2012-4329. Small Business Size Standards: Health Care and Social Assistance

AGENCY:

U.S. Small Business Administration.

ACTION:

Proposed rule.

SUMMARY:

The U.S. Small Business Administration (SBA) proposes to increase small business size standards for 28 industries in North American Industry Classification System (NAICS) Sector 62, Health Care and Social Assistance. As part of its ongoing comprehensive review of all size standards, SBA has evaluated all size standards in NAICS Sector 62 to determine whether the existing size standards should be retained or revised. This proposed rule is one of a series of proposed rules that will review size standards of industries grouped by NAICS Sector. SBA issued a White Paper entitled “Size Standards Methodology” and published a notice in the October 21, 2009 issue of the Federal Register that the “Size Standards Methodology” White Paper was available on its Web site at www.sba.gov/​size for public review and comments (74 FR 53940). The “Size Standards Methodology” White Paper explains how SBA establishes, reviews, and modifies its receipts based and employee based small business size standards. In this proposed rule, SBA has applied its methodology that pertains to establishing, reviewing, and modifying a receipts based size standard.

DATES:

SBA must receive comments to this proposed rule on or before April 24, 2012.

ADDRESSES:

You may submit comments, identified by RIN 3245-AG30 by one of the following methods: (1) Federal eRulemaking Portal: www.regulations.gov, following the instructions for submitting comments; or (2) Mail/Hand Delivery/Courier: Khem R. Sharma, Ph.D., Chief, Size Standards Division, 409 Third Street SW., Mail Code 6530, Washington, DC 20416. SBA will not accept comments to this proposed rule submitted by email.

SBA will post all comments to this proposed rule without change on www.regulations.gov. If you wish to submit confidential business information (CBI) as defined in the User Notice at www.regulations.gov,, you must submit such information to U.S. Small Business Administration, Khem R. Sharma, Ph.D., Chief, Size Standards Division, 409 Third Street SW., Mail Code 6530, Washington, DC 20416, or send an email to [e-mail]. Highlight the information that you consider to be CBI and explain why you believe SBA should hold this information as confidential. SBA will review your information and determine whether it will make the information public or not.

FOR FURTHER INFORMATION CONTACT:

Khem R. Sharma, Ph.D., Chief, Size Standards Division, [phone] or [e-mail].

SUPPLEMENTARY INFORMATION:

To determine eligibility for Federal small business assistance, SBA establishes small business size definitions (referred to as size standards) for private sector industries in the United States. SBA uses two primary measures of business size: average annual receipts and average number of employees. SBA uses financial assets, electric output, and refining capacity to measure the size of a few specialized industries. In addition, SBA's Small Business Investment Company (SBIC), Certified Development Company (504), and 7(a) Loan Programs use either the industry based size standards or net worth and net income based alternative size standards to determine eligibility for those programs. At the beginning of the current comprehensive size standards review, there were 41 different size standards covering 1,141 NAICS industries and 18 sub-industry activities (referred to as “exceptions” in SBA's table of size standards). Thirty-one of these size levels were based on average annual receipts, seven were based on average number of employees, and three were based on other measures.

Over the years, SBA has received comments that its size standards have not kept up with changes in the economy, in particular the changes in the Federal contracting marketplace and industry structure. The last time SBA conducted a comprehensive review of all size standards was during the late 1970s and early 1980s. Since then, most reviews of size standards were limited to a few specific industries in response to requests from the public and Federal agencies. SBA also reviews the effect of inflation on its size standards and makes necessary adjustments to its monetary based size standards at least once every five years. SBA's latest inflation adjustment to size standards was published in the Federal Register on July 18, 2008 (73 FR 41237).

SBA proposed new size standards for a number of industries in NAICS Sector 62 on May 4, 1999 (64 FR 23798), when the Standard Industrial Classification (SIC) System was in use. Subsequently, effective October 1, 2000, SBA adopted NAICS as the basis for small business size standards, thereby replacing the SIC System. Therefore, when SBA issued a final rule on November 17, 2000 (65 FR 69432), the adopted size standards in the final rule were based on the NAICS. The industries that are now in NAICS Subsector 621(Ambulatory Health Care Services), NAICS Subsector 622 (Hospitals), and NAICS Subsector 623 (Nursing and Residential Care Facilities) were part of SIC Major Industry Group 80, Health Services, while industries now in NAICS Subsector 624 (Social Assistance) were part of the SIC Major Industry Group 83, Social Services.

Because of changes in the Federal marketplace and industry structure since the last comprehensive size standards review, SBA recognizes that current data may no longer support some of its existing size standards. Accordingly, in 2007, SBA began a comprehensive review of all size standards to determine if they are consistent with current data, and to adjust them when necessary. In addition, on September 27, 2010, the President of the United States signed the Small Business Jobs Act of 2010 (Jobs Act). The Jobs Act directs SBA to conduct a detailed review of all size standards and to make appropriate adjustments to reflect market conditions (Sec. 1344, Pub. L. 111-240, 124 Stat. 2545). Specifically, the Jobs Act requires SBA to conduct a detailed review of at least one-third of all size standards during every 18-month period from the date of its enactment . In addition, the Jobs Act requires that SBA conduct a review of all size standards not less frequently than once every five years thereafter. Reviewing existing small business size standards and making appropriate adjustments based on current data are also consistent with Executive Order 13563 on improving regulation and regulatory review.

Rather than review all size standards at one time, SBA is reviewing size standards on a Sector by Sector basis. A NAICS Sector generally consists of 25 to 75 industries, except for NAICS Sector 31-33, Manufacturing, which has considerably more industries. Once SBA completes its review of size standards for industries in a NAICS Sector, it issues a proposed rule to revise size standards for those industries for which it believes currently available data and other relevant factors support doing so.

Below is a discussion of the size standards methodology for establishing receipts based size standards that SBA applied to this proposed rule, including analyses of industry structure, Federal procurement trends and other factors for industries reviewed in this proposed rule, the impact of the proposed revisions to size standards on Federal small business assistance, and the evaluation of whether a revised size standard would exclude dominant firms from being considered small.

Size Standards Methodology

As stated above, SBA has developed a “Size Standards Methodology” for developing, reviewing, and modifying size standards when necessary. SBA has published the document on its Web site at www.sba.gov/​size for public review and comments and included it as a supporting document in the electronic docket of this proposed rule at www.regulations.gov. SBA does not apply all features of its “Size Standards Methodology” to all industries because not all features are appropriate. For example, since all industries in NAICS Sector 62 have receipts based size standards, the methodology described in this proposed rule applies to establishing receipts based size standards. However, the methodology is made available in its entirety for parties who have an interest in SBA's overall approach to establishing, evaluating, and modifying small business size standards. SBA always explains its analysis in individual proposed and final rules relating to size standards for specific industries.

SBA welcomes comments from the public on a number of issues concerning its “Size Standards Methodology,” such as whether there are other approaches to establishing and modifying size standards; whether there are alternative or additional factors that SBA should consider; whether SBA's approach to small business size standards makes sense in the current economic environment; whether SBA's use of anchor size standards is appropriate; whether there are gaps in SBA's methodology because the data it uses are not current or sufficiently comprehensive; and whether there are other data, facts, and/or issues that SBA should consider. Comments on SBA's methodology should be submitted via (1) the Federal eRulemaking Portal: www.regulations.gov,, using docket number SBA-2009-0008 and following the instructions for submitting comments; or (2) Mail/Hand Delivery/Courier: Khem R. Sharma, Ph.D., Chief, Size Standards Division, 409 Third Street SW., Mail Code 6530, Washington, DC 20416. As with comments received to this and other proposed rules, SBA will post all comments on its methodology on www.regulations.gov. As of December 9, 2011, SBA has received 13 comments to its “Size Standards Methodology.” The comments are available to the public at www.regulations.gov. SBA continues to welcome comments on its methodology from interested parties. SBA will not accept comments to its “Size Standards Methodology” submitted by email.

Congress granted SBA's Administrator discretion to establish detailed small business size standards. 15 U.S.C. 632(a)(2). Specifically, Section 3(a)(3) of the Small Business Act requires that “* * * the [SBA] Administrator shall ensure that the size standard varies from industry to industry to the extent necessary to reflect the differing characteristics of the various industries and consider other factors deemed to be relevant by the Administrator.” 15 U.S.C. 632(a)(3). Accordingly, the economic structure of an industry is the basis for developing and modifying small business size standards. SBA identifies the small business segment of an industry by examining data on the economic characteristics defining the industry structure (as described below). In addition, SBA considers current economic conditions, its mission and program objectives, the Administration's current policies, suggestions from industry groups and Federal agencies, and public comments on the proposed rule. SBA also examines whether a size standard based on industry and other relevant data successfully excludes businesses that are dominant in the industry.

This proposed rule includes information regarding the factors SBA evaluated and the criteria it used to propose adjustments to certain size standards in NAICS Sector 62. The rule also explains why SBA has proposed to adjust some size standards in NAICS Sector 62 but not others. This proposed rule affords the public an opportunity to review and to comment on SBA's proposals to revise size standards in NAICS Sector 62, as well as on the data and methodology it uses to evaluate and revise a size standard. The public can also comment on those industries for which SBA did not propose changes to their size standards.

