Small Business Size Standards; Surety Bond Guarantee Program

Summary

The U.S. Small Business Administration (SBA) is amending the size eligibility criteria for its Surety Bond Guarantee (SBG) Program for construction (general or special trades) or service concerns performing contracts in the Presidentially-declared disaster areas resulting from the 2005 Hurricanes Katrina, Rita, or Wilma. This rule amends the SBG size standard for some concerns by requiring them to meet either the size standard for the primary industry in which it, together with its affiliates, is engaged, or the current $6 million standard for the SBG Program, whichever is higher. The amended size standard applies only to construction and service concerns seeking SBA- guaranteed surety bonds for contracts or subcontracts, public or private, that are performed in the Presidentially-declared disaster areas resulting from the 2005 Hurricanes Katrina, Rita, or Wilma. Surety companies with whom SBA has executed a Preferred Surety Bond (PSB) Agreement under 13 CFR part 115 will be responsible for determining eligibility in compliance with this regulation. SBA surety bond personnel will be responsible for determining eligibility in compliance with this regulation for those surety guarantees that require SBA's prior approval. SBA prepared this rule as an interim final rule because its immediate implementation will make available needed SBG Program assistance to otherwise eligible small businesses and facilitate reconstruction and recovery of the Gulf Coast and Florida.

Full text

SUMMARY: The U.S. Small Business Administration (SBA) is amending the 
size eligibility criteria for its Surety Bond Guarantee (SBG) Program 
for construction (general or special trades) or service concerns 
performing contracts in the Presidentially-declared disaster areas 
resulting from the 2005 Hurricanes Katrina, Rita, or Wilma. This rule 
amends the SBG size standard for some concerns by requiring them to 
meet either the size standard for the primary industry in which it, 
together with its affiliates, is engaged, or the current $6 million 
standard for the SBG Program, whichever is higher. The amended size 
standard applies only to construction and service concerns seeking SBA-
guaranteed surety bonds for contracts or subcontracts, public or 
private, that are performed in the Presidentially-declared disaster 
areas resulting from the 2005 Hurricanes Katrina, Rita, or Wilma. 
Surety companies with whom SBA has executed a Preferred Surety Bond 
(PSB) Agreement under 13 CFR part 115 will be responsible for 
determining eligibility in compliance with this regulation. SBA surety 
bond personnel will be responsible for determining eligibility in 
compliance with this regulation for those surety guarantees that 
require SBA's prior approval. SBA prepared this rule as an interim 
final rule because its immediate implementation will make available 
needed SBG Program assistance to otherwise eligible small businesses 
and facilitate reconstruction and recovery of the Gulf Coast and 
Florida.

DATES: Effective Date: This regulation becomes effective on November 
14, 2005.
    Comment Period: Comments must be received by SBA on or before 
December 14, 2005.

ADDRESSES: You may submit comments identified by RIN 3245-AE81 through 
one of the following methods: (1) Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments; 
(2) Fax: (202) 205-6390; or (3) Mail/Hand Delivery/Courier: Gary M. 
Jackson, Assistant Administrator for Size Standards, 409 Third Street, 
SW., Mail Code 6530, Washington, DC 20416.

FOR FURTHER INFORMATION CONTACT: Carl Jordan, Office of Size Standards, 
(202) 205-6618 or sizestandards@sba.gov.

SUPPLEMENTARY INFORMATION:

SBA's Surety Bond Guarantee Program and Current Size Standards

    SBA, through its Surety Bond Guarantee (SBG) Program, can guarantee 
bid, performance and payment bonds for contracts up to $2 million for 
small contractors who otherwise cannot obtain surety bonds without 
SBA's guarantee. SBA's guarantee gives sureties an incentive to provide 
bonding for eligible contractors, and thereby strengthens a 
contractor's ability to obtain bonding and provides greater access to 
contracting opportunities. A contractor applying for an SBA bond 
guarantee must qualify as a small business concern, in addition to 
meeting the surety company's bonding qualifications. Generally, under 
SBA's current Small Business Size Regulations, businesses in 
construction and service industries can qualify as small for the SBG 
Program if their average annual receipts, including those of their 
affiliates, for the last three fiscal years do not exceed $6 million 
(13 CFR 121.301(d)(1) and 13 CFR 121.104(c)). For all other types of 
business concerns, the concern must meet the size standard for the 
primary industry in which it, combined with its affiliates, is engaged 
(see 13 CFR 121.201 and Sec.  121.301(d)(2)).

