Tomorrow, SBA will issue an interim final rule increasing the receipts-based size standards for inflation. An unpublished version of the rule is available here. The change should be effective August 17, 2019, 30 days after the scheduled publication of the rulemaking. Comments to the rule are due September 16, 2019. For government contractors whose status changes in the System for Award Management (“SAM”) from “other than small” to “small,” as a result of the inflation adjustment, SBA advises that the business update their SAM profile and complete the “representations and certifications” section of SAM. Doing so will provide a more competitive environment for government contractors whose status changes to a “small business.”
SBA’s last inflationary adjustment was five years ago, in 2014. SBA estimates that this inflation adjustment will enable approximately 89,730 firms — competing under receipts-based size standards that are currently above SBA’s size standards — to gain small business status and become small again. As SBA explains:
The size standards adopted in this interim final rule will enable businesses that have exceeded the size standards for their industries to regain small business status. It will also help currently small businesses retain their small business status for a longer period. Many firms may have lost their eligibility and find it difficult to compete at current size standards with companies that are significantly larger than they are. SBA believes the competitive impact will be positive for existing small businesses and for those that exceed the size standards but are on the very low end of those that are not small.
To reiterate, SBA directs that businesses whose status changes in SAM from “other than small” to “small,” as a result of the inflation adjustment, must update their SAM profiles and complete the “representations and certifications” section of SAM.
The table below shows the current size standards and the adjusted size standards:
For example, the size standard for Engineering Services (541330) will increase from $15 million to $16.5 million, the size standard for Computer Systems Design Services (541512) will increase from $27.5 million to $30 million, and the size standard for Remediation Services (562910) will increase from $20.5 million to $22 million.
Notably, SBA has not yet completed its substantive review of the size standards, which it is supposed to complete every five years and has been due since 2017. In April, SBA said that it “plans to issue proposed rules on all receipts based size standards, including those in NAICS Sector 54 and Subsector 236, in the near future.” Potentially, these forthcoming proposed rules could mean more increases to the size standards.
For more information, please contact a member of PilieroMazza’s Government Contracts or Small Business Programs & Advisory Services practice groups.
Megan Connor, the author of this Client Alert, is a co-chair of the Firm’s Government Contracts Group.