[Federal Register Volume 81, Number 16 (Tuesday, January 26, 2016)]
[Rules and Regulations]
[Pages 4469-4492]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-00924]
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SMALL BUSINESS ADMINISTRATION
13 CFR Part 121
RIN 3245-AG50
Small Business Size Standards for Manufacturing
AGENCY: U.S. Small Business Administration.
ACTION: Final rule.
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SUMMARY: The United States Small Business Administration (SBA) is
increasing small business size standards for 209 industries in North
American Industry Classification System (NAICS) Sector 31-33,
Manufacturing. SBA is also modifying the size standard for NAICS
324110, Petroleum Refiners, by increasing the refining capacity
component of the size standard to 200,000 barrels per calendar day for
businesses that are primarily engaged in petroleum refining and by
eliminating the requirement that 90 percent of the output to be
delivered be refined by the successful bidder from either crude oil or
bona fide feedstocks. The Agency is also updating Footnote 5 to NAICS
326211 to reflect the current Census Product Classification Codes
3262111 and 3262113. As part of its ongoing comprehensive size
standards review, SBA evaluated employee based size standards for all
364 industries in NAICS Sector 31-33 to determine whether they should
be retained or revised. This rule is one of a series of rules that
result from SBA's review of size standards of industries grouped by
NAICS Sector.
DATES: This rule is effective February 26, 2016.
FOR FURTHER INFORMATION CONTACT: Jorge Laboy-Bruno, Ph.D., Economist,
Size Standards Division, (202) 205-6618 or [email protected].
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. The SBA's size standards generally use
two primary measures of business size, average annual receipts and
average 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), Certified Development Company (CDC/504) and 7(a) Loan Programs
determine small business eligibility using either the industry based
size standards or an alternative size standard based on both net worth
and net income. At the start of the current comprehensive review of
size standards, there were 41 different size standards, covering 1,141
NAICS industries and 18 ``exceptions.'' in SBA's table of size
standards. Of these, 31 were based on average annual receipts, seven on
average number of employees, and three on other measures. Presently,
there are 28 different size standards, covering 1047 NAICS industries
and 16 ``exceptions.'' Of these NAICS industries and exceptions, 533
are covered by size standards based on average annual receipts, 509 on
average number of employees, and five on average assets.
Over the years, some members of the public have remarked that SBA's
size standards have not kept up with changes in the economy, and in
particular, that they do not reflect changes in the Federal contracting
marketplace and industry structure. The last comprehensive size
standards review was in the late 1970s and early 1980s. Size standards
reviews since then, until this comprehensive review, were generally
limited to a few specific industries in response to requests from the
public and from Federal agencies. SBA also makes periodic inflation
adjustments to its monetary based size standards. The latest inflation
adjustment to size standards was effective July 14, 2015 (79 FR 33647
(June 12, 2014)).
Because of changes in industry structure and the Federal
marketplace since the last overall review, current data no longer
supported existing size standards for some industries. Accordingly, in
2007, SBA began a comprehensive review to determine whether existing
size standards are consistent with current data, and to revise them,
when necessary.
In addition, on September 27, 2010, the President of the United
States signed the Small Business Jobs Act of 2010 (Jobs Act), 111
Public Law 240, 124 Stat. 2504, Sep. 27, 2010. The Jobs Act
[[Page 4470]]
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 every18-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 are also consistent with Executive Order 13563,
``Improving Regulation and Regulatory Review.''
SBA has chosen not to review all size standards at one time.
Rather, the Agency is reviewing groups of related industries on an
NAICS Sector by Sector basis.
As part of SBA's comprehensive size standards review, grouped by
NAICS Sector, the Agency reviewed the 364 size standards for industries
in NAICS Sector 31-33, Manufacturing, to determine whether they should
be retained or revised. After its review, SBA published in the
September 10, 2014 issue of the Federal Register (79 FR 54145) a
proposed rule to increase size standards for 209 industries in NAICS
Sector 31-33, Manufacturing. SBA also proposed to amend Footnote 4 to
NAICS 324110, Petroleum Refiners, in its table of size standards in two
ways: (1) By increasing the refining capacity component of the size
standard from 125,000 to 200,000 barrels per calendar day total
capacity for businesses that are primarily engaged in petroleum
refining, and (2) by eliminating the requirement that 90 percent of the
output to be delivered be refined by the successful bidder from either
crude oil or bona fide feedstocks. SBA also proposed amending Footnote
5 to NAICS 326211, Tire Manufacturing (except Retreading), to reflect
the current Census Product Classification Codes 3262111 and 3262113.
As part of ongoing comprehensive size standards review, SBA
developed a ``Size Standards Methodology'' White Paper for developing,
reviewing, and modifying size standards, when necessary. SBA published
the document on its Web site at www.sba.gov/size for public review and
comments, and included it as a supporting document in the electronic
docket of the proposed rule at www.regulations.gov.
In evaluating an industry, SBA generally examines its
characteristics (such as average firm size, startup costs, industry
competition, and distribution of firms by size) and the level and share
of Federal contract dollars that small businesses receive. SBA also
examines the potential impact a size standard revision might have on
its financial assistance programs, and whether a business under a
revised size standard would be dominant in its industry. SBA analyzed
the characteristics of every industry in NAICS 31-33, using mostly a
special tabulation obtained from the U.S. Bureau of the Census from its
2007 Economic Census (the latest available). For the proposed rule, SBA
also evaluated the small business share of Federal contracts in each of
those industries using data from the Federal Procurement Data System--
Next Generation (FPDS-NG) for fiscal years 2009-2011. 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 2010-
2012. In this final rule, SBA has updated the impacts of size standards
changes using the FPDS-NG and loan data for fiscal years 2012-2014.
SBA's ``Size Standards Methodology'' White Paper provides a
detailed description of its analyses of various industry and program
factors and data sources, and how the Agency uses the results to
establish and revise size standards. In the September 10, 2014 proposed
rule, SBA detailed how it applied its ``Size Standards Methodology'' to
review and modify when necessary, the existing size standards for
industries in NAICS Sector 31-33. SBA sought comments from the public
on a number of issues about its ``Size Standards Methodology,'' such as
whether SBA should consider other approaches; whether SBA should
evaluate alternative or additional factors or data sources; whether
SBA's manner of establishing small business size standards makes sense
in the current economic environment; whether SBA's application of
anchor size standards is appropriate in the current economy; whether
there are gaps in SBA's methodology because of the lack of current or
comprehensive data; and whether there are other facts or issues that
SBA should consider.
SBA sought comments on its proposed size standards together with
other issues that could affect a final determination. Specifically, SBA
requested comments on the following:
1. SBA proposed five levels of employee based size standards for
industries in Manufacturing and for industries in other Sectors that
have employee based size standards (except for Wholesale Trade and
Retail Trade): 500 employees, 750 employees, 1,000 employees, 1,250
employees, and 1,500 employees. SBA invited comments on whether these
were appropriate levels and requested suggestions for alternatives, if
commenters thought them more appropriate.
2. Consistent with its policy of not lowering any size standards in
its recently completed proposed and final rules on receipts based size
standards, SBA proposed retaining the current 500-employee minimum and
1,500-employee maximum size standards for all industries in the
Manufacturing Sector. In its ``Size Standards Methodology,'' available
at www.sba.gov/size, SBA had proposed setting the minimum size standard
for these industries at 250 employees and the maximum size standard at
1000 employees. That would entail lowering size standards for some
industries. SBA invited comments on whether it should maintain the 500-
employee minimum and the 1,500-employee maximum size standards or lower
them to 250 employees and 1,000 employees, respectively, as the Agency
proposed in its ``Size Standards Methodology.'' SBA requested
suggestions on alternative minimum and maximum levels, if commenters
thought them more appropriate. For the same reason, SBA also proposed
to retain the current size standards for 19 industries when analytical
results might support lowering them. SBA had sought comments on whether
SBA should lower them solely based on its analysis or retain them at
their current levels in view of current economic conditions.
3. SBA sought feedback on whether it should adjust employee based
size standards for labor productivity growth. SBA periodically
increases receipts based size standards for inflation. Should SBA take
labor productivity growth and technological change into consideration
when it reviews employee based standards? If so, what data are
available to assist SBA in evaluating such factors? What if such an
evaluation leads to lower size standards for some industries? How
should SBA apply the results to its size standards?
4. SBA sought feedback on whether its proposal to increase size
standards for 209 industries and retain current size standards for 155
industries is appropriate, given the economic characteristics of each
industry reviewed in the proposed rule. SBA also sought feedback and
suggestions on alternative size standards, if commenters thought them
more appropriate.
5. SBA invited comments on its proposal to increase the capacity
component of the Petroleum Refiners (NAICS 324110) size standard from
125,000 barrels per calendar day (BPCD)
[[Page 4471]]
total Operable Atmospheric Crude Oil Distillation capacity to 200,000
BPCD and retain the employee component at the current 1,500-employee
level. SBA also welcomed comments on its proposal to allow business
concerns to qualify either under the 1,500-employee size standard or
under the 200,000 BPCD capacity size standard, if the firm, together
with its affiliates, is primarily engaged in petroleum refining.
Finally, SBA also requested feedback on its proposal to eliminate the
requirement that ``[t]he total product to be delivered under the
contract must be at least 90 percent refined by the successful bidder
from either crude oil or bona fide feedstocks.''
6. SBA's proposed size standards were based on five primary
factors--average firm size, average assets size (as a proxy of startup
costs and entry barriers), four-firm concentration ratio, distribution
of firms by size, and the level and small business share of Federal
contracting dollars of the evaluated industries. SBA invited comments
on these factors and/or suggestions on other factors that it should
consider when evaluating or revising employee based size standards. SBA
also sought information on relevant data sources, other than what it
uses, if available.
7. SBA gave equal weight to each of the five primary factors in all
industries. SBA asked for feedback on whether it should continue giving
equal weight to each factor or whether it should give more weight to
one or more factors for certain industries. SBA requested that
recommendations to weigh some factors more than others include
suggested weights for each factor along with supporting information.
8. For analytical simplicity and efficiency, in the proposed rule,
SBA refined its size standard methodology to obtain a single value as a
proposed size standard instead of a range of values, as in its past
size regulations. SBA welcomed any comments on this procedure and
suggestions on alternative methods.
Summary and Discussion of Comments
SBA received 26 comments to the proposed rule, but only 17 were
unique comments as some commenters submitted the same comment more than
once. All of the comments are available at www.regulations.gov (RIN
3245-AG50) and are summarized and discussed below.
Comments on NAICS 324110, Petroleum Refiners
Footnote 4 of SBA's table of size standards relates to NAICS
324110, Petroleum Refiners. SBA proposed to amend Footnote 4 in two
ways: (1) By increasing the refining capacity component of the size
standard from 125,000 barrels per calendar day (BPCD) total capacity to
200,000 BPCD total capacity for businesses that are primarily engaged
in petroleum refining, and (2) by eliminating the requirement that 90
percent of the output to be delivered be refined by the successful
bidder from either crude oil or bona fide feedstocks.
SBA received only one comment on these proposed changes.
Specifically, the commenter expressed concerns about removing the
requirement that 90 percent of the output to be delivered be refined by
the successful bidder from either crude oil or bona fide feedstocks.
The commenter contended that the change would have an adverse impact on
small businesses under NAICS 424720, Petroleum and Petroleum Product
Merchant Wholesalers, particularly those wishing to participate in the
Defense Logistics Agency's (DLA) bulk fuel small business set aside
program. To mitigate this, the commenter suggested a provision allowing
the procuring agency to source refined petroleum products from small
businesses in NAICS 424720 under a small business set-aside program.
Assuming that waivers of the nonmanufacturer rule will be eliminated
under the proposed rule, the commenter suggested some changes to the
waiver rule.
SBA's Response
The changes affect only the small business eligibility of petroleum
refiners. They do not affect the eligibility of wholesalers and other
suppliers of petroleum products. Companies that qualify as small for
supplying petroleum products they did not manufacture or produce can
continue to qualify as small under SBA's nonmanufacturer rule (13 CFR
121.406(b)). Under the nonmanufacturer rule, a business is deemed small
if it has 500 or fewer employees (including its affiliates), is
primarily engaged in the retail or wholesale trade and normally sells
the type of item being supplied, takes ownership or possession of the
product, and provides the product of a small manufacturer (in this
case, the product of a small petroleum refiner). The proposed changes
do not affect the 500-employee nonmanufacturer size standard and hence
the eligibility of wholesalers and dealers of petroleum products under
the nonmanufacturer rule.
Based on evaluation of relevant industry and procurement data and
public comments to the proposed rule, in this final rule, SBA is
adopting the changes to the size standard for NAICS 324110, as
proposed. Specifically, SBA is increasing the refining capacity
component of the Petroleum Refiners (NAICS 324110) size standard from
125,000 BPCD to 200,000 BPCD total capacity for businesses that are,
together with their affiliates, primarily engaged in refining crude
petroleum into refined petroleum products. A firm's ``primary
industry'' is determined in accordance with 13 CFR 121.107. In
addition, the final rule eliminates the requirement that 90 percent of
output being delivered is refined by a successful bidder. Accordingly,
SBA also revises Footnote 4 of SBA's table of size standards to reflect
these changes.
Under the revised size standard, for purposes of Federal
procurement, a petroleum refiner can qualify as small under the 1,500-
employee size standard or under the 200,000 BPCD total capacity size
standard. To qualify under the capacity size standard, the firm,
together with its affiliates, must be primarily engaged in refining
crude petroleum into refined petroleum products. SBA is removing the
requirement that 90 percent of the output to be delivered be refined by
the successful bidder from either crude oil or bona fide feedstocks
because the general requirement on a supply contract that is set aside
for small business is that the small business manufacturer must perform
50 percent of the cost of manufacturing, or may not subcontract more
than 50 percent of the contract to another firm.