What This Interim Final Rule Accomplishes

    This interim final rule amends the size standard applicable to a 
construction or service concern seeking an SBA-guaranteed surety bond 
by requiring the concern to meet either the size standard for the 
industry in which it, combined with its affiliates, is primarily 
engaged, or the $6 million standard, whichever is higher. The amended 
size standard applies only to businesses with contracts that are 
performed in the Presidentially-declared disaster areas resulting from 
the 2005 Hurricanes Katrina, Rita, or Wilma.
    The small business size standards for industries in North American 
Industry Classification System (NAICS) Sector 23, Construction, are the 
following: (1) $28.5 million in average annual receipts for building, 
heavy, and civil engineering construction; (2) $17 million in average 
annual receipts for dredging; and (3) $12 million in average annual 
receipts for special trade contractors. Also, the existing small 
business size standards for service industries range from $3 million to 
$30 million in average annual receipts, depending on the industry. This 
rule would expand the pool of businesses eligible for the SBG Program 
to include those that are currently excluded because they exceed the $6 
million SBG size standard but are considered small under existing size 
standards for other purposes, such as the examples in this paragraph.
    The amended size standards under this interim final rule are 
applicable until SBA determines that it is no longer necessary to 
expand the availability of SBG Program assistance for reconstruction 
and recovery of the Presidentially-declared disaster areas resulting 
from Hurricanes Katrina, Rita, and Wilma. This interim final rule is a 
specific response to those natural disasters. SBA is soliciting 
comments on how long the amended size standards under this interim 
final rule should apply to construction and service concerns performing 
contracts or subcontracts in the specified disaster areas. In 
particular, SBA is soliciting public comments on factors that would 
indicate that the amended size standards are no longer necessary and 
the appropriate Agency action after SBA determines that the amended 
size standards have served the intended purpose.
    SBA continues to believe that its current size standards for other 
small business assistance programs appropriately define small business 
concerns. As described above, the amended size standard for the SBG 
Program is being applied to a limited number of business concerns 
performing construction or certain service contracts in limited 
geographical areas--the Presidentially-declared disaster areas. This 
interim rule does not change the size standards applicable to other 
small business programs, including size standards for Federal 
contracting. Therefore, this interim final rule will have no effect on 
existing Federal contracts, the pool of small businesses competing for 
Federal contracts, or the ability of Federal agencies to attain their 
small business contracting goals.
    SBA has designed this rule so it will not adversely affect any 
small businesses. Under this rule, a construction or service concern 
must meet either the size standard for its primary industry (when 
combined with its affiliates) or the current SBA $6 million standard, 
whichever is higher. This guarantees that concerns in service 
industries with size standards below $6 million retain their 
eligibility for the SBG Program. Most service industries have a $6 
million size standard, although some are higher, as stated above. There are a small number of other service industries, however, 
such as NAICS 541330, Engineering Services, with size standards below 
$6 million. Concerns operating in industries with size standards below 
$6 million could suffer adverse affects if the rule required them only 
to meet the size standard for their primary industries, lower than the 
size standard they now must meet for the SBG Program. That would be 
contrary to the rule's intent and SBA's mission and goals. Under this 
rule, those concerns operating in industries with size standards below 
$6 million remain eligible so long as their average annual receipts do 
not exceed the current SBG $6 million standard.
    Under the Small Business Act, 15 U.S.C. 633(d) (Act), SBA has a 
statutory obligation to act in the public interest by establishing 
small business size standards to determine eligibility as a small 
business concern for Federal assistance. Pursuant to the Act, SBA has 
determined that immediate implementation of this rule is in the public 
interest and delaying its application would be impracticable. Failure 
to adopt this rule could work to the detriment of many small 
businesses.

