WASHINGTON - The Associated General Contractors of America (AGC), a commercial contracting organization, applauded the Small Business Administration (SBA) for withdrawing its March 19, 2004, proposed rule to restructure small-business size standards.

"The rule would have caused thousands of small contracting firms to lose their small-business size eligibility," said Stephen E. Sandherr, AGC chief executive officer. "We are pleased that SBA has heeded our warning about the harm this proposal would have had."

Negative effects on small businesses that AGC was concerned about included:

  • Reducing employee counts to fit or remain under the new size standards would cause motivation for layoffs, requiring more work on an overtime basis for remaining employees.

  • Shifting future hiring away from entry-level (lower revenue) employees to senior (higher revenue) employees in an effort to keep total employee counts down would cause less flexibility and result in damage to labor market competitiveness.

  • The conversion of current employees to "independent contractor" status would result in less advantageous working environments.

    The rule proposed simplifying size standards by establishing the number of employees as a common standard for all industries, and by reducing the number of individual size standard levels from 37 to 10. The current 37 standards are based either on monetary amounts or number of employees. To date, SBA has received more than 3,700 public comments. SBA intends to issue an Advance Notice of Proposed Rulemaking in order to collect additional information to review the issues raised by the comments on the proposed rule.

    Publication date: 07/19/2004