As part of its comprehensive review of size standards required by the Small Business Jobs Act of 2010, the U.S. Small Business Administration (“SBA”) recently made substantial increases to the revenue-based size standards for about three-quarters of the industry categories for Technical, Professional and Scientific services. For some categories, the SBA more than tripled the current standards, with a majority of the size standards at least doubling in revenue amount. Moreover, SBA’s final size standards varied significantly from the size standards that the SBA initially had proposed.

On February 10, 2012, the SBA issued its Final Rule that increased size standards in 34 of the 45 industries and in three sub-industries in the North American Industry Classification System (“NAICS”) Sector 54, “Professional, Scientific and Technical Services.” The industries where the standards increased include legal, accounting, engineering, consulting, and marketing services. The SBA retained the current standards for the remaining 11 industries in this sector. 77 Fed. Reg. 7490. This Final Rule will take effect on March 12, 2012.

The Final Rule reflects size standard changes made by the SBA that are significantly different from the proposed rule published on March 16, 2011. The SBA made these changes in its Final Rule as a result of receiving 1,426 comments during the public comment period. For instance, the SBA upwardly revised five size standards from $14 million in its proposed rule to $19 million. Conversely, after an overwhelming majority of comments opposed SBA’s proposed increases to size standards for various architectural services, the SBA adjusted these size standards from the proposed $19 million to $7 million in the Final Rule.

Companies that compete in the covered NAICS codes should review the Final Rule to ascertain their new size standards. The SBA estimates as many as 8,350 additional firms will become eligible for SBA programs as a result of these revisions. Based on these increased size standards, a company may qualify under a NAICS code for which it did not previously qualify. In addition, there may be more competition among a larger pool of eligible small businesses. Finally, the increases in these size standards will also enable more small businesses to retain their small business status for a longer period.

For more information contact Richard Oliver, 213-243-6169; Alison Doyle, 202-496-7604; or Amy Deng, 213-243-6111 at McKenna Long & Aldridge LLP.