Comments on NAICS 316210, Footwear Manufacturing
SBA received seven comments on NAICS 316210, Footwear
Manufacturing. The current size standard for NAICS 316210 is 1,000
employees and SBA proposed to retain it at the current level. Four
comments supported SBA's proposal, while two opposed it. The seventh
comment was ambiguous with respect to the size standard. These comments
and SBA's responses are discussed below.
Comments Supporting the Current 1,000-Employee Size Standard for NAICS
316210
Three footwear manufacturers supported maintaining the current
1,000-employee size standard for NAICS 316210. All three stated that
they are the major and continuous suppliers to the U.S. military, and
footwear products they manufacture meet the specifications as required
by the U.S. Department of Defense (DoD) and the
[[Page 4472]]
Berry Amendment (10 U.S.C. 2533a). The Berry Amendment requires DoD to
give preference in procurement to domestically produced, manufactured,
or home-grown products, most notably food, clothing, fabrics, and
specialty metals. Normally, one would expect special manufacturing
requirements to point to the need for a larger size standard, not
lower. Additionally, all three argued that, unlike large footwear
manufacturers with diversified market and product bases, they rely
heavily on small business contracts from the U.S. Defense Logistics
Agency (DLA) for their survival. Two of these commenters also agreed
with SBA's position of not reducing size standards in the current
economic environment.
The first commenter explained that footwear contractors to DoD are
often torn between two forces: (1) The need to increase the number of
employees to meet DoD's needs, and (2) the need to maintain small
business status to compete for DoD contracts. The commenter maintained
that footwear manufacturing is highly labor intensive and DoD contract
awards and their completions are associated with significant changes in
employee headcounts. Significant swings in employee counts also occur
with elevated demands for footwear by DoD during times of war, the
commenter added. The commenter argued that retaining the current 1,000-
employee size standard enables small businesses to meet DoD's needs
without jeopardizing their small business status. This would also
minimize the frequency of swings between small and large business
status among footwear contractors and the impact on the DoD's supply
chain, the commenter added. The same commenter stated that it relies on
its small business status to be able to compete with large businesses.
Many large businesses in the footwear industry are diverse, multi-
national corporations with several thousand employees with
significantly more resources and cost efficiencies, the commenter
explained. The commenter asserted that DoD contracts are often awarded
based on the lowest price where large businesses have significant cost
advantages, and would be able to squeeze out small businesses if there
were no small business protection. The 1,000-employee size standard
helps small footwear manufacturers protect themselves as suppliers to
DoD, the commenter concluded.
The second commenter also maintained that many contracts it
received to supply combat boots to the U.S. military were awarded
because of its small business status. Unless the small business size
standard remains at 1,000 employees, its future will be in jeopardy,
the commenter added. The commenter asserted that lowering the size
standard would have a negative impact on its business and employees it
supports. Any change in the size standard below the 1,000-employee
level would definitely have a negative impact on its ability to
continue manufacturing footwear for DoD and the industry, the commenter
noted.
The third commenter, whose primary customers include DoD/DLA,
supported keeping the 1,000-employee size standard because it allows
for employment fluctuations during the course of contract performance.
The commenter stated that, prior to October 1, 2012, when the size
standard for NAICS 316210 was 500 employees, the majority of DoD
contracts for combat boots went to large businesses with several
thousand employees against which the company had a difficult time
competing on a full and open basis. There are significant differences
in resources available to companies with many thousands of employees
versus those with less than 1,000 employees, the commenter added. To
demonstrate that the company has been the foremost innovator for
military footwear, the commenter provided numerous new combat boots it
developed over the years. In light of the decimation of U.S. footwear
manufacturing industry by imports reducing its share of all footwear
purchase in the U.S. to less than 2 percent in 2013, the 500-employee
footwear manufacturing size standard established more than a half
century ago has grown out of date with the realities of the industry,
the commenter explained. This commenter also stated that because the
footwear industry is highly labor intensive, one DoD award can easily
cause a contractor's employment level to increase by 10-20 percent or
more, resulting in a change to its status from a small business to a
large business during the course of the contract. This can be very
disruptive to the company and its employees, the commenter added. The
commenter also provided a detailed analysis of average firm size,
startup costs and entry barriers, industry competition, and Federal
contracting trends in support of SBA's proposal to maintain the 1,000-
employee size standard for Footwear Manufacturing. If the size standard
were to revert to 500 employees for NAICS 316210, it would have a
lasting negative impact on its business and harm the areas where its
employees live, the commenter concluded.
SBA also received a joint comment from two elected officials
supporting the 1,000-employee size standard for Footwear Manufacturing
on behalf of a footwear manufacturer operating factories in their
Districts. They maintained that the company manufactures its Berry
Amendment-compliant footwear in the U.S. and is a major supplier to the
U.S. military. They supported SBA's proposal to maintain the current
1,000-employee size standard for Footwear Manufacturing in light of
decreases in DLA contracts for military boots as it would help the
company remain competitive in the market. The commenters added that
lowering the size standard is not in the best interest of small
footwear manufacturers in the current economic environment.
Comments Opposing the Current 1,000-Employee Size Standard for NAICS
316210
SBA received two comments opposing the 1,000-employee size standard
for footwear manufacturers. One was from a footwear manufacturing
subsidiary of a large multi-national company and the other was from an
elected official. These comments and SBA's responses are below.
The first commenter argued that in 2012, SBA, without prior notice
or opportunity to comment, issued an interim final rule to revise size
standards to conform to NAICS 2012. The commenter also questioned SBA's
justification for using an interim final rule (IFR). The commenter
asserted that the 1,000-employee size standard for Footwear
Manufacturing was adopted solely for administrative reasons without
substantive analyses of industry and Federal contracting data as
required by the Small Business Act or SBA's own size standards
methodology. The commenter further argued that SBA consolidated five
separate footwear manufacturing NAICS codes into one footwear
manufacturing code (NAICS 316210) and changed the size standard from
500 employees to 1,000 employees by arbitrarily selecting the highest
size standard in the group. The commenter added that SBA did not
provide a detailed analysis and justification to establish a single
size standard for a group of 4-digit NAICS codes as required by 15
U.S.C. 632(a)(7). The commenter maintained that the increase of size
standard to 1,000 employees has allowed one or two firms between 500
employees and 1,000 employees to become dominant in the military
footwear industry. The commenter contends that has harmed truly small
businesses by forcing them to compete
[[Page 4473]]
against much larger firms even in small business set aside
procurements, as well as large businesses by forcing agencies to use
small business set asides and precluding them from participating in the
market.
The commenter claimed that the current proposed rule and proposed
size standards are fundamentally flawed. The commenter contended that
the proposed rule does not meet the requirements of the Jobs Act
because the Agency has not held two public forums in different
geographic regions of the country as required by the Jobs Act. The
commenter claimed that the actual industry data not only fails to
support the current 1,000-employee size standard for Footwear
Manufacturing, but supports lowering it to below 500 employees. In
addition, the commenter argued that SBA failed to explain how the
1,000-employee size standard is appropriate for Footwear Manufacturing.
The commenter stated that in addition to being based on the faulty 2012
IFR, the proposed size standard for Footwear Manufacturing is based on
insufficient data and is not supported by the publicly available data.
The commenter argued that the proposed rule provides no data for start-
up costs, industry competition, or size distribution of firms relating
to the footwear manufacturing industry. Similarly, there is no
discussion on secondary factors (such as technological changes,
industry growth trends, and SBA financial assistance and program
factors), the commenter contended. The commenter maintained that SBA
has not published data related to the vast majority of the primary
factors it must consider and has not provided sufficient analysis of
the size standard. SBA's failure to gather and consider data on each of
the required factors demonstrates that the rulemaking is legally
deficient, the commenter argued.
The commenter argued that the limited data SBA provides does not
support the 1,000-employee size standard for military footwear
manufacturing; the actual data require a lower size standard. The
commenter stated that, with the 1,000-employee size standard, every
significant domestic manufacturer of military footwear, except for two
companies, is now considered a small business. The commenter maintained
that publicly available Federal procurement data show that SBA's
improper change to a 1,000-employee size standard has allowed ``small
business'' to take a substantial share of the military footwear market.
The commenter alleged that SBA's data on Federal contracting is
inaccurate because the Agency has willfully and arbitrarily excluded
Federal contracting data after October 2012 from its analysis. For
example, SBA asserts that small businesses account for 7.8 percent of
the Federal footwear market, while FPDS-NG demonstrates that the actual
percentage is much higher, the commenter claimed.
The commenter contended that the 1,000-employee size standard for
the footwear manufacturing industry has created a situation where one
firm is now dominant in the industry. By raising the size standard from
500 employees to 1,000 employees, SBA has allowed two previously large
firms to be reclassified as small, such that six of the eight companies
in the industry are ``small'' businesses, the commenter maintained.
Accounting for more than 28 percent of fiscal year 2014 dollars spent
in NAICS 316210 nationwide and more than twice the share of other small
business, one small business has become dominant in the industry, the
commenter argued. SBA cannot adopt size standards which would cause a
concern to become dominant in its field of operation, the commenter
added. The commenter argued that SBA has provided no data to support
its statement that no individual firm at or below the proposed size
standards will be large enough to dominate its field of operation. SBA
has not performed such an analysis with respect to the footwear
manufacturing industry and failed to comply with the statutory
requirement that small businesses are only those that are not dominant
in their field of operation, the commenter alleged.
The commenter argued that SBA's position not to lower size
standards, even when its analysis might support a reduction, is
arbitrary and capricious and violates the requirements of the Act and
SBA's own methodology. This ``policy'' is inconsistent with
congressional intent and SBA's mission to aid, counsel, assist and
protect the interests of small business concerns, the commenter
maintained. The commenter added that this policy results in otherwise
large businesses being identified as small and being afforded special
treatment that was intended for small businesses, with repercussions
for the entire industry that SBA is required to consider. The commenter
contended that there is no basis to support SBA's assertion that not
lowering size standards would create jobs. Changing size standards
would have no impact on the government's demands for goods and services
and job creation, the commenter explains. In other words, the commenter
suggested that there is no impact on the economy and job creation
whether the contracts are performed by large or small businesses. The
commenter further argued that SBA failed to consider the impacts the
size standard changes would have by precluding certain companies from
Federal opportunities or by forcing truly small businesses to compete
against otherwise large businesses.
The commenter argued that to comply with U.S. military requirements
and the Berry Amendment, military footwear manufacturing involves a
very distinct production process from commercial footwear
manufacturing. Thus, the commenter recommended that SBA create a
military footwear manufacturing exception to NAICS 316210, with a size
standard of 500 employees. The commenter argued that, given the special
production requirements necessary to comply with the Berry Amendment,
the military footwear industry supports a separate industry designation
as an exception to NAICS 316210. The commenter recommended that SBA
return the size standard for Footwear Manufacturing to 500 employees
and create a separate size standard for the military footwear industry
as an exception to NAICS 316210 with a size standard well below 500
employees.
The second commenter, an elected official, expressed concerns about
the size standard for Footwear Manufacturing. The commenter contended
that the size standard for Footwear Manufacturing, increased in 2012
from 500 employees to 1,000 employees, not only endangers an already
fragile footwear manufacturing base, but also negatively affects the
small businesses the proposed rule is designed to assist. The commenter
maintained that, with only a limited number of companies remaining that
can produce Berry Amendment compliant footwear, the size standard
change for Footwear Manufacturing will have a detrimental impact on the
military's ability to procure high quality and consistent products. The
commenter added that the proposed 1,000-employee size standard for
Footwear Manufacturing has created a dominant firm within the size
standard contradicting the intent of the proposed rule. The commenter
recommended that SBA reconsider the proposed rule and return the small
business size standard for Footwear Manufacturing to 500 employees.
This will not only ensure fair competition among the few remaining
Berry compliant footwear manufacturers, but will also preserve the
military's ability to obtain consistent quality footwear, the commenter
concluded.
[[Page 4474]]
Another commenter supported a change to NAICS 316210 allowing a
separate classification for the Berry Amendment footwear. The commenter
also supported changing the small business classification to make the
business field more competitive. However, it was not clear whether the
comment was for increasing or decreasing the size standard for Footwear
Manufacturing.
SBA's Response
Every five years, with a notice and comment process, the Office of
Management and Budget (OMB) reviews and updates the NAICS industry
definitions to reflect changes in the U.S. economy. In each NAICS
update, OMB may create new industries and merge or modify others. In
the 2012 update, effective January 1, 2012, OMB merged the five
footwear manufacturing industries into a single, new NAICS industry--
NAICS 316210, Footwear Manufacturing. Thus, the commenter's statement
that SBA consolidated the five industries into one category is not
accurate.
When OMB merges multiple NAICS industries or their parts into a
single industry, SBA must determine a size standard for the new
industry when adopting the updated NAICS to its table of size
standards. For this, as explained in the IFR, SBA used a bright-line
approach to adopting the highest size standard among the merged
industries as the size standard for the new industry. Of the five
merged footwear manufacturing industries, one had a 1,000-employee size
standard, while four had a 500-employee size standard. Accordingly, SBA
adopted a 1,000-employee size standard for the new footwear
manufacturing industry. SBA applied the same approach to determine the
size standard for about 25 other new or modified industries in NAICS
2012. SBA had applied this approach to update its size standards in
response to the 2002 and 2007 NAICS updates with no adverse comments.
To do otherwise and adopt a lower size standard would result in firms
being disqualified from small business status without any analysis,
comment or opportunity for review. There is no evidence that SBA's
approach has ever resulted in firms that are dominant in the industry
qualifying as small business concerns.
