2022-13250. Small Business Size Standards: Adoption of 2022 North American Industry Classification System for Size Standards

AGENCY:

U.S. Small Business Administration.

ACTION:

Proposed rule.

SUMMARY:

The U.S. Small Business Administration (“SBA” or “Agency”) proposes to amend its small business size regulations to incorporate the U.S. Office of Management and Budget's (OMB) North American Industry Classification System (NAICS) revision for 2022, identified as NAICS 2022, into its table of small business size standards. The NAICS 2022 revision created 111 new industries by reclassifying, combining, or splitting 156 NAICS 2017 industries or their parts. SBA's proposed size standards for these 111 new industries under NAICS 2022 have resulted in an increase to the size standards for 21 industries and 27 parts of three industries under NAICS 2017, a decrease to size standards for seven industries and 41 parts of one industry, a change in the size standard measure from average annual receipts to number of employees for one industry, a change in the size standard measure from number of employees to average annual receipts for a part of one industry, and no change in size standards for 118 industries and 33 parts of eight industries. SBA proposes to adopt the updated table of size standards, effective October 1, 2022.

DATES:

SBA must receive comments to this proposed rule on or before August 4, 2022.

ADDRESSES:

Identify your comments by RIN 3245-AH89 and submit them 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, Office of Size Standards, 409 Third Street SW, Mail Code 6530, Washington, DC 20416. SBA will post all comments to this proposed rule 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, the Office of Size Standards, 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 such information as confidential. SBA will review your information and determine whether it will make the information public.

Requests to redact or remove posted comments cannot be honored and a request to redact or remove posted comments will be posted as a comment. See the www.regulations.gov Help section for information on how to make changes to your comments.

FOR FURTHER INFORMATION CONTACT:

Dr. Khem R. Sharma, Chief, Office of Size Standards, [phone] or [e-mail].

SUPPLEMENTARY INFORMATION:

Effective October 1, 2000, the U.S. Small Business Administration (SBA) adopted North American Industry Classification System (NAICS) 1997 industry definitions as a basis for defining industries for its table of small business size standards, replacing the 1987 Standard Industrial Classification (SIC) (65 FR 30836 (May 15, 2000)). Since then, the Office of Management and Budget (OMB) has issued five revisions to NAICS. SBA's table of size standards adopted the OMB's first revision, NAICS 2002, effective October 1, 2002 (67 FR 52597 (August 13, 2002)); the second revision, NAICS 2007, effective October 1, 2007 (72 FR 49639 (August 29, 2007)); the third revision, NAICS 2012, effective October 1, 2012 (77 FR 49991 (August 20, 2012)); and fourth revision, NAICS 2017, effective October 1, 2017 (82 FR 44886 (September 27, 2017)).

On December 21, 2021, OMB published its fifth and the latest revision to NAICS “Notice of NAICS 2022 Final Decisions; Update of Statistical Policy Directive No. 8, North American Industry Classification System: Classification of Establishments; and Elimination of Statistical Policy Directive No. 9, Standard Industrial Classification of Enterprises” (86 FR 72277). In the December 21, 2021, Federal Register notice, OMB accepted the Economic Classification Policy Committee's (ECPC) recommendations, as outlined in the July 2, 2021, Federal Register notice (86 FR 35350), for the 2022 revisions to the North American Industry Classification System (NAICS), as well as the recommendations to update OMB Statistical Policy Directive No. 8, North American Industry Classification System: Classification of Establishments and to eliminate OMB Statistical Policy Directive No. 9, Standard Industrial Classification of Enterprises.

The OMB's notice stated that Federal statistical establishment data published for reference years beginning on or after January 1, 2022, should be published using NAICS 2022. Though SBA is not a statistical agency, it proposes to adopt NAICS 2022 for its table of size standards, effective October 1, 2022.

As with the previous NAICS revisions, SBA proposes to adopt the latest NAICS revision, identified as NAICS 2022, effective October 1, 2022 ( i.e., the beginning of the new fiscal year following the effective date of the OMB's release of the NAICS 2022 revision), for several reasons: (1) Federal Government contracting data and related statistics will be more consistent and comparable with past data for analyzing future small business activity if implementation of the revised table of size standards occurs at the beginning of a new fiscal year; (2) Users of size standards, for instance, Federal prime contractors, who may use the size standards for developing their subcontracting plans, can have more consistent data to examine the past and future Federal contracting trends; and (3) Small business size standards apply to most Federal agencies and their programs involving small businesses; with a time lag between the OMB's effective date and SBA's update of its size standards, agencies will have sufficient time to implement the changes and develop training tools, if necessary.

Changes in NAICS 2022

The NAICS 2022 revision created 111 new NAICS industries by splitting, merging, or modifying 6-digit codes or industry titles/definitions of 156 exiting industries under NAICS 2017 structure, of which nine industries were split to two or more NAICS 2022 industries. These changes are broken down by NAICS sector in Table 1, “Modified Industries under NAICS 2017 and New Industries under NAICS 2022 by NAICS Sector.” As can be seen in Table 1, Sector 44-45 (Retail Trade) accounts for the largest proportions of NAICS 2017 industries that have changed or been amended and of the new industries that have been created under NAICS 2022, followed by Sector 31-33 (Manufacturing), and Sector 51 (Information).

Table 1—Modified Industries Under NAICS 2017 and New Industries Under NAICS 2022 by NAICS Sector

NAICS sector	Existing NAICS 2017 industries changed		New NAICS 2022 industries created
	Count	%	Count	%
Sector 21	13	8.3	6	5.4
Sector 31-33	33	21.2	19	17.1
Sector 42	5	3.2	3	2.7
Sector 44-45	61	39.1	52	46.8
Sector 51	20	12.8	18	16.2
Sector 52	12	7.7	6	5.4
Sector 81	7	4.5	2	1.8
Sectors 48-49, 54, 56 & 62	5	3.2	5	4.5
All Sectors	156	100.0	111	100.0

Of the 111 new industries under NAICS 2022, 79 (71% of the new industries) were created by merging two or more NAICS 2017 industries in their entirety, one or more of NAICS 2017 industries and part(s) of one or more NAICS 2017 industries, or parts of two or more NAICS 2017 industries. Altogether, 124 NAICS 2017 industries or their parts were involved in the creation of the 79 new industries. Of the remaining 32 new industries, OMB changed the 6-digit codes for 11 (10%) NAICS 2017 industries without changing their titles, amended the industry titles of 15 (14%) NAICS 2017 industries without changing their 6-digit codes, and created six (5%) new industries by modifying the title, 6-digit code, or definition (or any combination thereof) of a single NAICS 2017 industry or part. These results are summarized in Table 2, “Summary of NAICS 2022 Changes.”

Table 2—Summary of NAICS 2022 Changes

Types of new industries formed	Count	%
New industries formed by merging two or more NAICS 2017 industries or their parts 1	79	71.2
NAICS 2017 industries for which 6-digit codes have changed without changing their titles	11	9.9
NAICS 2017 industries for which titles have changed without changing their 6-digit codes	15	13.5
NAICS 2017 industries for which titles, 6-digit codes, or definitions have changed, mostly by splitting a single NAICS 2017 industry	6	5.4
Total	111	100.0
1  Of the 79 NAICS 2022 new industries, 15 industries formed by merging two or more NAICS 2017 industries or their parts used the NAICS 2017 industry titles, of which 14 used different 6-digit codes and one used the same NAICS 2017 industry code.

Complete information on the relationship between NAICS 2017 and NAICS 2022 is available on the U.S. Bureau of the Census (Census Bureau) website at https://www.census.gov/​naics/​. The Census Bureau's website also provides detailed documentation on Federal notices involving the replacement of SIC with NAICS, and all subsequent NAICS updates and revisions, including both the July 2, 2021, and December 21, 2021, Federal notices regarding the NAICS 2022 revision.

Of the 79 new NAICS 2022 industries formed by merging existing NAICS 2017 industries or their parts, 33 or 42% were formed by merging one NAICS 2017 industry with parts of two other NAICS 2017 industries.^[1] Likewise, 21 or 27% of new industries were formed by merging two NAICS 2017 industries, and 11 or 14% were formed by merging one NAICS 2017 industry with part of another industry. These results and the formation of the remining 14 or 18% of new industries are summarized in Table 3, “Formation of New Industries in NAICS 2022.”

Table 3—Formation of New Industries in NAICS 2022

NAICS 2017 industries or their parts	NAICS 2022 new industries formed by merging NAICS 2017 industries or their parts
	Count	%
One industry and parts of two industries	33	41.8
Two industries	21	26.6
One industry and part of one industry	11	13.9
Three industries	4	5.1
Two industries and parts of two industries	2	2.5
Parts of three industries	2	2.5
Four industries	2	2.5
One industry and parts of three industries	1	1.3
Parts of two industries	1	1.3
Three industries and part of one industry	1	1.3
Six industries and parts of two industries	1	1.3
Total	79	100.0

Table 4, “NAICS 2017 Industries or Their Parts Matched to NAICS 2022 Industries,” below, shows the detailed changes from NAICS 2017 to NAICS 2022.

Proposed Size Standards for New Industries in NAICS 2022

On October 22, 1999, SBA proposed to replace SIC with NAICS 1997 as the basis of industry definitions for its table of small business size standards (64 FR 57188). The proposed rule included a set of guidelines or rules that SBA applied to convert the size standards for industries under SIC to industries under NAICS. The guidelines primarily aimed to minimize the impact of applying a new industry classification system on SBA's size standards and on small businesses that qualified as small under the SIC-based size standards. SBA received no negative comments against the proposed guidelines. Thus, SBA published its final rule on May 15, 2000 (65 FR 30386), corrected on September 5, 2000 (65 FR 53533), adopting the resulting table of size standards based on NAICS 1997 structure, as proposed. To be consistent, SBA generally applied the same guidelines when it updated its table of size standards to adopt NAICS 2002, NAICS 2007, NAICS 2012, and NAICS 2017 revisions. In those updates as well, SBA received no adverse comments against using those guidelines, or against the resulting changes to the size standards. These guidelines to adopt NAICS revisions for size standards were also included in the SBA's “Size Standards Methodology” white paper and SBA received no adverse comments when the revised methodology was open for public comments. Accordingly, in this proposed rule to adopt NAICS 2022 structure for its size standards table as well, SBA has generally followed the same guidelines. The guidelines that are applicable to this update are shown below in Table 5, “General Guidelines to Establish Size Standards for New Industries under NAICS 2022.”

SBA generally applied the guidelines in Table 5 to convert the size standards from NAICS 2017 industries to NAICS 2022 industries. In addition to following the above general guidelines in Table 5, in cases where a new industry is formed by merging multiple industries or parts of multiple industries with substantially different levels or measures of size standards, in this proposed rule, SBA has also examined the relevant latest industry and Federal procurement data to determine an appropriate size standard for the new industry. Developed based on the above guidelines and analyses of the relevant data, where necessary, SBA's proposed size standards for the new industries under NAICS 2022 are shown in Table 6, “Proposed Size Standards for New Industries in NAICS 2022.” Also shown in Table 6 are the current size standards for the affected NAICS 2017 industries and their parts.

Derivation of Proposed Size Standards for Select NAICS 2022 Industries

NAICS 212114—Surface Coal Mining

SBA proposes a 1,250-employee size standard for NAICS 2022 industry 212114 (Surface Coal Mining). This new industry was formed by combining NAICS 2017 industry 212111 (Bituminous Coal and Lignite Surface Mining) with the Anthracite Surface Mining part of NAICS 2017 industry 212113 (Anthracite Mining). Their current size standards are 1,250 employees for NAICS 2017 industry 212111 and 250 employees for NAICS 2017 industry 212113. Based on the 2017 Economic Census data, 91.5% of firms in NAICS 212111 qualify as small under the 1,250-employee size standard. Similarly, 98% of all firms in entire NAICS 212113 are small under the 250-employee size standard. However, SBA cannot compute the percentage of firms that qualify as small for the Anthracite Surface Mining part of NAICS 2017 industry 212113 because such information is not available in the 2017 Economic Census data. Thus, SBA analyzed the data for NAICS 212111 and entire NAICS 212113. SBA follows this approach when a new NAICS 2022 industry includes part or parts of one or more NAICS 2017 industries.

Based on the 2017 Economic Census data, accounting for 98% of combined receipts, 80% of firms, and 96% of employees of the new 2022 NAICS industry 212114, NAICS 212111 dominates the new industry. When a new NAICS 2022 industry is composed of one or more NAICS 2017 industries and part(s) of one or more NAICS 2017 industries and they all have different size standards (which is true in the case of NAICS 2022 industry 212114), the guidelines in Table 5 directs to select the same size standard as for the NAICS 2017 industry or part that most closely matches the economic activity described by the NAICS 2022 industry. Additionally, the guidelines also provide that the size standard for a new NAICS 2022 industry, comprising one or more of NAICS 2017 industries in their entirety and one or more part(s) of NAICS 2017 industries with different size standards, will be the highest size standard among the NAICS 2017 industries or their part(s) making up the new industry, provided that the highest size standard does not include dominant or potentially dominant firms. These criteria support the higher 1,250-employee size standard for NAICS 2022 industry 212114. Nevertheless, SBA also considered adopting 250 employees as a size standard for the new industry, but it would cause 15 firms in NAICS 2017 industry 212111 to lose their small business status under the 250-employee size standard and access to Federal assistance. Based on the 2017 Economic Census data, 92.5% of firms will qualify as small under the proposed 1,250-employee size standard for in the new industry.