Industry Analysis

For the current comprehensive size standards review, SBA has established three “base” or “anchor” size standards: $7 million in average annual receipts for industries that have receipts based size standards, 500 employees for manufacturing and other industries that have employee based size standards (except for Wholesale Trade), and 100 employees for industries in the Wholesale Trade Sector. SBA established 500 employees as the anchor size standard for manufacturing industries at its inception in 1953. Shortly thereafter SBA established $1 million in average annual receipts as the anchor size standard for nonmanufacturing industries. SBA has periodically increased the receipts based anchor size standard for inflation, and today it is $7 million. Since 1986, the size standard for all industries in the Wholesale Trade Sector for SBA financial assistance and for most Federal programs has been 100 employees. However, the 100 employee size standards do not apply to Federal procurement programs. Rather, for Federal procurement the size standard for all industries in Wholesale Trade and for all industries in Retail Trade (NAICS Sector 44-45) is 500 employees under SBA's nonmanufacturer rule. See 13 CFR 121.406(b).

These long-standing anchor size standards have stood the test of time and gained legitimacy through practice and general public acceptance. An anchor is neither a minimum nor a maximum size standard. It is a common size standard for a large number of industries that have similar economic characteristics and serves as a reference point in evaluating size standards for individual industries. SBA uses the anchor in lieu of trying to establish precise small business size standards for each industry. Otherwise, theoretically, the number of size standards might be as high as the number of industries for which SBA establishes size standards (1,141). Furthermore, the data SBA analyzes are static, while the U.S. economy is not. Hence, absolute precision is impossible. Therefore, SBA presumes an anchor size standard is appropriate for a particular industry unless that industry displays economic characteristics that are considerably different from others with the same anchor size standard.

When evaluating a size standard, SBA compares the economic characteristics of the industry under review to the average characteristics of industries with one of the three anchor size standards (referred to as the “anchor comparison group”). This allows SBA to assess the industry structure and to determine whether the industry is appreciably different from the other industries in the anchor comparison group. If the characteristics of a specific industry under review are similar to the average characteristics of the anchor comparison group, the anchor size standard is generally appropriate for that industry. SBA may consider adopting a size standard below the anchor when (1) all or most of the industry characteristics are significantly smaller than the average characteristics of the anchor comparison group, or (2) other industry considerations strongly suggest that the anchor size standard would be an unreasonably high size standard for the industry.

If the specific industry's characteristics are significantly higher than those of the anchor comparison group, then a size standard higher than the anchor size standard may be appropriate. The larger the differences are between the characteristics of the industry under review and those in the anchor comparison group, the larger will be the difference between the appropriate industry size standard and the anchor size standard. To determine a size standard above the anchor size standard, SBA analyzes the characteristics of a second comparison group. For industries with receipts based size standards, including those in NAICS Sector 62 that are the subject of this proposed rule, SBA developed a second comparison group consisting of industries that have the highest levels of receipts based size standards. To determine a size standard above the anchor size standard, SBA analyzes the characteristics of this second comparison group. The size standards for this group of industries range from $23 million to $35.5 million in average annual receipts; the weighted average size standard for the group is $29 million. SBA refers to this comparison group as the “higher level receipts based size standard group.”

The primary industry factors that SBA evaluates include average firm size, startup costs and entry barriers, industry competition, and distribution of firms by size. SBA evaluates, as an additional primary factor, the impact that revising size standards might have on Federal contracting assistance to small businesses. These are, generally, the five most important factors SBA examines when establishing or revising a size standard for an industry. However, SBA will also consider and evaluate other information that it believes is relevant to a particular industry (such as technological changes, growth trends, SBA financial assistance, other program factors, etc.). SBA also considers the possible impacts of size standard revisions on eligibility for Federal small business assistance, current economic conditions, the Administration's policies, and suggestions from industry groups and Federal agencies. Public comments on a proposed rule also provide important additional information. SBA thoroughly reviews all public comments before making a final decision on its proposed size standards. Below are brief descriptions of each of the five primary factors that SBA has evaluated for each industry in NAICS Sector 62 being reviewed in this proposed rule. A more detailed description of this analysis is provided in SBA's “Size Standards Methodology,” available at http://www.sba.gov/​size.

1. Average firm size. SBA computes two measures of average firm size: simple average and weighted average. For industries with receipts based size standards, the simple average is the total receipts of the industry divided by the total number of firms in the industry. The weighted average firm size is the sum of weighted simple averages in different receipts size classes, where weights are the shares of total industry receipts for respective size classes. The simple average weighs all firms within an industry equally regardless of their size. The weighted average overcomes that limitation by giving more weight to larger firms.

If the average firm size of an industry is significantly higher than the average firm size of industries in the anchor comparison industry group, this will generally support a size standard higher than the anchor size standard. Conversely, if the industry's average firm size is similar to or significantly lower than that of the anchor comparison industry group, it will be a basis to adopt the anchor size standard, or in rare cases, a standard lower than the anchor.

2. Startup costs and entry barriers. Startup costs reflect a firm's initial size in an industry. New entrants to an industry must have sufficient capital and other assets to start and maintain a viable business. If new firms entering a particular industry have greater capital requirements than firms in industries in the anchor comparison group, this can be a basis for establishing a size standard higher than the anchor size standard. In lieu of actual startup costs data, SBA uses average assets as a proxy to measure the capital requirements for new entrants to an industry.

To calculate average assets, SBA begins with the sales to total assets ratio for an industry from the Risk Management Association's Annual eStatement Studies. SBA then applies these ratios to the average receipts of firms in that industry. An industry with average assets that are significantly higher than those of the anchor comparison group is likely to have higher startup costs; this in turn will support a size standard higher than the anchor. Conversely, an industry with average assets that are similar to or lower than those of the anchor comparison group is likely to have lower startup costs; this will support the anchor standard or one lower than the anchor.

3. Industry competition. Industry competition is generally measured by the share of total industry receipts generated by the largest firms in an industry. SBA generally evaluates the share of industry receipts generated by the four largest firms in each industry. This is referred to as the “four-firm concentration ratio,” a commonly used economic measure of market competition. SBA compares the four-firm concentration ratio for an industry to the average four-firm concentration ratio for industries in the anchor comparison group. If a significant share of economic activity within the industry is concentrated among a few relatively large companies, all else being equal, SBA will establish a size standard higher than the anchor size standard. SBA does not consider the four-firm concentration ratio as an important factor in assessing a size standard if its value for an industry under review is less than 40 percent. For industries in which the four-firm concentration ratio is 40 percent or more, SBA examines the average size of the four largest firms in determining a size standard.

4. Distribution of firms by size. SBA examines the shares of industry total receipts accounted for by firms of different receipts and employment size classes in an industry. This is an additional factor SBA evaluates in assessing competition within an industry. If most of an industry's economic activity is attributable to smaller firms, this generally indicates that small businesses are competitive in that industry. This can support adopting the anchor size standard. If most of an industry's economic activity is attributable to larger firms, this indicates that small businesses are not competitive in that industry. This can support adopting a size standard above the anchor.

Concentration is a measure of inequality of distribution. To determine the degree of inequality of distribution in an industry, SBA computes the Gini coefficient by constructing the Lorenz curve. The Lorenz curve presents the cumulative percentages of units (firms) along the horizontal axis and the cumulative percentages of receipts (or other measures of size) along the vertical axis. (For further detail, please refer to SBA's “Size Standards Methodology” on its Web site at www.sba.gov/​size.) Gini coefficient values vary from zero to one. If receipts are distributed equally among all the firms in an industry, the value of the Gini coefficient will equal zero. If an industry's total receipts are attributed to a single firm, the Gini coefficient will equal one.

SBA compares the Gini coefficient value for an industry with that for industries in the anchor comparison group. If the Gini coefficient value for an industry is higher than it is for industries in the anchor comparison industry group, all else being equal, this may warrant a higher size standard than the anchor. Conversely, if an industry's Gini coefficient is similar to or lower than that for the anchor group, the anchor standard, or in some cases a standard lower than the anchor, may be adopted.

5. Impact on Federal contracting and SBA loan programs. SBA examines the possible impact a size standard change may have on Federal small business assistance. This most often focuses on the share of Federal contracting dollars awarded to small businesses in the industry in question. In general, if the small business share of Federal contracting in an industry with significant Federal contracting is appreciably less than the small business share of the industry's total receipts, there is justification for considering a size standard higher than the existing size standard. The disparity between the small business Federal market share and industry-wide small business share may be due to various factors, such as extensive administrative and compliance requirements associated with Federal contracts, the different skill set required by Federal contracts as compared to typical commercial contracting work, and the size of Federal contracts. These, as well as other factors, are likely to influence the type of firms within an industry that compete for Federal contracts. By comparing the small business Federal contracting share with the industry-wide small business share, SBA includes in its size standards analysis the latest Federal contracting trends. This analysis may support a size standard larger than the current size standard.

SBA considers Federal contracting trends in the size standards analysis only if (1) the small business share of Federal contracting dollars is at least 10 percent lower than the small business share of total industry receipts, and (2) the amount of total Federal contracting averages $100 million or more during the latest three fiscal years. These thresholds reflect significant levels of contracting where a revision to a size standard may have an impact on contracting opportunities to small businesses.

Besides the impact on small business Federal contracting, SBA also evaluates the impact of a proposed size standard revision on SBA's loan programs. For this, SBA examines the volume and number of SBA's guaranteed loans within an industry and the size of firms obtaining those loans. This allows SBA to assess whether the existing or the proposed size standard for a particular industry may restrict the level of financial assistance to small firms. If the analysis shows that the current size standards have impeded financial assistance to small businesses, higher size standards may be supportable. However, if small businesses under current size standards have been receiving significant amounts of financial assistance through SBA's loan programs, or if the financial assistance has been provided mainly to businesses that are much smaller than the existing size standards, this factor is not considered for determining the size standard.