After receiving no inter-agency comments, SBA published the updated
size standards as an IFR on August 20, 2012 (77 FR 49991), with an
effective date of October 1, 2012. SBA provided a detailed
justification for using the IFR with an effective date of October 1,
2012. The commenter's argument that SBA provided no opportunity to
comment on the rule is incorrect. SBA provided a 60-day comment period
for the public and other concerned parties to comment on the size
standards changes adopted in the interim final rule. SBA received only
one comment on the IFR, which was unrelated to the 1,000-employee size
standard for NAICS 316210, Footwear Manufacturing. Therefore, the
1,000-employee size standard for NAICS 316210, Footwear Manufacturing,
has been in effect since October 1, 2012.
SBA does not agree with the commenter's assertion that SBA did not
provide a detailed analysis and justification for establishing a single
size standard for a group of industries at the 4-digit NAICS level as
required by 15 U.S.C. 632(a)(7). That requirement only applies when SBA
intends to establish a common size standard for a group of existing 6-
digit NAICS codes at the 4-digit NAICS Industry Group level. It does
not apply to the size standard that SBA adopted for NAICS 316210,
Footwear Manufacturing, the new industry that OMB created by merging
multiple NAICS industries as part of its NAICS 2012 updates because the
five industries have similar production processes.
SBA disagrees with most of the arguments from the commenter
regarding the Jobs Act and the analysis in the proposed rule. The
commenter's allegation that SBA has not held any public forums under
the Jobs Act is simply not correct. To obtain public input on numerous
provisions under the Jobs Act, in 2011, SBA presented its size
standards methodology to businesses in 13 cities in the U.S. and sought
their input. SBA also provided information on the status of the
comprehensive size standards review and on how interested parties can
provide SBA with input and feedback on the size standards review.
SBA does not agree with the commenter's claim that the Agency
failed to explain how the 1,000-employee size standard is appropriate
for the footwear manufacturing industry. In the proposed rule, SBA
detailed what industry and Federal contracting factors the Agency
considered, how they were calculated, what data sources it examined,
and how the results were translated to size standards supported by each
factor. The 2012 IFR had no impact on the SBA's September 10, 2014
proposed rule to retain the 1,000-employee based size standard for
Footwear Manufacturing.
As explained in the September 10, 2014 proposed rule, due to the
lack of data on actual start-up costs, SBA uses average assets as a
proxy for start-up costs. SBA calculates average assets by combining
the sales to total assets ratio for an industry from the Risk
Management Association's (RMA) Annual eStatement Studies with average
receipts from the Economic Census data. The 2009-2011 RMA data, the
latest available when SBA prepared the proposed rule, did not contain
the sales to assets ratio for the Footwear Manufacturing industries.
Therefore, the average assets factor was left blank for Footwear
Manufacturing. SBA measures industry competition using the four-firm
concentration ratio and estimates a size standard only if its value is
40 percent or more. SBA did not have the data to compute the four-firm
ratio for Footwear Manufacturing. Thus, that factor was not included in
the analysis. As explained in the proposed rule as well as in SBA's
size standards methodology, SBA analyzes the size distribution of firms
using the Gini coefficient. The Gini coefficient factor was included
for Footwear Manufacturing. As part of its review, SBA evaluates small
business participation on Federal contracting and SBA's loan programs
under both existing and proposed size standards as well.
The Federal contracting factor was evaluated for every industry,
including Footwear Manufacturing. The impact on loan programs was
evaluated on a more general basis as the vast majority of businesses
receiving SBA's loans are well below the size standards. Aggregated
impacts of proposed size standards on SBA's financial assistance and
Federal procurement were provided as part of the regulatory impact
analysis of the proposed rule. It was not practical to include the
results for each of the 364 industries covered by the proposed rule.
SBA considers secondary factors on a case by case basis. While the
commenter complained that SBA did not consider secondary factors, it
did not indicate what secondary factors SBA should consider in
reviewing the size standard for Footwear Manufacturing. Regarding the
publication of data, SBA provided the results for every primary factor
and each industry, unless the data were not available or the results
were not relevant. Additionally, the majority of the data SBA used in
the proposed rule are publicly available.
While the commenter claimed that actual industry data support
lowering the size standard for Footwear Manufacturing to below 500
employees, it did not provide any specific industry data or analysis to
support its claim. The commenter's allegation that SBA willfully and
arbitrarily excluded the Federal contracting data from October 2012 is
incorrect. When SBA prepared
[[Page 4475]]
the proposed rule, the latest Federal contracting data that were
available was for fiscal year 2011. The commenter wrongly interpreted
the 7.8 percent Federal contracting factor for Footwear Manufacturing
as the small business share of Federal footwear market. As explained in
the proposed rule, that value represents the difference between small
business share of total industry receipts (36.2%) and small business
share of total contract dollars (44.0%) for Footwear Manufacturing.
SBA disagrees with the comment that the 1,000-employee size
standard has allowed firms that are dominant in the footwear
manufacturing industry to qualify as small. Similarly, SBA also
disagrees with the argument that SBA did not perform the dominant
analysis for Footwear Manufacturing. SBA examined the market share
(i.e., share of total industry's receipts) of firms that would become
small under the proposed size standard in each industry and determined
that no individual firm at or below the proposed size standard would be
large enough to dominate its field of operation. Since it was not
practical to include the market share for each of the 364 industries,
SBA provided a range of values. Among the industries for which the
Agency proposed to change the size standards in Manufacturing, the
small business market share varied from 0.02 percent to 18.9 percent,
averaging 1.7 percent. For Footwear Manufacturing, that value was 1.9
percent, suggesting that at that level market share no individual firm
would be dominant under the proposed 1,000-employee size standard. SBA
looks at the share of total industry receipts, not Federal contract
dollars, to determine if a firm is dominant in the industry. Again, SBA
considers a firm to be dominant when it is dominant in the entire
industry, which in this case is NAICS 316210, Footwear Manufacturing.
It does not relate to a specific product line manufactured by a
particular company in that industry, or a particular agency. Otherwise,
the number of companies dominant in their industries, based on a
specific product they manufacture, would be too numerous to identify.
Furthermore, the data does not support the argument that the 1,000-
employee size standard has harmed the companies below 500 employees by
forcing them to compete against companies with 500-1,000 employees for
small business set aside procurements. The results from small business
goaling data shown in Table 1, ``Contract Dollars in Footwear
Manufacturing by Business Size,'' show that the share of companies
below 500 employees in total contract dollars in Footwear Manufacturing
related industries increased from about 31 percent during fiscal years
2011-2012 (i.e., prior to the 1,000-employee size standard) to 46
percent during fiscal years 2013-2014 (i.e., after the 1,000-employee
size standard). More importantly, small business dollars awarded to
firms below 500 employees increased from $32 million to $49 million, an
increase of more than 50 percent. Similarly, the results also do not
support the argument that the 1,000-employee size standard has reduced
Federal opportunities for firms that are above the size standard. As
can be seen from the table, dollars awarded to firms above 1,000
employees have increased more than 50 percent from $18 million per year
during fiscal years 2011-2012 to more than $27 million during fiscal
years 2013-2014. It is not that firms between 500 and 1,000 employees
that became small under the 1,000-employee size standard are getting
more contracts now, thereby reducing opportunities for firms below 500
employees and those above 1,000 employees. The data shows that they
continued to get those contracts, but as small businesses under the
1,000-employee size standard. In fact, firms between 500 and 1,000
employees lost some of their market share to firms below 500 employees
and those above 1,000 employees under the higher size standard.
Table 1--Contract Dollars in Footwear Manufacturing by Business Size
[In $ million]
------------------------------------------------------------------------
Business size (number of
employees) Average 2011-2012 Average 2013-2014
------------------------------------------------------------------------
Other than small business
------------------------------------------------------------------------
NA............................ 3.2 0.1
------------------------------------------------------------------------
>=500......................... 0.3 0.5
>500 to >=1,000............... 45.4 5.3
>1,000........................ 18.4 27.6
Other than small total........ 67.3 33.4
------------------------------------------------------------------------
Small business
------------------------------------------------------------------------
NA............................ 3.3 1.0
>=500......................... 31.6 48.6
>500 to >=1,000............... 1.8 23.1
>1,000........................ 0.3 0.2
Small total................... 36.9 72.9
------------------------------------------------------------------------
Overall
------------------------------------------------------------------------
NA............................ 6.5 1.1
>=500......................... 31.9 49.1
>500 to >=1,000............... 47.2 28.4
>1,000........................ 18.7 27.8
Overall total................. 104.3 106.4
------------------------------------------------------------------------
SBA is unable to verify the argument that one previously large
business that became small under the 1,000-employee size standard
captured more than 28 percent of total small business dollars awarded
under NAICS 316210 in 2014.
[[Page 4476]]
Based on the analysis of contract data for Fiscal year 2014, SBA found
no individual firm receiving more than 12 percent of small business
dollars awarded under for NAICS 316210. Moreover, because agencies
still continued to apply older footwear manufacturing NAICS codes
(albeit incorrectly) for footwear contracts, the results based on NAICS
316210 alone would be misleading. Using the data for all footwear
manufacturing related NAICS codes, SBA found that no individual firm
accounted for more than 19 percent of small business dollars awarded in
those NAICS codes for fiscal year 2014. These levels of market share do
not suggest that the size standard has classified dominant firms as
small.
SBA disagrees with the comment that the Agency's decision not to
lower any size standards was arbitrary and capricious and violates the
statute and Agency's methodology. Although not lowering small business
size standards has been SBA's general policy to enhance small business
participation in Federal programs in the current economic environment,
SBA does make exceptions. For example, in a final rule (RIN 3245-AG51)
published elsewhere in this Federal Register, SBA has lowered size
standards for three mining industries that are not part of
Manufacturing, Wholesale Trade, or Retail Trade. In the September 10,
2014 proposed rule, SBA provided a detailed analysis to explain why
lowering size standards would be against the best interests of small
businesses. SBA believes that businesses below 500 employees will be
better off competing with companies up to 1,000 employees for small
business set aside procurements than competing for unrestricted
procurements against companies that have several thousand employees.
Because small businesses do not have the economies of scale
(automation, marketing, production, technology, etc.) that larger
enterprises have, small businesses generally increase their employees,
resources, and tools when they get a new contract. As a result, SBA
believes that small businesses will add more to the economy by hiring
people, and purchasing equipment, materials, and technology that larger
businesses might already have on hand.
SBA disagrees and does not see the need for creating an exception
for military footwear manufacturing. According to the information
provided by the commenter, there exist numerous firms that are already
in compliance with the Berry Amendment. SBA is not convinced with the
rationale why a lower size standard is warranted to comply with
contracts with certain requirements. The Berry Amendment requires DoD
to give preference in procurement to domestically produced,
manufactured, or home-grown products, most notably food, clothing,
fabrics, and specialty metals. Normally, one would expect special
manufacturing requirements to point to the need for a larger size
standard, not lower.
In addition, the available industry data does not support a 500-
employee size standard for Footwear Manufacturing, especially for
military footwear manufacturing. Firms serving the military footwear
market are, on average, considerably larger than the rest of the firms
in the industry. Thus, it would be inconsistent to have a lower size
standard for the military footwear market and a higher standard for the
rest of the industry. Furthermore, compliance with the Berry Amendment
is not a function of the size of the business performing a contract.
Rather, it is a function of the origin of the products, which small
businesses can certainly manufacture. Moreover, there are several small
footwear manufacturers that manufacture footwear that is compliant with
the Berry Amendment.
Most importantly, SBA is concerned that lowering the size standard
would reduce the pool of small businesses that are available to meet
the DLA/DoD requirements under small business procurements for military
footwear. This would cause the Government to procure its needs through
more full and open competition, thereby forcing smaller firms,
including those between 500 employees and 1,000 employees, to compete
with firms many times their size.
In response to the comments, SBA updated the Federal contracting
factor for Footwear Manufacturing using FPDS-NG data for fiscal years
2013-2014. It should be noted that the Federal contracting factor is
calculated based on the 1,000-employee size standard for NAICS 316210.
Following OMB's merging of five footwear manufacturing industries to
one industry, RMA's eStatement Studies started publishing the sales to
total assets ratio for the new industry (NAICS 316210). Accordingly,
using that data for years 2012-2014, SBA is now also able to calculate
the average assets factor for NAICS 316210, which was not included in
the proposed rule. The updated results are shown in Table 2 ``Updated
Size Standards Analysis for Footwear Manufacturing (No. of
Employees),'' below. As can be seen from the table, the updated results
reconfirm the 1,000-employee size standard for NAICS 316210, Footwear
Manufacturing.
Table 2--Updated Size Standards Analysis for Footwear Manufacturing
[Number of Employees]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Simple Weighted Four-firm Calculated
average average Average average Federal size
firm size firm size assets size Four-firm size Gini coeffi- contract standard
(number of (number of ($ million) ratio (%) (number of cient factor (%) (number of
employees) employees) employees)* employees)
---------------------------------------------------------------------------------------------------------------------------------------------
Factor............................... 55 550 3.7 ........... NA 0.827 3.8 1,000
Size standard........................ 500 1,500 500 ........... NA 1,500 1,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
*Size standard for four-firm average size is not calculated because there is no data to compute the four-firm ratio.
Therefore, based on the analyses of all supportive and opposing
comments on the proposed rule and latest industry and contracting data
available when this final rule was prepared, SBA is retaining the
1,000-employee size standard for Footwear Manufacturing (NAICS 316210),
as proposed.
Comments on Subsector 315, Apparel Manufacturing
SBA received four comments on size standards for industries within
NAICS Subsector 315, Apparel Manufacturing. SBA proposed to increase
the size standard for seven industries in that subsector from 500
employees to 750 employees.
