SBA Proposes to Modify Its Method for Calculating Annual Average Receipts Used to Define Size Standards for Small Businesses

The U.S. Small Business Administration (SBA) proposes to modify its method for calculating annual average receipts used to prescribe size standards for small businesses. Specifically, consistent with a recent amendment to the Small Business Act made by Public Law 115-324, SBA proposes to change its regulations on the calculation of annual average receipts for all receipts-based SBA size standards and other agencies’ proposed size standards for service-industry firms from a three-year averaging period to a five-year averaging period.

SBA seeks feedback, along with supporting facts and analyses, on whether it should calculate annual average receipts over five years for all industries subject to receipts-based size standards or whether it should use a five-year annual receipts average for businesses in services industries only and continue using a three-year annual average for other businesses. SBA is concerned that the latter option may create confusion for both businesses in reporting their size based on annual average receipts and for contracting personnel in verifying the size of bidders to Federal contracts.

SBA also invites input on how the use of annual average receipts over five years instead of three years would impact both smaller small businesses and more advanced, larger small businesses in terms of getting access to Federal opportunities for small businesses.

• The text of this proposed rule and further information is posted here.
• Comments on this proposed rule are due by August 23, 2019 and can be submitted here.
• Advocacy contact: Major Clark.