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SBA Size Standards Increases for Architecture Firms

The SBA Released the New Architectural Size Standard of $7million Annual Gross Receipts

The SBA released final size standards for architecture firms on February 10, representing a significant change in course from their original proposal to lump architecture and other professions into a massive $19 million standard. SBA’s decision shows the impact grassroots advocacy can have on issues AIA members mobilize around.

The new architecture size standard of $7 million in gross annual receipts is 63 percent lower than the originally-proposed $19 million.  With engineering increasing from $4.5 million to $14 million, the SBA’s move represents the first time that architecture and engineering have been separated into two individual categories. 

Originally, the SBA proposed to lump architecture, interior design, landscape architecture, engineering, mapping, and other related services into one category with a $19 million cap.  However, 90 percent of architects who wrote to the SBA opposed the change. In fact, the SBA noted that, even though the proposed rule covered one third of all industries, more than 60 percent of comments submitted were about the architecture proposal. The new standard is effective on March 12, 2012.

AIA’s Comment to the SBA on their Proposed Size Standard Change

The AIA submitted its comments on June 14, 2011. The AIA’s letter outlined concerns regarding the proposed changes. In addition, there were over 650 comments made by AIA members on the proposed change. This represented approximately 60% of the total comments made for this proposed regulation.

Proposed Comments to the SBA

The AIA is asking you to make your comments on the SBA’s proposed change to the size standards. We have one week left to make comments and we need your voice. There are a few talking points listed below which can help you start your comments. Just go to the link above this paragraph and start!

    • I do not support the SBA’s proposed change in size standard for architectural services to $19 million. I request that the status does not change from the current $4.5 million in net receipts until the SBA works with the profession to find a better alternative.

    • I request that the SBA further study the architectural services number as the current definition allows for participation from 91.7% of U.S. firms, based on AIA data.  The proposed standard would allow over 97.7% of member firms to participate in small business set-asides. This inclusion would not allow for small businesses to compete against larger firms.

    • I request that the SBA create a micro-status for business to give them the ability to begin participation in the federal market.

    • (Insert how the SBA regulations affect your business here)

Member Call-In

Our member call-in on Thursday, June 2 allowed members to voice their opinions on the size standard issue. The AIA hosted an open member call focused exclusively on the issue of the Small Business Administration's proposed firm size standards. This event gave background on the work that the AIA has done on this topic so far, and allowed for member discussion.

Comment Deadline Extension

AIA was successful in our request to Congress for an extension of the SBA deadline. Walter J. Hainsfurther, FAIA, and two other representatives from other organizations, asked that the House Subcommittee on Economic Growth, Capital Access and Tax request an extension for the comment period. The AIA is also working with this Congress and the SBA to outline other potential methods to determine small business requirements.

Congressional Testimony:

Walter J. Hainsfurther, FAIA, testified today before the United States House of Representatives, Subcommittee on Economic Growth, Capital Access and Tax to discuss the effect of the SBA’s proposed standards on architects. The AIA asked the committee for additional time to get our responses into the SBA. The current deadline is Monday, May 16th and we are continuing to hear from members. The AIA Government and Community Relations Team is working hard to make your voices heard by the SBA on this important issue.

For more information, connect to the subcommittee’s website. There, you can find links to the written testimony from all four speakers, including Walter’s, the committee’s press release, and a link to the video of the hearing. Click here for AIA’s press release on the hearing.

To discuss this issue, please go to the AIA’s Linked In or Facebook pages. For more information on how you can submit your own comments, click here.

Background:

The Small Business Administration has proposed new size standards for what defines an architecture small business. Their proposals may have large impacts on many firms across the country. The SBA effort focuses on simplifying the regulatory process and to combine what they consider to be similar professions into a single standard.

The SBA is proposing to change the size standards for Architecture firms from $4.5 million in annual receipts to $19 million in annual receipts. (Please click here for more information on how to calculate annual receipts.)

As of 2009, a majority of firms qualify for SBA business status based on their billings. Just over ninety percent of firms reported their annual gross billings under the $4.5 million SBA status threshold.

As you can see below, the proposed increase would enable another 6% of firms to qualify for SBA status. C:\Users\banchoffa\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.Outlook\9IJNTIIJ\table-graphic.jpg
Source: 2009 AIA Firm Survey

In the past, members have had diverse opinions regarding size standards. The SBA is requesting feedback from the public about their proposals.

How the SBA affects Your Business:

This proposed regulatory change could help firms that currently may be too large to qualify as a small business, while increasing the number of businesses that can compete for special small business status for federal government contracts. There are special set-asides in federal contracts for small businesses and many large contractors qualify for contracts through their small business sub-contracts. SBA loans are also available for businesses who qualify for small business status.

For more information on SBA programs for small businesses, click here: www.sba.gov

Facebook and Linked-in Discussion page:

If you want to know more about what other members think, or to post comments, please post your comments on AIA’s Facebook page or on AIA’s Linkedin page.

How to Submit Comments to the SBA:

Comments may be submitted by two methods. You must include this identifier, RIN 3245-AG07, in your comments.

• Via the web at the Federal eRulemaking Portal. Follow the instructions for submitting comments; or

• Via Mail/Hand Delivery/Courier: Khem R. Sharma, PhD, Chief, Size Standards Division, 409 Third Street, SW., Mail Code 6530, Washington, DC 20416.

Additional Resources:

2011 AIA Architectural Services Data Summary (PDF)
www.sba.gov

Jobs Act Tour Information

Tax Breaks for Small Businesses

Small Business Loans and Grant Information

Information Tailored to Your Needs as a Small Business Owner

 

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