A commenter supported proposed increases to size standards for the
apparel manufacturing industries from
[[Page 4477]]
500 employees to 750 employees. The commenter argued that the current
500-employee size standard has been a major deterrent in its ability to
hire and retain employees to meet unexpected surges in demand of
clothing items by DLA from small businesses, especially in times of
war. Higher size standards are important for small clothing
manufacturers to remain eligible to compete for small business set
aside purchases by DoD and DLA, the commenter observed. The commenter
pointed out that, because these industries are labor intensive, higher
size standards will offer small businesses greater opportunities to
hire more people in different areas of the country.
A labor organization also supported proposed increases to size
standards for NAICS codes 315210 (Cut and Sew Apparel Contractors),
315220 (Men's and Boys' Cut and Sew Apparel Manufacturing), 315240
(Women's, Girls', and Infants' Cut and Sew Apparel Manufacturing), and
315280 (Other Cut and Sew Apparel Manufacturing) from 500 employees to
750 employees. These NAICS codes apply to procurement of military
apparel by DoD and DLA to support U.S. troops, and the current 500-
employee size standard has made it difficult for small business apparel
contractors to meet demands during surges in troop support acquisitions
(also referred to as surge capability), the commenter maintained. The
500-employee size standard has created persistent capacity and price
problems for small businesses, the commenter added. The organization
stated that small apparel contractors find themselves torn between the
need to maintain the surge capabilities expected by the DLA and the
need to maintain the small business status necessary to compete for DLA
uniform contracts. Therefore, the 750-employee size standard will allow
small apparel and clothing contractors to expand production temporarily
when demand surges without jeopardizing their small business status,
the commenter maintained. The capability to meet unexpected surges in
demand for items such as uniforms and body armor is critical to
maintaining warfighter readiness, the organization noted. Citing a May
2013 survey of DLA's clothing and apparel contractors, the organization
stated that 90 percent of respondents were dependent on DoD contracts
for their financial viability.
An Alaska Native Corporation representative opposed the proposed
750-employee size standard for Subsector 315, Apparel Manufacturing.
The Corporation owns several small disadvantaged businesses in the
apparel manufacturing industry, the commenter observed. The commenter
argued that raising the size standard would negatively affect the
growth of their company and profits of their shareholders. Raising size
standards would make a greater number of large companies eligible for
small business status, thereby increasing competition in the apparel
manufacturing market and reducing opportunities for their company and
other small businesses, the commenter explained. This would be
detrimental in light of decreases in Federal government spending in the
apparel manufacturing market over the last 5 years because there would
be more companies bidding on fewer contracts and fewer opportunities
for true small businesses, the commenter concluded.
Another commenter recommended a 250-employee size standard for
several industries within Subsector 315, namely NAICS 315210 (Cut and
Sew Apparel Contractors), 315220 (Men's and Boys' Cut and Sew Apparel
Manufacturing), 315240 (Women's, Girls', and Infants' Cut and Sew
Apparel Manufacturing), 315280 (Other Cut and Sew Apparel
Manufacturing), and 315990 (Apparel Accessories and Other Apparel
Manufacturing). The commenter argued that the 250-employee size
standard would offer protection for emerging small businesses, given
the fragility of the clothing and textile industry. However, the
commenter provided no data or analysis to support the argument.
SBA's Response
Based on its analysis of industry and Federal procurement data and
public comments, SBA has determined that it will adopt the 750-employee
size standard for the seven industries in Subsector 315, Apparel
Manufacturing, as proposed. In recent years, DLA has strived to
increase its awards for procuring military clothing through small
businesses. This has put strains on many small businesses, according to
the commenters, to meet DLA's expected surge capabilities while
maintaining their small business size status. The increase from 500
employees to 750 employees will allow a number of small businesses to
take on these contracts and to hire more workers without jeopardizing
their eligibility. Based on data from the Economic Census and System of
Award Management (SAM), only about 10 additional businesses that are
primarily involved in Apparel Manufacturing will qualify as small under
the 750-employee size standard. SBA does not believe that the higher
size standard will cause a significant negative impact on existing
small businesses. Therefore, SBA is adopting the 750-employee size
standard for all industries in NAICS Subsector 315, Apparel
Manufacturing.
Comments on NAICS 327993, Mineral Wool Manufacturing
A comment from a trade association for manufacturers of fiber glass
and rock and slag wool insulation addressed the size standard for NAICS
327993, Mineral Wool Manufacturing. Specifically, the association
supported SBA's proposal to increase the size standard for NAICS 327993
from 750 employees to 1,500 employees.
SBA's Response
Because there were no comments opposed to this increase, SBA is
adopting the 1,500 employee size standard for NAICS 327993, as
proposed.
Comments on NAICS 336412, Aircraft Engine and Engine Parts
Manufacturing; and NAICS 336413, Other Aircraft Part and Auxiliary
Equipment Manufacturing
SBA proposed increasing the size standards for NAICS 336412 from
1,000 employees to 1,500 employees and for NAICS 336413 from 1,000
employees to 1,250 employees. A military aircraft parts and auxiliary
equipment manufacturer supported the proposed increases to size
standards for both industries, but recommends that SBA adopt the same
1,500-employee size standard for NAICS 336413 as well, instead of the
proposed 1,250-employee size standard. The commenter argued that the
differences in manufacturing engine parts and other aircraft equipment
are minimal. The single size standard for both industries would provide
uniform employee levels for small business eligibility and offer them
more flexibility to adjust to the requirements of the marketplace, the
commenter explained.
SBA's Response
SBA has not adopted the recommendation for three reasons. First,
although product lines and production methods may be related, there
exist significant differences in industry characteristics between the
two industries. For example, based on the 2007 Economic Census, the
average size of firms is 230 employees for NAICS 336412 as compared to
146 employees for NAICS 336413. Similarly, average assets size is about
$74 million for NAICS 336412 as opposed to only $26 million for NAICS
336413. Second, the
[[Page 4478]]
size standards for aircraft, aircraft parts and equipment related
exceptions to NAICS 541712 (Research and Development in the Physical,
Engineering and Life Sciences (except Biotechnology)) are tied to size
standards for industries within NAICS Industry Group 3364 (Aerospace
Product and Parts Manufacturing). Therefore, changing size standards
for any of the industries in NAICS Industry Group 3364 would also
require changing the size standards for exceptions under NAICS 541712.
Third, the National Defense Authorization Act of fiscal year 2013 (NDAA
2013) limits establishing a single or common size standard for multiple
industries without proper justification and without publishing such a
size standard for public comments. Obviously, given the industry data
that support different size standards for the two industries, it would
be difficult to justify the single size standard for them in accordance
with NDAA 2013. As part of its quinquennial review of all size
standards required by the Jobs Act, SBA will reevaluate the size
standards for those industries in the coming years and consider the
recommendation at that time.
For the above reasons, in this final rule, SBA is adopting the
1,500-employee size standard for NAICS 336412 and the 1,250-employee
size standard for NAICS 336413, as proposed.
Comments on NAICS 611512, Flight Training
A commenter supported increasing size standards for NAICS Sector
31-33 manufacturing, specifically increasing the size standard for
NAICS 336413 from 1,000 employees to 1,250 employees. The commenter,
operating primarily in NAICS 611512 (Flight Training), advocated for
the creation of a separate manufacturing NAICS code for ``Military
Defense Training'' with a size standard of 1,500 employees. Contracting
Officers have recently been utilizing NAICS 336413 for solicitations
for services contracts involving military training due to its higher
size standard and technical nature of military training, the commenter
explained. NAICS 611512 and its $27.5 million receipts based size
standard do not reflect the requirements for military defense training,
the commenter added. The commenter argued that flight training can more
realistically be categorized under NAICS Sector 31-33 (Manufacturing)
rather than under Sector 61 (Education).
SBA's Response
SBA cannot make the suggested change for several reasons. First,
the September 10, 2014 proposed rule and this final rule only apply to
industries in NAICS Sector 31-33, Manufacturing. The September 10, 2014
proposed rule did not address NAICS 611512, Flight Training. SBA
evaluated NAICS 611512 and its size standard in a proposed rule (76 FR
70667 (November 15, 2011)) that was part of its comprehensive review of
Sector 61, Educational Services. In the final rule, SBA determined that
data did not support an increase in the size standard for NAICS 611512.
The final rule (77 FR 58739 (September 24, 2012)) fully explains and
justifies how SBA arrived at its determination that the then existing
$25.5 million size standard for NAICS 611512 should remain unchanged.
It was increased for inflation to $27.5 million, effective July 14,
2014, along with increases to all other monetary based size standards
(79 FR 33647 (June 12, 2014)).
Second, SBA has no authority or expertise to create new NAICS codes
or modify existing ones. Creating or modifying NAICS industry
definitions or codes is done through the U.S. Economic Classification
Policy Committee under the Office of Management and Budget (OMB) in
cooperation with statistical agencies from the U.S., Canada, and
Mexico. If the commenter believes that a new NAICS code is warranted
for military flight training, it should approach OMB (see http://www.census.gov/eos/www/naics/). Every five years, OMB updates NAICS
codes and definitions, the next being the NAICS 2017 updates.
For Federal procurement, the contracting officer must specify the
NAICS code and size standard in accordance with the principal purpose
of the procurement (13 CFR 121.402(b)). When the government purchases
manufactured products, the contracting officer must assign the
appropriate NAICS code and size standard from Sector 31-33. There may
be ancillary services that accompany the manufactured product, but if
the principal purpose of the procurement action is to purchase product,
then the NAICS code and small business size standard are from the
manufacturing sector. If a service is the primary purpose of the
procurement, it should be classified under the appropriate services
NAICS code and size standard. When the government procures both
products and services, it must determine which is the greater part of
the contract, and must assign the appropriate NAICS code and size
standard (13 CFR 121.402(b)). Any interested party adversely affected
by a contracting officer's NAICS code designation may appeal that
designation to SBA's Office of Hearings and Appeals (OHA) (see 13 CFR
121.1101-1103).
Comments on NAICS 321212, Softwood Veneer and Plywood Manufacturing
A commenter opposed SBA's proposal to increase the size standard
for Softwood Veneer and Plywood Manufacturing (NAICS 321212) from 500
employees to 1,250 employees. The commenter maintained that the
increase would have an impact on the majority of manufacturers in this
industry by affecting the availability of Federal timber, because it
would increase the competition for the timber sale set aside for small
businesses in this industry by enlarging the pool of eligible small
business manufacturers. The commenter argued that the proposed size
standard increase is not warranted because companies that qualify as
small under the current size standard already exist. The commenter was
concerned that by allowing larger companies to qualify as small the
proposed increase to the size standard for NAICS 321212 would
negatively impact a number of companies that have made business
decisions to remain below the 500-employee size standard to benefit
from the SBA's timber set-aside program. With the proposed 1,250-
employee size standard, the plywood and veneer manufacturers below 500
employees would lose the protection provided by the program, the
commenter concluded.
SBA's Response
With respect to the argument that an increase to the size standard
for NAICS 321212 or any other wood product manufacturing industry would
negatively impact firms participating in the SBA's Commercial Timber
Sale Set-Aside Program, the wood manufacturing industry size standards
do not apply to determine eligibility for purposes of that program.
Rather, the size standard for the timber sale set-aside program (except
for salvage timber) is 500 employees (see 13 CFR 121.507), which SBA
did not propose to increase.
The arguments that there are already small businesses under the
existing size standard, that firms have made business decisions to
remain small to benefit from the program, and that they would lose
small business protection if additional firms qualify as small, are not
valid reasons for not revising the size standard when the relevant
industry data warrants doing so. Of the 14 industries in NAICS
Subsector 321, Wood Product Manufacturing, based on
[[Page 4479]]
the results of the evaluation of industry characteristics (such as
average firm size, industry concentration, and distribution of firms by
size) and the Federal contracting factor, SBA proposed increasing the
size standards for NAICS 321212 and four others, and retaining the
current 500-employee size standard for nine industries. As can be seen
from the results in Table 3 of the September 10, 2014 proposed rule,
the industries for which SBA proposed increasing the size standards had
significantly higher average firm size, four-firm concentration ratio
and Gini coefficient than others. To still maintain their size standard
at the 500-employee level would be inconsistent with SBA's mandate to
adjust size standards based on current industry and market data.
Moreover, based on the Economic Census and SAM data for NAICS 321212,
only about five additional firms will qualify as small under the 1,250-
employee size standard, suggesting that the higher size standard will
have very minimal impact on businesses below the current 500-employee
size standard. For these reasons, SBA is adopting the 1,250-employee
size standard for NAICS 321212, as proposed. Similarly, SBA is adopting
proposed size standards increases for four other industries in
Subsector 321.
Other Comments
Two commenters offered general assessments of SBA's proposed rule.
Both supported SBA's proposed five employee based size standard levels
for Manufacturing and their incremental increases of 250 employees
rather than 500 employees; however, one suggested that SBA should
incorporate the sixth level at 250 employees and set the maximum
employee based standard at 1,000 employees. A lower size standard would
protect emerging manufacturers that are not able to compete with
established larger businesses, the commenter explained. One opposed
proposed increases to size standards in Manufacturing arguing that
higher size standards would allow manufacturers to create less
productive, low paying jobs, while the other commenter supported the
increases except for industries in Subsector 315 for which the
commenter suggested a lower 250-employee size standard.
Both commenters argued that the Agency should lower size standards
when the analysis supports lowering them. One argued that not lowering
size standards would encourage manufacturers not to upgrade their
facilities with advanced manufacturing techniques and allow larger
manufacturers to compete with true small manufacturers. While one
commenter suggested that SBA should not adjust employee based size
standards for labor productivity growth and focus on protecting
emerging businesses instead, the other pointed out that the lack of
data on labor productivity would make adjusting size standards based on
labor productivity difficult. One commenter supported weighing all
factors equally, while the other suggested weighing some factors more
than others for certain industries. In addition to employee counts, the
second commenter suggested other criteria for establishing size
standards, including business tenure (5 years), subcontracting
limitations, revenue limits ($30 million), and net worth limits ($5
million). Lastly, both commenters endorsed SBA's approach to use a
single value as a size standard as opposed to a range of values.
