SBA reopens size standard comment period, slashes estimates of its impacts

The Small Business Administration’s Office of Advocacy has significantly lowered its estimates of the impacts from the proposed size standards overhaul, which seems to be the reason why SBA is extending the comment period by 60 days.

SBA announced the extension on Monday and only vaguely explained why.

“In response to requests for additional time to comment and following the SBA’s clarification of the impacts of SBA’s proposed changes, the agency is extending the comment periods,” SBA wrote in its memo. The memo makes no mention of the Office of Advocacy's report.

The deadline for comments is now Nov. 20 instead of the original date of Sept. 21.

On Sept. 27 the Office of Advocacy released its estimate of the impact of the proposed rules revamping the size standards and the methodology for determining the size category a company fits into.

SBA originally said the changes would allow 115,000 additional companies to qualify as small businesses.

But the Advocacy Office has since greatly restated that number, now saying that only an additional 4,000 to 6,000 current contractors would qualify as small businesses.

“The analysis, therefore, finds the proposal would make a narrow, targeted adjustment to eligibility, rather than a broad expansion of the small-business marketplace,” the office said in its announcement.

A change that significant will likely spark more comments on SBA’s proposed rules.

The size standard proposal has received 68,000 submissions so far, but SBA has only posted 2,700. There is always a lag between when comments are submitted and when they are posted. SBA's methodology proposal has received about 1,300 submissions with 881 posted so far.

Regulations.gov still marks the proposed rules as closed for comments as of Monday, but SBA’s memo says the extension is effective Monday. The memo will be published in the Federal Register on Thursday, so perhaps comments will reopen by then.

Since their release on Aug. 20, SBA’s proposed rules have been seen as a “seismic” shift for the market as Professional Services Council president Stephanie Kostro said in our most recent WT 360 podcast episode.

SBA’s original estimates said companies as large as $500 million in annual revenue would qualify as small in some categories.

The proposal also collapses the number of industry categories from nearly 1,000 to 338. SBA’s rationale is that changes in the industry categories and the higher threshold will increase competition and lower barriers to entry into the federal market.

Those opposing the changes say that small businesses, meaning those designated such under the current rules, will suffer they will lack the scale and infrastructure to compete with much larger businesses that will suddenly be considered small.

“The proposed rule would blur the line between small businesses that rely on set-asides to enter and grow in the federal market and much larger firms that already have substantial revenue, staff, proposal infrastructure, incumbent relationships, and pricing flexibility,” wrote the CEO of one woman-owned small business in comments submitted to Regulations.gov.

As several commenters argued: The kind of infrastructure needed to build a $300 million-annual revenue company simply does not exist at a $30 million company.

Clear differences exist in bid and proposal operations, capture, past performance, accounting systems, and on and on.