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Focus on Regulation

SBA Increasing Opportunities for Small Business Construction Contractors

This post was co-authored by Todd R. Overman and Brendan M. Lill.  Todd Overman is a Partner in Hogan Lovells’ Government Contracts Practice.  His practice focuses primarily on advising clients doing business with the federal government. In this regard, his practice includes a combination of transactional issues, litigation, and regulatory advice.  Todd can be contacted at +1 202 637 3565 or todd.overman@hoganlovells.com.  Brendan Lill is an Associate in our Government Contracts Practice.

On July 18, 2012, the Small Business Administration (SBA) issued a proposed rule to significantly increase the size standards that qualify certain businesses in the construction industry for small business federal contracting opportunities. This proposed rule continues SBA’s ongoing efforts to update its small business size standards which have resulted in increased opportunities for many small to mid-size companies that do business with the federal government.

SBA’s size standards, which vary by industry, establish size ceilings that government contractors must full under to be eligible for individual small business contract awards. The size standards use either total number of employees or annual revenue to define what qualifies as a “small business” for an individual procurement.

SBA’s proposed rule would increase the revenue-based size standards for two construction categories: Land Subdivision from $7 million to $25 million and Dredging and Surface Cleanup from $20 million to $30 million. If the proposed rule becomes final, SBA estimates that more than 400 firms that are not small under the existing size standards will become small (i.e. eligible to bid on small business procurements) under the new standards. Earlier this year, SBA issued a final rule increasing 37 industry size standards that fall under the category of Professional, Technical, and Scientific Services. Under that final rule, SBA estimated that over 8,000 companies would similarly obtain small business status.

Small to mid-size companies that may be impacted by SBA’s size standards can expect this rulemaking activity to continue. The Small Business Jobs Act of 2010 requires SBA to review the size standards of at least one-third of the 1,141 industries for which SBA establishes size standards every 18 months. In addition to monitoring developments, many companies submit written comments to SBA regarding proposed rules that may directly impact their business.