Proposal to change small business size standards rescinded
Recommended policy would have made it easier for agencies to meet contracting targets for small businesses.
The Small Business Administration on Thursday withdrew a proposal to change the way it defines small companies.
A recent study by Eagle Eye Publishers Inc., a Fairfax, Va.-based market research company, found that the proposed standards would have increased the number of government contractors qualifying as small businesses, in effect making it easier for agencies to meet congressionally mandated targets. By law, the federal government must aim to award at least 23 percent of prime contract dollars to small businesses.
Under the draft policy, published in the Federal Register in March, SBA would have classified certain businesses as small based on the number of its employees rather than revenues. The proposed rule drew 3,700 public comments.
SBA will seek further input on some of the issues raised in the comments. After reviewing feedback, officials may rework the proposal, Barreto stated. The result could look substantially different from the March draft rule, he said.
The change sought to simplify the standards for defining small businesses and, from an administrative perspective, made sense, said Eagle Eye President Paul Murphy earlier this week. But the rule, while well-intentioned, needed to be fine-tuned, he said.
"The real solution is to just spend more money on small businesses," Murphy added. The governmentwide target for small business contracting is too low, regardless of how small companies are defined, he said. He advocated raising the bar to at least 30 percent, a goal "much more reflective of the economy as a whole."
Two Washington-area industry groups praised SBA for withdrawing the proposal.
"The rule did not simplify the size standards for businesses and would have done nothing to aid the government in its acquisition planning or execution," said Stan Soloway, president of the Professional Services Council, an Arlington, Va.,-based contractor association.
Chris Jahn, president of the Contract Services Association, called the withdrawal "the right-and only-action to take."
SBA recently revised its fiscal 2003 statistics on small business contracting, after uncovering a technical error in the original statistics. The latest figures show that agencies awarded $65.5 billion in contracts to small companies last year, representing 23.6 percent of $277.5 billion in prime contracts.