NAICS 212115—Underground Coal Mining

SBA proposes to adopt a 1,500-employee size standard for NAICS 2022 industry 212115 (Underground Coal Mining). This new industry was generated by merging NAICS 2017 industry 212112 (Bituminous Underground Mining) and the Anthracite Underground Mining part of NAICS 2017 industry 212113 (Anthracite Mining). The current size standards are 1,500 employees for NAICS 212112 and 250 employees for NAICS 212113. Based on the 2017 Economic Census data, 92.6% of firms in NAICS 212112 are below the 1,500-employee size standard. While SBA does not have the data to estimate the percentage of firms that would be small in the Anthracite Underground Mining part of NAICS 212113, 98% of firms qualify as small under the 250-employee size standard for the overall NAICS 212113 industry.

Based on the 2017 Economic Census data, accounting for 98% of total receipts, 68% of total firms, and 97% of total employees, NAICS 2017 industry 212112 dominates the new NAICS 2022 industry 212115. These percentages would be even higher if only the part of NAICS 212113 was considered instead of the entire industry. Thus, based on these results, the guidelines in Table 5 support the 1,500-employee size standard for NAICS 212115. SBA also considered adopting the 250-employee size standard applicable to NAICS 212113 as the size standard for NAICS 212115. However, doing so would cause about 20 firms in NAICS 212112 to lose their small business status. Adopting any size standard lower than 1,500 employees would cause some businesses that are currently small in NAICS 212112 to lose their small status. The data shows that one additional firm would qualify as small in NAICS 212113 under the 1,500-employee size standard. According to the 2012 Economic Census data, 94% of firms would qualify as small under the proposed 1,500-employee size standard for NAICS 2022 industry 212115.

NAICS 212220—Gold Ore and Silver Ore Mining

SBA proposes to adopt a 1,500-employee size standard for NAICS 2022 industry 212220 (Goal Ore and Silver Ore Mining). This new industry was generated by merging NAICS 2017 industry 212221 (Gold Ore Mining) and NAICS 2017 industry 212222 (Silver Ore Mining). The current size standards are 1,500 employees for NAICS 212221 and 250 employees for NAICS 212222. Based on the 2017 Economic Census data, about 96.2% of firms in NAICS 212112 are below the 1,500-employee size standard and almost all firms in NAICS 212222 are small under the 250-employee size standard. Accounting for 95% of total receipts, 94% of total firms, and 91% of total employees, NAICS 2017 industry 212221 dominates the new NAICS industry 212220. Thus, according to the guidelines in Table 5, SBA is proposing to adopt, as the size standard for the new NAICS industry 212220, a 1,500-employee size standard, which applies to NAICS 2017 industry 212221. If SBA were to adopt the lower 250-employee size standard, five firms will lose their small business status in NAICS 212221. Based on the 2017 Economic Census data, 96.5% of firms in NAICS 2022 industry 212220 would qualify as small under the proposed 1,500-employee size standard.

NAICS 212290—Other Metal Ore Mining

SBA proposes to adopt a 750-employee size standard for NAICS 2022 industry 212290 (Other Metal Ore Mining). This new industry was generated by merging NAICS 2017 industry 212291 (Uranium-Radium-Vanadium Ore Mining) and NAICS 2017 industry 212299 (Other Metal Ore Mining). The current size standards are 250 employees for NAICS 212291 and 750 employees for NAICS 212299. Accounting for 83% of total employees of the new industry (information on receipts and firms not available in the 2017 Economic Census tabulations), NAICS 212299 dominates the new industry. Thus, SBA is proposing to adopt 750 employees as the size standard for NAICS 212290. SBA also considered proposing a 250-employee size standard for the new industry but doing so would cause two firms in NAICS 212299 to lose their small business status and access to Federal small business assistance.

NAICS 212323—Kaolin, Clay, and Ceramic and Refractory Minerals Mining

SBA proposes to adopt a 500-employee size standard for NAICS 2022 industry NAICS 212323 (Kaolin, Clay, and Ceramic and Refractory Minerals Mining). This new industry was formed by combining NAICS 2017 industry 212324 (Kaolin and Ball Clay Mining) and NAICS 2017 industry 212325 (Clay and Ceramic and Refractory Minerals Mining). The current size standards are 750 employees for NAICS 212324 and 500 employees for NAICS 212325. Based on the 2017 Economic Census data, almost all firms in NAICS 212324 are below the 750-employee size standard and 91.7% of firms are small under the 500-employee size standard in NAICS 212222. Accounting for half of total receipts and employees and 78% of total firms, NAICS 212325 tends to dominate the new industry. Following the guidelines in Table 5, SBA is adopting 500 employees as the size standard for NAICS 212323. Adopting the higher 750-employee standard would enable the largest, and possibly a dominant, firm in NAICS 212324 to qualify as small. Adopting 500 employee would cause only one largest firm in NAICS 212324 to lose its small business status. Thus, SBA is proposing to adopt 500 employees as the size standard for NAICS 2022 industry 212323. Under the proposed 500-employee size standard, 92.2% of firms would qualify as small in the new industry.

NAICS 212390—Other Nonmetallic Mineral Mining and Quarrying

SBA proposes to adopt a 500-employee size standard for NAICS 2022 industry 212390 (Other Nonmetallic Mineral Mining and Quarrying). This new industry was formed by combining four NAICS 2017 industries: NAICS 212391 (Potash, Soda, and Borate Mineral Mining), NAICS 312392 (Phosphate Rock Mining), NAICS 212393 (Other Chemical and Fertilizer Mineral Mining), and NAICS 212399 (All Other Nonmetallic Mineral Mining). Their current size standards are 750 employees, 1,000 employees, 500 employees, and 500 employees, respectively. Based on the 2017 Economic Census data, almost all firms in NAICS 212391 and in NAICS 212392 are below their 750-employee and 1,000-employee size standards, respectively. Similarly, 90% of firms in NAICS 212393 and 91.9% firms in NAICS 212300 qualify as small under their 500-employee size standard. Except for NAICS 212399 accounting for 69% of total firms, no individual industry was found to dominate the new industry. SBA proposes to assign a 500-employee standard for NAICS 212390, which applies to two of the four industries comprising the new industry. No firms in NAICS 212391 and NAICS 212392 would lose their small business status by adopting a lower 500-employee size standard for the new industry. Based on the 2017 Economic Census data, 92.5% of firms would qualify as small under the proposed 500-employee size standard for the new industry.

NAICS 316990—Other Leather and Allied Product Manufacturing

SBA proposes to adopt a 500-employee size standard for NAICS 2022 industry NAICS 316990 (Other Leather and Allied Product Manufacturing). This new industry was formed by combining NAICS 2017 industry 316992 (Women's Handbag and Purse Manufacturing) and NAICS 2017 industry 316998 (All Other Leather Good and Allied Product Manufacturing). The current size standards are 750 employees for NAICS 316992 and 500 employees for NAICS 316998. Based on the 2017 Economic Census data, 98.9% of firms in NAICS 316992 are below the 750-employee size standard and 98.8% of firms are small under the 500-employee size standard in NAICS 316998. Accounting for nearly 80% of combined receipts and 87-88% of combined firms and employees, NAICS 316998 with a 500-employee size standard dominates the new industry. Thus, SBA is proposing to adopt the 500 employees as the size standard for new NAICS 2022 industry 316990. No firms in NAICS 316992 would lose their small business status under the proposed 500-employee size standard. Based on the 2017 industry data, 98.8% of firms will qualify as small under the proposed 500-employee size standard for NAICS 2022 industry 316990.

NAICS 321215—Engineered Wood Member Manufacturing

SBA proposes to adopt a 500-employee size standard for NAICS 2022 industry NAICS 321215 (Engineered Wood Member Manufacturing). This new industry was formed by combining NAICS 2017 industry 321213 (Engineered Wood Member (except Truss) Manufacturing) and NAICS 2017 industry 321214 (Truss Manufacturing). The current size standards are 750 employees for NAICS 321213 and 500 employees for NAICS 321214. Based on the 2017 Economic Census data, 90.3% of firms in NAICS 321213 qualify as small under its 750-employee size standard and 96.3% of firms are small under the 500-employee size standard in NAICS 321214. Accounting for 76% of combined receipts and 86-87% of combined firms and employees, NAICS 321214 dominates the new industry. Following the guidelines in Table 5, SBA proposes to adopt the 500-employee size standard for NAICS 2022 industry 321315. Only one firm in NAICS 321213 would lose small business status under the proposed 500-employee size standard. Based on the 2017 industry data, 95.4% of firms will qualify as small under the proposed 500-employee size standard for NAICS 2022 industry 321215.

NAICS 322120—Paper Mills

SBA proposes to adopt a 1,250-employee size standard for NAICS 2022 industry NAICS 322120 (Paper Mills). This new industry was created by combining NAICS 2017 industry 322121 (Paper (except Newsprint) Mills) and NAICS 2017 industry 322122 (Newsprint Mills). The current size standards are 1,250 employees for NAICS 322121 and 750 employees for NAICS 322122. Based on the 2017 Economic Census data, 77% of firms in NAICS 322121 qualify as small under its 1,250-employee size standard and 66.7% of firms are small under the 750-employee size standard in NAICS 322122. Accounting for 98% of combined receipts, 85% of total firms, and 91% of aggregate employees, NAICS 322122 dominates the new industry. Thus, in accordance with the guidelines in Table 5, SBA proposes to adopt, as the size standard for NAICS 322120, 1,250-employee standard that applies to NAICS 322122. Adopting 750-employee size standard would have caused five firms to lose their small business status in NAICS 322121. Based on the 2017 industry data, 77.1% of firms will qualify as small under the proposed 1,250-employee size standard for NAICS 2022 industry 322120.

NAICS 333248—All Other Industrial Machinery Manufacturing

SBA proposes to adopt a 750-employee size standard for NAICS 2022 industry 333248 (All Other Industrial Machinery Manufacturing). This new industry was formed by combining NAICS 2017 industry 333244 (Printing Machinery and Equipment Manufacturing) and NAICS 2017 industry 333249 (Other Industrial Machinery Manufacturing). The current size standards are 750 employees for NAICS 333244 and 500 employees for NAICS 333249. Based on the 2017 Economic Census data, 98.1% of firms in NAICS 333244 qualify as small under its 750-employee size standard and 95.4% of firms are small under the 500-employee size standard in NAICS 333249. Accounting for 87-89% of combined receipts, firms, and employees, NAICS 333249 dominates the new industry. Thus, SBA considered adopting, as the size standard for NAICS 333248, the 500-employee size standard that applies to NAICS 333249. However, under the lower 500-employee size standard would cause three firms participating in Federal contracting in NAICS 333244 to lose their small business status. Thus, SBA is proposing to adopt the higher 750-employee size standard that applies to NAICS 333244. Based on the 2017 industry data, 96.7% of firms would qualify as small under the proposed 750-employee size standard for NAICS 2022 industry 333248.

NAICS 333310—Commercial and Service Industry Machinery Manufacturing

SBA proposes to adopt a 1,000-employee size standard for NAICS 2022 industry 333310 (Commercial and Service Industry Machinery Manufacturing). This new industry was generated by aggregating three NAICS 2017 industries. These include NAICS 333314 (Optical Instrument and Lens Manufacturing) with a 500-employee size standard, NAICS 333316 (Photographic and Photocopying Equipment Manufacturing) with a 1,000-employee size standard, and NAICS 333318 (Other Commercial and Service Industry Machinery Manufacturing) with a 1,000-employee size standard. Based on the 2017 Economic Census data, 91.3% of firms in NAICS 333314, 96.7% of firms in NAICS 333316, and 96.1% of firms in NAICS 333318 qualify as small under their respective size standards. Accounting for 75-76% of combined receipts and employees, and 68% of combined firms, NAICS 333318 dominates the new industry. Thus, SBA is proposing, as the size standard for new NAICS 333310, to adopt the 1,000-employee standard that applies to NAICS 333318. SBA also considered adopting the 500-employee size standard but doing so would, based on the 2017 Economic Census data, cause about 25 firms in NAICS 333316 and 333318 to lose their small business status. This would also, based on the Federal Procurement Data System-Next Generation (FPDS-NG) data for fiscal years 2018-2020, cause more than 25 firms participating in Federal contracting to lose their small business eligibility. Based on the 2017 Economic Census data, 95.5% of firms will qualify as small under the proposed 1,000 employee size standard for NAICS 2022 industry 333310.

NAICS 334610—Manufacturing and Reproducing Magnetic and Optical Media

SBA proposes to adopt a 1,250-employee size standard for NAICS 2022 industry 334610 (Manufacturing and Reproducing Magnetic and Optical Media). This new industry was created by combining NAICS 2017 industry 334613 (Blank Magnetic and Optical Recording Media Manufacturing) and NAICS 2017 industry 334614 (Software and Other Prerecorded Compact Disc, Tape, and Record Reproducing). Their current size standards are 1,000 employees for NAICS 334613 and 1,250 employees for NAICS 334614. Based on the 2017 Economic Census data, 98.2% of firms in NAICS 334613 and 99.2% of firms in NAICS 334614 qualify as small under their respective size standards. Accounting for 80% of combined receipts, 87% of firms, and 94% of employees, NAICS 334614 dominates the new industry. Thus, SBA is proposing to adopt, as the size standard for the new industry, 1,250-employee size standard that applies to NAICS 334614. SBA also considered proposing to adopt a lower 1,000-employee size standard; however, doing so would cause seven firms participating in Federal contracting in that industry to lose their small business status. Based on the 2017 industry data, 99.1% of firms would qualify as small under the proposed 1,250-employee size standard for NAICS 2022 industry 334610.