SBA's Response
Some of the issues the commenters have raised (such as lowering
minimum and maximum size standards, using different factors and
weighing them differently from others, lowering size standards, etc.)
will be addressed when SBA updates its ``Size Standards Methodology''
for the next round of size standards review. With respect to SBA's
policy of not lowering size standards when the data support doing so,
SBA provided a detailed explanation in the proposed rule with respect
to why lowering size standards is not in the best interest of small
businesses in the current economic climate. SBA is concerned that
lowering maximum and minimum levels of size standards would cause
untold numbers of small businesses to lose their eligibility for
Federal programs.
Incorporation of net worth into SBA's table of size standards is
not practicable. It is not a value that lends itself to comparing
businesses in a particular industry. A company's net worth can be
affected by a number of things, such as debt, repurchased corporate
stock, etc. Furthermore, data on net worth is not available by
industry.
Other criteria proposed by the commenter would, SBA believes, be
too nebulous, temporary, and subjective and therefore not useful when
establishing size standards that usually must remain static and in
place for a number of years. Establishing small business eligibility
based on multiple criteria (such as revenue limit, net worth limit, and
employee count), as suggested by the commenter, would create
unnecessary complexity and confusion in size standards.
NAICS 326211, Tire Manufacturing (Except Retreading)
In the September 10, 2014 proposed rule, SBA proposed amending
Footnote 5 to the table of size standards relating to NAICS 326211,
Tire Manufacturing (except Retreading). In the absence of comments
opposing the proposed amendment, SBA is amending Footnote 5, as
proposed, by replacing the former Census classification codes 30111 and
30112 with the new Census Product Classification Codes 3262111 and
3262113 respectively.
Conclusions
Based on the analyses of the latest industry and Federal
contracting data available and thorough evaluation of all public
comments on the proposed rule, SBA is adopting all size standards
changes in NAICS Sector 31-33, Manufacturing, as proposed.
Specifically, SBA is increasing size standards for 209 industries in
NAICS Sector 31-33. These industries, along with their current and
revised size standards are shown in Table 3 ``Summary of Size Standards
Revisions in NAICS Sector 31-33.'' SBA is also increasing the refining
capacity component of the size standard for NAICS 324110 (Petroleum
Refiners) from 125,000 barrels per calendar day (BPCD) to 200,000 BPCD
for businesses that are primarily engaged in petroleum refining and
eliminating the requirement that 90 percent of the output to be
delivered be refined by the successful bidder from either crude oil or
bona fide feedstocks. To qualify under the capacity size standard, the
firm, together with its affiliates, must be primarily engaged in
refining crude petroleum into refined petroleum products. To reflect
these changes, SBA is also amending Footnote 4 of SBA's table of size
standards. Finally, the Agency is also updating Footnote 5 to NAICS
326211 to reflect the current Census Product Classification Codes
3262111 and 3262113.
[[Page 4480]]
Table 3--Summary of Size Standards Revisions in NAICS Sector 31-33
------------------------------------------------------------------------
Current size Revised size
NAICS U.S. industry standard standard
NAICs code title (number of (number of
employees) employees)
------------------------------------------------------------------------
311111........... Dog and Cat Food 500 1,000
Manufacturing.
311211........... Flour Milling........ 500 1,000
311221........... Wet Corn Milling..... 750 1,250
311314........... Cane Sugar 750 1,000
Manufacturing.
311340........... Nonchocolate 500 1,000
Confectionery
Manufacturing.
311351........... Chocolate and 500 1,250
Confectionery
Manufacturing from
Cacao Beans.
311352........... Confectionery 500 1,000
Manufacturing from
Purchased Chocolate.
311411........... Frozen Fruit, Juice, 500 1,000
and Vegetable
Manufacturing.
311412........... Frozen Specialty Food 500 1,250
Manufacturing.
311421........... Fruit and Vegetable 500 1,000
Canning.
311422........... Specialty Canning.... 1,000 1,250
311423........... Dried and Dehydrated 500 750
Food Manufacturing.
311511........... Fluid Milk 500 1,000
Manufacturing.
311512........... Creamery Butter 500 750
Manufacturing.
311513........... Cheese Manufacturing. 500 1,250
311514........... Dry, Condensed, and 500 750
Evaporated Dairy
Product
Manufacturing.
311520........... Ice Cream and Frozen 500 1,000
Dessert
Manufacturing.
311611........... Animal (except 500 1,000
Poultry)
Slaughtering.
311612........... Meat Processed from 500 1,000
Carcasses.
311613........... Rendering and Meat 500 750
Byproduct Processing.
311615........... Poultry Processing... 500 1,250
311710........... Seafood Product 500 750
Preparation and
Packaging.
311812........... Commercial Bakeries.. 500 1,000
311813........... Frozen Cakes, Pies, 500 750
and Other Pastries
Manufacturing.
311821........... Cookie and Cracker 750 1,250
Manufacturing.
311824........... Dry Pasta, Dough, and 500 750
Flour Mixes
Manufacturing from
Purchased Flour.
311830........... Tortilla 500 1,250
Manufacturing.
311911........... Roasted Nuts and 500 750
Peanut Butter
Manufacturing.
311919........... Other Snack Food 500 1,250
Manufacturing.
311920........... Coffee and Tea 500 750
Manufacturing.
311930........... Flavoring Syrup and 500 1,000
Concentrate
Manufacturing.
311941........... Mayonnaise, Dressing, 500 750
and Other Prepared
Sauce Manufacturing.
312111........... Soft Drink 500 1,250
Manufacturing.
312112........... Bottled Water 500 1,000
Manufacturing.
312113........... Ice Manufacturing.... 500 750
312120........... Breweries............ 500 1,250
312130........... Wineries............. 500 1,000
312140........... Distilleries......... 750 1,000
312230........... Tobacco Manufacturing 1,000 1,500
313110........... Fiber, Yarn, and 500 1,250
Thread Mills.
313230........... Nonwoven Fabric Mills 500 750
314110........... Carpet and Rug Mills. 500 1,500
314120........... Curtain and Linen 500 750
Mills.
315110........... Hosiery and Sock 500 750
Mills.
315190........... Other Apparel 500 750
Knitting Mills.
315210........... Cut and Sew Apparel 500 750
Contractors.
315220........... Men's and Boys' Cut 500 750
and Sew Apparel
Manufacturing.
315240........... Women's, Girls', and 500 750
Infants' Cut and Sew
Apparel
Manufacturing.
315280........... Other Cut and Sew 500 750
Apparel
Manufacturing.
316992........... Women's Handbag and 500 750
Purse Manufacturing.
321212........... Softwood Veneer and 500 1,250
Plywood
Manufacturing.
321213........... Engineered Wood 500 750
Member (except
Truss) Manufacturing.
321219........... Reconstituted Wood 500 750
Product
Manufacturing.
321911........... Wood Window and Door 500 1,000
Manufacturing.
321991........... Manufactured Home 500 1,250
(Mobile Home)
Manufacturing.
322121........... Paper (except 750 1,250
Newsprint) Mills.
322130........... Paperboard Mills..... 750 1,250
322211........... Corrugated and Solid 500 1,250
Fiber Box
Manufacturing.
322219........... Other Paperboard 750 1,000
Container
Manufacturing.
322220........... Paper Bag and Coated 500 750
and Treated Paper
Manufacturing.
322230........... Stationery Product 500 750
Manufacturing.
322291........... Sanitary Paper 500 1,500
Product
Manufacturing.
323117........... Books Printing....... 500 1,250
324191........... Petroleum Lubricating 500 750
Oil and Grease
Manufacturing.
325194........... Cyclic Crude, 750 1,250
Intermediate, and
Gum and Wood
Chemical
Manufacturing.
325199........... All Other Basic 1,000 1,250
Organic Chemical
Manufacturing.
325211........... Plastics Material and 750 1,250
Resin Manufacturing.
325312........... Phosphatic Fertilizer 500 750
Manufacturing.
325320........... Pesticide and Other 500 1,000
Agricultural
Chemical
Manufacturing.
[[Page 4481]]
325411........... Medicinal and 750 1,000
Botanical
Manufacturing.
325412........... Pharmaceutical 750 1,250
Preparation
Manufacturing.
325413........... In-Vitro Diagnostic 500 1,250
Substance
Manufacturing.
325414........... Biological Product 500 1,250
(except Diagnostic)
Manufacturing.
325510........... Paint and Coating 500 1,000
Manufacturing.
325611........... Soap and Other 750 1,000
Detergent
Manufacturing.
325612........... Polish and Other 500 750
Sanitation Good
Manufacturing.
325613........... Surface Active Agent 500 750
Manufacturing.
325620........... Toilet Preparation 500 1,250
Manufacturing.
325992........... Photographic Film, 500 1,500
Paper, Plate, and
Chemical
Manufacturing.
326111........... Plastics Bag and 500 750
Pouch Manufacturing.
326112........... Plastics Packaging 500 1,000
Film and Sheet
(including
Laminated)
Manufacturing.
326113........... Unlaminated Plastics 500 750
Film and Sheet
(except Packaging)
Manufacturing.
326122........... Plastics Pipe and 500 750
Pipe Fitting
Manufacturing.
326140........... Polystyrene Foam 500 1,000
Product
Manufacturing.
326150........... Urethane and Other 500 750
Foam Product (except
Polystyrene)
Manufacturing.
326160........... Plastics Bottle 500 1,250
Manufacturing.
326191........... Plastics Plumbing 500 750
Fixture
Manufacturing.
326211........... Tire Manufacturing 1,000 1,500
(except Retreading).
326220........... Rubber and Plastics 500 750
Hoses and Belting
Manufacturing.
326291........... Rubber Product 500 750
Manufacturing for
Mechanical Use.
327110........... Pottery, Ceramics, 750 1,000
and Plumbing Fixture
Manufacturing.
327212........... Other Pressed and 750 1,250
Blown Glass and
Glassware
Manufacturing.
327213........... Glass Container 750 1,250
Manufacturing.
327215........... Glass Product 500 1,000
Manufacturing Made
of Purchased Glass.
327310........... Cement Manufacturing. 750 1,000
327332........... Concrete Pipe 500 750
Manufacturing.
327410........... Lime Manufacturing... 500 750
327420........... Gypsum Product 1,000 1,500
Manufacturing.
327910........... Abrasive Product 500 750
Manufacturing.
327993........... Mineral Wool 750 1,500
Manufacturing.
331110........... Iron and Steel Mills 1,000 1,500
and Ferroalloy
Manufacturing.
331315........... Aluminum Sheet, 750 1,250
Plate, and Foil
Manufacturing.
331511........... Iron Foundries....... 500 1,000
331512........... Steel Investment 500 1,000
Foundries.
332111........... Iron and Steel 500 750
Forging.
332112........... Nonferrous Forging... 500 750
332215........... Metal Kitchen 500 750
Cookware, Utensil,
Cutlery, and
Flatware (except
Precious)
Manufacturing.
332216........... Saw Blade and 500 750
Handtool
Manufacturing.
332311........... Prefabricated Metal 500 750
Building and
Component
Manufacturing.
332313........... Plate Work 500 750
Manufacturing.
332321........... Metal Window and Door 500 750
Manufacturing.
332410........... Power Boiler and Heat 500 750
Exchanger
Manufacturing.
332420........... Metal Tank (Heavy 500 750
Gauge) Manufacturing.
332431........... Metal Can 1,000 1,500
Manufacturing.
332510........... Hardware 500 750
Manufacturing.
332911........... Industrial Valve 500 750
Manufacturing.
332912........... Fluid Power Valve and 500 1,000
Hose Fitting
Manufacturing.
332913........... Plumbing Fixture 500 1,000
Fitting and Trim
Manufacturing.
332919........... Other Metal Valve and 500 750
Pipe Fitting
Manufacturing.
332991........... Ball and Roller 750 1,250
Bearing
Manufacturing.
332992........... Small Arms Ammunition 1,000 1,250
Manufacturing.
333111........... Farm Machinery and 500 1,250
Equipment
Manufacturing.
333112........... Lawn and Garden 500 1,500
Tractor and Home
Lawn and Garden
Equipment
Manufacturing.
333120........... Construction 750 1,250
Machinery
Manufacturing.
333132........... Oil and Gas Field 500 1,250
Machinery and
Equipment
Manufacturing.
333242........... Semiconductor 500 1,500
Machinery
Manufacturing.
333244........... Printing Machinery 500 750
and Equipment
Manufacturing.
333415........... Air-Conditioning and 750 1,250
Warm Air Heating
Equipment and
Commercial and
Industrial
Refrigeration
Equipment
Manufacturing.
333611........... Turbine and Turbine 1,000 1,500
Generator Set Units
Manufacturing.
333612........... Speed Changer, 500 750
Industrial High-
Speed Drive, and
Gear Manufacturing.
333613........... Mechanical Power 500 750
Transmission
Equipment
Manufacturing.
333618........... Other Engine 1,000 1,500
Equipment
Manufacturing.
333911........... Pump and Pumping 500 750
Equipment
Manufacturing.
333912........... Air and Gas 500 1,000
Compressor
Manufacturing.
333913........... Measuring and 500 750
Dispensing Pump
Manufacturing.
333921........... Elevator and Moving 500 1,000
Stairway
Manufacturing.
333923........... Overhead Traveling 500 1,250
Crane, Hoist, and
Monorail System
Manufacturing.
[[Page 4482]]
333992........... Welding and Soldering 500 1,250
Equipment
Manufacturing.
333995........... Fluid Power Cylinder 500 750
and Actuator
Manufacturing.
333996........... Fluid Power Pump and 500 1,250
Motor Manufacturing.
334111........... Electronic Computer 1,000 1,250
Manufacturing.
