The Small Business Administration (SBA) withdrew yesterday a proposed rule that would have restructured criteria for small business size standards.
The rule, submitted March 19, 2004, proposed to simplify size standards by establishing number of employees—in addition to a business’s gross receipts—as criteria to determine a small business. The proposal also requested to reduce the number of size standard levels from 37 to 10.
A realignment of small business size has far reaching implications for businesses that gain small business status and those that fall out. In construction, not being a small business may exclude a company from bidding on certain contracts, or it may require a ten percent assessment on top of the bid.
Marco Giamberadino, a director for the Associated General Contractors of America, told Business Fleet the proposal might motivate employers to lay off employees to fall under the new size standards. It may also shift current employees to “independent contractor” status resulting in less advantageous working environments. It would hurt some of the smaller companies who were already struggling to compete with the bigger ones, he said.
The employee size standard was a major issue. “Construction is seasonal work, and some people only work limited hours per week,” Giamberadino said. You may have four employees working a total of forty hours, but realistically they’re only doing the job of one person.”
“We definitely think they were trying to make a good faith effort to recognize the different needs of different industries, but it was unfortunately not a very well-thought out proposal,” Giamberadino said.
SBA will now issue a new proposed rule prior to the final vote. Public comments during that time will be allowed. To view the criteria for determining a small business, click www.sba.gov