NAICS 335139—Electric Lamp Bulb and Other Lighting Equipment Manufacturing

SBA proposes to adopt a 1,250-employee size standard for NAICS 2022 industry 335139 (Electric Lamp Bulb and Other Lighting Equipment Manufacturing). This new industry was generated by merging NAICS 2017 industry 335110 (Electric Lamp Bulb and Part Manufacturing) and NAICS 2017 industry 335129 (Other Lighting Equipment Manufacturing). Their current size standards are 1,250 employees and 500 employees, respectively. Based on the 2017 Economic Census data, 93.5% of firms in NAICS 335110 and 94.9% of firms in NAICS 335129 qualify as small under their respective size standards. Contributing to 74-75% of combined receipts and employees and 82% of all firms, NAICS 335129 dominates the new industry. Thus, SBA considered assigning 500 employees as a size standard for the new industry. However, adopting the 500-employee size standard would cause three firms based on the 2017 Economic Census data and eight firms based on the FPDS-NG data for fiscal years 2018-2020 to lose their small business eligibility in NAICS 335110. Accordingly, SBA is proposing to adopt 1,250 employees as a size standard for the new industry. Based on the 2017 Economic Census data, 95.8% of firms would qualify as small under the proposed 1,250-employee size standard for NAICS 2022 industry 335139.

NAICS 335910—Battery Manufacturing

SBA proposes to adopt a 1,250-employee size standard for NAICS 2022 industry 335910 (Battery Manufacturing). This new industry was generated by merging NAICS 2017 industry 335911 (Storage Battery Manufacturing) and NAICS 2017 industry 335912 (Primary Battery Manufacturing). Their current size standards are 1,250 employees and 1,000 employees, respectively. Based on the 2017 Economic Census data, 92.5% of firms in NAICS 335911 and 87.7% of firms in NAICS 335129 qualify as small under their respective size standards. Accounting for 78-79% of combined receipts and employees and 68% of combined firms, NAICS 335911 dominates the new industry. Thus, SBA is proposing to adopt, as the size standard for the new industry, 1,250 employees which is the current size standard for NAICS 359111. Had SBA adopted 1,000 employees as the size standard for the new industry, three firms participating in Federal contracts in NAICS 359111 would lose their small business status. Based on the 2017 industry data, 91.5% of firms would qualify as small under the proposed 1,250-employee size standard for NAICS 2022 industry 335910.

NAICS 424350—Clothing and Clothing Accessories Merchant Wholesalers

SBA proposes to adopt a 150-employee size standard for NAICS 2022 industry 424350 (Clothing and Clothing Accessories Merchant Wholesalers). This new industry was formed by combining NAICS 2017 industry 424320 (Men's and Boys' Clothing and Furnishings Merchant Wholesalers) and NAICS 2017 industry 424330 (Women's, Children's, and Infants' Clothing and Accessories Merchant Wholesalers). Their current size standards are 150 employees and 100 employees, respectively. Based on the 2017 Economic Census data, 96.2% of firms in NAICS 424320 and 96.7% of firms in NAICS 424330 qualify as small under their respective size standards. Accounting for 55% of combined receipts, 69% of firms, and 61% of employees, NAICS 424330 tends to dominate the new industry. Thus, SBA considered adopting 100 employees as size standard for the new industry. However, that would cause more than 30 firms in NAICS 424320 to lose their small business status. Thus, SBA is proposing to adopt the 150 employees as the size standard for the new industry. Based on the 2017 Economic Census data, 97.1% of firms in NAICS 2022 industry 424350 would qualify as small under the proposed 150-employee size standard.

Size Standards for New Retail Trade Industries in NAICS 2022

For the Retail Trade sector, given the increasing prevalence of omni-channel distribution and variations in reporting patterns, the OMB eliminated the store/nonstore distinction (89 FR 35350 (July 2, 2021)). Under the NAICS 2017 structure, Subsector 454, Nonstore Retailers, included industries for NAICS 454110 (Electronic Shopping and Mail-Order Houses), NAICS 454210 (Vending Machine Operators), NAICS 454310 (Fuel Dealers), and 454390 (Other Direct Selling Establishments). OMB eliminated Subsector 454 from the NAICS 2017 structure. Under the NAICS 2022 structure for the sector, NAICS 454110 and NAICS 454390 are distributed throughout the new structure in the same way as retail stores, delineated by specialized broad product lines, such as groceries, apparel, hardware, etc. Vending Machine Operators is moved to Subsector 445 (Food and Beverage Retailers) with a new 6-digit code of 445132 and Fuel Dealers is moved to Subsector 457 (Gasoline Stations and Fuel Dealers) with a new 6-digit code of 457210.

As stated previously, NAICS 2017 industry 454110 was distributed to 42 different retail trade industries, and NAICS 454390 was distributed to 39 different retail trade industries. Almost all the new NAICS 2022 retail trade industries thus formed saw their 6-digit codes and NAICS industry titles changed but largely retained their contents and descriptions. Almost all new retail trade industries under NAICS 2022 contained a NAICS 2017 retail trade industry and parts of NAICS 454110 and NAICS 454390 and carried the description of the NAICS 2017 retail trade industry. Accordingly, following the guidelines in Table 5 (2b), SBA assigned the same size standard as for the NAICS 2017 retail trade industry that most closely matched the economic activity described by the NAICS 2022 retail trade industry.

For example, as shown in Table 7, Formation of NAICS 449110 (Furniture Retailers) under NAICS 2022, NAICS 2022 industry 449110 was formed by combining NAICS 442110 (Furniture Stores) with parts of NAICS 454110 and 454390 under NAICS 2017 and by changing the industry title to Furniture Retailers. The description of NAICS 2022 industry 449110 is almost the same as that for the corresponding NAICS 2017 industry. Thus, based on the same industry description, the size standard for new NAICS 2022 industry 449110 is $22 million, the same size standard as that for NAICS 442110 under NAICS 2017. The current size standards are $41.5 million for NAICS 454110 and $8.0 million for NAICS 454390. In this example, the adoption of the $22 million size standard for NAICS 2022 industry 449110 will, thus, result in a decrease to size standard for part of NAICS 454110 and an increase to the size standard for part of NAICS 454390 that merged with NAICS 442110. SBA applies this approach in determining the size standard for all other new NAICS 2022 retail trade industries that contained part of NAICS 2017 industry 454110, part of NAICS 454390, or both.

Since the current size standards for almost all impacted retail trade industries are less than $41.5 million which is the size standard for NAICS 454110, parts of NAICS 454110 that have merged with other retail trade industries will, in almost all cases, experience a decrease to the size standard. Specifically, of the 42 different split parts of NAICS 454110 that have merged with other retail trade industries, 41 will experience a decrease to the size standard and one will experience no change. Similarly, of the 39 different split parts of NAICS 454390 that have merged with other retail trade industries, 25 will see an increase to the size standard and 14 will see no changes to the size standard. The size standards for the affected NAICS 2017 retail trade industries are not impacted and, therefore, remain the same.

NAICS 458110—Clothing and Clothing Accessories Retailers

SBA is proposing to adopt the $41.5 million receipts-based size standard for NAICS 2022 industry 458110 (Clothing and Clothing Accessories Retailers). This new industry was formed by combining six clothing and clothing accessories related retail trade industries with parts of NAICS 2017 industries 454110 and 454390. Table 8, Formation of NAICS 2022 Industry 458110 (Clothing and Clothing Accessories Retailers), lists all of these industries along with their respective size standards. Excluding parts of NAICS 454110 and 454390, the size standards for those six industries vary from $12 million for NAICS 448110 (Men's Clothing Stores) to $41.5 million for NAICS 448140 (Family Clothing Stores), and the percentages of firms that are small under their respective size standards vary from 96.7% for 448110 to 98.9% for NAICS 448120 (Women's Clothing Stores).

Excluding parts of NAICS 454110 and 454390, no single industry seems to dominate among those six clothing and clothing accessories related retail trade industries making up the new industry. Accordingly, following the guidelines laid out in Table 5, SBA is proposing to adopt the highest $41.5 million size standard among the six industries as the size standard for new NAICS 2022 industry 458110. Based on the 2017 industry data, 98.7% of firms in NAICS 458110 would qualify as small under the proposed $41.5 million size standard. SBA confirmed that no individual firm at the proposed $41.5 million size standard would dominate the market in any of those industries. For example, based on the 2017 Economic Census data, the market share of a firm at the proposed size standard averaged just 0.3%, varying from 0.04% to 0.6%. SBA determines that these levels of market shares effectively preclude a firm at or below the proposed size standard from exerting control on any of the industries.

NAICS 513140—Directory and Mailing List Publishers

SBA proposes to adopt a 1,000-employee size standard for NAICS 2022 industry 513140 (Directory and Mailing List Publishers). This new industry was formed by combining NAICS 2017 industry 511140 (Directory and Mailing List Publishers) and the internet Directory and Mailing List Publishers part of NAICS 2017 industry 519130 (Internet Publishing and Broadcasting and Web Search Portals). Their current size standards are 1,250 employees and 1,000 employees, respectively. Based on the 2017 Economic Census data, 98.3% of firms in both industries qualify as small under their respective size standards. Accounting for 97% of combined receipts, 92% of combined firms, and 95% of combined employees, NAICS 519130 dominates the new industry. Thus, SBA is proposing to adopt 1,000 employees as the size standard for the new industry. Moreover, under the 1,000-employee size standard, no firm in NAICS 511140 would lose small status, based on both the 2017 Economic Census and FPDS-NG data for fiscal years 2018-2020.

NAICS 513191—Greeting Card Publishers

SBA proposes to adopt a 1,000-employee size standard for NAICS 2022 industry 513191 (Greeting Card Publishers). This new industry was formed by combining NAICS 2017 industry 511191 (Greeting Card Publishers) with the Internet Greeting Card Publishers part of NAICS 2017 industry 519130 (Internet Publishing and Broadcasting and Web Search Portals). Their current size standards are 1,500 employees and 1,000 employees, respectively. Based on the 2017 Economic Census data, 99% of firms in NAICS 511191 and 98.3% in 519130 qualify as small under their respective size standards. Accounting for 98% of combined receipts and firms and 95% of combined employees, NAICS 519130 dominates the new industry. Thus, SBA is proposing to adopt 1,000 employees as the size standard for the new industry. Moreover, at the 1,000- employee size standard, no firm in NAICS 511191 would lose small status, based on both the 2017 Economic Census and FPDS-NG data for fiscal years 2018-2020. Based on the 2017 industry data, 98.4% of firms in NAICS 2022 industry 513191 would qualify as small under the proposed 1,000-employee size standard.

NAICS 513199—All Other Publishers

SBA proposes to adopt a 1,000-employee size standard for NAICS 2022 industry 513199 (All Other Publishers). This new industry was formed by combining NAICS 2017 industry 511199 (All Other Publishers) with the All Other Internet Publishers part of NAICS 2017 industry 519130 (Internet Publishing and Broadcasting and Web Search Portals). Their current size standards are 500 employees and 1,000 employees, respectively. Based on the 2017 Economic Census data, 98.9% of firms in NAICS 511199 and 98.3% in 519130 qualify as small under their respective size standards. Accounting for 98-99% of combined receipts and employees, and 93% of combined firms, NAICS 519130 dominates the new industry. Thus, SBA is proposing to adopt 1,000 employees as the size standard for the new industry. SBA also considered adopting, as the size standard for the new industry, the 500-employee size standard that applies to NAICS 511199. However, doing so would cause about 40 firms based on the 2017 Economic Census data and 35 firms based on the FPDS-NG data for fiscal years 2018-2020 to lose small business status in NAICS 519130. Based on the 2017 Economic Census data, 98.7% of firms in NAICS 2022 industry 513199 would qualify as small under the proposed 1,000-employee size standard.

NAICS 516210—Media Streaming Distribution Services, Social Networks, and Other Media Networks and Content Providers

SBA proposes to adopt a $41.5 million receipts-based size standard for NAICS 2022 industry 516210 (Media Streaming Distribution Services, Social Networks, and Other Media Networks and Content Providers). This new industry was formed by combining three industries in their entirety with parts of two other industries under NAICS 2017. As shown in Table 9, Formation of NAICS 2022 Industry 516210, NAICS 515111 (Radio Networks), NAICS 515210 (Cable and other Subscription Programming), NAICS 519110 (News Syndicates), and the Television Networks part of NAICS 515120 (Television Broadcasting) have receipts-based size standards, and the Internet Broadcasting part of NAICS 519130 (Internet Publishing and Broadcasting and Web Search Portals) has an employee size standard. Since four of the five components of the new industry have a receipts-based size standard, SBA determines that a receipts-based size standard would be more appropriate for the new industry instead of an employee-based size standard. Moreover, industries with receipts-based size standards account for more than two-thirds (68%) of total firms in the new industry. When converted to receipts, the 1,000-employee size standard for the Internet Broadcasting part of NAICS 519130 will translate to a $41.5 million receipts-based size standard.^[2]

Considering the $41.5 million receipts-based equivalent of the 1,000-employee size standard for NAICS 519130, four of the five industries or parts contained in NAICS 2022 industry 516210 now have a $41.5 million receipts-based size standard. Thus, consistent with the guidelines as set forth in Table 5, SBA is proposing to adopt, as the size standard for the new industry, a $41.5 million receipts-based size standard which happens to be the highest and most frequently occurring size standard among the industries or parts comprising the new industry. SBA has determined that no individual firm at or below the proposed $41.5 million size standard will be large enough to dominate the operation in NAICS 2017 industry 519110, which currently has a lower size $32 million receipts-based size standard. Specifically, an individual firm at or below the proposed $41.5 million size standard would account for less than 3% of total industry receipts in NAICS 519110. This level of market share precludes the possibility of a firm at the proposed size standard to dominate the industry. Nearly 96% of firms in NAICS 511930 will qualify as small under the proposed $41.5 million size standard, as compared to 98% under the current 1,000-employee size standard. At the $41.5 million size standard, based on the 2017 Economic Census data, about 15-20 firms in NAICS 511930 (0.25% of firms in the industry) would lose their status as small businesses. Based on the 2017 Economic Census data, 92.3% of total firms in the new industry would qualify as small under the proposed $41.5 million receipts-based size standard.