Compliance With This Regulation

    Surety companies with whom SBA has executed a Preferred Surety Bond 
(PSB) Agreement under 13 CFR part 115 will be responsible for 
determining eligibility in compliance with this regulation. They must 
determine that the construction or service contracts will be performed 
in the Presidentially-declared disaster areas resulting from the 2005 
Hurricanes Katrina, Rita, or Wilma and sufficiently document that 
bonded contracts meet this eligibility requirement (A list of parishes 
and counties declared disaster areas by the President as a result of 
the hurricanes is located at: http://www.sba.gov/disaster_recov/katrinafactsheets.html.) They must also determine that the concern 
seeking this SBA-guaranteed bonding assistance meets the applicable 
size standard for its primary industry (when combined with its 
affiliates), or has average annual receipts that do not exceed $6 
million, whichever size standard is higher. SBA surety bond personnel 
will be responsible for determining eligibility in compliance with this 
regulation for those surety guarantees that require SBA's prior 
approval and document their findings accordingly. Small businesses 
seeking such SBA assistance do not need to be located in the disaster 
areas, provided they perform the contracts in the Presidentially-
declared disaster areas resulting from the 2005 Hurricanes Katrina, 
Rita, or Wilma. This rule enables these small businesses all over the 
country to assist other businesses and individuals that need their 
services.

Reasons for Limiting the Application of This Amended SBG Size Standard 
to Only Contracts and Subcontracts Performed in Certain Areas

    In the wake of Hurricanes Katrina, Rita, and Wilma, public and 
private entities will spend significant amounts on recovery efforts for 
many years. Much of this work will be for construction and services. 
The Federal Government is committed to facilitating small business 
participation in the reconstruction and recovery efforts in the Gulf 
Coast region and Florida.
    SBA recognizes that some construction or service contracts and 
subcontracts may be performed outside the Presidentially-declared 
disaster areas that are connected (by varying degrees) to 
reconstruction and recovery activities in the Gulf Coast and Florida. 
However, SBA limited the application of this amended SBG size standard 
to only contracts and subcontracts performed in Presidentially-declared 
disaster areas because the limit is an objective standard that sureties 
and SBA can apply in a consistent and fair manner. Furthermore, those 
contracts and subcontracts will have a direct impact on communities in 
the Gulf Coast and Florida because the reconstruction activities will 
restore the infrastructure and the service activities will serve 
residents of affected areas. SBA believes that amending the SBG 
Program's $6 million size standard for construction and service 
concerns seeking SBA-guarantees will expand procurement opportunities 
for small businesses in the construction and service industries, 
including local small businesses within the Presidentially-declared 
disaster areas, while facilitating the reconstruction of the affected 
areas and serving victims of Hurricanes Katrina, Rita, and Wilma.

Reasons for Using the Size Standard for the Primary Industry of the 
Construction or Service Concern as an Alternate Size Standard for the 
SBG Program

    This interim final rule makes the size eligibility criteria for the 
SBG Program more consistent with other SBA financial assistance 
programs. Both SBA's 7(a) Business Loan Program and its Disaster 
Assistance EIDL Program determine size eligibility based on the primary 
industry in which the applicant, together with its affiliates, is 
engaged. Many small businesses affected by Hurricanes Katrina, Rita, or 
Wilma are seeking and will be seeking assistance through SBA's programs 
and obtaining Federal and non-Federal contracts. Applying similar size 
eligibility criteria to the SBG Program will complement the assistance 
these other SBA programs and Federal contracting provide.
    The SBA's current Small Business Size Regulations do permit, under 
certain circumstances, a small construction or service contractor with 
annual receipts greater than $6 million to qualify as eligible for its 
SBG Program. This occurs only when a construction or service concern 
meets the size standard for the NAICS code that best describes the 
principal purpose of the procurement (see 13 CFR 121.402(a)) and when 
it is the prime contractor for the Federal procurement. Section 121.305 
provides ``A concern qualified as small for a particular procurement, 
including an 8(a) subcontract, is small for financial assistance 
directly and primarily relating to the performance of the particular 
procurement.'' However, this provision only applies when the concern is 
a prime contractor with the Federal Government. A surety bond running 
to another obligee, other than the Federal Government, such as a 
private owner, another contractor, a not-for-profit entity, or non-
Federal political subdivision, is not eligible for SBA's guarantee 
under existing regulations unless the contractor meets the SBG $6 
million size standard.
    However, most SBA-guaranteed surety bonds are for contractors who 
are not prime contractors with the Federal Government. Applying the 
industry size standards to non-Federal contracts enables small 
construction and service concerns above $6 million in size to be 
equally as competitive for Federal contracts as non-Federal contracts. 
To limit access to the SGB Program to only concerns with average annual 
receipts that do not exceed $6 million, or to consider a size standard 
different from the industry size standards, would likely limit small 
business opportunities at a time when potential assistance is most 
needed.

