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 established dollar size standards are adjusted each year for inflation and rounded to the nearest half-million dollars. The current small business size standard for engineering firms is $4.5 million in annual gross receipts, averaged over a three year period. In a process begun in 2008, the SBA is reviewing and establishing new size standards for all industry categories. Final action is anticipated for later in 2009.

The new size standards are based on U.S. Census data from 2000 (the latest completely processed census) and are developed from information on numbers of businesses, their sizes, projected workloads, and similar data for the entire engineering industry. In recent years, ACEC and other industry representatives have voiced concerns over an SBA proposal to add employee numbers to the gross receipts standard when determining small business eligibility. Based on widespread opposition, SBA rescinded the proposal and has indicated their intention to continue using gross receipts as the threshold for determining eligibility.

ACEC Position
ACEC maintains the most effective available measure for determining the size status of engineering firms should be based on firms’ annual gross receipts. ACEC advocates that size standards be reviewed at regular intervals to ensure they accurately capture small businesses within the engineering industry and that inflationary adjustments are made. Though SBA is currently proceeding in agreement with ACEC’s position, ACEC will continue to monitor the development and implementation of the new size standard. 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.