NAICS 519290—Web Search Portals and All Other Information Services

SBA proposes to adopt a 1,000-employee size standard for NAICS 2022 industry 519290 (Web Search Portals and All Other Information Services). This new industry was formed by combining NAICS 2017 industry 519190 (All Other Information Services) with the Web Search Portals part of NAICS 2017 industry 519130 (Internet Publishing and Broadcasting and Web Search Portals). Their current size standards are $30 million in average annual receipts and 1,000 employees, respectively. Based on the 2017 Economic Census data, 97.7% of firms in NAICS 519190 and 98.3% in NAICS 519130 qualify as small under their respective size standards. Accounting for 97-98% of combined receipts and employees, and 87% of combined firms, NAICS 519130 dominates the new industry. Thus, SBA is proposing to adopt 1,000 employees as the size standard for the new industry. Based on the 2017 Economic Census data, SBA confirmed that the proposed 1,000-employee size standard excludes the largest and potentially dominant firms in NAICS 519190, even with 99% of firms qualifying as small under the 1,000-emploee size standard compared to 97.7% at the $30 million receipts-based size standard. Based on the 2017 industry data, 98.8% of firms would qualify as small under the 1,000-employee based size standard for NAICS 2022 industry 519290.

NAICS 811210—Electronic and Precision Equipment Repair and Maintenance

SBA proposes to adopt a $30 million receipts-based size standard for NAICS 2022 industry 811210 (Electronic and Precision Equipment Repair and Maintenance). This new industry was formed by merging four electronic, machinery and equipment repair and maintenance related industries. These industries, along with their respective size standards, are listed in Table 10, Formation of NAICS 811210 (Electronic and Precision Equipment Repair and Maintenance). Their current size standards for these industries vary from $19.5 million for NAICS 811213 to $30 million for NAICS 811212. The percentages of firms that are below the current size standards vary from 96.6% for NAICS 811219 to 99% for NAICS 811212. Based on the shares of combined receipts, firms, or employees, no industry seems to dominate the new industry. Accordingly, following the guidelines set forth in Table 5, SBA proposes to adopt, as the size standard for the new industry, the highest size standard ( i.e., $30 million) among the four industries making up the new industry. Based on the 2017 industry data, 98.4% of firms in NAICS 2022 industry 811210 would qualify as small under the proposed $30 million size standard.

In none of the three industries for which the current size standard is lower than the proposed $30 million, no largest or potentially dominant firms will be included under the proposed $30 million size standard. For example, based on the 2017 Economic Census data, the market share of a firm at the proposed $30 million size standard averages 1%, ranging from 0.4% for NAICS 812219 to 2.1% for NAICS 811211. SBA determines that these levels of market shares effectively preclude a firm at or below the proposed size standard from exerting control on any of the four impacted industries.

Summary of Proposed Size Standards for NAICS 2022 Industries

The NAICS 2022 revision created 111 new industries by reclassifying, combining, or splitting 156 NAICS 2017 industries or their parts. SBA's proposed size standards for these 111 new industries under NAICS 2022, as shown in Table 6 (above) have resulted in an increase to the size standards for 21 industries and 27 parts of three industries under NAICS 2017, a decrease to size standards for seven industries and 41 parts of one industry, a change in the size standard measure from average annual receipts to number of employees for one industry, a change in the size standard measure from number of employees to average annual receipts for part of one industry, and no change in size standards for 118 industries and 33 parts of eight industries.

Evaluation of 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: (1) Is independently owned and operated; (2) Is not dominant in its field of operation; and (3) Meets a specific small business definition or size standard established by SBA's Administrator. SBA considers, as part of its evaluation, whether a business concern at a proposed or revised 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 or revised standard. SBA also examines distribution of firms by size to ensure that a contemplated size standard excludes the largest and potentially dominant firms within an industry. The results of the market share analysis and size distribution of firms may indicate whether a firm, at the proposed or revised size standard, can exercise a control on a national basis. SBA has determined that for the industries for which size standards have been changed in this proposed rule, no individual firm at or below the proposed size standard will be large enough to dominate its field of operation. The share of a firm in total industry receipts at the proposed size standard, among those industries for which size standards have been changed is, on average, 1.4%, ranging from 0.005% to 31.2%. SBA determines that these levels of market shares effectively preclude a firm at or below the proposed size standards from exerting control on any of the industries.

Alternatives to Adopting NAICS 2022 for Size Standards

As an alternative to proposing new size standards for NAICS 2022 industries, SBA considered retaining NAICS 2017 as the basis of industry definitions for its small business size standards. That would, however, lead to inconsistency between SBA's size standards and establishment data published by Federal agencies that will adopt NAICS 2022 for their statistical and other data collection programs. OMB stated in its December 21, 2021, notice that “Federal statistical establishment data published for reference years beginning on or after January 1, 2022, should be published using the 2022 NAICS United States codes.” SBA is not a statistical agency, but the Agency uses for its size standards analyses establishment data collected by other Federal agencies, such as the Economic Census data and County Business Patterns from the U.S. Census Bureau. If SBA continues using NAICS 2017 for its size standards, it will not be able to analyze and evaluate industry structure adequately and accurately and adjust small business size standards appropriately because the forthcoming Economic Census and County Business Patterns data based on NAICS 2022 will not be compatible with NAICS 2017. That would run counter to the mandate of the Small Business Jobs Act (Jobs Act) (Pub. L. 111-240 (September 27, 2010)), which requires SBA to review all size standards and adjust them appropriately to reflect the current industry and market data every five years.

To establish, review, or revise, where necessary, small business size standards, SBA uses special tabulations of industry data that it obtains from the U.S. Census Bureau based on its Economic Census of U.S. industries and businesses, and establishment data from its County Business Patterns. Because the 2022 Economic Census will be based on NAICS 2022 industry definitions, it is imperative that SBA use NAICS 2022 as the basis of industry definitions for its table of small business size standards.

Request for Comments

SBA welcomes public comment on this proposed rule. Specifically, SBA invites comments on whether its proposed size standards for new industries are appropriate and suggestions on alternative size standards, along with supporting data and analysis, if proposed size standards are not appropriate. SBA also seeks comments on its methodology for converting size standards from NAICS 2017 to NAICS 2022 and data sources and analyses it used in developing proposed size standards for new industries. SBA will thoroughly evaluate and address all comments in preparing the final rule to adopt NAICS 2022 for its table of size standards.

Justification for the October 1, 2022, Effective Date

SBA's small business size standards, matched to NAICS 2022 to be adopted in a forthcoming final rule, will be effective on October 1, 2022, for the following reasons:

1. OMB stated in its December 21, 2021, notice that Federal statistical establishment data published for reference years beginning on or after January 1, 2022, should be published using NAICS 2022. SBA is not a statistical agency, but it uses the establishment data collected from other Federal agencies, such as the Economic Census and County Business Patterns data from the Census Bureau for its size standards analysis. Similarly, Federal procurement databases and systems, such as FPDS-NG and the System for Award Management (SAM), use NAICS codes from SBA's table of size standards. If SBA does not adopt NAICS 2022 for its table of size standards in a timely manner, it will result in inconsistency between SBA's size standards and other Federal procurement databases.

2. October 1, 2022, is the start of the new Federal Government fiscal year following OMB's adoption of NAICS 2022 effective January 1, 2022, and is consistent with SBA's adoption of previous NAICS revisions for its size standards effective at the beginning of the new fiscal year after the OMB's effective date.

3. With the adoption of the updated size standards at the start of the new fiscal year, Federal agencies that use NAICS industry definitions and SBA's size standards can collect comparable and consistent data on Federal statistics for program and industry analyses.

4. With the October 1, 2022, effective date, Federal agencies that use SBA's small business size standards for their programs will have sufficient time to plan and implement the updated size standards and assess the impact of size standards changes on their programs.

Compliance With Executive Orders 12866, the Congressional Review Act (5 U.S.C. 801-808), the Regulatory Flexibility Act (5 U.S.C. 601-612), Executive Orders 13563, 12988, and 13132, and the Paperwork Reduction Act (44 U.S.C. Ch. 35)

Executive Order 12866

OMB has determined that this proposed rule is not a “significant regulatory action” for purposes of Executive Order 12866. This rule proposes to incorporate the OMB's 2022 revisions of NAICS, which SBA uses as a basis of industry definitions for purposes of establishing small business size standards. As discussed above in this SUPPLEMENTARY INFORMATION section, the size standards of some industries or their parts would change because of the adoption of the NAICS 2022 revisions for SBA's Table of Size Standards. However, SBA has determined that a vast majority of businesses defined as small under the current NAICS 2017 based size standards will continue to remain small under the NAICS 2022 based size standards. The proposed rule, if adopted in its present form, will also affect other Federal Government programs that use SBA's size standards and provide various benefits for small businesses. SBA welcomes comments describing the impact on small businesses of the size standard changes resulting from the adoption of the NAICS revision for SBA Table of Size Standards. In order to help explain the need and objective of this proposed rule and its potential benefits and costs, SBA is providing, below, a Cost Benefit Analysis of this rule, including (1) A statement of the need for the regulatory action, (2) An examination of alternative approaches, and (3) An evaluation of the benefits and costs—both quantitative and qualitative—of the regulatory action and the alternatives considered.

Cost Benefit Analysis

1. What is the need for the regulatory action?

SBA believes that revising its small business size standards based on NAICS 2022 is in the best interests of small businesses. SBA's mission is to aid and assist small businesses through a variety of financial, procurement, business development and counselling, and advocacy programs. To ensure that these programs are best directed to their intended beneficiaries, SBA establishes numerical small business definitions (usually referred to as “size standards”) to determine which businesses are deemed eligible for Federal small business assistance. NAICS 2022 provides the latest industry definitions reflecting the latest changes in industry structure in the United States.

Under the Small Business Act (Act) (15 U.S.C. 632(a)), SBA Administrator is responsible for establishing small business size definitions and for ensuring that such definitions vary from industry to industry to reflect differences among various industries. By analyzing and reviewing size standards based on the NAICS 2022 industry definitions, SBA can more accurately and appropriately fulfill its mandate. If SBA does not use the latest industry definitions under NAICS 2022, size standards would not accurately reflect differences among industries. In addition, the Jobs Act requires SBA to review, at least every five years, all size standards and make necessary adjustments to reflect current industry and market conditions. To better serve this mandate, SBA needs to evaluate the industry data based on the latest NAICS industry definitions available.

In this proposed rule, SBA is generally following the same guidelines that it followed for adopting prior NAICS revisions for size standards, as spelled out under the Supplemental Information section. SBA also analyzed the relevant industry and program data to determine the size standards for certain NAICS 2022 industries involving NAICS 2017 industries or their parts with substantially different size standards. Size standards based on NAICS 2022 industry definitions and corresponding data will serve SBA's mission more effectively.

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

As stated previously, the NAICS 2022 revision created 111 new industries by reclassifying, combining, or splitting 156 NAICS 2017 industries or their parts. Changes from NAICS 2017 to NAICS 2022 consist of mergers of 124 NAICS 2017 industries or their parts to form the 79 new industries in NAICS 2022 with impacts on size standards on a number of NAICS 2017 industries. The NAICS 2022 revision also comprises of 32 changes in 6-digit codes, industry titles, or descriptions without changing the size standards. SBA's proposed size standards for these 111 new industries under NAICS 2022 have resulted in an increase to the size standards for 21 industries and 27 parts of three industries, a decrease to size standards for seven industries and 41 parts of one industry, a change in the size standard measure from average annual receipts to number of employees for one industry, a change in the size standard measure from number of employees to average annual receipts for part of one industry, and no change in size standards for 118 industries and 33 parts of eight industries. The benefits, costs, and transfer impacts of these changes are discussed below.

OMB directs agencies to establish an appropriate baseline to evaluate any benefits, costs, or transfer impacts of new regulatory actions and alternative approaches considered. The baseline should represent the agency's best assessment of what the world would look like absent the regulatory action. For a regulatory action promulgating modifications to an existing regulation (such as modifying the existing size standards), a baseline assuming no change to the regulation ( i.e., making no changes to current size standards) would generally provide an appropriate benchmark for evaluating benefits, costs, or transfer impacts of proposed or final regulatory changes and their alternatives.

The Baseline

For purposes of this regulatory action, the baseline represents maintaining the “status quo,” i.e., making no changes to the current size standards. Using the number of small businesses and levels of small business benefits (such as set-aside contracts, SBA's loans, disaster assistance, etc.) they receive under the current size standards as a baseline, one can examine the potential benefits, costs, and transfer impacts of changes to size standards on small businesses and on the overall economy.