Sources of Industry and Program Data

SBA's primary source of industry data used in this proposed rule is a special tabulation of the 2007 Economic Census (see www.census.gov/​econ/​census07/​) prepared by the U.S. Bureau of the Census (Census Bureau) for SBA. The 2007 Economic Census data are the latest available. The special tabulation provides SBA with data on the number of firms, number of establishments, number of employees, annual payroll, and annual receipts of companies by NAICS Sector (2-digit level), Subsector (3-digit level), Industry Group (4-digit level), Industry (6-digit level). These data are arrayed by various classes of firms' size based on the overall number of employees and receipts of the entire enterprise (all establishments and affiliated firms) from all industries. The special tabulation enables SBA to evaluate average firm size, the four-firm concentration ratio, and distribution of firms by various receipts and employment size classes.

In some cases, where data were not available due to disclosure prohibitions in the Census Bureau's tabulation, SBA either estimated missing values using available relevant data or examined data at a higher level of industry aggregation, such as at the NAICS 2-digit (Sector), 3-digit (Subsector), or 4-digit (Industry Group) level. In some instances, SBA's analysis was based only on those factors for which data were available or estimates of missing values were possible.

To calculate average assets, SBA used sales to total assets ratios from the Risk Management Association's Annual eStatement Studies (see http://www.statementstudies.org/​) from 2008 to 2010.

To evaluate Federal contracting trends, SBA examined data on Federal contract awards for fiscal years 2008 to 2010. The data are available from the U.S. General Service Administration's Federal Procurement Data System—Next Generation (FPDS-NG).

To assess the impact on financial assistance to small businesses, SBA examined data on its own guaranteed loan programs for fiscal years 2008 to 2010.

Data sources and estimation procedures SBA uses in its size standards analysis are documented in detail in SBA's “Size Standards Methodology” White Paper, which is available at www.sba.gov/​size.

Dominance in Field of Operation

Section 3(a) of the Small Business Act (15 U.S.C. 632(a)) defines a small business concern as one that is (1) Independently owned and operated, (2) not dominant in its field of operation, and (3) within a specific small business definition or size standard established by the SBA Administrator. SBA considers as part of its evaluation whether a business concern at a proposed size standard would be dominant in its field of operation. For this, SBA generally examines the industry's market share of firms at the proposed standard. Market share and other factors may indicate whether a firm can exercise a major controlling influence on a national basis in an industry where a significant number of business concerns are engaged. If a contemplated size standard includes a dominant firm, SBA will consider a lower size standard to exclude the dominant firm from being defined as small.

Selection of Size Standards

To simplify size standards, for the ongoing comprehensive review of receipts based size standards, SBA has proposed to select size standards from a limited number of levels. For many years, SBA has been concerned about the complexity of determining small business status caused by a large number of varying receipts based size standards (see 69 FR 13130 (March 4, 2004) and 57 FR 62515 (December 31, 1992)). At the beginning of the current comprehensive size standards review, there were 31 different levels of receipts based size standards. They ranged from $0.75 million to $35.5 million, and many of them applied to one or only a few industries. SBA believes that size standards with such a large number of small variations among them are both unnecessary and difficult to justify analytically. To simplify managing and using size standards, SBA proposes that there be fewer size standard levels. This will produce more common size standards for businesses operating in related industries. This will also result in greater consistency among the size standards for industries that have similar economic characteristics.

SBA proposes, therefore, to apply one of eight “fixed” receipts based size standards to each industry in NAICS Sector 62. All size standards in NAICS Sector 62 are based on average annual receipts. The eight “fixed” receipts based size standard levels are $5 million, $7 million, $10 million, $14 million, $19 million, $25.5 million, $30 million, and $35.5 million. SBA established these eight receipts based size standard based on the current minimum, the current maximum, and the most commonly used current receipts based size standards. At the start of the current comprehensive review, the most commonly used receipts based size standards clustered around the following: $2.5 million to $4.5 million, $7 million, $9 million to $10 million, $12.5 million to $14 million, $25 million to $25.5 million, and $33.5 million to $35.5 million. SBA selected $7 million as one of eight fixed levels of receipts based size standards because it is an anchor standard for receipts based standards. The lowest or minimum receipts based size level will be $5 million. Other than the size standards for agriculture and industries with receipts based on commissions (such as real estate brokers and travel agents), the $5 million size standard includes those industries with the lowest receipts based standards, which ranged from $2 million to $4.5 million at the start of comprehensive size standards review. Among the higher level size clusters, SBA has set four fixed levels: $10 million, $14 million, $25.5 million, and $35.5 million. Because of large intervals between some of the fixed levels, SBA established two intermediate levels, namely $19 million between $14 million and $25.5 million, and $30 million between $25.5 million and $35.5 million. These two intermediate levels reflect roughly the same proportional differences as between the other two successive levels.

To simplify size standards further, SBA may propose a common size standard for closely related industries. Although the size standard analysis may support a separate size standard for each industry, SBA believes that establishing different size standards for closely related industries may not always be appropriate. For example, in cases where many of the same businesses operate in the same multiple industries, a common size standard for those industries might better reflect the Federal marketplace. This might also make size standards among related industries more consistent than separate size standards for each of those industries. This led SBA to establish a common size standard for the information technology (IT) services (NAICS 541511, NAICS 541112, NAICS 541513, NAICS 541519, and NAICS 811212), even though the industry data might support a distinct size standard for each industry (see 57 FR 27906 (June 23, 1992)). In NAICS Sector 62, currently all industries in NAICS Industry Group 6211 (Offices of Physicians), all industries in NAICS Industry Group 6213 (Offices of Other Health Practitioners), and all industries in NAICS Industry Group 6215 (Medical and Diagnostic Laboratories) have common size standards. Similarly, all industries in NAICS Subsector 622 (Hospitals) and all industries in NAICS Subsector 624 (Social Assistance) have common size standards. In this proposed rule, SBA proposes to retain common size standards for NAICS Industry Group 6211, NAICS Industry Group 6213, NAICS Subsector 622, and NAICS Industry Group 6241 (Individual and Family Services) and proposes a new common size standard for NAICS Industry Group 6232 (Residential Mental Retardation, Mental Health and Substance Abuse Facilities). Whenever SBA proposes a common size standard for closely related industries, it will provide its justification.

Evaluation of Industry Structure

SBA evaluated the structure of the 39 industries in NAICS Sector 62, Health Care and Social Assistance, to assess the appropriateness of the current size standards. As described above, SBA compared data on the economic characteristics of each industry to the average characteristics of industries in two comparison groups. The first comparison group consists of all industries with a size standard of $7 million size and is referred to as the “receipts based anchor comparison group.” Because the goal of SBA's size standards review is to assess whether a specific industry's size standard should be the same as or different from the anchor size standard, this is the most logical group of industries to analyze. In addition, this group includes a sufficient number of firms to provide a meaningful assessment and comparison of industry characteristics.

If the characteristics of an industry are similar to the average characteristics of industries in the anchor comparison group, the anchor size standard is generally considered appropriate for that industry. If an industry's structure is significantly different from industries in the anchor group, a size standard lower or higher than the anchor size standard might be appropriate. The level of the new size standard is based on the difference between the characteristics of the anchor comparison group and a second industry comparison group. As described above, the second comparison group for receipts based standards consists of industries with the highest receipts based size standards, ranging from $23 million to $35.5 million. The average size standard for this group is $29 million. SBA refers to this group of industries as the “higher level receipts based size standard comparison group.” SBA determines differences in industry structure between an industry under review and the industries in the two comparison groups by comparing data on each of the industry factors, including average firm size, average assets size, the four-firm concentration ratio, and the Gini coefficient of distribution of firms by size. Table 1, Average Characteristics of Receipts Based Comparison Groups, (below) shows the average firm size (both simple and weighted), average assets size, four-firm concentration ratio, average receipts of the four largest firms, and the Gini coefficient for both anchor level and higher level comparison groups for receipts based size standards.

Table 1—Average Characteristics of Receipts Based Comparison Groups

Receipts based comparison group	Average firm size ($ million)		Average assets size ($ million)	Four-firm concentration ratio (%)	Average receipts of four largest firms ($ million) *	Gini coefficient
	Simple average	Weighted average
Anchor Level	1.32	19.63	0.84	16.6	196.4	0.693
Higher Level	5.07	116.84	3.20	32.1	1,376.0	0.830
* To be used for industries with a four-firm concentration ratio of 40% or greater.

Derivation of Size Standards Based on Industry Factors

For each industry factor in Table 1, SBA derives a separate size standard based on the differences between the values for an industry under review and the values for the two comparison groups. If the industry value for a particular factor is near the corresponding factor for the anchor comparison group, SBA will consider the $7 million anchor size standard appropriate for that factor.

An industry factor significantly above or below the anchor comparison group will generally imply a size standard for that industry above or below the $7 million anchor. The new size standard in these cases is based on the proportional difference between the industry value and the values for the two comparison groups.

For example, if an industry's simple average receipts are $3.3 million, that can support a $19 million size standard. The $3.3 million level is 52.8 percent between $1.32 million for the anchor comparison group and $5.07 million for the higher level comparison group (($3.30 million − $1.32 million) ÷ ($5.07 million − $1.32 million) = 0.528 or 52.8%). This proportional difference is applied to the difference between the $7 million anchor size standard and average size standard of $29 million for the higher level size standard group and then added to $7 million to estimate a size standard of $18.61 million ([{$29.0 million − $7.0 million} * 0.528] + $7.0 million = $18.61 million). The final step is to round the estimated $18.61 million size standard to the nearest fixed size standard, which in this example is $19 million.

SBA applies the above calculation to derive a size standard for each industry factor. Detailed formulas involved in these calculations are presented in SBA's “Size Standards Methodology,” which is available on its Web site at www.sba.gov/​size. (However, it should be noted that figures in the “Size Standards Methodology” White Paper are based on 2002 Economic Census data and are different from those presented in this proposed rule. That is because when SBA prepared its “Size Standards Methodology,” the 2007 Economic Census data were not yet available). Table 2, Values of Industry Factors Supported Size Standards, (below) shows ranges of values for each industry factor and the levels of size standards supported by those values.

