------------------------------------------------------------
 

[[Page 72709]]

 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
519190.....................  All Other Information Services.................              25.5
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------


    Dated: April 25, 2012.
Karen G. Mills,
Administrator.

    Editorial Note: This document was received at the Office of the 
Federal Register on November 30, 2012.
[FR Doc. 2012-29360 Filed 12-5-12; 8:45 am]
BILLING CODE 8025-01-P