Based on the 2017 Economic Census data, of a total of about 880,245 firms in the 156 impacted industries under NAICS 2017, 97.7% are considered small under the current size standards under NAICS 2017.

Similarly, based on the data from FPDS-NG for fiscal years 2018-2020, about 15,400 unique firms in those 156 NAICS 2017 industries received at least one Federal contract during that period, of which 76.2% were found to be small under the current size standards.^[3] Of about $18.6 billion in total average annual contract dollars awarded to businesses in the impacted industries during that period, 25.6% went to small businesses. Of about $4.8 billion in total small business contract dollars awarded in those industries during that period, 87.1% were awarded through various set-aside programs and 12.9% were awarded through non-set aside contracts. Table 11, Baseline of Impacted Industries Under NAICS 2017, provides these baseline results.

Table 11—Baseline of Impacted Industries Under NAICS 2017

Impact variable	Value
Number of industries impacted	156
Total firms in impacted industries (2017 Economic Census)	880,245
Total small firms in impacted industries under current size standards (2017 Economic Census)	859,573
Small firms as % of total firms (2017 Economic Census)	97.7%
Total contract dollars ($ million) (FPDS-NG—fiscal years 2018-2020)	$18,644
Total small business contract dollars under current standards ($ million) (FPDS-NG—fiscal years 2018-2020)	$4,776
Small business dollars as % of total dollars (FPDS-NG fiscal years 2018-2020)	25.6%
Total number of unique firms getting contracts (FPDS-NG fiscal years 2018-2020)	15,391
Total number of unique small firms getting small business contracts (FPDS-NG fiscal years 2018-2020)	11,727
Small business firms as % of total firms (FPDS-NG fiscal years 2018-2020)	76.2%
Number of 7(a) and Certified Development Company (CDC)/504 loans (fiscal years 2018-2020)	8,316
Amount of 7(a) and 504 loans ($ million) (fiscal years 2018-2020)	$4,789
Number of Economic Injury Disaster Loan (EIDL) program loans (fiscal years 2018-2020) 1	589
Amount of EIDL loans ($ million) (fiscal years 2018-2020) 1	$52.6
1  Excludes COVID-19 related EIDL loans due to their temporary nature. Effective January 1, 2022, SBA stopped accepting applications for new COVID EIDL loans or advances.

Based on the SBA's internal data on its loan programs for fiscal years 2018-2020, small businesses in those 156 industries received, on an annual basis, a total of 8,316 7(a) loans and CDC/504 loans in that period, totaling about $4.8 billion, of which 85.8% was issued through the 7(a) loan guarantee program and 14.2% was issued through the CDC/504 program. During fiscal years 2018-2020, small businesses in those industries also received 589 loans through the SBA's EIDL program, totaling about $52.6 million on an annual basis.^[4]

Proposed Increases to Size Standards

As stated above, SBA's proposed size standards for the 111 new industries under NAICS 2022 have resulted in an increase to the size standards for 21 industries and 27 parts of three industries under NAICS 2017. Below are descriptions of the benefits, costs, and transfer impacts of the proposed size standards.

Benefits of Proposed Increases to Size Standards

The benefits of adopting NAICS 2022 and the resulting proposed increases to size standards, if adopted, will accrue to three groups in the following ways: (1) Some businesses that are currently above their current size standards may gain small business status, thereby becoming eligible to participate in Federal small business assistance programs, including SBA's 7(a) loan program, CDC/504 loan program, EIDL program, Surety Bond Guarantee Program, and Federal procurement and business development programs intended for small businesses; (2) Growing small businesses that are close to exceeding the current size standards for their NAICS 2017 industries may retain their small business status for a longer period under proposed size standards under NAICS 2022, and can continue participating in the above programs; and (3) Federal Government agencies will have a larger pool of small businesses from which to draw to fulfill their small business procurement requirements because they will be able to define more accurately the principal purposes of their procurements under NAICS 2022 industry definitions.

The most significant benefit to businesses from increases to size standards is gaining or extending eligibility for Federal small business assistance programs. These include SBA's 7(a) loan program, CDC/504 loan program, EIDL program, Surety Bond Guarantee Program, and Federal procurement programs intended for small businesses. Federal procurement programs provide targeted, set-aside opportunities for small businesses. These include the 8(a) Business Development (BD) program, the Small Disadvantaged Businesses (SDB) program, the Historically Underutilized Business Zones (HUBZone) program, the Women-Owned Small Businesses (WOSB) program, the Economically Disadvantaged Women-Owned Small Businesses (EDWOSB) program, and the Service-Disabled Veteran-Owned Small Businesses (SDVOSB) program.

For the affected NAICS 2017 industries or their parts for which size standards have increased, based on the 2017 Economic Census data, SBA estimates that approximately 700 additional businesses would gain small business status under the proposed size standards for 2022 NAICS industries. That represents about 1.0% of the total number of small businesses in the affected industries. SBA's proposed size standards would result in an increase to the small business share of total receipts in those 24 industries ( i.e., those with increases in size standards) from 38.3% to 44.6%. Table 12, Impacts of Proposed Size Standards for NAICS 2022 Industries, provides impacts of increasing size standards for 21 industries and 27 parts of three industries under NAICS 2017.

Table 12—Impacts of Proposed Size Standards for NAICS 2022 Industries

Impact variable	Value
Number of industries with increases to size standards	24
Total current small businesses in industries with increases to size standards (2017 Economic Census)	70,979
Additional firms qualifying as small under standards (2017 Economic Census)	691
% of additional firms qualifying as small relative to current small businesses in industries with increases to size standards (2017 Economic Census)	1.0%
Number of current unique small firms getting small business contracts in industries with increases to size standards (FPDS-NG fiscal years 2018-2020) 1	1,479
Additional small business firms getting small business status (FPDS-NG fiscal years 2018-2020) 1	42
% increase to small businesses relative to current unique small firms getting small business contracts in industries with increases to size standards (FPDS-NG fiscal years 2018-2020)	2.8%
Total small business contract dollars under current standards in industries with increases to size standards ($ million) (FPDS-NG fiscal years 2018-2020)	$492.3
Estimated additional small business dollars available to newly- qualified small firms (using avg. dollars obligated to small businesses) ($ million) (FPDS-NG fiscal years 2018-2020) 2	$60.4
% increase to small business dollars relative to total small business contract dollars under current standards in industries with increases to size standards	12.3%
Total number of 7(a) and 504 loans to small business in industries with increases to size standards (fiscal years 2018-2020)	822
Total 7(a) and 504 loan amounts to small businesses in industries with increases to size standards ($ million) (fiscal years 2018-2020)	$300.0
Estimated number of 7(a) and 504 loans to newly qualified small firms	1
Estimated 7(a) and 504 loan amounts to newly qualified small firms ($ million)	$0.001
% increase to 7(a) and 504 loan amount relative to the total amount of 7(a) and 504 loans in industries with increases to size standards	0.0%
Total number of EIDL loans to small businesses in industries with increases to size standards (fiscal years 2018-2020) 3	87
Total amount of EIDL loans to small businesses in industries with increases to size standards ($ million) (fiscal years 2018-2020) 3	$5.4
Estimated number of EIDL loans to newly qualified small firms 3	0
Estimated EIDL loan amount to newly qualified small firms ($ million) 3	$0.0
% increase to EIDL loan amount relative to the total amount of disaster loans in industries with increases to size standards 3	0.0%
1  Total impact represents total unique number of firms impacted to avoid double counting as some firms are participating in more than one industry.
2  Additional dollars are calculated multiplying average small business dollars obligated per Data Universal Numbering System (DUNS) times change in number of firms. Numbers of firms are calculated using the SBA current size standard, not the contracting officer's size designation.
3  Excludes COVID-19 related EIDL loans due to their temporary nature. Effective January 1, 2022, SBA stopped accepting applications for new COVID EIDL loans or advances.

As shown in Table 12, based on the FPDS-NG data for fiscal years 2018-2020, SBA estimates that about 42 firms that are currently active in Federal contracting in those industries would gain small business status under the proposed size standards. Based on the same data, SBA estimates that those newly qualified small businesses under the proposed size standards under NAICS 2022 could receive Federal small business contracts totaling about $60.4 million annually. That represents a 12.3% increase to Federal small business dollars from the baseline.

The added competition from more businesses qualifying as small can result in lower prices to certain Federal Government procurements set aside or reserved for small businesses, but SBA cannot quantify this impact precisely. Costs could also be higher when full and open contracts are awarded to HUBZone businesses that receive price evaluation preferences. However, with agencies likely setting aside more contracts for small businesses in response to the availability of a larger pool of small businesses under the proposed size standards, HUBZone firms might receive more set-aside contracts and fewer full and open contracts, thereby resulting in some cost savings to agencies. SBA cannot estimate such costs savings as it is impossible to determine the number and value of unrestricted contracts to be otherwise awarded to HUBZone firms will be awarded as set-asides. However, such cost savings are likely to be relatively small as only a small fraction of full and open contracts are awarded to HUBZone businesses.

Under SBA's 7(a) and CDC/504 loan programs, with more businesses qualifying as small under the proposed size standards, SBA will be able to guarantee more loans to small businesses. However, SBA expects the impact on loans to be minimal since applicants to SBA's financial assistance programs are typically much smaller than the industry size standard and most businesses that currently participate in the program would remain eligible for assistance even after this rule is adopted. Moreover, SBA does not anticipate that the proposed increases to size standards will have a significant impact on the distribution of firms receiving loans by size of firm. Since SBA's proposed size standards changes primarily impact firms at the higher margin of size standards, SBA estimates the impact to its financial assistance programs by estimating the number of loans and the amount of loans to firms greater than 10% below their size thresholds. SBA believes that expanding access to SBA's financial assistance programs will help all small businesses to adapt to changes in business environment, recover from disasters more quickly, and grow successfully, while having no impact on the ability of smaller small firms to access financial services from SBA.

Based on its internal data for fiscal years 2018-2020, SBA estimates that about one additional 7(a) and CDC/504 loans, totaling approximately $.001 million, could be made to the newly-defined small businesses under the proposed size standards under NAICS 2022. That represents a 0.0% increase to the loan amount compared to the baseline (see Table 12). The actual impact might be smaller as the newly qualified firms under the proposed size standards could have qualified anyway under the tangible net worth and net income based alternative size standard.

Newly-defined small businesses will also benefit from SBA's EIDL program, which, like SBA's 7(a) and CDC/504 loan program, typically provides loans to businesses that are much smaller than the industry size standard. Since this program is contingent on the occurrence and severity of a disaster, SBA cannot make a precise estimate of the future EIDL benefit. However, based on its internal disaster loan program data for fiscal years 2018-2020 and the amount of loans to firms greater than 10% below their size thresholds, SBA estimates that, on an annual basis, the newly defined small businesses under the proposed size standards for NAICS 2022 would not be impacted.

Additionally, the newly-defined small businesses under proposed size standards under NAICS 2022 would also benefit through reduced fees, less paperwork, and fewer compliance requirements that are available to small businesses through the Federal Government programs, but SBA has no data to quantify this impact.

Costs of Proposed Increases to Size Standards

Aside from taking time to register in the System for Award Management (SAM) to be eligible to participate in Federal contracting and update the SAM profile annually, small businesses incur no direct costs to gain or retain their small business status under proposed size standards for NAICS 2022. All businesses willing to do business with the Federal Government must register in SAM and update their SAM profiles annually, regardless of their size status. SBA believes that a vast majority of businesses that are willing to participate in Federal contracting are already registered in SAM and update their SAM profiles annually. It is important to point out that most business entities that are already registered in SAM will not be required to update their SAM profiles. However, it will be incumbent on registrants to review, and update as necessary, their profiles to ensure that they have the correct NAICS codes. SAM requires that registered companies review and update their profiles annually, and therefore, businesses will need to pay particular attention to the changes to determine if they might affect them. They will also have to verify, and update, if necessary, their Representations and Certifications in SAM. More importantly, this proposed rule does not establish the new size standards for the very first time; rather it intends to modify the existing size standards to conform to new industry definitions under NAICS 2022.

To the extent that the newly-defined small firms under NAICS 2022 could become active in Federal procurement programs, this may entail some additional administrative costs to the Federal Government because of more businesses qualifying for Federal small business programs. For example, there will be more firms seeking SBA's loans, more firms eligible for enrollment in the SBA's Dynamic Small Business Search (DSBS) database or in certify.sba.gov, more firms seeking certifications as 8(a) BD or HUBZone firms, or qualifying for SDB, WOSB, EDWOSB, and SDVOSB status, and more firms applying for SBA's 8(a) BD mentor-protégé program.

Among those newly-defined small businesses seeking SBA's loans, there could be some additional costs associated with verification of their small business status. However, small business lenders have an option of using the tangible net worth and net income-based alternative size standard instead of using the industry-based size standards to establish eligibility for SBA's loans. For these reasons, SBA believes that these added administrative costs will be minor because necessary mechanisms are already in place to handle these added requirements.

Additionally, some Federal contracts may possibly have higher costs. With a greater number of businesses defined as small due to proposed size standards under NAICS 2022, Federal agencies may choose to set aside more contracts for competition among small businesses only instead of using a full and open competition. The movement of contracts from unrestricted competition to small business set-aside contracts might result in competition among fewer total bidders, although there will be more small businesses eligible to submit offers under the proposed size standards. However, any additional costs associated with fewer bidders are expected to be minor since, by law, procurements may be set aside for small businesses under the 8(a)/BD, SDB, HUBZone, WOSB, EDWOSB, or SDVOSB programs only if awards are expected to be made at fair and reasonable prices.

