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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: November 22, 2002

SUBJECT: Small Business Administration; Small Business Size Standard for Job Corps Centers

SOURCE: Federal Register, November 22, 2002, Vol. 67, No. 226, page 70330

AGENCIES: Small Business Administration (SBA)

ACTION: Proposed Rule

SYNOPSIS: SBA is proposing to establish a $30,000,000 small business size standard in average annual receipts for Job Corps Centers activities classified within the "Other Technical and Trade Schools" industry (North American Industry Classification System (NAICS) code 611519). The current size standard for all activities within NAICS 611519 is $6,000,000 in average annual receipts.

EDITOR'S NOTE: The SBA's regulations are in Title 13 of the Code of Federal Regulations (CFR). The SBA small business size regulations are in Chapter 1, Small Business Administration; Part 121, Small Business Size Regulations; Subpart A, Size Eligibility Provisions and Standards; Section 121.201, What size standards has SBA identified by North American Industry Classification System codes?

A complete listing of current size standards is available at SBA's Size Standards website at http://www.sba.gov/size, or by calling 202-205-6618 and requesting a copy of the table of size standards.

Also today, SBA has published a proposed rule revising its regulations regarding appeals of size determinations to the Office of Hearings and Appeals (OHA). See today's FEDERAL CONTRACTS DISPATCH "Small Business Administration; Small Business Size Standards, and Proceedings of the Office of Hearings and Appeals."

DATES: Comments must be received no later than December 23, 2002.

ADDRESSES: Comments should be sent to Gary M. Jackson, Assistant Administrator for Size Standards, 409 Third Street, SW, Mail Code 6530, Washington, DC 20416; e-mail: SIZESTANDARDS@sba.gov; or by fax to 202-205-6930.

FOR FURTHER INFORMATION CONTACT: Diane Heal, Office of Size Standards, 202-205-6618.

SUPPLEMENTAL INFORMATION: The Department of Labor (DOL) operates most Job Corps Centers though private companies. DOL had classified its Job Corps Centers contracts under the Facilities Support Services industry, NAICS 561210, and applied the Base Maintenance size standard of $23,000,000 in average annual receipts. A potential offeror on a recent solicitation appealed this NAICS designation to SBA's Office of Hearings and Appeals (OHA). OHA decided that the Job Corps Center contract was not properly classified under the Base Maintenance subcategory of Facilities Support Services (see NAICS Appeal of Global Solutions Network, Inc., SBA No. NAICS-4478, dated March 5, 2002). For the appealed requirement, OHA determined that the proper classification for an activity that trains individuals in life skills and readies them for the job market through academic studies and/or technical training is Other Technical and Trade Schools, NAICS 611519. The effect of this decision was to change the size standard for Job Corps Center contracts from $23,000,000 to $6,000,000. DOL requested that SBA review the size standard used for Federal Job Corps Center contracts, and based on the review, SBA proposes to establish $30,000,000 as the small business size standard specifically for DOL Job Corp Center contracts.

When determining a small business size standard, SBA evaluates five factors: (1) average firm size in the industry; (2) distribution of firms by size; (3) start-up costs; (4) competition within the industry; and (5) competition for federal procurements and SBA financial assistance (SBA's small business size standards methodology is in Standard Operating Procedure (SOP) 90 01 3, "Size Determination Program," which is available on SBA's website at http://www.sba.gov/library/soproom.html). Much of the information SBA evaluates comes from data collected by the Bureau of the Census.

The average Job Corps Center contract is for $8,800,000. There are 21 organizations performing 88 Job Corps Center contracts. Only one of the organizations has receipts below $6,000,000, and that organization's receipts are $5,800,000. About 80% of the value of Job Corps Center contracts were awarded to organization with receipts of $50 million or more. Only 1% of Job Corps Center contract dollars go to small businesses using a $6 million size standard. In addition, 49% of contract dollars were awarded to firms and organizations that have over $100,000,000 in receipts. This shows that a significant proportion of economic activity within the Job Corps Centers industry is concentrated among a few relatively large organizations. Also, for an organization to perform on the average Job Corps Center contract of $8.8 million, it generally must be at least several times that size. Therefore, SBA is proposing a $30,000,000 size standard for Job Corps Centers. This size standard would be an exception to the $6,000,000 size standard for NAICS 611519, and proposed footnote 16 to the table in 13 CFR 121.201 would describe the Job Corps Centers as follows:

"Job Corps Centers. For classifying a federal procurement, the purpose of the solicitation must be for the management and operation of a U.S. Department of Labor Job Corps Center. The activities involved include admissions activities, life skills training, educational activities, comprehensive career preparation activities, career development activities, career transition activities, as well as the management and support functions and services needed to operate and maintain the facility. For SBA assistance as a small business concern, other than for federal government procurements, a concern must be primarily engaged in providing the services to operate and maintain Federal Job Corps Centers."

SBA welcomes public comments on its proposed size standard for Job Corps Centers. SBA is concerned with how the proposed size standard may negatively affect those qualified under the current size standard. Comments supporting an alternative to the proposal, including the $23,000,000, or the option of retaining the size standard at $6,000,000, should explain why the alternative would be preferable to the proposed size standard, and how the alternative affects current small businesses.

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

Copyright 2002 by Panoptic Enterprises. All Rights Reserved.

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