Procurement

Small Business Industry Size Standards

Issue
The United States Small Business Administration (SBA) is responsible for establishing thresholds by which firms within specific industries are considered to be small businesses for the purposes of eligibility for special programs and loans offered by SBA, as well as small business classification when competing for federal contracts. The current small business size standard for engineering firms is $4.5 million in annual gross receipts-averaged over a three year period.

In recent years, SBA has undertaken an initiative to restructure size standards. As part of the restructuring, SBA proposed, in 2004, to implement a dual size standard on engineering firms that would have limited the small business classification to engineering firms that employ less than 50 employees (full and part time) and have annual gross receipts less than $7 million. ACEC and other industry representatives opposed SBA's proposal. Based on widespread opposition SBA rescinded the proposal and vowed to keep working on another viable solution. SBA is expected to review the engineering size standard in 2008.

ACEC Position
ACEC opposes the implementation of a dual size standard because it would be unnecessary and overly burdensome on small engineering firms. ACEC maintains the most effective measure for determining the size status of engineering firms should be based on firms' annual gross receipts. ACEC advocates size standards be reviewed at regular intervals to ensure they accurately capture small businesses within the engineering industry and that inflationary adjustments are made. ACEC also supports provisions that allow firms that have grown beyond the size standard to continue to qualify as a small business for a limited time to help them adjust to competing against larger businesses.