Costs may also be higher when full and open contracts are awarded to HUBZone businesses that receive price evaluation preferences. However, with agencies likely setting aside more contracts for small businesses in response to the availability of a larger pool of small businesses under the adopted increases to size standards, HUBZone firms might receive fewer full and open contracts, thereby resulting in some cost savings to agencies. However, such cost savings are likely to be minimal as only a small fraction of unrestricted contracts are awarded to HUBZone businesses.

Transfer Impacts of Proposed Increases to Size Standards

The proposed size standards for the NAICS 2022 industries may result in some redistribution of Federal contracts between the newly-qualified small businesses and large businesses and between the newly-qualified small businesses and small businesses under the current size standards. However, it would have no impact on the overall economic activity since total Federal contract dollars available for businesses to compete for will not change with changes to size standards. While SBA cannot quantify with certainty the actual outcome of the gains and losses from the redistribution of contracts among different groups of businesses, it can identify several probable impacts in qualitative terms. With the availability of a larger pool of small businesses under the proposed increases to size standards for 21 NAICS 2017 industries and 27 parts of three industries, some unrestricted Federal contracts that would otherwise be awarded to large businesses may be set aside for small businesses. As a result, large businesses may lose some Federal contracting opportunities. Similarly, some small businesses under the current size standards may obtain fewer set-aside contracts due to the increased competition from larger businesses qualifying as small under the proposed size standards for NAICS 2022 industries. This impact may be offset by a greater number of procurements being set aside for small businesses because of more businesses qualifying as small under the proposed size standards. With larger businesses qualifying as small under the higher proposed size standards, smaller small businesses could face some disadvantage in competing for set-aside contracts against their larger counterparts. However, SBA cannot quantify these impacts.

Proposed Decreases to Size Standards

As stated above, SBA's proposed size standards for the 111 new industries under NAICS 2022 have resulted in a decrease to the size standards for 7 industries and 41 parts of one industry under NAICS 2017. Below are descriptions of the benefits, costs, and transfer impacts of these proposed decreases to size standards.

Benefits of Proposed Decreases to Size Standards

The most significant benefit from proposed decreases to size standards based on analytical results is to ensure that size standards are more reflective of latest industry structure and Federal market trends and that Federal small business assistance is more effectively targeted to its intended beneficiaries. These include SBA's 7(a) loan program, CDC/504 loan program, EIDL program, Surety Bond Guarantee Program, and Federal procurement programs. As stated previously, Federal procurement programs provide targeted, set-aside opportunities for small businesses under SBA's contracting and business development programs, such as small business, SDB, 8(a) BD, HUBZone, WOSB, EDWOSB, and SDVOSB programs. The adoption of size standards based on relevant data diminishes the risk of awarding Federal Government contracts or granting financial assistance to firms that are not small anymore. Lowering size standards would also reduce the risk of allowing the largest and potentially dominant firms to qualify as small and become eligible for Federal assistance intended for small businesses. This may provide a better chance for smaller small firms to grow and benefit from the opportunities available on the Federal marketplace and strengthen the small business industrial base for the Federal Government.

Costs of Proposed Decreases to Size Standards

Table 13, Impacts of Proposed Decreases to Size Standards, shows the various impacts of proposing to lower size standards in seven industries and 41 parts of one industry under NAICS 2017. Based on the 2017 Economic Census, about 1,055 (2.7%) firms would lose their small business status under proposed decreases to size standards.^[5] However, many of these businesses were not found to have participated in Federal small businesses programs, including SBA's financial assistance and procurement programs, which suggests that impacts of proposed decreases to size standards would be fairly minimal. Similarly, based on the FPDS-NG data for fiscal years 2018-2020, SBA estimates that no small businesses participating in Federal contracting would lose their small status and become ineligible to compete for set-aside contracts. Thus, SBA believes these impacts are minimal.

Table 13—Impacts of Proposed Decreases to Size Standards

Impact variable	Value
Number of industries for which SBA proposes to decrease size standards	8
Total current small businesses in industries for which SBA proposes to decrease size standards (2017 Economic Census)	39,011
Estimated number of firms losing small status in industries for which SBA proposes to decrease size standards (2017 Economic Census)	1,055
% of firms losing small status relative to current small businesses in industries for which SBA proposes to decrease size standards (2017 Economic Census)	2.7%
Number of current unique small firms getting small business contracts in industries for which SBA proposes to decrease size standards (FPDS-NG FY 2018-2020) 1	30
Estimated number of small business firms that would have lost small business status in industries for which SBA proposes to decrease size standards (FPDS-NG FY 2018-2020) 1	0
% decrease to small business firms relative to current unique small firms getting small business contracts in industries for which SBA proposes to decrease size standards (FPDS-NG FY 2018-2020) 1	0%
Total small business contract dollars under current size standards in industries for which SBA proposes to decrease size standards ($ million) (FPDS-NG FY 2018-2020)	$3.3
Estimated small business dollars not available to firms losing small business status in industries for which SBA proposes to decrease size standards ($ million) (FPDS-NG FY 2018-2020) 2	0
% decrease to small business dollars relative to total small business contract dollars under current size standards in industries for which SBA proposes to decrease size standards	0%
Total number of 7(a) and 504 loans to small businesses in industries for which SBA proposes to decrease size standards (FY 2018-2020)	402
Total amount of 7(a) and 504 loans to small businesses in industries for which SBA proposes to decrease size standards ($ million) (FY 2018-2020)	$140.3
Estimated number of 7(a) and 504 loans not available to firms that would have lost small business status in industries for which SBA proposes to decrease size standards	1
Estimated 7(a) and 504 loan amount not available to firms that would have lost small status ($ million)	$0.001
% decrease to 7(a) and 504 loan amount relative to the total amount of 7(a) and 504 loans in industries for which SBA proposes to decrease size standards	0.0%
Total number of EIDL loans to small businesses in industries for which SBA proposes to decrease size standards (FY 2018-2020) 3	4
Total amount of EIDL loans to small businesses in industries for which SBA proposes to decrease size standards ($ million) (FY 2018-2020) 3	$0.2
Estimated number of EIDL loans not available to firms that would have lost small business status in industries for which SBA proposes to decrease size standards 3	0
Estimated EIDL loan amount not available to firms that would have lost small business status ($ million) 3	$0.0
% decrease to EIDL loan amount relative to the baseline 3	0.0%
1  Total impact represents total unique number of firms impacted to avoid double counting as some firms participate in more than one industry.
2  Additional dollars are calculated multiplying average small business dollars obligated per unique small firm times change in number of firms. Numbers of firms are calculated using the SBA's current size standards, not the contracting officer's size designation.
3  Excludes COVID-19 related EIDL loans due to their temporary nature. Effective January 1, 2022, SBA stopped accepting applications for new COVID EIDL loans or advances.

Transfer Impacts of Proposed Decreases to Size Standards

If the size standards are decreased, it may result in a redistribution of Federal contracts between small businesses losing their small business status and large businesses and between small businesses losing their small business status and small businesses remaining small under the reduced size standards. However, as under the proposed increases to size standards, this would have no impact on the overall economic activity since the total Federal contract dollars available for businesses to compete for will stay the same. While SBA cannot estimate with certainty the actual outcome of the gains and losses among different groups of businesses from contract redistribution resulting from decreases to size standards, it can identify several probable impacts. With a smaller pool of small businesses under the proposed decreases to size standards, some set-aside Federal contracts to be otherwise awarded to small businesses may be competed on an unrestricted basis. As a result, large businesses may have more Federal contracting opportunities. However, because agencies are still required by law to award 23% of Federal dollars to small businesses, SBA expects the movement of set-aside contracts to unrestricted competition to be limited. For the same reason, small businesses under the reduced size standards are likely to obtain more set-aside contracts due to the reduced competition from fewer businesses qualifying as small under the decreases to size standards. With some larger small businesses losing small business status under the proposed decreases to size standards, smaller small businesses would likely become more competitive in obtaining set-aside contracts. However, SBA cannot quantify these impacts.

Net Impacts of Proposed Size Standards Changes

The impacts of the proposed increases of size standards for 21 industries and 27 parts of three industries were shown in Table 12 (above). Similarly, the impacts of proposed decreases of size standards for seven industries and 41 parts of one industry were presented in Table 13 (above). Table 14, Net Impacts of Proposed Size Standards Changes, below, presents the net impacts of proposed changes to size standards for 28 industries and 68 parts of four industries.

Based on the 2017 Economic Census, SBA estimates that in 28 NAICS 2017 industries and 68 parts of four industries for which proposed size standards for NAICS 2022 have resulted changes in size standards, about 364 firms (almost all in NAICS 2017 industry 454110) would not qualify as small under the proposed size standards for NAICS 2022 industries. That represents about 0.3% of all firms classified as small in those industries and industry parts under the current size standards.

Table 14—Net Impacts of Proposed Size Standards Changes

Impact variable	Value
Number of industries or industry parts with changes to size standards	32
Total number of small firms under the current size standards in industries with changes to size standards (2017 Economic Census)	109,990
Additional number of firms qualifying as small under size standards changes (2017 Economic Census)	−364
% of additional firms qualifying as small relative to total current small firms (2017 Economic Census)	−0.3%
Number of current unique small firms getting small business contracts in industries with changes to size standards (FPDS-NG FY 2018-2020) 1	1,509
Additional number of unique small firms gaining small business status in industries with changes to size standards (FPDS-NG FY 2018-2020) 1	42
% increase to small firms relative to current unique small firms gaining small business status (FPDS-NG FY 2018-2020)	2.8%
Total small business contract dollars under current size standards in industries with changes to size standards ($ million) (FPDS-NG FY 2018-2020)	$495.6
Estimated small business dollars available to newly qualified small firms ($ million) (FPDS-NG FY 2018-2020) 2	$60.4
% increase to dollars relative to total small business contract dollars under current size standards	12.2%
Total number of 7(a) and 504 loans to small businesses in industries with changes to size standards (FY 2018-2020)	1,224
Additional number of 7(a) and 504 loans to small businesses in industries with changes to size standards (FY 2018-2020)	0
% of additional 7(a) and 504 loans go small businesses in industries with changes to size standards	0.0%
Total amount of 7(a) and 504 loans to small businesses in industries with changes to size standards ($ million) (FY 2018-2020)	$440.3
Estimated additional 7(a) and 504 loan amount to newly-qualified small firms ($ million)	$0.0
% increase to 7(a) and 504 loan amount relative to the total amount of 7(a) and 504 loans to small businesses	0.0%
Total number of EIDL loans to small businesses in industries with changes to size standards (FY 2018-2020) 3	91
Estimated number of additional EIDL loans to newly-qualified small firms (FY 2018-2020) 3	0
% of additional EIDL loans to small businesses in industries with changes to size standards	0.0%
Total amount of EIDL loans to small businesses in industries with changes to size standards ($ million) (FY 2018-2020) 3	$0.2
Estimated additional EIDL loan amount to newly-qualified small firms ($ million) 3 (FY2018-2020)	$0.0
% increase to EIDL loan amount relative to the total amount of disaster loans to small businesses 3	0.0%
1  Total impact represents total unique number of firms impacted to avoid double counting as some firms participate in more than one industry.
2  Additional dollars are calculated multiplying average small business dollars obligated per unique firm times change in number of firms. Numbers of firms are calculated using the SBA's current size standards, not the contracting officer's size designation.
3  Excludes COVID-19 related EIDL loans due to their temporary nature. Effective January 1, 2022, SBA stopped accepting applications for new COVID EIDL loans or advances.

Based on the FPDS-NG data for fiscal years 2018-2020, SBA estimates that about 42 unique active firms in Federal contracting in those industries would gain their small business status under proposed changes to size standards, most of them in Sector 31-33 (Manufacturing). This represents an increase of about 2.8% of the total number of small businesses participating in Federal contracting under the current size standards. Based on the same data, SBA estimates that about $60.4 million of Federal procurement dollars would become available to all small firms, including those gaining small status. This represents an increase of 12.2% from the baseline. SBA estimates that the dollars obligated to small businesses will increase despite a reduction in the total number of small firms because the contract dollars to newly-qualified small businesses in sectors with increases to size standards is higher than the contract dollars to small businesses losing small business status in sectors with decreases to size standards.

Based on the SBA's loan data for fiscal years 2018-2020, the total number of 7(a) and CDC/504 loans will not be impacted, and the loan amount may increase slightly since the average loan value to firms with increases to size standards is higher than the average loan value to firms with decreases to size standards.

Firms' participation under the SBA's EIDL program will be affected as well. Since the benefit provided through this program is contingent on the occurrence and severity of a disaster in the future, SBA cannot make a meaningful estimate of this impact. However, based on the disaster loan program data for fiscal years 2018-2020, SBA estimates that the total number of EIDL loans and the loan amount will not be impacted.