334112........... Computer Storage 1,000 1,250
Device Manufacturing.
334210........... Telephone Apparatus 1,000 1,250
Manufacturing.
334220........... Radio and Television 750 1,250
Broadcasting and
Wireless
Communications
Equipment
Manufacturing.
334412........... Bare Printed Circuit 500 750
Board Manufacturing.
334413........... Semiconductor and 500 1,250
Related Device
Manufacturing.
334417........... Electronic Connector 500 1,000
Manufacturing.
334418........... Printed Circuit 500 750
Assembly (Electronic
Assembly)
Manufacturing.
334510........... Electromedical and 500 1,250
Electrotherapeutic
Apparatus
Manufacturing.
334511........... Search, Detection, 750 1,250
Navigation,
Guidance,
Aeronautical, and
Nautical System and
Instrument
Manufacturing.
334513........... Instruments and 500 750
Related Products
Manufacturing for
Measuring,
Displaying, and
Controlling
Industrial Process
Variables.
334514........... Totalizing Fluid 500 750
Meter and Counting
Device Manufacturing.
334515........... Instrument 500 750
Manufacturing for
Measuring and
Testing Electricity
and Electrical
Signals.
334516........... Analytical Laboratory 500 1,000
Instrument
Manufacturing.
334517........... Irradiation Apparatus 500 1,000
Manufacturing.
334614........... Software and Other 750 1,250
Prerecorded Compact
Disc, Tape, and
Record Reproducing.
335110........... Electric Lamp Bulb 1,000 1,250
and Part
Manufacturing.
335121........... Residential Electric 500 750
Lighting Fixture
Manufacturing.
335210........... Small Electrical 750 1,500
Appliance
Manufacturing.
335221........... Household Cooking 750 1,500
Appliance
Manufacturing.
335222........... Household 1,000 1,250
Refrigerator and
Home Freezer
Manufacturing.
335224........... Household Laundry 1,000 1,250
Equipment
Manufacturing.
335228........... Other Major Household 500 1,000
Appliance
Manufacturing.
335312........... Motor and Generator 1,000 1,250
Manufacturing.
335313........... Switchgear and 750 1,250
Switchboard
Apparatus
Manufacturing.
335911........... Storage Battery 500 1,250
Manufacturing.
335932........... Noncurrent-Carrying 500 1,000
Wiring Device
Manufacturing.
336111........... Automobile 1,000 1,500
Manufacturing.
336112........... Light Truck and 1,000 1,500
Utility Vehicle
Manufacturing.
336120........... Heavy Duty Truck 1,000 1,500
Manufacturing.
336212........... Truck Trailer 500 1,000
Manufacturing.
336213........... Motor Home 1,000 1,250
Manufacturing.
336214........... Travel Trailer and 500 1,000
Camper Manufacturing.
336310........... Motor Vehicle 750 1,000
Gasoline Engine and
Engine Parts
Manufacturing.
336320........... Motor Vehicle 750 1,000
Electrical and
Electronic Equipment
Manufacturing.
336330........... Motor Vehicle 750 1,000
Steering and
Suspension
Components (except
Spring)
Manufacturing.
336340........... Motor Vehicle Brake 750 1,250
System Manufacturing.
336350........... Motor Vehicle 750 1,500
Transmission and
Power Train Parts
Manufacturing.
336360........... Motor Vehicle Seating 500 1,500
and Interior Trim
Manufacturing.
336370........... Motor Vehicle Metal 500 1,000
Stamping.
336390........... Other Motor Vehicle 750 1,000
Parts Manufacturing.
336412........... Aircraft Engine and 1,000 1,500
Engine Parts
Manufacturing.
336413........... Other Aircraft Parts 1,000 1,250
and Auxiliary
Equipment
Manufacturing.
336414........... Guided Missile and 1,000 1,250
Space Vehicle
Manufacturing.
336415........... Guided Missile and 1,000 1,250
Space Vehicle
Propulsion Unit and
Propulsion Unit
Parts Manufacturing.
336510........... Railroad Rolling 1,000 1,500
Stock Manufacturing.
336611........... Ship Building and 1,000 1,250
Repairing.
336612........... Boat Building........ 500 1,000
336991........... Motorcycle, Bicycle, 500 1,000
and Parts
Manufacturing.
336992........... Military Armored 1,000 1,500
Vehicle, Tank, and
Tank Component
Manufacturing.
336999........... All Other 500 1,000
Transportation
Equipment
Manufacturing.
337110........... Wood Kitchen Cabinet 500 750
and Countertop
Manufacturing.
337121........... Upholstered Household 500 1,000
Furniture
Manufacturing.
337122........... Nonupholstered Wood 500 750
Household Furniture
Manufacturing.
337124........... Metal Household 500 750
Furniture
Manufacturing.
337125........... Household Furniture 500 750
(except Wood and
Metal) Manufacturing.
337211........... Wood Office Furniture 500 1,000
Manufacturing.
337214........... Office Furniture 500 1,000
(except Wood)
Manufacturing.
337910........... Mattress 500 1,000
Manufacturing.
337920........... Blind and Shade 500 1,000
Manufacturing.
339112........... Surgical and Medical 500 1,000
Instrument
Manufacturing.
339113........... Surgical Appliance 500 750
and Supplies
Manufacturing.
339114........... Dental Equipment and 500 750
Supplies
Manufacturing.
339115........... Ophthalmic Goods 500 1,000
Manufacturing.
[[Page 4483]]
339920........... Sporting and Athletic 500 750
Goods Manufacturing.
339940........... Office Supplies 500 750
(except Paper)
Manufacturing.
339992........... Musical Instrument 500 1,000
Manufacturing.
339993........... Fastener, Button, 500 750
Needle, and Pin
Manufacturing.
339995........... Burial Casket 500 1,000
Manufacturing.
------------------------------------------------------------------------
Evaluation of Dominance in Field of Operation
Section 3(a) of the Small Business Act (15 U.S.C. 632(a)) defines a
small business concern as one that: (1) Is independently owned and
operated; (2) is not dominant in its field of operation; and (3) meets
a specific small business definition or size standard established by
SBA's Administrator. SBA considers as part of its evaluation whether a
business concern at a proposed or revised size standard would be
dominant in its field of operation. SBA has determined that for the
industries for which it has revised size standards in this final rule,
no individual firm at or below the revised size standard will be large
enough to dominate its field of operation. At the revised size
standards that are adopted in this final rule, the small business share
of total industry receipts among those industries for which SBA has
revised size standards is, on average, 1.7 percent, ranging from a
minimum of 0.02 percent to a maximum of 18.9 percent. SBA determines
that these market shares effectively preclude a firm at or below the
revised size standards from exerting control on any of the industries.
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, in the next section SBA provides a Regulatory
Impact Analysis of this rule. However, this rule is not a ``major
rule'' 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 size standards revisions in this rule are a
better reflection of the economic characteristics of small businesses
and the Federal government marketplace in the affected industries.
SBA's mission is to aid and assist small businesses through a variety
of financial, procurement, business development, and advocacy programs.
To determine the intended beneficiaries of these programs, SBA
establishes distinct definitions of 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 Jobs Act further requires SBA to
review all size standards and make necessary adjustments to reflect
market conditions. The supplementary information section of this rule
explains 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 affected by this rule is
their gaining or maintaining eligibility for Federal small business
assistance programs. These include SBA's financial assistance programs,
economic injury disaster loans, and Federal procurement programs
intended for small businesses. Federal procurement programs provide
targeted opportunities for small businesses under SBA's business
development programs, such as 8(a), Small Disadvantaged Businesses
(SDB), small businesses located in Historically Underutilized Business
Zones (HUBZone), women-owned small businesses (WOSB), economically
disadvantaged women-owned small businesses (EDWOSB), and service-
disabled veteran-owned small businesses (SDVOSB). Federal agencies may
also use SBA's size standards for a variety of other regulatory and
program purposes. These programs assist small businesses to become more
knowledgeable, stable, and competitive. SBA estimates that in the 209
industries for which it is increasing size standards about 1,250 firms,
not small under the current size standards, will become small and
therefore eligible for these programs. That is about 0.4 percent of all
firms classified as small under the current size standards in all
industries that SBA reviewed for the September 10, 2014 proposed rule
and this final rule. SBA anticipates that the small business share of
total receipts in those industries will increase from 26 percent to 29
percent.
Four groups can benefit from the revised size standards: (1) Some
businesses that are above the current size standards may 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; (3) Federal agencies that will have a
larger pool of small businesses from which to draw for their small
business procurement programs; and, (4) wholesalers and dealers that
sell products to the Federal government as small businesses under the
nonmanufacturer rule (13 CFR 121.406(b)) will have additional sources
of goods to fill their orders.
SBA estimates that firms gaining small business status under the
revised size standards might receive Federal contracts totaling $150
million to $160 million annually under SBA's small business, 8(a), SDB,
HUBZone, WOSB, EDWOSB, and SDVOSB Programs, as well as other
unrestricted procurements. The added competition for many of these
procurements can also result in lower prices to the Government for
procurements reserved for small businesses, but SBA cannot quantify
this benefit.
SBA provides financial assistance to small businesses under its
7(a) and 504 Loan Programs. Under SBA's 7(a) and 504 Loan Programs,
based on the fiscal years 2012-2014 data, SBA estimates approximately
20 to 25 SBA loans
[[Page 4484]]
totaling about $10 million to $15.0 million could be made to these
newly defined small businesses under the revised size standards.
However, it is impractical to try to estimate the number and total
amount of loans with any precision. There are two reasons for this: (1)
Under the Jobs Act, SBA can now guarantee substantially larger loans
than in the past; and (2) as described above, the Jobs Act established
a higher alternative size standard ($15 million in tangible net worth
and $5 million in net income after income taxes) for business concerns
that do not meet the size standards for their industry.
Newly defined small businesses will also benefit from SBA's
Economic Injury Disaster Loan (EIDL) Program. Since this program is
contingent on the occurrence and severity of a disaster in the future,
SBA cannot make a meaningful estimate of this impact.
In addition, newly defined small businesses will also benefit
through reduced fees, less paperwork, and fewer compliance requirements
that are available to small businesses throughout the Federal
government.
To the extent that 1,250 newly defined small firms may become
active in Federal procurement programs, the revised size standards
might also add administrative costs to the government because there are
now more businesses eligible for Federal small business programs. For
example, there will be more firms seeking SBA's guaranteed loans, more
firms eligible for enrollment in the SAM database, and more firms
seeking certification as 8(a) or HUBZone firms or qualifying for small
business, WOSB, EDWOSB, SDVOSB, and SDB status. Among those newly
defined small businesses seeking Federal assistance, there could be
additional costs associated with compliance and verification of small
business status and administration of size protests. However, SBA
believes that these added administrative costs will be minimal because
there are mechanisms in place to handle these requirements.
Additionally, some Federal government contracts might have higher
costs. With a greater number of businesses defined as small under the
revised size standards, Federal agencies may set aside more contracts
to small businesses, rather than use full and open competition. The
movement from unrestricted to small business set-aside contracting
might result in competition among fewer total bidders, although there
will be more small businesses eligible to submit offers. However, the
additional costs associated with fewer bidders are expected to be minor
since, by law, procurements may be set aside or reserved for the small
business, 8(a), HUBZone, WOSB, EDWOSB, or SDVOSB Programs only if
awards are expected to be made at fair and reasonable prices. In
addition, there may be higher costs when more full and open contracts
are awarded to HUBZone businesses that receive price evaluation
preferences.
Revised size standards might have distributional effects among
large and small business contractors. Although SBA cannot estimate with
certainty the actual outcome of the gains and losses among small and
large businesses, it can identify several probable impacts. Some
Federal contracts may be transferred to small businesses from large
businesses. Large businesses may have fewer Federal contract
opportunities as Federal agencies decide to set aside more contracts
for small businesses. In addition, some Federal contracts may be
awarded to HUBZone concerns instead of large businesses since they are
eligible for price evaluation preferences when they compete on a full
and open basis.
Similarly, some businesses defined small under the current size
standards may receive fewer Federal contracts due to increased
competition from more businesses now defined as small under higher size
standards. This transfer may be offset by a greater number of small
business set-aside procurements. 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 from
large and currently defined small businesses. Because there are so many
variables affecting the Federal market, SBA cannot estimate the
potential distributional impacts of these transfers with any degree of
precision.
The increased size standards for 209 industries and the
modification of the size standard for NAICS 324110 in Sector 31-33 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
Descriptions of the need for this regulatory action and benefits
and costs associated with this action including possible distributional
impacts that relate to Executive Order 13563 are included in the
Regulatory Impact Analysis under Executive Order 12866, above.
In an effort to engage interested parties in this action, SBA
presented its size standards methodology (discussed above under
Supplementary Information) to various industry associations and trade
groups. SBA also met with a number of industry groups and individual
businesses to get their feedback on its methodology and other size
standards issues. The Agency additionally conferred with Federal
procurement officials that purchase products manufactured by a number
of industries for which SBA proposed to increase size standards. In
addition, as part of its Jobs Act tour SBA presented its size standards
methodology to businesses in 13 cities in the U.S. and sought their
input. The presentations 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.
Moreover, 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's size standards and whether
current size 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 rule.
Finally, the SBA has maintained a roster of parties (government and
industry) that have expressed interest in various manufacturing
industries over the last few years, and sent each of them a copy of the
September 10, 2014 proposed rule to assure they had ample time and
opportunity to provide comments.
Increasing size standards for the industries covered in this rule
is consistent with Executive Order 13563, Section 6, calling for
retrospective analyses of existing rules. The last comprehensive review
of size standards occurred during the late 1970s and early 1980s. Since
then, except for periodic adjustments for monetary based size
standards, most reviews of size
[[Page 4485]]
standards were limited to a few specific industries in response to
requests from the public and from Federal agencies. The majority of
employee based size standards, including those in NAICS Sector 31-33,
have not been reviewed since they were first established. 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 its size standards to ensure that
existing size standards have supportable bases and to revise them when
necessary. In addition, the Jobs Act requires 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, SBA has determined that this
rule has no 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 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 rule imposes no new reporting or record
keeping requirements.