Table 2—Values of Industry Factors and Supported Size Standards

If simple average receipts size ($ million)	Or if weighted average receipts size ($ million)	Or if average assets size ($ million)	Or if average receipts of largest four firms ($ million)	Or if Gini coefficient	Then implied size standard is ($ million)
<1.15	<15.22	<0.73	<142.8	<0.686	5.0
1.15 to 1.57	15.22 to 26.26	0.73 to 1.00	142.8 to 276.9	0.686 to 0.702	7.0
1.58 to 2.17	26.27 to 41.73	1.01 to 1.37	277.0 to 464.5	0.703 to 0.724	10.0
2.18 to 2.94	41.74 to 61.61	1.38 to 1.86	464.6 to 705.8	0.725 to 0.752	14.0
2.95 to 3.92	61.62 to 87.02	1.87 to 2.48	705.9 to 1,014.1	0.753 to 0.788	19.0
3.93 to 4.86	87.03 to 111.32	2.49 to 3.07	1,014.2 to 1,309.0	0.789 to 0.822	25.5
4.87 to 5.71	111.33 to 133.41	3.08 to 3.61	1,309.1 to 1,577.1	0.823 to 0.853	30.0
>5.71	>133.41	>3.61	>1,577.1	>0.853	35.5

Derivation of Size Standard Based on Federal Contracting Factor

Besides industry structure, SBA also evaluates Federal contracting data to assess how successful small businesses are in getting Federal contracts under the existing size standards. For industries where the small business share of total Federal contracting dollars is 10 to 30 percent lower than the small business share of total industry receipts, SBA has designated a size standard one level higher than their current size standard. For industries where the small business share of total Federal contracting dollars is more than 30 percent lower than the small business share of total industry receipts, SBA has designated a size standard two levels higher than the current size standard.

Because of the complex relationships among several variables affecting small business participation in the Federal marketplace, SBA has chosen not to designate a size standard for the Federal contracting factor alone that is more than two levels above the current size standard. SBA believes that a larger adjustment to size standards based on Federal contracting activity should be based on a more detailed analysis of the impact of any subsequent revision to the current size standard. In limited situations, however, SBA may conduct a more extensive examination of Federal contracting experience. This may support a different size standard than indicated by this general rule and take into consideration significant and unique aspects of small business competitiveness in the Federal contract market. SBA welcomes comments on its methodology for incorporating the Federal contracting factor in the size standard analysis and suggestions for alternative methods and other relevant information on small business experience in the Federal contract market.

Of the 39 industries in NAICS Sector 62 reviewed in this proposed rule, 13 industries averaged $100 million or more annually in Federal contracting during fiscal years 2008 to 2010. In five of those 13 industries, the Federal contracting factor was significant (i.e., the difference between the small business share of total industry receipts and small business share of Federal contracting dollars was 10 percentage points or more), and a separate size standard was derived for that factor for each of them.

New Size Standards Based on Industry and Federal Contracting Factors

Table 3, Size Standards Supported by Each Factor for Each Industry (millions of dollars), shows the results of analyses of industry and Federal contracting factors for each industry covered by this proposed rule. Many of the NAICS industries in columns 2, 3, 4, 6, 7, and 8 show two numbers. The upper number is the value for the industry or Federal contracting factor shown on the top of the column, and the lower number is the size standard supported by that factor. For the four-firm concentration ratio, SBA estimates a size standard if its value is 40 percent or more. If the four-firm concentration ratio for an industry is less than 40 percent, no size standard is estimated for that factor. If the four-firm concentration ratio is more than 40 percent, SBA indicates in column 6 the average size of the industry's top four firms together with a size standard based on that average. Column 9 shows a calculated new size standard for each industry. This is the average of the size standards supported by each factor, rounded to the nearest fixed size level. Analytical details involved in the averaging procedure are described in SBA's “Size Standard Methodology.” For comparison with the new standards, the current size standards are in column 10 of Table 3.

Table 3—Size Standards Supported by Each Factor for Each Industry

[Millions of dollars]

NAICS code/ NAICS industry title	Simple average firm size ($ million)	Weighted average firm size ($ million)	Average assets size ($ million)	Four-firm ratio (%)	Four-firm average size ($ million)	Gini coefficient	Federal contract factor (%)	Calculated size standard ($ million)	Current size standard ($ million)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)
621111—Offices of Physicians (except Mental Health Specialists)	$1.8	$31.1	$0.3	4.4	$3,660.3	0.697	−14.6	$10.0	$10.0
	$10.0	$10.0	$5.0			$7.0	$14.0
621112—Offices of Physicians, Mental Health Specialists	$0.4	$1.4	$0.1	2.5	$27.0	0.362	−8.0	$5.0	$10.0
	$5.0	$5.0	$5.0			$5.0
621210—Offices of Dentists	$0.8	$3.9	$0.2	1.4	$330.4	0.343	−14.5	$7.0	$7.0
	$5.0	$5.0	$5.0			$5.0	$10.0
621310—Offices of Chiropractors	$0.3	$0.5	$0.1	0.6	$14.1	0.112		$5.0	$7.0
	$5.0	$5.0	$5.0			$5.0
621320—Offices of Optometrists	$0.6	$1.4	$0.1	1.7	$42.9	0.317		$5.0	$7.0
	$5.0	$5.0	$5.0			$5.0
621330—Offices of Mental Health Practitioners (except Physicians)	$0.3	$1.8	$0.1	3.3	$43.0	0.468		$5.0	$7.0
	$5.0	$5.0	$5.0			$5.0
621340—Offices of Physical, Occupational and Speech Therapists and Audiologists	$0.8	$7.8	$0.2	12.3	$546.0	0.617		$5.0	$7.0
	$5.0	$5.0	$5.0			$5.0
621391—Offices of Podiatrists	$0.5	$1.0	$0.1	0.9	$8.5	0.261		$5.0	$7.0
	$5.0	$5.0	$5.0			$5.0
621399—Offices of All Other Miscellaneous Health Practitioners	$0.3	$1.2	$0.1	2.1	$17.6	0.352	−23.3	$7.0	$7.0
	$5.0	$5.0	$5.0			$5.0	$10.0
621410—Family Planning Centers	$1.3	$7.2	$0.9	17.4	$78.3	0.722		$7.0	$10.0
	$7.0	$5.0	$7.0			$10.0
621420—Outpatient Mental Health and Substance Abuse Centers	$2.6	$7.8	$1.5	3.7	$111.1	0.651	−35.5	$14.0	$10.0
	$14.0	$5.0	$14.0			$5.0	$19.0
621491—HMO Medical Centers	$153.2	$370.2	$58.9	88.3	$1,184.0		0.1	$30.0	$10.0
	$35.5	$35.5	$35.5		$25.5
621492—Kidney Dialysis Centers	$25.3	$244.4	$13.1	76.5	$2,365.3	0.860		$35.5	$34.5
	$35.5	$35.5	$35.5		$35.5	$35.5
621493—Freestanding Ambulatory Surgical and Emergency Centers	$4.4	$14.1	$2.0	13.7	$526.8	0.648		$14.0	$10.0
	$25.5	$5.0	$19.0			$5.0
621498—All Other Outpatient Care Centers	$5.4	$28.0	$2.8	9.4	$637.7	0.763		$19.0	$10.0
	$30.0	$10.0	$25.5			$19.0
621511—Medical Laboratories	$8.2	$67.5	$3.9	45.3	$2,587.9	0.830	−6.9	$30.0	$13.5
	$35.5	$19.0	$35.5		$35.5	$30.0
621512—Diagnostic Imaging Centers	$3.4	$14.8	$1.7	7.4	$316.7	0.725		$14.0	$13.5
	$19.0	$5.0	$14.0			$14.0
621610—Home Health Care Services	$2.9	$23.1	$0.9	7.4	$884.8	0.786		$14.0	$13.5
	$14.0	$7.0	$7.0			$19.0
621910—Ambulance Services	$3.2	$25.5	$1.4	23.6	$586.4	0.764		$14.0	$7.0
	$19.0	$7.0	$14.0			$19.0
621991—Blood and Organ Banks	$24.4	$147.2	$17.4	34.6	$770.3	0.795		$30.0	$10.0
	$35.5	$35.5	$35.5			$25.5
621999—All Other Miscellaneous Ambulatory Health Care Services	$2.8	$24.0	$1.3	20.4	$370.6	0.805	42.1	$14.0	$10.0
	$14.0	$7.0	$10.0			$25.5
622110—General Medical and Surgical Hospitals	$213.7	$472.3	$183.2	7.8	$12,744.3		51.8	$35.5	$34.5
	$35.5	$35.5	$35.5
622210—Psychiatric and Substance Abuse Hospitals	$40.1	$58.3	$25.0	15.2	$653.2			$30.0	$34.5
	$35.5	$14.0	$35.5
622310—Specialty (except Psychiatric and Substance Abuse) Hospitals	$75.9	$123.8	$49.5	24.0	$1,708.4			$35.5	$34.5
	$35.5	$30.0	$35.5
623110—Nursing Care Facilities	$10.7	$56.7	$7.7	10.6	$2,462.0	0.691	14.1	$25.5	$13.5
	$35.5	$14.0	$35.5			$7.0
623210—Residential Mental Retardation Facilities	$3.1	$18.7	$1.9	8.9	$407.6	0.717		$14.0	$10.0
	$19.0	$7.0	$19.0			$10.0
623220—Residential Mental Health and Substance Abuse Facilities	$2.5	$7.9	$1.7	6.8	$147.1	0.610		$10.0	$7.0
	$14.0	$5.0	$14.0			$5.0
623311—Continuing Care Retirement Communities	$7.2	$31.7	$12.7	10.9	$709.9	0.720		$25.5	$13.5
	$35.5	$10.0	$35.5			$10.0
623312—Homes for the Elderly	$1.3	$18.1	$1.7	18.6	$705.3	0.729		$10.0	$7.0
	$7.0	$7.0	$14.0			$14.0
623990—Other Residential Care Facilities	$2.3	$7.9	$1.7	5.4	$113.4	0.663	−20.8	$10.0	$7.0
	$14.0	$5.0	$14.0			$5.0	$10.0
624110—Child and Youth Services	$1.6	$9.0	$1.2			0.702		$7.0	$7.0
	$10.0	$5.0	$10.0			$7.0
624120—Services for the Elderly and Persons with Disabilities	$1.6	$11.7	$1.0	3.6	$230.2	0.719		$7.0	$7.0
	$10.0	$5.0	$7.0			$10.0
624190—Other Individual and Family Services	$1.3	$9.9	$0.9			0.727	−9.9	$10.0	$7.0
	$7.0	$5.0	$7.0			$14.0
624210—Community Food Services	$1.8	$12.3	0.8	7.2	$93.7	0.753		$10.0	$7.0
	$10.0	$5.0	$7.0			$19.0
624221—Temporary Shelters	$1.2	$2.9	1.6	5.9	$55.4	0.487		$10.0	$7.0
	$7.0	$5.0	$14.0			$5.0
624229—Other Community Housing Services	$1.8	$14.5	$3.6	21.1	$321.6	0.651		$14.0	$7.0
	$10.0	$5.0	$30.0	21.1	$321.6	$5.0
624230—Emergency and Other Relief Services	$11.3	$265.3		43.0	$906.6	0.925		$30.0	$7.0
	$35.5	$35.5			$19.0	$35.5
624310—Vocational Rehabilitation Services	$2.5	$9.3	$1.6	5.6	$160.5	0.644		$10.0	$7.0
	$14.0	$5.0	$14.0			$5.0
624410—Child Day Care Services	$0.5	$9.9	0.2	11.4	$842.7	0.538		$5.0	$7.0
	$5.0	$5.0	$5.0			$5.0