Justification for Publication as an Interim Final Rule

    In general, SBA publishes a proposed rule for public comment before 
issuing a final rule, in accordance with the Administrative Procedure 
Act (APA) and SBA regulations. (5 U.S.C. 553 and 13 CFR 101.108). The 
APA provides an exception to the standard rulemaking process, however, 
when an agency finds good cause to adopt a rule without prior public 
participation. (5 U.S.C. 553(b)(3)(B)). The good cause requirement is satisfied when prior 
public participation is impracticable, unnecessary, or contrary to the 
public interest. Under those conditions, an agency may publish an 
interim final rule without first soliciting public comment.
    In the good cause exception to standard rulemaking procedures, 
Congress recognized that emergencies (such as the need for disaster 
assistance) might arise when an agency must issue a rule without prior 
public participation. On August 29, 2005, the President declared major 
disaster areas in Louisiana, Mississippi, and Alabama in the aftermath 
of Hurricane Katrina. The President also declared major disaster areas 
in Louisiana and Texas after Hurricane Rita destroyed more of the Gulf 
Coast region and in Florida after Hurricane Wilma. These natural 
disasters have affected U.S. businesses in the declared disaster areas 
and across the Nation. Implementing this rule immediately will support 
the economic recovery of the Gulf Coast region and Florida and is in 
the best interest of the public. Construction and service concerns 
affected by the disaster will be more able to assist in the rebuilding 
and clean-up efforts, and in delivering much needed services to 
disaster victims. This rule will also assist small construction and 
service concerns not affected by the disaster to provide disaster 
assistance in their industries.
    The Federal Government and other public and private entities are, 
and will be, contracting for clean-up activities, substantial 
reconstruction and other services in the disaster areas. However, some 
small construction and service concerns that had been able to obtain 
standard surety bonding before the disasters may now need SBA's 
guarantee because of their deteriorating financial conditions. This 
rule will permit more businesses to qualify for SBA-guaranteed surety 
bonds and perform contracts to help rebuild and revitalize the Gulf 
Coast region and Florida. Strong small business participation, in turn, 
will promote economic recovery in the area. In the public interest, 
this interim final rule would increase the number of small business 
participants in these efforts.
    Accordingly, SBA finds good cause to publish this rule as an 
interim final rule because of the urgent need to speed delivery of 
disaster assistance to the affected area. Furthermore, advance 
solicitation of comments for this rulemaking would be impracticable and 
contrary to the public interest because it would delay delivery of 
critical assistance to these businesses by at least four to six months. 
Such delay could have serious adverse affects on small businesses and 
the public in the disaster area. Immediate access to SBA-guaranteed 
surety bonds can help protect some small businesses that might 
otherwise have to cease operations before a rule could be promulgated 
under standard notice and comment rulemaking procedures.
    Although SBA is publishing this rule as an interim final rule, the 
Agency requests interested parties to submit their comments to the 
amended size standard. In particular, SBA welcomes comments on how long 
the amended size standards under this interim final rule should apply 
to construction and service concerns performing contracts or 
subcontracts in the specified disaster areas, factors SBA should 
consider before determining that the size standards are no longer 
necessary, and the appropriate Agency action after SBA makes that 
determination. SBA must receive the comments on or before December 14, 
2005. SBA may then consider these comments in making any necessary 
revisions to these regulations.