Final Regulatory Flexibility Analysis
Under the Regulatory Flexibility Act (RFA), this rule may have a
significant impact on a substantial number of small businesses in the
industries covered by this rule. As described above, this rule may
affect small businesses seeking Federal contracts, loans under SBA's
7(a), 504 and Economic Injury Disaster Loan Programs, and assistance
under other Federal small business programs.
Immediately below, SBA sets forth a final regulatory flexibility
analysis (FRFA) of this 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 businesses to which the
rule applies? (3) What are the projected reporting, record keeping, and
other compliance requirements of the rule? (4) What are the relevant
Federal rules that 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 businesses?
1. What are the need for and objective of the rule?
Changes in industry structure, technological changes, productivity
growth, mergers and acquisitions, and updated industry definitions have
changed the structure of many industries reviewed in the September 10,
2014 proposed rule and this final rule. Such changes can be sufficient
to warrant revisions to current size standards for some industries.
Based on the analysis of the latest data available, SBA believes that
the revised size standards in this rule more appropriately reflect the
size of businesses that need Federal assistance. The Jobs Act also
requires SBA to review all size standards and make necessary
adjustments to reflect market conditions.
2. What are SBA's description and estimate of the number of small
businesses to which the rule will apply?
SBA estimates that about 1,250 additional firms will become small
because of revised size standards for 209 industries in NAICS Sector
31-33. That represents 0.4 percent of total firms that are small under
current size standards in all industries in that Sector. This will
result in an increase in the small business share of total industry
receipts in Sector 31-33 from 26 percent under the current size
standards to 29 percent under the size standards adopted in this final
rule. The revised size standards will enable more small businesses to
retain their small business status for a longer period and many others
to regain small business status that may have exceeded current size
standards, making it difficult for them to compete with companies that
are significantly larger than they are. SBA believes that the overall
impact of this rule will be positive for existing small businesses, as
well as for those that exceed the current size standards but are on the
low end of those that are not small. They might otherwise be called or
referred to as mid-sized businesses, although SBA only defines what is
a small business concern. That is, entities that do not meet SBA's
small business size standards are considered ``other than small.''
3. What are the projected reporting, record keeping and other
compliance requirements of the rule?
The size standard changes impose no additional reporting or record
keeping requirements on small businesses. However, qualifying for
Federal procurement and a number of other programs requires that
businesses register in the SAM database and certify in SAM that they
are small at least once annually. Therefore, businesses opting to
participate in those programs must comply with SAM requirements.
Additionally, businesses affected by the changes, if they are already
registered in SAM, must update their certifications and affirmations.
However, there are no costs associated with SAM registration or
certification. Changing size standards alters access to SBA's programs
designed to assist small businesses, but does not impose a regulatory
burden because 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 to do
otherwise. In 1995, SBA published in the Federal Register a ``Table of
Statutory and Regulatory Size Standards Set by Agencies Other than
SBA'' (60 FR 57988, November 24, 1995). SBA is not aware of any Federal
rule that would duplicate or conflict with establishing 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 for purposes of compliance with that Act, after
consultation with the Office of Advocacy of the U.S. Small Business
Administration (5 U.S.C. 601(3)).
[[Page 4486]]
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 practical alternative exists to the system of
numerical size standards.
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 the reasons set forth in the preamble, SBA amends 13 CFR part
121 as follows:
PART 121--SMALL BUSINESS SIZE REGULATIONS
1. The authority citation for part 121 continues to read as
follows:
Authority: 15 U.S.C. 632, 634(b)(6), 662, and 694a(9).
2. Amend Sec. 121.201 in the table ``Small Business Size Standards
by NAICS Industry'' as follows:
a. Revise the entries for ``311111'', ``311211'', ``311221'',
``311314'', ``311340'', ``311351'', ``311352'', ``311411'', ``311412'',
``311421'', ``311422'', ``311423'', ``311511'', ``311512'', ``311513'',
``311514'', ``311520'', ``311611'', ``311612'', ``311613'', ``311615'',
``311710'', ``311812'', ``311813'', ``311821'', ``311824'', ``311830'',
``311911'', ``311919'', ``311920'', ``311930'', ``311941'', ``312111'',
``312112'', ``312113'', ``312120'', ``312130'', ``312140'', ``312230'',
``313110'', ``313230'', ``314110'', ``314120'', ``315110'', ``315190'',
``315210'', ``315220'', ``315240'', ``315280'', ``316992'', ``321212'',
``321213'', ``321219'', ``321911'', ``321991'', ``322121'', ``322130'',
``322211'', ``322219'', ``322220'', ``322230'', ``322291'', ``323117'',
``324110'', ``324191'', ``325194'', ``325199'', ``325211'', ``325312'',
``325320'', ``325411'', ``325412'', ``325413'', ``325414'', ``325510'',
``325611'', ``325612'', ``325613'', ``325620'', ``325992'', ``326111'',
``326112'', ``326113'', ``326122'', ``326140'', ``326150'', ``326160'',
``326191'', ``326211'', ``326220'', ``326291'', ``327110'', ``327212'',
``327213'', ``327215'', ``327310'', ``327332'', ``327410'', ``327420'',
``327910'', ``327993'', ``331110'', ``331315'', ``331511'', ``331512'',
``332111'', ``332112'', ``332215'', ``332216'', ``332311'', ``332313'',
``332321'', ``332410'', ``332420'', ``332431'', ``332510'', ``332911'',
``332912'', ``332913'', ``332919'', ``332991'', ``332992'', ``333111'',
``333112'', ``333120'', ``333132'', ``333242'', ``333244'', ``333415'',
``333611'', ``333612'', ``333613'', ``333618'', ``333911'', ``333912'',
``333913'', ``333921'', ``333923'', ``333992'', ``333995'', ``333996'',
``334111'', ``334112'', ``334210'', ``334220'', ``334412'', ``334413'',
``334417'', ``334418'', ``334510'', ``334511'', ``334513'', ``334514'',
``334515'', ``334516'', ``334517'', ``334614'', ``335110'', ``335121'',
``335210'', ``335221'', ``335222'', ``335224'', ``335228'', ``335312'',
``335313'', ``335911'', ``335932'', ``336111'', ``336112'', ``336120'',
``336212'', ``336213'', ``336214'', ``336310'', ``336320'', ``336330'',
``336340'', ``336350'', ``336360'', ``336370'', ``336390'', ``336412'',
``336413'', ``336414'', ``336415'', ``336510'', ``336611'', ``336612'',
``336991'', ``336992'', ``336999'', ``337110'', ``337121'', ``337122'',
``337124'', ``337125'', ``337211'', ``337214'', ``337910'', ``337920'',
``339112'', ``339113'', ``339114'', ``339115'', ``339920'', ``339940'',
“339992'', ``339993'', and ``339995''; and
0
b. Revise footnotes 3, 4, 5, and 7.
The revisions 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 in millions of in number of
title dollars employees
------------------------------------------------------------------------
* * * * * * *
311111........... Dog and Cat Food .............. 1,000
Manufacturing.
* * * * * * *
311211........... Flour Milling........ .............. 1,000
* * * * * * *
311221........... Wet Corn Milling..... .............. 1,250
* * * * * * *
311314........... Cane Sugar .............. 1,000
Manufacturing.
311340........... Nonchocolate .............. 1,000
Confectionery
Manufacturing.
311351........... Chocolate and .............. 1,250
Confectionery
Manufacturing from
Cacao Beans.
311352........... Confectionery .............. 1,000
Manufacturing from
Purchased Chocolate.
311411........... Frozen Fruit, Juice, .............. 1,000
and Vegetable
Manufacturing.
311412........... Frozen Specialty Food .............. 1,250
Manufacturing.
311421........... Fruit and Vegetable .............. \3\ 1,000
Canning \3\.
311422........... Specialty Canning.... .............. 1,250
311423........... Dried and Dehydrated .............. 750
Food Manufacturing.
311511........... Fluid Milk .............. 1,000
Manufacturing.
311512........... Creamery Butter .............. 750
Manufacturing.
311513........... Cheese Manufacturing. .............. 1,250
311514........... Dry, Condensed, and .............. 750
Evaporated Dairy
Product
Manufacturing.
311520........... Ice Cream and Frozen .............. 1,000
Dessert
Manufacturing.
311611........... Animal (except .............. 1,000
Poultry)
Slaughtering.
311612........... Meat Processed from .............. 1,000
Carcasses.
[[Page 4487]]
311613........... Rendering and Meat .............. 750
Byproduct Processing.
311615........... Poultry Processing... .............. 1,250
311710........... Seafood Product .............. 750
Preparation and
Packaging.
* * * * * * *
311812........... Commercial Bakeries.. .............. 1,000
311813........... Frozen Cakes, Pies, .............. 750
and Other Pastries
Manufacturing.
311821........... Cookie and Cracker .............. 1,250
Manufacturing.
311824........... Dry Pasta, Dough, and .............. 750
Flour Mixes
Manufacturing from
Purchased Flour.
311830........... Tortilla .............. 1,250
Manufacturing.
311911........... Roasted Nuts and .............. 750
Peanut Butter
Manufacturing.
311919........... Other Snack Food .............. 1,250
Manufacturing.
311920........... Coffee and Tea .............. 750
Manufacturing.
311930........... Flavoring Syrup and .............. 1,000
Concentrate
Manufacturing.
311941........... Mayonnaise, Dressing, .............. 750
and Other Prepared
Sauce Manufacturing.
* * * * * * *
312111........... Soft Drink .............. 1,250
Manufacturing.
312112........... Bottled Water .............. 1,000
Manufacturing.
312113........... Ice Manufacturing.... .............. 750
312120........... Breweries............ .............. 1,250
312130........... Wineries............. .............. 1,000
312140........... Distilleries......... .............. 1,000
312230........... Tobacco Manufacturing .............. 1,500
313110........... Fiber, Yarn, and .............. 1,250
Thread Mills.
* * * * * * *
313230........... Nonwoven Fabric Mills .............. 750
* * * * * * *
314110........... Carpet and Rug Mills. .............. 1,500
314120........... Curtain and Linen .............. 750
Mills.
* * * * * * *
315110........... Hosiery and Sock .............. 750
Mills.
315190........... Other Apparel .............. 750
Knitting Mills.
315210........... Cut and Sew Apparel .............. 750
Contractors.
315220........... Men's and Boys' Cut .............. 750
and Sew Apparel
Manufacturing.
315240........... Women's, Girls', and .............. 750
Infants' Cut and Sew
Apparel
Manufacturing.
315280........... Other Cut and Sew .............. 750
Apparel
Manufacturing.
* * * * * * *
316992........... Women's Handbag and .............. 750
Purse Manufacturing.
* * * * * * *
321212........... Softwood Veneer and .............. 1,250
Plywood
Manufacturing.
321213........... Engineered Wood .............. 750
Member (except
Truss) Manufacturing.
* * * * * * *
321219........... Reconstituted Wood .............. 750
Product
Manufacturing.
321911........... Wood Window and Door .............. 1,000
Manufacturing.
* * * * * * *
321991........... Manufactured Home .............. 1,250
(Mobile Home)
Manufacturing.
* * * * * * *
322121........... Paper (except .............. 1,250
Newsprint) Mills.
* * * * * * *
322130........... Paperboard Mills..... .............. 1,250
322211........... Corrugated and Solid .............. 1,250
Fiber Box
Manufacturing.
* * * * * * *
322219........... Other Paperboard .............. 1,000
Container
Manufacturing.
322220........... Paper Bag and Coated .............. 750
and Treated Paper
Manufacturing.
322230........... Stationery Product .............. 750
Manufacturing.
322291........... Sanitary Paper .............. 1,500
Product
Manufacturing.
* * * * * * *
323117........... Books Printing....... .............. 1,250
[[Page 4488]]
* * * * * * *
324110........... Petroleum Refineries .............. \4\ 1,500
\4\.
* * * * * * *
324191........... Petroleum Lubricating .............. 750
Oil and Grease
Manufacturing.
* * * * * * *
325194........... Cyclic Crude, .............. 1,250
Intermediate, and
Gum and Wood
Chemical
Manufacturing.
325199........... All Other Basic .............. 1,250
Organic Chemical
Manufacturing.
325211........... Plastics Material and .............. 1,250
Resin Manufacturing.
* * * * * * *
325312........... Phosphatic Fertilizer .............. 750
Manufacturing.
* * * * * * *
325320........... Pesticide and Other .............. 1,000
Agricultural
Chemical
Manufacturing.
325411........... Medicinal and .............. 1,000
Botanical
Manufacturing.
325412........... Pharmaceutical .............. 1,250
Preparation
Manufacturing.
325413........... In[dash]Vitro .............. 1,250
Diagnostic Substance
Manufacturing.
325414........... Biological Product .............. 1,250
(except Diagnostic)
Manufacturing.
325510........... Paint and Coating .............. 1,000
Manufacturing.
* * * * * * *
325611........... Soap and Other .............. 1,000
Detergent
Manufacturing.
325612........... Polish and Other .............. 750
Sanitation Good
Manufacturing.
325613........... Surface Active Agent .............. 750
Manufacturing.
325620........... Toilet Preparation .............. 1,250
Manufacturing.
* * * * * * *
325992........... Photographic Film, .............. 1,500
Paper, Plate, and
Chemical
Manufacturing.
* * * * * * *
326111........... Plastics Bag and .............. 750
Pouch Manufacturing.
326112........... Plastics Packaging .............. 1,000
Film and Sheet
(including
Laminated)
Manufacturing.