Common Size Standards

When many of the same businesses operate in multiple industries, SBA believes that a common size standard can be appropriate for these industries even if the industry and relevant program data suggest different size standards. For instance, in past rules, SBA established a common size standard for Computer Systems Design and Related Services (NAICS 541511, NAICS 541112, NAICS 541513, NAICS 541519 (excluding the “exception”), and NAICS 811212). Another example is the common size standard for certain Architectural, Engineering (A&E) and Related Services. These include NAICS 541310, NAICS 541330 (excluding the “exceptions”), Map Drafting (an “exception” under NAICS 541340), NAICS 541360, and NAICS 541370 (see 64 FR 28275 (May 25, 1999)). More recently, SBA established a common size standard for some of the industries in NAICS Sector 44-45, Retail Trade (see 75 FR 61597 (October 6, 2010)). Earlier this year, SBA proposed common size standards for several industries in NAICS Sector 54, Professional, Scientific and Technical Services (see 76 FR 14323 (March 16, 2011)), NAICS Sector 48-49, Transportation and Warehousing (see 76 FR 27935 (May 13, 2011)), NAICS Sector 56, Administrative and Support, Waste Management and Remediation Services (see 76 FR 63510 (October 12, 2011)), and NAICS Sector 53, Real Estate and Rental and Leasing (see 76 FR 70680 (November 15, 2011)).

For NAICS Sector 62, SBA derives, as an alternative to a separate size standard for each industry, common size standards for industries in four NAICS Industry Groups and one NAICS Subsector, as shown in Table 4 Industry Groups for Common Size Standards. The SBA evaluated industry and Federal contracting factors and derived a common size standard for each Industry Group and Subsector using the same method as described above. The results are in Table 5, Size Standards Supported by Each Factor for Each Industry Group (millions of dollars) which immediately follows Table 4, below.

Table 4—Industry Groups for Common Size Standards

Industry sector/group: NAICS codes	Industry group title	Industries: 6-digit NAICS codes
6211 *	Offices of Physicians	621111, 621112
6213 *	Offices of Other Health Practitioners	621310, 621320, 621330, 621340, 621391, 621399
622	Hospitals	622110, 622210, 622310
6232	Residential Mental Retardation, Mental Health and Substance Abuse Facilities	623210, 623220
6241 *	Individual and Family Services	624110, 624120, 624190
* Industries in these Industry Groups currently have the common size standards. SBA proposes to retain common size standards for those industries and proposes a common size standard for two industries in NAICS Industry Group 6232 that currently have separate size standards.

Table 5—Size Standards Supported by Each Factor for Each Industry Group

[Millions of dollars]

NAICS code/industry title	Simple average firm size ($ million)	Weighted average firm size ($ million)	Average assets size ($ million)	Four-firm ratio (%)	Four-firm average size ($ million)	Gini coefficient	Federal contract factor (%)	Calculated size standard ($ million)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)
6211—Offices of physicians	$1.7	$30.5	$0.3	4.4	$3,663.3	0.697	−11.9	$10.0
	$10.0	$10.0	$5.0			$7.0	$14.0
6213—Offices of other health practitioners	$0.4	$3.1	$0.1	4.3	$546.4	0.410	−16.3	$7.0
	$5.0	$5.0	$5.0			$5.0	$10.0
622—Hospitals	$191.0	$460.6	$160.6	7.4	$12,984.0		50.2	$35.5
	$35.5	$35.5	$35.5
6232—Residential mental retardation, mental health and substance abuse facilities	$3.0	$15.2	$1.9	6.3	$425.5	0.701		$14.0
	$19.0	$7.0	$19.0			$7.0
6241—Individual and Family Services	$1.5	$13.4	$1.0	3.1	$489.7	0.740	−11.9	$10.0
	$7.0	$5.0	$7.0			$14.0	$10.0

Evaluation of SBA Loan Data

Before deciding on an industry's size standard, SBA also considers the impact of new or revised size standards on SBA's loan programs. Accordingly, SBA examined its 7(a) and 504 Loan Program data for fiscal years 2008 to 2010 to assess whether the proposed size standards need further adjustments to ensure credit opportunities for small businesses through those programs. For the industries reviewed in this rule, the data show that it is mostly businesses much smaller than the current size standards that utilize the SBA's 7(a) and 504 loans.

Furthermore, the Jobs Act established an alternative size standard for SBA's 7(a) and 504 Program applicants. Specifically, an applicant exceeding an NAICS industry based size standard may still be eligible if its maximum tangible net worth does not exceed $15 million and its average net income after Federal income taxes (excluding any carry-over losses) for the 2 full fiscal years before the date of the application is not more than $5 million.

Therefore, no size standard in NAICS 62, Health Care and Social Assistance, needs an adjustment based on this factor.

Proposed Changes to Size Standards

Table 6, Summary of Size Standards Analysis, (below) summarizes the results of SBA analyses of industry specific size standards from Table 3 and the results for common size standards from Table 5. In terms of industry specific size standards, the results in Table 3 might support increases in size standards for 25 industries, decreases for nine industries and no changes for five industries. Based on common size standards for certain NAICS Industry Groups and Subsectors, the results in Table 5 appear to support increases in size standards for 28 industries, decreases for two industries, and no changes for nine industries.

Table 6—Summary of Size Standards Analysis

NAICS codes	NAICS industry title	Current size standard ($ million)	Calculated industry specific size standard ($ million)	Calculated common size standard ($ million)
621111	Offices of Physicians (except Mental Health Specialists)	$10.0	$10.0	$10.0
621112	Offices of Physicians, Mental Health Specialists	10.0	5.0	10.0
621210	Offices of Dentists	7.0	7.0
621310	Offices of Chiropractors	7.0	5.0	7.0
621320	Offices of Optometrists	7.0	5.0	7.0
621330	Offices of Mental Health Practitioners (except Physicians)	7.0	5.0	7.0
621340	Offices of Physical, Occupational and Speech Therapists and Audiologists	7.0	5.0	7.0
621391	Offices of Podiatrists	7.0	5.0	7.0
621399	Offices of All Other Miscellaneous Health Practitioners	7.0	7.0	7.0
621410	Family Planning Centers	10.0	7.0
621420	Outpatient Mental Health and Substance Abuse Centers	10.0	14.0
621491	HMO Medical Centers	10.0	30.0
621492	Kidney Dialysis Centers	34.5	35.5
621493	Freestanding Ambulatory Surgical and Emergency Centers	10.0	14.0
621498	All Other Outpatient Care Centers	10.0	19.0
621511	Medical Laboratories	13.5	30.0
621512	Diagnostic Imaging Centers	13.5	14.0
621610	Home Health Care Services	13.5	14.0
621910	Ambulance Services	7.0	14.0
621991	Blood and Organ Banks	10.0	30.0
621999	All Other Miscellaneous Ambulatory Health Care Services	10.0	14.0
622110	General Medical and Surgical Hospitals	34.5	35.5	35.5
622210	Psychiatric and Substance Abuse Hospitals	34.5	30.0	35.5
622310	Specialty (except Psychiatric and Substance Abuse) Hospitals	34.5	35.5	35.5
623110	Nursing Care Facilities	13.5	25.5
623210	Residential Mental Retardation Facilities	10.0	14.0	14.0
623220	Residential Mental Health and Substance Abuse Facilities	7.0	10.0	14.0
623311	Continuing Care Retirement Communities	13.5	25.5
623312	Homes for the Elderly	7.0	10.0
623990	Other Residential Care Facilities	7.0	10.0
624110	Child and Youth Services	7.0	7.0	10.0
624120	Services for the Elderly and Persons with Disabilities	7.0	7.0	10.0
624190	Other Individual and Family Services	7.0	10.0	10.0
624210	Community Food Services	7.0	10.0
624221	Temporary Shelters	7.0	10.0
624229	Other Community Housing Services	7.0	14.0
624230	Emergency and Other Relief Services	7.0	30.0
624310	Vocational Rehabilitation Services	7.0	10.0
624410	Child Day Care Services	7.0	5.0

