The Definition of Small

Next week the Small Business Administration (SBA) wraps up a month of public hearings on small business size standards. The public hearings, including today’s in Dallas, are part of an effort to gather input from small business owners across the nation to help the SBA update their size standard regulations.

The SBA’s size standards and related regulations have come under fire recently when a report surfaced indicating that contracts earmarked for small businesses had in fact gone to large businesses.

“There were some instances where a small business got a contract as a small business and it exceeded the size standard after it got the contract,” SBA Administrator Hector Barreto told the South Florida Sun-Sentinel.

Currently, the SBA defines a business as small if it has fewer than 500 employees or had a certain level of receipts, depending on the industry. Over the years, the variety of standards has been criticized for being difficult to understand. So, in March, 2004, the SBA proposed a restructuring of the size standards to make them easier to understand and apply. After issuing the proposal, the SBA was flooded with more than 4,500 responses to its proposal. Although most of the comments were supportive, the opposing comments raised enough concerns to inspire the SBA to hold a series of public hearings on the issue.

With access billions of dollars in federal, state and local contracts and loans at stake, it is no wonder the debate has been heated.

“If large corporations are allowed to bid on small-business contracts, they are going to beat out my small business every single time,” Carol McCallister, owner of Champion Business Services in Aurora, Colorado told the Rocky Mountain News.

“Increasing the size [definition] will drive out any small business trying to compete,” agrees Michael Edwards, president of Triton Manufacturing Co. in Monee, Illinois according to the Chicago Tribune.

More than 6,000 comments have been received so far. According to the SBA the comments and testimony will be considered in any proposals resulting from the public hearings.

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