3. What alternatives have been considered?

As stated previously, as an alternative to proposing new size standards for NAICS 2022 industries, SBA considered retaining NAICS 2017 as the basis of industry definitions for its small business size standards. That would, however, lead to inconsistencies between SBA's size standards and establishment data published by Federal agencies that will adopt NAICS 2022 for their statistical and other data collection programs. OMB stated in its December 21, 2021, notice that “Federal statistical establishment data published for reference years beginning on or after January 1, 2022, should be published using the 2022 NAICS United States codes.” SBA is not a statistical agency, but it uses for its size standards analyses establishment data collected by other Federal agencies, such as the Economic Census data and County Business Patterns from the U.S. Census Bureau. If SBA continues using NAICS 2017 for its size standards, it will not be able to analyze and evaluate industry structure adequately and accurately and adjust small business size standards appropriately because the forthcoming Economic Census and County Business Patterns data based on NAICS 2022 will not be compatible with NAICS 2017 industry definitions. That would run counter to the Jobs Act mandate that requires SBA to review all size standards and adjust them appropriately to reflect the current industry structure and market conditions every five years.

To establish, review, or revise, where necessary, small business size standards, SBA uses special tabulations of industry data that it obtains from the U.S. Census Bureau based on its Economic Census of U.S. industries and businesses, and establishment data from its County Business Patterns (CBP). Because the 2022 Economic Census and CBP data will be based on NAICS 2022 industry definitions, it is imperative that SBA also use NAICS 2022 as the basis of industry definitions for its table of small business size standards.

Congressional Review Act

Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996 (codified at 5 U.S.C. 801-808), also known as the Congressional Review Act or CRA, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. SBA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States. A major rule under the CRA cannot take effect until 60 days after it is published in the Federal Register . OMB's Office of Information and Regulatory Affairs has determined that this rule is not a “major rule” as defined by 5 U.S.C. 804(2).

Initial Regulatory Flexibility Analysis

Under the Regulatory Flexibility Act (RFA), this proposed rule, if adopted, may have a significant impact on a substantial number of small businesses in some industries whose size standards have been revised. As described above, this rule may affect small businesses applying for Federal Government contracts, loans under SBA's 7(a), 504, 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 objectives 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?

The Small Business Act requires that small business size standards vary from industry to industry reflecting the differing characteristics of the various industries. SBA uses the latest NAICS as a basis of industries definitions for its table of size standards. As part of its five-year review of and revisions to NAICS industry definitions, OMB published its latest NAICS revision, NAICS 2022, on December 21, 2021. According to the OMB's notice, Federal establishment and industry data for reference years beginning on or after January 1, 2022, should be published using NAICS 2022. This rule proposes to amend SBA's small business size regulations to incorporate NAICS 2022 into its table of size standards. This not only makes SBA's size standards more reflective of the latest industry differences but also makes them more consistent with latest industry data the Agency uses to establish, review or adjust size standards. Updating size standards to the latest industry definitions also serves the SBA's mandate to review all size standards and make appropriate adjustments to reflect market conditions under the Jobs Act.

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

With the update of size standards to the latest industry definitions under NAICS 2022, Federal small business assistance is more effectively targeted to its intended beneficiaries. The NAICS 2022 revision created 111 new industries by reclassifying, combining, or splitting 156 NAICS 2017 industries or their parts. If adopted as proposed, SBA's proposed size standards for these 111 new industries under NAICS 2022 will result in an increase to the size standards for 21 industries and 27 parts of three industries under NAICS 2017, a decrease to size standards for seven industries and 41 parts of one industry, a change in the size standard measure from average annual receipts to number of employees for one industry, a change in the size standard measure from number of employees to average annual receipts for a part of one industry, and no change in size standards for 118 industries and 33 parts of eight industries. In 21 industries and 27 parts of three industries whose size standards would increase due to the adoption of NAICS 2022, nearly 700 firms above the current size standards would qualify as small under the updated size standards, thereby making them eligible for Federal small business assistance programs. Based on the data for fiscal years 2018-2020, SBA estimates that approximately $60.0 million in Federal contracts and about $100,000 in SBA 7(a) and 504 loans could be awarded to the newly defined small businesses under the updated size standards. The updated size standards would enable advanced small businesses to maintain their small business size status for a longer period and some mid-size businesses ( i.e., businesses that have just exceeded the size thresholds) regain their small business status. In the seven NAICS 2017 industries and 41 parts of one industry for which size standards will decrease as a result of adoption of NAICS 2022, 1,055 firms below the current size standards would lose their small business size status under the proposed size standards. However, the program data suggests that this would cause no impact on them in terms of access to Federal contracting and SBA's loans programs. Currently, they are not participating in any small business programs.

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

The proposed size standard changes due to the adoption of NAICS 2022 impose no additional reporting or record keeping requirements on small businesses. However, qualifying for Federal small business contracting and other programs may require businesses to register in SAM and recertify in SAM that they are small at least once annually. Therefore, the newly qualified small businesses opting to participate in those programs must comply with SAM requirements. There are minimal costs associated with SAM registration and annual recertification, but the proposed rule does not impose any new costs in this area. Changing size standards alters the access to SBA's financial and other Federal programs that assist small businesses but does not impose a regulatory burden because they neither regulate nor control business behavior.

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

Under section 3(a)(2)(C) of the Small Business Act, 15 U.S.C. 632(a)(2)(c), Federal agencies must generally 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)). An agency may establish for its programs a size standard that is different from those established by SBA if approved by SBA's Administrator in accordance with 13 CFR 121.903. SBA is not aware of any Federal rule that would duplicate or conflict with establishing or updating 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 RFA authorizes a Federal 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 levels of size standards by industry and changing the size measures, no practical alternative exists to the systems of numerical size standards. As stated previously, SBA considered continuing to use NAICS 2017 as a basis of industry definitions for its table of size standards. However, that would render SBA's table of size standards incompatible with Federal industry and establishment statistics and other databases when evaluating industry characteristics to ensure size standards are reflective of current industry structure and market conditions.

Executive Order 13563

A description of the need for this proposed regulatory action and benefits and costs associated with this action including possible distribution impacts that relate to Executive Order 13563 are included above in the Cost Benefit Analysis.

To engage interested parties in this action, SBA reached out to all Federal agencies advising them that the Agency plans to update its table of size standards to NAICS 2022, effective October 1, 2022, and that agencies must continue using the current size standards until that date. Adopting the updated size standards on October 1, 2022, is consistent with SBA's adoptions of previous NAICS revisions at the beginning of the new fiscal year following the OMB's January 1 effective date of NAICS revisions for Federal statistical agencies.

Unlike the previous NAICS revisions which SBA adopted for its size standards either through a direct final rule or through an interim final rule, for the adoption of NAICS 2022 revision, SBA is issuing this proposed rule and seeking comments to better engage the public in the process. SBA will also issue a press release on the publication of the proposed rule and update the size standards web page at www.sba.gov/​size, asking interested parties to comment on the rule. SBA will thoroughly consider all public comments when developing the final rule.

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 purposes of Executive Order 13132, SBA has determined that this proposed rule, if adopted as proposed, will not have substantial, direct effects on the States, on the relationship between the Federal 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 purpose of the Paperwork Reduction Act, 44 U.S.C. Ch. 35, SBA has determined that this proposed rule would not impose any new reporting or record keeping requirements.

List of Subjects in 13 CFR Part 121

• Administrative practice and procedure
• Federal Government procurement
• Federal 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 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(a)(36), 662, 694a(9), and 9012.

2. In § 121.201, amend the table, “Small Business Size Standards by NAICS Industry” as follows:

a. Remove the entries for 212111, 212112, and 212113.

b. Add entries for 212114, 212115, and 212220 in numerical order.

c. Remove the entries for 212221 and 212222.

d. Add an entry for 212290 in numerical order.

e. Remove the entries for 212291 and 212299.

f. Add an entry for 212323 in numerical order.

g. Remove the entries for 212324 and 212325.

h. Add an entry for 212390 in numerical order.

i. Remove the entries for 212391, 212392, 212393, and 212399.

j. Revise entry 311221.

k. Remove the entry for 315110.

l. Add an entry for 315120 in numerical order.

m. Remove the entries for 315190, 315220, and 315240.

n. Add an entry for 315250 in numerical order.

o. Remove the entry for 315280.

p. Add an entry for 316990 in numerical order.

q. Remove the entries for 316992, 316998, 321213, and 321214.

r. Add entries for 321215 and 322120 in numerical order.

s. Remove the entries for 322121 and 322122.

t. Add an entry for 325315 in numerical order.

u. Revise entry 325992.

v. Remove the entry for 333244.

w. Add an entry for 333248 in numerical order.

x. Remove the entry for 333249.

y. Add an entry for 333310 in numerical order.

z. Remove the entries for 333314, 333316, 333318, and 333997.

aa. Add an entry for 333998 in numerical order.

bb. Remove the entry for 333999.

cc. Add an entry for 334610 in numerical order.

dd. Remove the entries for 334613, 334614, 335110, 335121, 335122, and 335129.

ee. Add entries for 335131, 335132, 335139, and 335910 in numerical order.

ff. Remove the entries for 335911 and 335912.

gg. Add an entry for 336110 in numerical order.

hh. Remove the entries for 336111, 336112, 337124, and 337125.

ii. Add an entry for 337126 in numerical order.

jj. Remove the entries for 424320 and 424330.

kk. Add an entry for 424350 in numerical order.

ll. Revise entry 424940 and the heading for Subsector 425.

mm. Remove the entry for 425110.

nn. Add an entry for 441227 in numerical order.

oo. Remove the entries for 441228, 441310, and 441320.

pp. Add entries for 441330 and 441340 in numerical order.

qq. Remove the heading for Subsector 442 and entries 442110, 442210, 442291, and 442299 and the heading for Subsector 443 and entries 443141 and 443142.

rr. Revise entry 444120.

ss. Remove the entry for 444130.

tt. Add entries for 444140 and 444180 in numerical order.

uu. Remove the entries for 444190, 444210, and 444220.

vv. Add entries for 444230 and 444240 in numerical order.

ww. Revise the heading for Subsector 445 and all the entries under Subsector 445.

xx. Remove the heading for Subsector 446 and all the entries under Subsector 446, the heading for Subsector 447 and all the entries under Subsector 447, and the heading for Subsector 448 and all the entries under Subsector 448.

yy. Add a heading for Subsector 449 and entries 449110, 449121, 449122, 449129, and 449210 in numerical order.

zz. Remove the heading for Subsector 451 and all the entries under Subsector 451, the heading for Subsector 452 and all the entries under Subsector 452, the heading for Subsector 453 and all the entries under Subsector 453, and the heading for Subsector 454 and all the entries under Subsector 454.

aaa. Add a heading for Subsector 455 and entries 455110, 455211, and 455219, a heading for Subsector 456 and entries 456110, 456120, 456130, 456191, and 456199, a heading for Subsector 457 and entries 457110, 457120, and 457210, a heading for Subsector 458 and entries 458110, 458210, 458310, and 458320, and a heading for Subsector 459 and entries 459110, 459120, 459130, 459140, 459210, 459310, 459410, 459420, 459510, 459910, 459920, 459930, 459991, and 459999 in numerical order.

bbb. Revise entry 485310.

ccc. Remove the heading for Subsector 511 and all the entries under Subsector 511.

ddd. Add a heading for Subsector 513 and entries 513110, 513120, 513130, 513140, 513191, 513199, and 513210 in numerical order.

eee. Remove the heading for Subsector 515 and all the entries under Subsector 515.

fff. Add a heading for Subsector 516 and entries 516110, 516120, and 516210 in numerical order.

ggg. Remove all the entries under Subsector 517.

hhh. Add entries 517111, 517112, 517121, 517122, and 517810 in numerical order.

iii. Revise the heading for Subsector 518, entry 518210, and the heading for Subsector 519.

jjj. Remove the entries for 519110, 519120, 519130, and 519190.

kkk. Add entries for 519210 and 519290 in numerical order.

lll. Remove the entry for 522120.

mmm. Add an entry for 522180 in numerical order.

nnn. Remove the entries for 522190, 522293, 522294, and 522298.

ooo. Add an entry for 522299 in numerical order.

ppp. Remove the entries for 523110, 523120, 523130, and 523140.

qqq. Add entries for 523150 and 523160 in numerical order.

rrr. Remove the entries for 523920 and 523930.

sss. Add an entry for 523940 in numerical order.

ttt. Revise entries for 524292, 541380, 541850, 561611, and 624410.

uuu. Remove the entries for 811112 and 811113.

vvv. Add an entry for 811114 in numerical order.

www. Remove the entry for 811118.

xxx. Add an entry for 811210 in numerical order.

yyy. Remove the entries for 811211, 811212, 811213, and 811219.

zzz. Revise footnotes 8 and 15 at the end of the table.