Justification for Immediate Effective Date of Interim Final Rule

    The APA requires that ``publication or service of a substantive 
rule shall be made not less than 30 days before its effective date, 
except * * * as otherwise provided by the agency for good cause found 
and published with the rule.'' 5 U.S.C. 553(d)(3). SBA finds that good 
cause exists to make this final rule become effective on the same day 
it is published in the Federal Register.
    The purpose of the APA provision delaying the effective date of a 
rule for 30 days after publication is to provide interested and 
affected members of the public sufficient time to adjust their behavior 
before the rule takes effect. In this case, however, the 30-day delay 
is unnecessary because this interim final rule would not require 
businesses, sureties, or SBA to make significant changes to their 
current procedures when applying for, issuing, or guaranteeing surety 
bonds. Sureties and SBA would begin applying the new size eligibility 
criteria to businesses upon publication of this interim final rule. 
Furthermore, SBA does not expect to receive any comments from those 
stakeholders in the SBG Program or others opposing the immediate 
effective date of this interim final rule. SBA included a proposal 
similar to this interim final rule in a proposed rule published on 
March 19, 2004 (69 FR 13129), and the Agency did not receive any 
comments opposing it. Moreover, SBA believes, based on its discussions 
with interested members of the public and the need to quickly assist 
hurricane victims, that there is a strong interest in immediate 
implementation of this rule. SBA is aware of many entities that will be 
assisted by the immediate adoption of this rule, many of those are 
small businesses directly affected by the natural disasters.

Compliance With Executive Orders 12866, 12988, and 13132, the 
Regulatory Flexibility Act (5 U.S.C. 601-612) and the Paperwork 
Reduction Act (44 U.S.C. Ch. 35)

    The Office of Management and Budget (OMB) has determined that this 
rule is a ``significant regulatory action'' under section 3(f) under 
Executive Order 12866. A general discussion of the need for this 
regulatory action and its potential costs and benefits follows.

1. Is There a Need for the Regulatory Action?

    SBA's statutory mission is to aid and assist small businesses 
through a variety of financial, procurement, business development, and 
advocacy programs. To effectively assist the intended beneficiaries of 
these programs, SBA must establish distinct definitions of which 
businesses are deemed small businesses. The Small Business Act (15 
U.S.C. 632(a)) (Act) delegates to the SBA Administrator the 
responsibility for establishing small business definitions. The Act 
also requires that small business definitions vary to reflect industry 
differences, as necessary.
    As discussed in the above supplemental information section, this 
interim final rule is needed to expand eligibility for SBA's SBG 
Program to construction and service contractors participating in the 
reconstruction and recovery efforts of the Gulf Coast and Florida. The 
amended size standard for the SBG Program only applies to contracts 
that are performed in the Presidentially-declared disaster areas 
resulting from the 2005 Hurricanes Katrina, Rita, or Wilma. This action 
will assist construction and service concerns located in the disaster 
areas and across the Nation by providing access to the SBG Program and 
expanding procurement opportunities for them. Disaster victims will 
also benefit as small businesses help to rebuild their communities.