326113........... Unlaminated Plastics .............. 750
Film and Sheet
(except Packaging)
Manufacturing.
* * * * * * *
326122........... Plastics Pipe and .............. 750
Pipe Fitting
Manufacturing.
* * * * * * *
326140........... Polystyrene Foam .............. 1,000
Product
Manufacturing.
326150........... Urethane and Other .............. 750
Foam Product (except
Polystyrene)
Manufacturing.
326160........... Plastics Bottle .............. 1,250
Manufacturing.
326191........... Plastics Plumbing .............. 750
Fixture
Manufacturing.
* * * * * * *
326211........... Tire Manufacturing .............. \5\ 1,500
(except Retreading)
\5\.
* * * * * * *
326220........... Rubber and Plastics .............. 750
Hoses and Belting
Manufacturing.
326291........... Rubber Product .............. 750
Manufacturing for
Mechanical Use.
* * * * * * *
327110........... Pottery, Ceramics, .............. 1,000
and Plumbing Fixture
Manufacturing.
* * * * * * *
327212........... Other Pressed and .............. 1,250
Blown Glass and
Glassware
Manufacturing.
327213........... Glass Container .............. 1,250
Manufacturing.
327215........... Glass Product .............. 1,000
Manufacturing Made
of Purchased Glass.
327310........... Cement Manufacturing. .............. 1,000
* * * * * * *
327332........... Concrete Pipe .............. 750
Manufacturing.
* * * * * * *
327410........... Lime Manufacturing... .............. 750
327420........... Gypsum Product .............. 1,500
Manufacturing.
327910........... Abrasive Product .............. 750
Manufacturing.
[[Page 4489]]
* * * * * * *
327993........... Mineral Wool .............. 1,500
Manufacturing.
* * * * * * *
331110........... Iron and Steel Mills .............. 1,500
and Ferroalloy
Manufacturing.
* * * * * * *
331315........... Aluminum Sheet, .............. 1,250
Plate, and Foil
Manufacturing.
* * * * * * *
331511........... Iron Foundries....... .............. 1,000
331512........... Steel Investment .............. 1,000
Foundries.
* * * * * * *
332111........... Iron and Steel .............. 750
Forging.
332112........... Nonferrous Forging... .............. 750
* * * * * * *
332215........... Metal Kitchen .............. 750
Cookware, Utensil,
Cutlery, and
Flatware (except
Precious)
Manufacturing.
332216........... Saw Blade and .............. 750
Handtool
Manufacturing.
332311........... Prefabricated Metal .............. 750
Building and
Component
Manufacturing.
* * * * * * *
332313........... Plate Work .............. 750
Manufacturing.
332321........... Metal Window and Door .............. 750
Manufacturing.
* * * * * * *
332410........... Power Boiler and Heat .............. 750
Exchanger
Manufacturing.
332420........... Metal Tank (Heavy .............. 750
Gauge) Manufacturing.
332431........... Metal Can .............. 1,500
Manufacturing.
* * * * * * *
332510........... Hardware .............. 750
Manufacturing.
* * * * * * *
332911........... Industrial Valve .............. 750
Manufacturing.
332912........... Fluid Power Valve and .............. 1,000
Hose Fitting
Manufacturing.
332913........... Plumbing Fixture .............. 1,000
Fitting and Trim
Manufacturing.
332919........... Other Metal Valve and .............. 750
Pipe Fitting
Manufacturing.
332991........... Ball and Roller .............. 1,250
Bearing
Manufacturing.
332992........... Small Arms Ammunition .............. 1,250
Manufacturing.
* * * * * * *
333111........... Farm Machinery and .............. 1,250
Equipment
Manufacturing.
333112........... Lawn and Garden .............. 1,500
Tractor and Home
Lawn and Garden
Equipment
Manufacturing.
333120........... Construction .............. 1,250
Machinery
Manufacturing.
* * * * * * *
333132........... Oil and Gas Field .............. 1,250
Machinery and
Equipment
Manufacturing.
* * * * * * *
333242........... Semiconductor .............. 1,500
Machinery
Manufacturing.
* * * * * * *
333244........... Printing Machinery .............. 750
and Equipment
Manufacturing.
* * * * * * *
333415........... Air-Conditioning and .............. 1,250
Warm Air Heating
Equipment and
Commercial and
Industrial
Refrigeration
Equipment
Manufacturing.
* * * * * * *
333611........... Turbine and Turbine .............. 1,500
Generator Set Units
Manufacturing.
333612........... Speed Changer, .............. 750
Industrial High-
Speed Drive, and
Gear Manufacturing.
333613........... Mechanical Power .............. 750
Transmission
Equipment
Manufacturing.
333618........... Other Engine .............. 1,500
Equipment
Manufacturing.
333911........... Pump and Pumping .............. 750
Equipment
Manufacturing.
333912........... Air and Gas .............. 1,000
Compressor
Manufacturing.
333913........... Measuring and .............. 750
Dispensing Pump
Manufacturing.
333921........... Elevator and Moving .............. 1,000
Stairway
Manufacturing.
[[Page 4490]]
* * * * * * *
333923........... Overhead Traveling .............. 1,250
Crane, Hoist, and
Monorail System
Manufacturing.
* * * * * * *
333992........... Welding and Soldering .............. 1,250
Equipment
Manufacturing.
* * * * * * *
333995........... Fluid Power Cylinder .............. 750
and Actuator
Manufacturing.
333996........... Fluid Power Pump and .............. 1,250
Motor Manufacturing.
* * * * * * *
334111........... Electronic Computer .............. 1,250
Manufacturing.
334112........... Computer Storage .............. 1,250
Device Manufacturing.
* * * * * * *
334210........... Telephone Apparatus .............. 1,250
Manufacturing.
334220........... Radio and Television .............. 1,250
Broadcasting and
Wireless
Communications
Equipment
Manufacturing.
* * * * * * *
334412........... Bare Printed Circuit .............. 750
Board Manufacturing.
334413........... Semiconductor and .............. 1,250
Related Device
Manufacturing.
* * * * * * *
334417........... Electronic Connector .............. 1,000
Manufacturing.
334418........... Printed Circuit .............. 750
Assembly (Electronic
Assembly)
Manufacturing.
* * * * * * *
334510........... Electromedical and .............. 1,250
Electrotherapeutic
Apparatus
Manufacturing.
334511........... Search, Detection, .............. 1,250
Navigation,
Guidance,
Aeronautical, and
Nautical System and
Instrument
Manufacturing.
* * * * * * *
334513........... Instruments and .............. 750
Related Products
Manufacturing for
Measuring,
Displaying, and
Controlling
Industrial Process
Variables.
334514........... Totalizing Fluid .............. 750
Meter and Counting
Device Manufacturing.
334515........... Instrument .............. 750
Manufacturing for
Measuring and
Testing Electricity
and Electrical
Signals.
334516........... Analytical Laboratory .............. 1,000
Instrument
Manufacturing.
334517........... Irradiation Apparatus .............. 1,000
Manufacturing.
* * * * * * *
334614........... Software and Other .............. 1,250
Prerecorded Compact
Disc, Tape, and
Record Reproducing.
335110........... Electric Lamp Bulb .............. 1,250
and Part
Manufacturing.
335121........... Residential Electric .............. 750
Lighting Fixture
Manufacturing.
* * * * * * *
335210........... Small Electrical .............. 1,500
Appliance
Manufacturing.
335221........... Household Cooking .............. 1,500
Appliance
Manufacturing.
335222........... Household .............. 1,250
Refrigerator and
Home Freezer
Manufacturing.
335224........... Household Laundry .............. 1,250
Equipment
Manufacturing.
335228........... Other Major Household .............. 1,000
Appliance
Manufacturing.
* * * * * * *
335312........... Motor and Generator .............. 1,250
Manufacturing.
335313........... Switchgear and .............. 1,250
Switchboard
Apparatus
Manufacturing.
* * * * * * *
335911........... Storage Battery .............. 1,250
Manufacturing.
* * * * * * *
335932........... Noncurrent-Carrying .............. 1,000
Wiring Device
Manufacturing.
* * * * * * *
336111........... Automobile .............. 1,500
Manufacturing.
336112........... Light Truck and .............. 1,500
Utility Vehicle
Manufacturing.
336120........... Heavy Duty Truck .............. 1,500
Manufacturing.
* * * * * * *
336212........... Truck Trailer .............. 1,000
Manufacturing.
336213........... Motor Home .............. 1,250
Manufacturing.
336214........... Travel Trailer and .............. 1,000
Camper Manufacturing.
[[Page 4491]]
336310........... Motor Vehicle .............. 1,000
Gasoline Engine and
Engine Parts
Manufacturing.
336320........... Motor Vehicle .............. 1,000
Electrical and
Electronic Equipment
Manufacturing.
336330........... Motor Vehicle .............. 1,000
Steering and
Suspension
Components (except
Spring)
Manufacturing.
336340........... Motor Vehicle Brake .............. 1,250
System Manufacturing.
336350........... Motor Vehicle .............. 1,500
Transmission and
Power Train Parts
Manufacturing.
336360........... Motor Vehicle Seating .............. 1,500
and Interior Trim
Manufacturing.
336370........... Motor Vehicle Metal .............. 1,000
Stamping.
336390........... Other Motor Vehicle .............. 1,000
Parts Manufacturing.
* * * * * * *
336412........... Aircraft Engine and .............. 1,500
Engine Parts
Manufacturing.
336413........... Other Aircraft Parts .............. \7\ 1,250
and Auxiliary
Equipment
Manufacturing \7\.
336414........... Guided Missile and .............. 1,250
Space Vehicle
Manufacturing.
336415........... Guided Missile and .............. 1,250
Space Vehicle
Propulsion Unit and
Propulsion Unit
Parts Manufacturing.
* * * * * * *
336510........... Railroad Rolling .............. 1,500
Stock Manufacturing.
336611........... Ship Building and .............. 1,250
Repairing.
336612........... Boat Building........ .............. 1,000
336991........... Motorcycle, Bicycle, .............. 1,000
and Parts
Manufacturing.
336992........... Military Armored .............. 1,500
Vehicle, Tank, and
Tank Component
Manufacturing.
336999........... All Other .............. 1,000
Transportation
Equipment
Manufacturing.
337110........... Wood Kitchen Cabinet .............. 750
and Countertop
Manufacturing.
337121........... Upholstered Household .............. 1,000
Furniture
Manufacturing.
337122........... Nonupholstered Wood .............. 750
Household Furniture
Manufacturing.
337124........... Metal Household .............. 750
Furniture
Manufacturing.
337125........... Household Furniture .............. 750
(except Wood and
Metal) Manufacturing.
* * * * * * *
337211........... Wood Office Furniture .............. 1,000
Manufacturing.
* * * * * * *
337214........... Office Furniture .............. 1,000
(except Wood)
Manufacturing.
* * * * * * *
337910........... Mattress .............. 1,000
Manufacturing.
337920........... Blind and Shade .............. 1,000
Manufacturing.
* * * * * * *
339112........... Surgical and Medical .............. 1,000
Instrument
Manufacturing.
339113........... Surgical Appliance .............. 750
and Supplies
Manufacturing.
339114........... Dental Equipment and .............. 750
Supplies
Manufacturing.
339115........... Ophthalmic Goods .............. 1,000
Manufacturing.
* * * * * * *
339920........... Sporting and Athletic .............. 750
Goods Manufacturing.
* * * * * * *
339940........... Office Supplies .............. 750
(except Paper)
Manufacturing.
* * * * * * *
339992........... Musical Instrument .............. 1,000
Manufacturing.
339993........... Fastener, Button, .............. 750
Needle, and Pin
Manufacturing.
* * * * * * *
339995........... Burial Casket .............. 1,000
Manufacturing.
* * * * * * *
------------------------------------------------------------------------
* * * * *
Footnotes
* * * * *
3. NAICS code 311421--For purposes of Government procurement for
food canning and preserving, the standard of 1,000 employees excludes
agricultural labor as defined in 3306(k) of the Internal Revenue Code,
26 U.S.C. 3306(k).
4. NAICS code 324110--To qualify as small for purposes of
Government procurement, the petroleum refiner, including its
affiliates, must be a concern that has either no more than 1,500
employees or no more than 200,000 barrels per calendar day total
Operable Atmospheric Crude Oil Distillation capacity. Capacity includes
all domestic and foreign affiliates, all owned or leased facilities,
and all facilities under a processing agreement or an arrangement such
as an exchange agreement or a throughput. To qualify
[[Page 4492]]
under the capacity size standard, the firm, together with its
affiliates, must be primarily engaged in refining crude petroleum into
refined petroleum products. A firm's ``primary industry'' is determined
in accordance with 13 CFR 121.107.
5. NAICS code 326211--For Government procurement, a firm is small
for bidding on a contract for pneumatic tires within Census NAICS
Product Classification codes 3262111 and 3262113, provided that:
(a) The value of tires within Census NAICS Product Classification
codes 3262113 that it manufactured in the United States during the
previous calendar year is more than 50 percent of the value of its
total worldwide manufacture,
(b) The value of pneumatic tires within Census NAICS Product
Classification codes 3262113 comprising its total worldwide manufacture
during the preceding calendar year was less than 5 percent of the value
of all such tires manufactured in the United States during that period,
and
(c) The value of the principal product that it manufactured,
produced, or sold worldwide during the preceding calendar year is less
than 10 percent of the total value of such products manufactured or
otherwise produced or sold in the United States during that period.
* * * * *
7. NAICS code 336413--Contracts for the rebuilding or overhaul of
aircraft ground support equipment on a contract basis are classified
under NAICS code 336413.
* * * * *
Maria Contreras-Sweet,
Administrator.
[FR Doc. 2016-00924 Filed 1-25-16; 8:45 am]
BILLING CODE 8025-01-P