The additions and revisions read as follows:

§ 121.201

What size standards has SBA identified by North American U.S. 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
*         *         *         *         *         *         *
Sector 21—Mining, Quarrying, and Oil and Gas Extraction
*         *         *         *         *         *         *
Subsector 212—Mining (except Oil and Gas)
212114	Surface Coal Mining		1,250
212115	Underground Coal Mining		1,500
*         *         *         *         *         *         *
212220	Gold Ore and Silver Ore Mining		1,500
*         *         *         *         *         *         *
212290	Other Metal Ore Mining		750
*         *         *         *         *         *         *
212323	Kaolin, Clay, and Ceramic and Refractory Minerals Mining		500
212390	Other Nonmetallic Mineral Mining and Quarrying		500
*         *         *         *         *         *         *
Sectors 31-33—Manufacturing
Subsector 311—Food Manufacturing
*         *         *         *         *         *         *
311221	Wet Corn Milling and Starch Manufacturing		1,250
*         *         *         *         *         *         *
Subsector 315—Apparel Manufacturing
315120	Apparel Knitting Mills		750
*         *         *         *         *         *         *
315250	Cut and Sew Apparel Manufacturing (except Contractors)		750
*         *         *         *         *         *         *
Subsector 316—Leather and Allied Product Manufacturing
*         *         *         *         *         *         *
316990	Other Leather and Allied Product Manufacturing		500
Subsector 321—Wood Product Manufacturing
321215	Engineered Wood Member Manufacturing		500
*         *         *         *         *         *         *
Subsector 322—Paper Manufacturing
*         *         *         *         *         *         *
322120	Paper Mills		1,250
*         *         *         *         *         *         *
Subsector 325—Chemical Manufacturing
*         *         *         *         *         *         *
325315	Compost Manufacturing		500
*         *         *         *         *         *         *
325992	Photographic Film, Paper, Plate, Chemical, and Copy Toner Manufacturing		1,500
*         *         *         *         *         *         *
Subsector 333—Machinery Manufacturing  6
*         *         *         *         *         *         *
333248	All Other Industrial Machinery Manufacturing		750
333310	Commercial and Service Industry Machinery Manufacturing		1,000
*         *         *         *         *         *         *
333998	All Other Miscellaneous General Purpose Machinery Manufacturing		500
Subsector 334—Computer and Electronic Product Manufacturing  6
*         *         *         *         *         *         *
334610	Manufacturing and Reproducing Magnetic and Optical Media		1,250
Subsector 335—Electrical Equipment, Appliance and Component Manufacturing  6
335131	Residential Electric Lighting Fixture Manufacturing		750
335132	Commercial, Industrial, and Institutional Electric Lighting Fixture Manufacturing		500
335139	Electric Lamp Bulb and Other Lighting Equipment Manufacturing		1,250
*         *         *         *         *         *         *
335910	Battery Manufacturing		1,250
*         *         *         *         *         *         *
Subsector 336—Transportation Equipment Manufacturing  6
336110	Automobile and Light Duty Motor Vehicle Manufacturing		1,500
*         *         *         *         *         *         *
Subsector 337—Furniture and Related Product Manufacturing
*         *         *         *         *         *         *
337126	Household Furniture (except Wood and Upholstered) Manufacturing		750
*         *         *         *         *         *         *
Sector 42—Wholesale Trade
*         *         *         *         *         *         *
Subsector 424—Merchant Wholesalers, Nondurable Goods
*         *         *         *         *         *         *
424350	Clothing and Clothing Accessories Merchant Wholesalers		150
*         *         *         *         *         *         *
424940	Tobacco Product and Electronic Cigarette Merchant Wholesalers		250
*         *         *         *         *         *         *
Subsector 425—Wholesale Trade Agents and Brokers
*         *         *         *         *         *         *
Sector 44-45—Retail Trade
*         *         *         *         *         *         *
Subsector 441—Motor Vehicles and Parts Dealers
*         *         *         *         *         *         *
441227	Motorcycle, ATV, and All Other Motor Vehicle Dealers	35.00
441330	Automotive Parts and Accessories Retailers	16.50
441340	Tire Dealers	16.50
Subsector 444—Building Material and Garden Equipment and Supplies Dealers
*         *         *         *         *         *         *
444120	Paint and Wallpaper Retailers	30.00
444140	Hardware Retailers	8.00
444180	Other Building Material Dealers	22.00
444230	Outdoor Power Equipment Retailers	8.00
444240	Nursery, Garden Center, and Farm Supply Retailers	12.00
Subsector 445—Food and Beverage Retailers
445110	Supermarkets and Other Grocery Retailers (except Convenience Retailers)	35.00
445131	Convenience Retailers	32.00
445132	Vending Machine Operators	12.00
445230	Fruit and Vegetable Retailers	8.00
445240	Meat Retailers	8.00
445250	Fish and Seafood Retailers	8.00
445291	Baked Goods Retailers	8.00
445292	Confectionery and Nut Retailers	8.00
445298	All Other Specialty Food Retailers	8.00
445320	Beer, Wine, and Liquor Retailers	8.00
Subsector 449—Furniture, Home Furnishings, Electronics, and Appliance Retailers
449110	Furniture Retailers	22.00
449121	Floor Covering Retailers	8.00
449122	Window Treatment Retailers	8.00
449129	All Other Home Furnishings Retailers	22.00
449210	Electronics and Appliance Retailers	35.00
*         *         *         *         *         *         *
Subsector 455—General Merchandise Retailers
455110	Department Stores	35.00
455211	Warehouse Clubs and Supercenters	32.00
455219	All Other General Merchandise Retailers	35.00
Subsector 456—Health and Personal Care Retailers
456110	Pharmacies and Drug Retailers	30.00
456120	Cosmetics, Beauty Supplies, and Perfume Retailers	30.00
456130	Optical Goods Retailers	22.00
456191	Food (Health) Supplement Retailers	16.50
456199	All Other Health and Personal Care Retailers	8.00
Subsector 457—Gasoline Stations and Fuel Dealers
457110	Gasoline Stations with Convenience Stores	32.00
457120	Other Gasoline Stations	16.50
457210	Fuel Dealers		100
Subsector 458—Clothing, Clothing Accessories, Shoe, and Jewelry Retailers
458110	Clothing and Clothing Accessories Retailers	41.50
458210	Shoe Retailers	30.00
458310	Jewelry Retailers	16.50
458320	Luggage and Leather Goods Retailers	30.00
Subsector 459—Sporting Goods, Hobby, Musical Instrument, Book, and Miscellaneous Retailers
459110	Sporting Goods Retailers	16.50
459120	Hobby, Toy, and Game Retailers	30.00
459130	Sewing, Needlework, and Piece Goods Retailers	30.00
459140	Musical Instrument and Supplies Retailers	12.00
459210	Book Retailers and News Dealers	30.00
459310	Florists	8.00
459410	Office Supplies and Stationery Retailers	35.00
459420	Gift, Novelty, and Souvenir Retailers	8.00
459510	Used Merchandise Retailers	8.00
459910	Pet and Pet Supplies Retailers	22.00
459920	Art Dealers	8.00
459930	Manufactured (Mobile) Home Dealers	16.50
459991	Tobacco, Electronic Cigarette, and Other Smoking Supplies Retailers	8.00
459999	All Other Miscellaneous Retailers	8.00
Sectors 48-49—Transportation and Warehousing
*         *         *         *         *         *         *
Subsector 485—Transit and Ground Passenger Transportation
*         *         *         *         *         *         *
485310	Taxi and Ridesharing Services	16.50
*         *         *         *         *         *         *
Sector 51—Information
*         *         *         *         *         *         *
Subsector 513—Publishing Industries
513110	Newspaper Publishers		1,000
513120	Periodical Publishers		1,000
513130	Book Publishers		1,000
513140	Directory and Mailing List Publishers		1,000
513191	Greeting Card Publishers		1,000
513199	All Other Publishers		1,000
513210	Software Publishers 15	15  41.50
Subsector 516—Broadcasting and Content Providers
516110	Radio Broadcasting Stations	41.50
516120	Television Broadcasting Stations	41.50
516210	Media Streaming Distribution Services, Social Networks, and Other Media Networks and Content Providers	41.50
Subsector 517—Telecommunications
517111	Wired Telecommunications Carriers		1,500
517112	Wireless Telecommunications Carriers (except Satellite)		1,500
517121	Telecommunications Resellers		1,500
517122	Agents for Wireless Telecommunications Services		1,500
517810	All Other Telecommunications	35.00
Subsector 518—Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services
518210	Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services	35.00
Subsector 519—Web Search Portals, Libraries, Archives, and Other Information Services
519210	Libraries and Archives	18.50
519290	Web Search Portals and All Other Information Services		1,000
Sector 52—Finance and Insurance
Subsector 522—Credit Intermediation and Related Activities
*         *         *         *         *         *         *
522180	Savings Institutions and Other Depository Credit Intermediation8	750.00 million in average assets 8
*         *         *         *         *         *         *
522299	International, Secondary Market, and All Other Nondepository Credit Intermediation	41.50
*         *         *         *         *         *         *
Subsector 523—Securities, Commodity Contracts, and Other Financial Investments and Related Activities
523150	Investment Banking and Securities Intermediation	41.50
523160	Commodity Contracts Intermediation	41.50
*         *         *         *         *         *         *
523940	Portfolio Management and Investment Advice	41.50
*         *         *         *         *         *         *
Subsector 524—Insurance Carriers and Related Activities
*         *         *         *         *         *         *
524292	Pharmacy Benefit Management and Other Third-Party Administration of Insurance and Pension Funds	40.00
*         *         *         *         *         *         *
Sector 54—Professional, Scientific and Technical Services
Subsector 541—Professional, Scientific and Technical Services
*         *         *         *         *         *         *
541380	Testing Laboratories and Services	16.50
*         *         *         *         *         *         *
541850	Indoor and Outdoor Display Advertising	30.50
*         *         *         *         *         *         *
Sector 56—Administrative and Support and Waste Management and Remediation Services
Subsector 561—Administrative and Support Services
*         *         *         *         *         *         *
561611	Investigation and Personal Background Check Services	22.00
*         *         *         *         *         *         *
Sector 62—Health Care and Social Assistance
Subsector 621—Ambulatory Health Care Services
*         *         *         *         *         *         *
624410	Child Care Services	8.50
*         *         *         *         *         *         *
Sector 81—Other Services (Except Public Administration)
Subsector 811—Repair and Maintenance
*         *         *         *         *         *         *
811114	Specialized Automotive Repair	8.00
*         *         *         *         *         *         *
811210	Electronic and Precision Equipment Repair and Maintenance	30.00
*         *         *         *         *         *         *
Footnotes:
*         *         *         *         *         *         *
6. NAICS Subsectors 333, 334, 335 and 336 —For rebuilding machinery or equipment on a factory basis, or equivalent, use the NAICS code for a newly manufactured product. Concerns performing major rebuilding or overhaul activities do not necessarily have to meet the criteria for being a “manufacturer” although the activities may be classified under a manufacturing NAICS code. Ordinary repair services or preservation are not considered rebuilding.
*         *         *         *         *         *         *
8. NAICS Codes 522110, 522130, 522180, and 522210 —A financial institution's assets are determined by averaging the assets reported on its four quarterly financial statements for the preceding year. “Assets” for the purposes of this size standard means the assets defined according to the Federal Financial Institutions Examination Council 041 call report form for NAICS codes 522110, 522180, and 522210 and the National Credit Union Administration 5300 call report form for NAICS code 522130.
*         *         *         *         *         *         *
15. NAICS code 513210 —For purposes of Government procurement, the purchase of software subject to potential waiver of the nonmanufacturer rule pursuant to § 121.1203(d) should be classified under this NAICS code.
*         *         *         *         *         *         *

Isabella Casillas Guzman,

Administrator.

Footnotes

1.  These 33 industries were in Sector 44-45 (Retail Trade). Specifically, NAICS 2017 industry 454110 (Electronic Shopping and Mail-Order Houses) was split to and distributed across 42 different retail trade industries, and similarly NAICS 454390 (Other Direct Selling Establishments) was split to and distributed across 39 different retail trade industries, which were in turn merged with 33 different Retail Trade industries.

2.  Using the 2012 Economic Census data, the 1,000-employee size standard for NAICS 519130 is equivalent to $286 million in receipts, capping of which translates to the maximum receipts-based size standard of $41.5 million. In accordance with the SBA's “Size Standards Methodology,” SBA's receipts-based size standards are capped at the maximum of $41.5 million and employee-based size standards are capped at the maximum of 1,500 employees.

3.  Of the 156 NAICS 2017 industries impacted in the NAICS 2022 revision, 66 industries were part of Sector 42 (Wholesale Trade) or Sector 44-45 (Retail Trade) that does not apply for Federal contracting. In the remaining 90 industries that belong to other sectors, about 15,400 unique firms got at least one Federal contract during fiscal years 2018-2022.

4.  The analysis of the disaster loan data excludes physical disaster loans that are available to anyone regardless of size, disaster loans issued to nonprofit entities, and EIDLs issued under the COVID-19 relief program. Effective January 1, 2022, SBA stopped accepting applications for new COVID EIDL loans or advances. Thus, the disaster loan analysis presented here pertains to the regular EIDL loans only. SBA estimates impacts of size standards changes on EIDL loans by calculating the ratio of businesses getting EIDL loans to total small businesses (based on the 2017 Economic Census data) and multiplying it by the number of impacted small firms. Due to data limitations, for FY 2019-20, some loans with both physical and EIDL loan components could not be broken into the physical and EIDL loan amounts. In such cases, SBA applied the ratio of EIDL amount to total (physical loan + EIDL) amount using FY 2016-18 data to the FY 2019-20 data to obtain the amount attributable to the EIDL loans.

5.  Of the 1,055 firms losing small business status under the proposed size standards for new industries under NAICS 2022 structure, 1053 (or 99.8%) belong to NAICS 2017 industry 454110 (Electronic Shopping and Mail-Order Houses). NAICS 454110, with a $41.5 million size standard, was split and distributed among 42 other Retail Trade industries, resulting in a decrease to the size standard for 41 parts and no change to the size standard for one part. This would have very minimal impact on firms seeking SBA's financial assistance as firms receiving such assistance are typically much smaller than the size standard. Moreover, businesses not qualifying as small for financial assistance under the industry size standard, could still qualify under the tangible net worth and net income based alternative size standard. The reduction in size standard for NAICS 454110 would have no impact on small businesses seeking Federal contracts as that NAICS code does not apply to Federal contracting.