2. What Are the Potential Benefits and Costs of This Regulatory Action?

    At this time, SBA cannot estimate the number or value of contracts, 
Federal or non-Federal, that small construction and service concerns 
will undertake to rebuild the Gulf Coast and Florida following Hurricanes Katrina, Rita, or Wilma. SBA cannot estimate the 
number or value of contracts that will require surety bonds or the 
number or value of surety bonds that SBA will guarantee. Nor can it 
estimate the number of small businesses affected and not affected by 
the natural disasters that will participate in the SBG Program after 
the publication of this rule. SBA does believe, however, that expanding 
eligibility for its SBG Program will provide the disaster victims with 
significant and timely benefits when and where the greatest needs 
exist. For example, disaster-affected small business concerns can 
receive SBG Program assistance to restart their businesses. Other small 
business concerns may qualify to contract for more and larger surety 
bonds with SBA's guarantee.
    SBA expects that this rule will lead to an increase in the number 
of SBA-guaranteed bonds. Although SBA does not anticipate loss rates 
changing significantly after this interim final rule becomes effective, 
the Government may incur additional costs to honor its guarantee on a 
greater volume of (but stable percentage of) defaulted bonds. SBA must 
honor its guarantees to the sureties on defaulted bonds for the 
percentage of loss that it guaranteed. Guaranteed amounts vary as 
follows: (1) Under the PSB Program, 70 percent (this does not change); 
(2) under the prior approval program, contracts valued at $100,000 or 
less, or on behalf of a concern owned by a socially and economically 
disadvantaged individual, 90 percent; and (3) for contracts in excess 
of $100,000 there is a gradually decreasing percentage, but the 
percentage does not fall below 80 percent (13 CFR 115.31). For fiscal 
years 2003, 2004 and 2005, SBA's loss rates were 1.8 percent, 1.3 
percent and 1.6 percent, respectively. SBA expects these rates to 
remain stable even though the volume of SBA-guaranteed surety bonds is 
expected to increase.
    Among businesses seeking SBA's assistance through the SBG Program, 
there could be additional costs for professional time required to 
complete applications for the surety and the SBA guarantee. Businesses 
also incur costs through payment of fees to participate in the SBG 
Program. Contractors pay a fee of $6 per $1,000 of the contract value, 
which the surety companies remit to SBA. (13 CFR 115.32). Although 
there have been no protests of a SBG Program participant's small 
business status in the last five years, at least, businesses could also 
incur legal costs associated with defending themselves against size 
protests. Businesses may also incur legal costs associated with 
compliance.
    Both surety companies and SBA could incur additional administrative 
costs as a result of processing the increased volume of surety bond 
applications and applications for the SBA-guarantee. There may be 
additional administrative costs for PSB surety bond companies because 
they must document the contractors' eligibility for the SBA-guaranteed 
surety bond under the amended size standard. SBA anticipates, however, 
that these additional administrative costs will be minimal because 
surety companies and SBA already perform these administrative functions 
in the ordinary course of business.
    SBA anticipates little or no adverse effects on currently defined 
small businesses from the increase in the number of newly eligible 
small businesses. Potentially, a newly defined small business could 
obtain a contract that a currently defined small business may have 
received. SBA expects those cases to be few in number because the 
decision to award a contract is based on many considerations. This rule 
enhances the environment for small construction and service concerns to 
compete for opportunities and strengthens their competitiveness related 
to contracts performed in the Presidentially-declared disaster areas 
resulting from the 2005 Hurricanes Katrina, Rita, or Wilma.
    For purposes of Executive Order 12988, SBA has drafted this rule, 
to the extent practicable, in accordance with the standards set forth 
in section 3 of that Order.
    This regulation will not have substantial direct effects on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibility among the 
various levels of government. Therefore, under Executive Order 13132, 
SBA determines that this rule does not have sufficient federalism 
implications to warrant the preparation of a federalism assessment.
    SBA has determined that this rule does not impose any new 
information collection requirements from SBA that require approval by 
OMB under the Paperwork Reduction Act of 1980, 44 U.S.C. Ch. 35.
    Under the Regulatory Flexibility Act (RFA), this rule may have a 
significant impact on a substantial number of small entities. 
Immediately below, SBA sets forth an initial regulatory flexibility 
analysis (IRFA) addressing the reasons for promulgating the rule; the 
objectives of this rule; SBA's descriptions and estimate of the number 
of small entities to which the rule will apply; a description of 
potential benefits of the rule; the projected reporting record keeping 
and other compliance requirements of the rule; the relevant Federal 
rules which may duplicate, overlap or conflict with the rule; and 
alternatives considered by SBA.

(1) What Is the Reason for This Action?