Despite the results depicted in Table 6, SBA believes that lowering small business size standards is not in the best interest of small businesses in the current economic environment. The U.S. economy was in recession from December 2007 to June 2009, the longest and deepest of any recessions since World War II. The economy lost more than eight million non-farm jobs during 2008 to 2009. In response, Congress passed and the President signed into law the American Recovery and Reinvestment Act of 2009 (Recovery Act) to promote economic recovery and to preserve and create jobs. Although the recession officially ended in June 2009, the unemployment rate was 9.4 percent or higher from May 2009 to December 2010. It has moderated somewhat to 8.6 percent in November 2011, but has been 9.0 percent or higher for eight of the previous 10 months. The unemployment rate is forecast to remain around this elevated level for a while. More recently, Congress passed and the President signed the Jobs Act to promote small business job creation. The Jobs Act puts more capital into the hands of entrepreneurs and small business owners; strengthens small businesses' ability to compete for contracts; includes recommendations from the President's Task Force on Federal Contracting Opportunities for Small Business; creates a more even playing field for small businesses; promotes small business exporting, building on the President's National Export Initiative; expands training and counseling; and provides $12 billion in tax relief to help small businesses invest in their firms and create jobs.

Lowering size standards can decrease the number of firms that participate in Federal financial and procurement assistance programs for small businesses. It can also affect small businesses that are now exempt from or that receive some form of relief from the myriad other Federal regulations that use SBA's size standards. That impact could take the form of increased fees, paperwork, or other compliance requirements for small businesses. Furthermore, size standards based solely on analytical results without any other considerations can cut off currently eligible small firms from those programs and benefits. In NAICS Sector 62, more than 500 businesses would lose their small business eligibility if size standards were lowered based solely on results from industry specific analysis, and more than 240 small firms would lose their eligibility if the size standards were lowered based solely on common size standards analysis. That would run counter to what SBA and the Federal Government are doing to help small businesses. Reducing size eligibility for Federal procurement opportunities, especially under current economic conditions, would not preserve or create more jobs; rather, it would have the opposite effect. Therefore, in this proposed rule, SBA does not intend to reduce size standards for any industries. For industries where analyses might seem to support lowering size standards, SBA proposes to retain the current size standards. As stated previously, the Small Business Act requires the Administrator to “* * * consider other factors deemed to be relevant * * *” to establishing small business size standards. The current economic conditions and the impact on job creation are quite relevant to establishing small business size standards. SBA nevertheless invites comments and suggestions on whether it should lower size standards as suggested by analyses of industry and program data or retain the current standards for those industries in view of current economic conditions.

Based on comparisons between industry specific size standards and common size standards within each Industry Group or Subsector, SBA finds that for some industries, common size standards are more appropriate for several reasons. First, analyzing industries at the more aggregated Industry Group or Subsector level simplifies size standards analysis and will produce more consistent results among related industries. Second, in most cases, industries within each Industry Group or Subsector currently have the same size standards and SBA believes it is better to keep the revised size standards also the same unless industries are significantly different. Third, within each Industry Group or Subsector many of the same businesses tend to operate in the same multiple industries. SBA believes that common size standards reflect the Federal marketplace in those industries better than do different size standards for each industry. Fourth, industry specific size standards and common size standards are mostly within a reasonably close range.

For industries where both industry specific size standards and common size standards have been calculated, for the above reasons, SBA proposes to apply common size standards. For industries where SBA has not estimated common size standards, it proposes to apply industry specific size standards. As discussed above, SBA has decided that lowering small business size standards is inconsistent with what the Federal Government is doing to stimulate the economy and encourage job growth through the Recovery Act and the Jobs Act. Therefore, for those industries for which its analyses suggested decreasing their size standards, SBA proposes to retain the current size standards. Thus, of the 39 industries in NAICS Sector 62, SBA proposes to increase size standards for 28 industries and retain the current size standards for 11 industries. The industries for which SBA has proposed to increase their size standards and their proposed size standards appear in Table 7, Summary of Proposed Size Standards Revisions (below).

SBA's decision to not lower size standards in NAICS Sector 62 is consistent with SBA's prior actions for NAICS Sector 44-45 (Retail Trade), NAICS Sector 72 (Accommodation and Food Services), and NAICS Sector 81 (Other Services), which the Agency proposed (74 FR 53924, 74 FR 53913, and 74 FR 53941 (October 21, 2009)) and adopted in its final rules (75 FR 61597, 75 FR 61604, and 75 FR 61591 (October 6, 2010)). It is also consistent with the Agency's recently proposed rules for NAICS Sector 54, Professional, Technical, and Scientific Services (76 FR 14323 (March 16, 2011)), NAICS Sector 48-49, Transportation and Warehousing (76 FR 27935 (May 13, 2011)), NAICS Sector 51, Information (76 FR 63216 (October 12, 2011)), and NAICS Sector 56, Administrative and Support, Waste Management and Remediation Services (76 FR 63510 (October 12, 2011)), NAICS Sector 61, Educational Services (76 FR 70667 (November 15, 2011)), and NAICS Sector 53, Real Estate and Rental and Leasing (76 FR 70680 (November 15, 2011)). In each of those final and proposed rules, SBA opted not to reduce small business size standards, for the same reasons it has provided above in this proposed rule.

Table 7—Summary of Proposed Size Standards Revisions

NAICS codes	NAICS industry title	Current size standard ($ million)	Proposed size standard ($ million)
621420	Outpatient Mental Health and Substance Abuse Centers	$10.0	$14.0
621491	HMO Medical Centers	10.0	30.0
621492	Kidney Dialysis Centers	34.5	35.5
621493	Freestanding Ambulatory Surgical and Emergency Centers	10.0	14.0
621498	All Other Outpatient Care Centers	10.0	19.0
621511	Medical Laboratories	13.5	30.0
621512	Diagnostic Imaging Centers	13.5	14.0
621610	Home Health Care Services	13.5	14.0
621910	Ambulance Services	7.0	14.0
621991	Blood and Organ Banks	10.0	30.0
621999	All Other Miscellaneous Ambulatory Health Care Services	10.0	14.0
622110	General Medical and Surgical Hospitals	34.5	35.5
622210	Psychiatric and Substance Abuse Hospitals	34.5	35.5
622310	Specialty (except Psychiatric and Substance Abuse) Hospitals	34.5	35.5
623110	Nursing Care Facilities	13.5	25.5
623210	Residential Mental Retardation Facilities	10.0	14.0
623220	Residential Mental Health and Substance Abuse Facilities	7.0	14.0
623311	Continuing Care Retirement Communities	13.5	25.5
623312	Homes for the Elderly	7.0	10.0
623990	Other Residential Care Facilities	7.0	10.0
624110	Child and Youth Services	7.0	10.0
624120	Services for the Elderly and Persons with Disabilities	7.0	10.0
624190	Other Individual and Family Services	7.0	10.0
624210	Community Food Services	7.0	10.0
624221	Temporary Shelters	7.0	10.0
624229	Other Community Housing Services	7.0	14.0
624230	Emergency and Other Relief Services	7.0	30.0
624310	Vocational Rehabilitation Services	7.0	10.0

Evaluation of Dominance in Field of Operation

SBA has determined that for the industries in NAICS Sector 62 for which it has proposed to increase size standards, no individual firm at or below the proposed size standard will be large enough to dominate its field of operation. At the proposed individual size standards, if adopted, small business shares of total industry receipts among those industries vary from less than 0.01 percent to 0.6 percent, with an average of 0.1 percent. These levels of market share effectively preclude a firm at or below the proposed size standards from exerting control on any of the industries.

Request for Comments

SBA invites public comments on this proposed rule, especially on the following issues:

1. To simplify size standards, SBA proposes eight fixed levels for receipts based size standards: $5 million, $7 million, $10 million, $14 million, $19 million, $25.5 million, $30 million, and $35.5 million. SBA invites comments on whether simplification of size standards in this way is necessary and if these proposed fixed size levels are appropriate. SBA welcomes suggestions on alternative approaches to simplifying small business size standards.

2. SBA seeks feedback on whether the proposed size standards for NAICS Sector 62 are appropriate given the economic characteristics of each industry reviewed in this proposed rule. SBA also seeks feedback and suggestions on alternative standards, if they would be more appropriate, including whether the number of employees is a more suitable measure of size for certain industries and what that employee level should be.

3. SBA proposes common size standards for industries within certain NAICS Industry Groups, namely NAICS 6211, NAICS 6213, NAICS 6232, NAICS 6241, and NAICS 622. SBA invites comments or suggestions along with supporting information with respect to the following:

a. Whether SBA should adopt common size standards for those industries or establish a separate size standard for each industry,

b. Whether the proposed common size standards for those industries are at the correct levels or what are more appropriate size standards if the proposed standards are not suitable, and

c. Based on SBA's analysis of the industry data, too much variation exists among the industries to retain the current common size standards or propose different common size standards for several other industries that currently have common size standards. SBA welcomes comments on whether it should adopt common size standards for other industries in NAICS Sector 62, and if so, how those industries are related so that a common size standard would be appropriate.

