Grassroots Movement Blasts SBA's Proposed New Size Standards

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Proposed Size Standards Are No Help to Small Businesses in Key Sectors

“The proposed regulations do little in the way of SBA living up to its mission of promoting competitive viability for the nation’s industrial small business base."

Yesterday, the Small Business Administration (SBA) released draft regulation that slightly raises small business size standards, setting the threshold at up to $35.5 million for 35 industries in NAICS Sector 54, Professional, Scientific and Technical Services and for one industry in NAICS Sector 81, Other Services.

These disappointingly minor modifications heighten the urgency and importance for real reform of the size standards system. The grassroots movement of small federal contractors, born from the Solutions Summit Conference on March 4, is quickly organizing to respond to the proposed regulations in a series of solutions-focused workshops to meet the May 16 deadline for commentary.

"We anticipated, based on past experience, that SBA would not make any meaningful changes,” said Fernando Galaviz, Chairman of the National Federal Contractors Association (NaFCA) and a small business owner. “The proposed regulations do little in the way of SBA living up to its mission of promoting competitive viability for the nation’s industrial small business base and instead leave in place significant hurdles to entrepreneurs growing their small businesses profitably, or to growing at all.”

SBA’s recently developed Size Standards Methodology uses industry averages from 2007 Economic Census data, a set of statistics without any relationship to competitive realities in the market place. By its own admission, SBA lacks relevant data with respect to Federal services providers. In its calibrations, ignoring its statutory obligations, SBA does not address small federal contractors’ obvious struggle to remain competitively viable or to remain in business at all, which many small businesses face after outgrowing their small business designation.

Constituency groups have voiced this shortcoming in size standards design to SBA for many years, pointing out that the dominant firms in federal market place have billions in annual revenues and above 100,000 employees. Small firms of $25 million or less cannot hope to succeed in fair competition against these giants.

The last time SBA proposed any comprehensive adjustments to size standards was in 2004. The small business community with the bipartisan support of Congress, narrowly averted disaster when it convinced SBA to abandon a proposed rule that would have resulted in tens of thousands of businesses losing their small business eligibility. While SBA is not proposing to lower any size standards in view of the current economic conditions, its current proposal entirely fails to address the particular challenges of competition in the federal market place and does little to promote the creation of jobs in that sector of the market.

Much like the last failed attempt at size standards reform, SBA's new proposed size standards remain inadequate. To address solutions for a better way of size standard reform, the first set of workshops will begin on March 22 and business audiences are strongly encouraged to participate. The grassroots solutions meetings will be held 10 a.m. – 12 p.m. from at 6402 Arlington Blvd (in the Level B, B100 Conference Room), Falls Church, VA 22042.

About NaFCA
The National Federal Contractors Association (NaFCA) is a proactive, advocacy organization representing and advancing the agenda of U.S. small business. NaFCA protects and promotes the growth of technology-based small businesses in the government procurement marketplace.

About Set Aside Alert
Business Research Services, publishers of top-quality directories of minority and woman-owned businesses, was founded in 1984. Located in Washington, D.C., the company currently publishes business directories and electronic directory products, as well as Set-Aside Alert, the leading newsletter for small, minority, and woman-owned business issues and contracting news.

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Fernando V. Galaviz
NaFCA
703-626-5433
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