    As discussed in the above supplemental information section, this 
rule provides immediate eligibility to construction and service 
contractors for SBA's SBG Program under the same small business size 
standards that apply to all other SBG applicants. However, SBA will 
only guarantee surety bonds for contracts to eligible small 
construction or service concerns that will be performed in the 
Presidentially-declared disaster areas resulting from the 2005 
Hurricanes Katrina, Rita, or Wilma.
    Surety companies with whom SBA has executed a Preferred Surety Bond 
(PSB) Agreement under 13 CFR part 115 will be responsible for 
determining eligibility in compliance with this regulation. SBA surety 
bond personnel will be responsible for determining eligibility in 
compliance with this regulation for those surety guarantees that 
require SBA's prior approval.

(2) What Are the Objectives and Legal Basis for the Rule?

    Section 3(a) of the Small Business Act (15 U.S.C. 632(a)) gives SBA 
authority to establish and change size standards. SBA is using that 
discretionary authority to provide SBG Program assistance to those who 
need it and to those who can help with recovery and reconstruction.
    SBA intends to provide immediate SBG Program assistance to 
construction and service contractors in the areas affected by 
Hurricanes Katrina, Rita, or Wilma. SBA intends also to provide SBG 
Program assistance to construction and service contractors not directly 
affected by the hurricanes, if their contracts or subcontracts are 
performed in the Presidentially-declared disaster areas resulting from 
the 2005 Hurricanes Katrina, Rita, or Wilma.

(3) What Is SBA's Description and Estimate of the Number of Small 
Entities To Which the Rule Will Apply?

    This rule applies to all construction (general and special trades) 
and service concerns that meet the amended size standard and perform 
contracts that are performed in the Presidentially-declared disaster 
areas resulting from the 2005 Hurricanes Katrina, Rita, or Wilma. SBA 
is issuing this interim final rule without estimating the number of small entities affected by this interim final 
rule in the interest of assisting disaster victims and providing 
immediate opportunities for small businesses to participate in the 
recovery efforts. The scope of this amended size standard is limited to 
contracts performed in the Presidentially-declared disaster areas 
resulting from the 2005 Hurricanes Katrina, Rita, or Wilma. It is 
likely that most construction and service concerns that will benefit 
from this rule will also be located in the Gulf Coast states and 
Florida. SBA welcomes comments describing the types and number of small 
entities that this rule will affect.

(4) Description of Potential Benefits of the Rule

    The most significant benefits of this rule will flow to small 
businesses and victims of Hurricanes Katrina, Rita, or Wilma in the 
Gulf Coast region of the United States and Florida. Many small 
construction and service contractors were not eligible for SBG 
assistance before this rule because their annual receipts exceeded $6 
million. Under this interim final rule, they are eligible if they 
(together with their affiliates) meet the small business size standards 
for their primary industries or the current SBG $6 million standard, 
whichever is higher. Small construction and service contractors not 
directly affected by the hurricanes, but that can provide assistance, 
are similarly eligible now if they (together with their affiliates) 
meet the small business size standards for their primary industries or 
the current SBG $6 million standard, whichever is higher. In the end, 
hurricane victims will benefit the most.
    SBA cannot estimate of the number or value of contracts, whether 
Federal or non-Federal, that they will receive. Nor can we estimate the 
number of small businesses affected and not affected by the disaster 
that will benefit. SBA does believe, however, that the increase in 
eligibility for its SBG Program will provide the disaster victims with 
significant and timely benefits. Disaster-affected small business 
concerns can receive SBG Program assistance to restart their 
businesses. Other small business concerns may qualify for more and 
larger contracts and surety bonds with SBA's guarantee.
    This rule does not affect other than small businesses. However, 
entities that are not small businesses, such as not-for-profit 
entities, cities, towns, and other political subdivisions, can be 
beneficiaries of the reconstruction and services that small businesses 
will provide.
    This rule will not provide assistance under SBA's 7(a) Guaranteed 
Loan Program, or any other program. This rule does not amend or 
otherwise modify the small business size standard for any other SBA 
programs, including its 7(a) Guaranteed Loan and Disaster Assistance 
EIDL Programs. However, it will enable businesses to obtain SBA-
guaranteed surety bonding that may work hand-in-hand with SBA's 
Business Loan and EIDL Programs, for those that apply for and receive 
financial assistance under one or both of them.