4. SBA's proposed size standards are based on its evaluation of five primary factors: average firm size, average assets size (as a proxy of startup costs and entry barriers), four-firm concentration ratio, distribution of firms by size and the level, and small business share of Federal contracting dollars. SBA welcomes comments on these factors and/or suggestions of other factors that it should consider for assessing industry characteristics when evaluating or revising size standards. SBA also seeks information on relevant data sources, other than those used by the Agency, if available.

5. SBA gives equal weight to each of the five primary factors in all industries. SBA seeks feedback on whether it should continue giving equal weight to each factor or whether it should give more weight to one or more factors for certain industries. Recommendations to weigh some factors more than others should include suggestions on the specific weight for each factor for those industries along with supporting information.

6. For some industries, based on its analysis of industry and program data alone, SBA proposes to increase the existing size standards by a large amount (such as NAICS 621511, NAICS 621991, NAICS 623110, and NAICS 624230), while for others the proposed increases are modest. SBA seeks feedback on whether, as a policy, it should limit the increase to a size standard or establish minimum or maximum values for its size standards. SBA seeks suggestions on appropriate levels of changes to size standards and on their minimum or maximum levels.

7. For analytical simplicity and efficiency, in this proposed rule, SBA has refined its size standard methodology to obtain a single value as a proposed size standard instead of a range of values, as in its past size regulations. SBA welcomes any comments on this procedure and suggestions on alternative methods.

Public comments on the above issues are very valuable to SBA for validating its size standard methodology and proposed size standards revisions in this proposed rule. This will help SBA to move forward with its review of size standards for other NAICS Sectors. Commenters addressing size standards for a specific industry or a group of industries should include relevant data and/or other information supporting their comments. If comments relate to using size standards for Federal procurement programs, SBA suggests that commenters provide information on the size of contracts, the size of businesses that can undertake the contracts, start-up costs, equipment and other asset requirements, the amount of subcontracting, other direct and indirect costs associated with the contracts, the use of mandatory sources of supply for products and services, and the degree to which contractors can mark up those costs.

Compliance With Executive Orders 12866, 13563, 12988, and 13132, the Paperwork Reduction Act (44 U.S.C. Ch. 35), and the Regulatory Flexibility Act (5 U.S.C. 601-612)

Executive Order 12866

The Office of Management and Budget (OMB) has determined that this proposed rule is a “significant” regulatory action for purposes of Executive Order 12866. Accordingly, the next section contains SBA's Regulatory Impact Analysis. This is not a “major” rule, however, under the Congressional Review Act, 5 U.S.C. 801, et seq.

Regulatory Impact Analysis

1. Is there a need for the regulatory action?

SBA believes that the proposed size standards revisions for a number of industries in NAICS Sector 62, Health Care and Social Assistance, will better reflect the economic characteristics of small businesses and the Federal Government marketplace. SBA's mission is to aid and assist small businesses through a variety of financial, procurement, business development, and advocacy programs. To assist the intended beneficiaries of these programs, SBA must establish distinct definitions of which businesses are deemed small businesses. The Small Business Act (15 U.S.C. 632(a)) delegates to SBA's Administrator the responsibility for establishing small business size definitions. The Act also requires that small business size definitions vary to reflect industry differences. The recently enacted Jobs Act also requires SBA to review all size standards and make necessary adjustments to reflect market conditions. The supplementary information section of this proposed rule explains SBA's methodology for analyzing a size standard for a particular industry.

2. What are the potential benefits and costs of this regulatory action?

The most significant benefit to businesses obtaining small business status because of this rule is gaining eligibility for Federal small business assistance programs. These include SBA's financial assistance programs, economic injury disaster loans, and Federal procurement programs intended for small businesses. Federal procurement programs provide targeted opportunities for small businesses under SBA's business development programs, such as 8(a), Small Disadvantaged Businesses (SDB), small businesses located in Historically Underutilized Business Zones (HUBZone), women-owned small businesses (WOSB), and service-disabled veteran-owned small business concerns (SDVO SBC). Federal agencies may also use SBA size standards for a variety of other regulatory and program purposes. These programs assist small businesses to become more knowledgeable, stable, and competitive. In the 28 industries in NAICS Sector 62 for which SBA has proposed increasing size standards, SBA estimates that more than 4,100 additional firms will obtain small business status and become eligible for these programs. That number is about 0.7 percent of the total number of firms that are classified as small under the current standards in all industries within NAICS Sector 62. If adopted as proposed, this will increase the small business share of total industry receipts in all industries within NAICS Sector 62 from about 30 percent under the current size standards to nearly 32 percent.

Three groups will benefit from the proposed size standards revisions in this rule, if they are adopted as proposed: (1) Some businesses that are above the current size standards may gain small business status under the higher size standards, thereby enabling them to participate in Federal small business assistance programs; (2) growing small businesses that are close to exceeding the current size standards will be able to retain their small business status under the higher size standards, thereby enabling them to continue their participation in the programs; and (3) Federal agencies will have larger pools of small businesses from which to draw for their small business procurement programs.

During fiscal years 2008 to 2010, about 66 percent of Federal contracting dollars spent in industries in NAICS Sector 62 were accounted for by the 28 industries for which SBA has proposed to increase size standards. SBA estimates that additional firms gaining small business status in those industries under the proposed size standards could potentially obtain Federal contracts totaling up to $25 million to $30 million annually under SBA's small business, 8(a), SDB, HUBZone, WOSB, and SDVO SBC Programs, and other unrestricted procurements. The added competition for many of these procurements can also result in lower prices to the Government for procurements reserved for small businesses, but SBA cannot quantify this benefit.

Under SBA's 7(a) Business Loan and 504 Programs, based on the 2008 to 2010 data, SBA estimates about 35 to 45 additional loans totaling about $11 million to $15 million in Federal loan guarantees could be made to these newly defined small businesses under the proposed standards. Increasing the size standards will likely result in more small business guaranteed loans to businesses in these industries, but it would be impractical to try to estimate exactly the number and total amount of loans. Under the Jobs Act, SBA can now guarantee substantially larger loans than in the past. In addition, as described above, the Jobs Act established an alternative size standard ($15 million in tangible net worth and $5 million in net income after income taxes) for business concerns that do not meet the size standards for their industry. Therefore, SBA finds it similarly difficult to quantify the impact of these proposed standards on its 7(a) and 504 Loan Programs.

Newly defined small businesses will also benefit from SBA's Economic Injury Disaster Loan (EIDL) Program. Since this program is contingent on the occurrence and severity of one or more disasters, SBA cannot make a meaningful estimate of this impact.

To the extent that about 4,100 newly defined additional small firms could become active in Federal procurement programs, the proposed changes, if adopted, may entail some additional administrative costs to the Federal Government associated with additional bidders for Federal small business procurement opportunities. In addition, there will be more firms seeking SBA's guaranteed loans, more firms eligible for enrollment in the Central Contractor Registration's Dynamic Small Business Search database, and more firms seeking certification as 8(a) or HUBZone firms or qualifying for small business, WOSB, SDVO SBC, and SDB status. Among those newly defined small businesses seeking SBA assistance, there could be some additional costs associated with compliance and verification of small business status and protests of small business status. SBA believes that these added costs will be minimal because mechanisms are already in place to handle these administrative requirements.

Additionally, the costs to the Federal Government may be higher on some Federal contracts. With a greater number of businesses defined as small, Federal agencies may choose to set aside more contracts for competition among small businesses rather than using full and open competition. The movement from unrestricted to small business set-aside contracting might result in competition among fewer total bidders, although there will be more small businesses eligible to submit offers. In addition, higher costs may result when more full and open contracts are awarded to HUBZone businesses that receive price evaluation preferences. However, the additional costs associated with fewer bidders are expected to be minor since, as by law, procurements may be set aside for small businesses or reserved for the 8(a), HUBZone, WOSB, or SDVO SBC Programs only if awards are expected to be made at fair and reasonable prices (15 U.S.C. 637(a)(1)(D)(i)(I), 644(a), 657a(b)(2)(b), and 657f(b)). The proposed size standards revisions, if adopted, may have distributional effects among large and small businesses. Although SBA cannot estimate with certainty the actual outcome of the gains and losses among small and large businesses, it can identify several probable impacts. There may be a transfer of some Federal contracts to small businesses from large businesses. Large businesses may have fewer Federal contract opportunities as Federal agencies decide to set aside more Federal contracts for small businesses. In addition, some Federal contracts may be awarded to HUBZone concerns instead of large businesses since these firms may be eligible for a price evaluation preference for contracts when they compete on a full and open basis. Similarly, currently defined small businesses may obtain fewer Federal contracts due to the increased competition from more businesses defined as small. This transfer may be offset by a greater number of Federal procurements set aside for all small businesses. The number of newly defined and expanding small businesses that are willing and able to sell to the Federal Government will limit the potential transfer of contracts away from large and currently defined small businesses. SBA cannot estimate the potential distributional impacts of these transfers with any degree of precision because FPDS-NG data only identify the size of businesses receiving Federal contracts as “small businesses” or “other than small businesses”; FPDS-NG does not provide the exact size of the business.

The proposed revisions to the existing size standards for Industries in NAICS Sector 62 are consistent with SBA's statutory mandate to assist small business. This regulatory action promotes the Administration's objectives. One of SBA's goals in support of the Administration's objectives is to help individual small businesses succeed through fair and equitable access to capital and credit, Government contracts, and management and technical assistance. Reviewing and modifying size standards, when appropriate, ensures that intended beneficiaries have access to small business programs designed to assist them.

Executive Order 13563

A description of the need for this regulatory action and benefits and costs associated with this action including possible distributional impacts that relate to Executive Order 13563 are included above in the Regulatory Impact Analysis under Executive Order 12866.

