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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: March 26, 2002

SUBJECT: Small Business Administration; Small Business Size Standards for Programs of Other Agencies

SOURCE: Federal Register, March 26, 2002, Vol. 67, No. 58, page 13714

AGENCIES: Small Business Administration (SBA)

ACTION: Final Rule

SYNOPSIS: SBA is amending its regulations that agencies must follow to obtain approval of the SBA for establishing size standards for use in their programs that are different than those established by the SBA. This rule requires agencies to obtain SBA's approval before publishing a final rule.

EDITOR'S NOTE: The SBA's regulations are in Title 13 of the Code of Federal Regulations (CFR). The SBA regulations pertaining to small business size standards applicable to other agencies' programs are in Chapter 1, Small Business Administration; Part 121, Small Business Size Regulations.

For more on the proposed rule, see the see the January 26, 2000, FEDERAL CONTRACTS DISPATCH "Small Business Administration; Small Business Size Standards for Compliance With Programs of Other Agencies."

EFFECTIVE DATE: April 25, 2002.

FOR FURTHER INFORMATION CONTACT: Carl Jordan, Office of Size Standards, 202-205-6618.

SUPPLEMENTAL INFORMATION: The Small Business Act provides for the establishment of small business size standards, and authorizes the SBA administrator to "specify detailed definitions or standards by which a business concern may be determined to be a small business concern for the purposes of this act or any other act." Therefore, unless a statute specifically provides size standards for an agency's program or gives an agency authority to establish different size standards, the agency must use the applicable size standards established by SBA. However, the act allows an agency to "prescribe a size standard for categorizing a business concern as a small business concern" if the contemplated size standard meets certain criteria and the agency first obtains approval of the SBA administrator (see Section 3 of 15 U.S.C. 632).

Title 13 of the CFR, Section 121.902, What size standards are applicable to programs of other agencies?, contained the procedures for agencies to follow before they prescribed size standards for their own use. These regulations required that the agency obtain the SBA administrator's approval before it proposed them for comment as part of its rulemaking process. Then the agency had to propose the specific size standards, explain why it believed they were appropriate for their intended purposes, why SBA's size standards were not appropriate, and seek public comments on them. However, there was no requirement for the agency to obtain the SBA administrator's before finalizing the size standard, so an agency could decide to institute a different size standard than the proposed size standard the SBA administrator approved.

On January 26, 2000, SBA published a proposed rule to modify the procedure so that an agency would be required to consult with SBA's Office of Size Standards at least 14 calendar days before proposing to use an alternative size standard, and the agency would be required to obtain the SBA administrator's approval of the alternative size standard before publishing its final rule. This would allow SBA to provide advice to the agency regarding the proposed size standard prior to the agency's initiation of the formal rulemaking procedure, and would give SBA the final approval.

SBA received six comments on the proposed rule, and minor editorial changes were made to the final rule as a result of the comments.

This final rule:

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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