(5) Will This Rule Impose Any Additional Reporting or Recordkeeping 
Requirements on Small Businesses?

    This rule does not impose any new information collection 
requirements under the Paperwork Reduction Act of 1980, 44 U.S.C. Ch. 
35. A new size standard does not impose any additional reporting, 
recordkeeping or compliance requirements on small entities. Increasing 
size standards expands access to SBA programs that assist small 
businesses, but does not impose a regulatory burden because small 
business size standards neither regulate nor control business behavior.

(6) What Are the Relevant Federal Rules Which May Duplicate, Overlap or 
Conflict With This Rule?

    This rule affects only SBA's SBG Program. This rule does not 
overlap with other Federal rules that use SBA's size standards to 
define a small business. Under section 632(a)(2)(C) of the Small 
Business Act, unless specifically authorized by statute, Federal 
agencies must use SBA's size standards to define a small business. In 
1995, SBA published in the Federal Register a list of statutory and 
regulatory size standards that identified the application of SBA's size 
standards as well as other size standards used by Federal agencies (60 
FR 57988-57991, November 24, 1995). SBA is not aware of any Federal 
rule that would duplicate or conflict with this rule.
    This regulation will not impact other Federal programs that use its 
size standards. When a Federal agency believes that an SBA-established 
size standard is not appropriate for its programs, the Small Business 
Act and SBA's regulations allows that agency to develop different size 
standards, subject to the approval of the SBA Administrator. (13 CFR 
121.902). For a regulatory flexibility analysis, agencies must consult 
with SBA's Office of Advocacy when developing different size standards 
for their programs.

(7) What Alternatives Did SBA Consider?

    One alternative to this rule would be to leave the SBG Program size 
standard unchanged. However, given the immediacy and anticipated extent 
of the need at hand, SBA believes this would not be in the best 
interests of disaster victims.
    Another alternative is to issue a proposed rule. However, as stated 
above, that process could conceivably take at least four to six months 
before any final action would occur. This too, could be harmful to 
small businesses who may be forced to cease operations before the final 
rule could be published. Also, delayed reconstruction efforts would not 
be in the best interests of disaster victims. This interim final rule 
will provide immediate assistance where needed and at the same time 
provide opportunity for interested parties to comment on the rule.

List of Subjects in 13 CFR Part 121

    Government procurement--business, Loan programs--business, Disaster 
assistance loans, Reporting and recordkeeping requirements, Small 
business.


0
For reasons set forth in the preamble, amend part 121 of title 13 Code 
of Federal Regulations as follows:

PART 121--SMALL BUSINESS SIZE REGULATIONS

0
1. The authority citation for part 121 is revised to read as follows:

    Authority: 15 U.S.C. 632, 634(b)(6), 636(b), 637(a), 644, and 
662(5); and Pub. L. 105-135, sec. 401 et seq., 111 Stat. 2592.

0
2. Amend Sec.  121.301 by revising paragraph (d)(1) and adding 
paragraph (d)(3) to read as follows:


Sec.  121.301  What size standards are applicable to financial 
assistance programs?

* * * * *
    (d) * * *
    (1) Any construction (general or special trade) concern or concern 
performing a contract for services is small if, together with its 
affiliates, its average annual receipts do not exceed $6.0 million, 
except as provided in Sec.  121.301(d)(3).
    (2) * * *
    (3) For any contract or subcontract, public or private, to be 
performed in the Presidentially-declared disaster areas resulting from 
the 2005 Hurricanes Katrina, Rita, or Wilma, the construction (general 
or special trade) concern or concern performing a contract for services 
is small if it meets the size standard for the primary industry in which it, together with its affiliates, is engaged, or if it meets the 
size standard set forth in paragraph (d)(1), whichever is higher.
* * * * *

    Dated: November 8, 2005.
Hector V. Barreto,
Administrator.
[FR Doc. 05-22570 Filed 11-10-05; 8:45 am]
BILLING CODE 8025-01-P  

References

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