In an effort to engage interested parties in this action, SBA has presented its methodology (discussed above under Supplementary Information) to various industry associations and trade groups. SBA also met with various industry groups to get their feedback on its methodology and other size standards issues. In addition, SBA presented its size standards methodology to businesses in 13 cities in the U.S. and sought their input as part of Jobs Act tours. The presentation also included information on the latest status of the comprehensive size standards review and on how interested parties can provide SBA with input and feedback on size standards.

Additionally, SBA sent letters to the Directors of the Offices of Small and Disadvantaged Business Utilization (OSDBU) at several Federal agencies with considerable procurement responsibilities requesting their feedback on how the agencies use SBA size standards and whether current standards meet their programmatic needs (both procurement and non-procurement). SBA gave appropriate consideration to all input, suggestions, recommendations, and relevant information obtained from industry groups, individual businesses, and Federal agencies in preparing this proposed rule.

The review of size standards in NAICS Sector 62, Health Care and Social Assistance, is consistent with Executive Order 13563, Section 6, calling for retrospective analyses of existing rules. The last comprehensive review of size standards occurred during the late 1970s and early 1980s. Since then, except for periodic adjustments for monetary based size standards, most reviews of size standards were limited to a few specific industries in response to requests from the public and Federal agencies. SBA recognizes that changes in industry structure and the Federal marketplace over time have rendered existing size standards for some industries no longer supportable by current data. Accordingly, in 2007, SBA began a comprehensive review of its size standards to ensure that existing size standards have supportable bases and it will revise them when necessary. In addition, the Jobs Act requires SBA to conduct a detailed review of all size standards and to make appropriate adjustments to reflect market conditions. Specifically, the Jobs Act requires SBA to conduct a detailed review of at least one-third of all size standards during every 18-month period from the date of its enactment and do a complete review of all size standards not less frequently than once every 5 years thereafter.

Executive Order 12988

This action meets applicable standards set forth in Sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. The action does not have retroactive or preemptive effect.

Executive Order 13132

For the purposes of Executive Order 13132, SBA has determined that this proposed rule will not have substantial, direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, SBA has determined that this proposed rule has no federalism implications warranting preparation of a federalism assessment.

Paperwork Reduction Act

For the purposes of the Paperwork Reduction Act, 44 U.S.C. Ch. 35, SBA has determined that this rule will not impose any new reporting or record keeping requirements.

Initial Regulatory Flexibility Analysis

Under the Regulatory Flexibility Act (RFA), this proposed rule, if finalized, may have a significant impact on a substantial number of small businesses in NAICS Sector 62, Health Care and Social Assistance. As described above, this rule may affect small businesses seeking Federal contracts, loans under SBA's 7(a), 504 Guaranteed Loan and Economic Injury Disaster Loan Programs, and assistance under other Federal small business programs.

Immediately below, SBA sets forth an initial regulatory flexibility analysis (IRFA) of this proposed rule addressing the following questions: (1) What are the need for and objective of the rule? (2) What are SBA's description and estimate of the number of small businesses to which the rule will apply? (3) What are the projected reporting, record keeping, and other compliance requirements of the rule? (4) What are the relevant Federal rules that may duplicate, overlap, or conflict with the rule? and (5) What alternatives will allow the Agency to accomplish its regulatory objectives while minimizing the impact on small businesses?

1. What are the need for and objective of the rule?

Although size standards for three Subsectors of NAICS 62 (NAICS Subsector 621, Ambulatory Health Care Services; NAICS Subsector 622, Hospitals; and NAICS Subsector 623, Nursing and Residential Care Facilities) were reviewed during 1999-2000, size standards for NAICS Subsector 624, Social Assistance, which includes nine industries, have not been reviewed since the early 1980s. Changes in industry structure, technological changes, productivity growth, mergers and acquisitions, and updated industry definitions may have changed the structure of many industries within NAICS Sector 62. Such changes can be sufficient to support revisions to current size standards for some industries. Based on the analysis of the latest data available, SBA believes that the revised standards in this proposed rule more appropriately reflect the size of businesses in those industries that need Federal assistance. The recently enacted Jobs Act also requires SBA to review all size standards and make necessary adjustments to reflect market conditions.

2. What are SBA's description and estimate of the number of small businesses to which the rule will apply?

If the proposed rule is adopted in its present form, SBA estimates that more than 4,100 additional firms will become small because of increases in size standards in 28 industries in NAICS Sector 62. That represents 0.7 percent of total firms that are small under current size standards in all industries within that Sector. This will result in an increase in the small business share of total industry receipts for the Sector from about 30 percent under the current size standard to nearly 32 percent under the proposed standards. The proposed standards, if adopted, will enable more small businesses to retain their small business status for a longer period. Many 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. They might otherwise be called or referred to as mid-sized businesses, although SBA only defines what is small; other entities are other than small.

3. What are the projected reporting, recordkeeping and other compliance requirements of the rule?

The proposed size standards changes do not impose any additional reporting or recordkeeping requirements on small businesses. However, qualifying for Federal procurement and a number of other programs requires that businesses register in the CCR database and certify at least once annually that they are small in the Online Representations and Certifications Application (ORCA). Therefore, businesses opting to participate in those programs must comply with CCR and ORCA requirements. There are no costs associated with either CCR registration or ORCA certification. Changing size standards alters the access to SBA programs that assist small businesses, but does not impose a regulatory burden as they neither regulate nor control business behavior.

4. What are the relevant Federal rules which may duplicate, overlap, or conflict with the rule?

Under § 3(a)(2)(C) of the Small Business Act, 15 U.S.C. 632(a)(2)(c), Federal agencies must use SBA's size standards to define a small business, unless specifically authorized by statute to do otherwise. In 1995, SBA published in the Federal Register a list of statutory and regulatory size standards that identified the application of SBA's size standards as well as other size standards used by Federal agencies (60 FR 57988 (November 24, 1995)). SBA is not aware of any Federal rule that would duplicate or conflict with establishing size standards.

However, the Small Business Act and SBA's regulations allow Federal agencies to develop different size standards if they believe that SBA's size standards are not appropriate for their programs, with the approval of SBA's Administrator (13 CFR 121.903). The Regulatory Flexibility Act authorizes an Agency to establish an alternative small business definition, after consultation with the Office of Advocacy of the U.S. Small Business Administration (5 U.S.C. 601(3)).

5. What alternatives will allow the Agency to accomplish its regulatory objectives while minimizing the impact on small entities?

By law, SBA is required to develop numerical size standards for establishing eligibility for Federal small business assistance programs. Other than varying size standards by industry and changing the size measures, no practical alternative exists to the systems of numerical size standards.

List of Subjects in 13 CFR Part 121

• Administrative practice and procedure
• Government procurement
• Government property
• Grant programs—business
• Individuals with disabilities
• Loan programs—business
• Reporting and recordkeeping requirements
• Small businesses

For the reasons set forth in the preamble, SBA proposes to amend part 13 CFR part 121 as follows:

PART 121—SMALL BUSINESS SIZE REGULATIONS

1. The authority citation for part 121 is revised to read as follows:

Authority: 15 U.S.C. 632, 634(b)(6), 636(b), 662, and 694a(9).

2. In § 121.201, in the table, revise the entries for “621420”, “621491”, “621492”, “621493”, “621498”, “621511”, “621512”, “621610”, “621910”, “621991”, “621999”, “622110”, “622210”, “622310”, “623110”, “623210”, “623220”, “623311”, “623312”, “623990”, “624110”, “624120”, “624190”, “624210”, “624221”, “624229”, “624230”, and “624310” to read as follows:

§ 121.201

What size standards has SBA identified by North American Industry Classification System codes?

* * * * *

Small Business Size Standards by NAICS Industry

NAICS codes	NAICS U.S. industry title	Size standards in millions of dollars	Size standards in number of employees
*         *         *         *         *         *         *
621420	Outpatient Mental Health and Substance Abuse Centers	$14.0
621491	HMO Medical Centers	30.0
621492	Kidney Dialysis Centers	35.5
621493	Freestanding Ambulatory Surgical and Emergency Centers	14.0
621498	All Other Outpatient Care Centers	19.0
621511	Medical Laboratories	30.0
621512	Diagnostic Imaging Centers	14.0
621610	Home Health Care Services	14.0
621910	Ambulance Services	14.0
621991	Blood and Organ Banks	30.0
621999	All Other Miscellaneous Ambulatory Health Care Services	14.0
Subsector 622—Hospitals
*         *         *         *         *         *         *
622110	General Medical and Surgical Hospitals	35.5
622210	Psychiatric and Substance Abuse Hospitals	35.5
622310	Specialty (except Psychiatric and Substance Abuse) Hospitals	35.5
Subsector 623—Nursing and Residential Care Facilities
623110	Nursing Care Facilities	25.5
623210	Residential Mental Retardation Facilities	14.0
623220	Residential Mental Health and Substance Abuse Facilities	14.0
623311	Continuing Care Retirement Communities	25.5
623312	Homes for the Elderly	10.0
623990	Other Residential Care Facilities	10.0
Subsector 624—Social Assistance
*         *         *         *         *         *         *
624110	Child and Youth Services	10.0
624120	Services for the Elderly and Persons with Disabilities	10.0
624190	Other Individual and Family Services	10.0
624210	Community Food Services	10.0
624221	Temporary Shelters	10.0
624229	Other Community Housing Services	14.0
624230	Emergency and Other Relief Services	30.0
624310	Vocational Rehabilitation Services	10.0
*         *         *         *         *         *         *

Dated: December 21, 2011.

Karen G. Mills,

Administrator.