On August 20th, the Small Business Administration (SBA) published proposed rules to change Small Business Size Standards and revise the Size Standards Methodology.
Changes to the small business size standards aren’t unusual. In fact, SBA is required to review size standards every five years and make necessary adjustments to reflect market conditions. What is unusual is proposing to change the Size Standards Methodology so soon after the last formal change, which came in 2024.
Four Notable Changes:
- NAICS Level Consolidation – The proposal shifts the level at which standards are set from six-digit NAICS codes to four- and five-digit codes, reducing the total from roughly 1,000 to 338 standards.
- Magnitude of Increases – Thresholds in professional services, IT, engineering, and related sectors would rise as much as tenfold or more. The chart below provides examples of proposed size standards for some of the most common NAICS under the GSA Schedule.
NAICS NAICS Description Current Size Standard Proposed Size Standard 513210 SOFTWARE PUBLISHERS $47 M 3,600 Employees 541211 OFFICES OF CERTIFIED PUBLIC ACCOUNTANTS $26.5 M $97 M 541330 ENGINEERING SERVICES $25.5 M $252 M 541511 CUSTOM COMPUTER PROGRAMMING SERVICES $34 M $531 M 541512 COMPUTER SYSTEMS DESIGN SERVICES $34 M $531 M 541519 OTHER COMPUTER RELATED SERVICES $34 M $531 M 541611 ADMINISTRATIVE MANAGEMENT AND GENERAL MANAGEMENT CONSULTING SERVICES $24.50 $295 M 561210 FACILITIES SUPPORT SERVICES $47 M $156 M 561599 ALL OTHER TRAVEL ARRANGEMENT AND RESERVATION SERVICES $32.5 M $254 M - Structural Changes – The rule would eliminate all 18 subindustry exceptions (including ITVAR), convert several sectors (including construction) from receipts-based to employee-based standards, remove the ceiling on receipts-based standards, and add a productivity escalator on top of inflation.
- No Reductions – SBA proposes not to reduce any existing size standard, even where its own analytics support a decrease.
If your company outgrew its small business size standard, this proposal could restore that status — reopening access to set-aside contracts and SBA loan programs. Existing small businesses should prepare for an influx of competition. If passed, this change could add more than 110,000 companies to the small business pool.
Bottom Line and Next Steps
It’s important to note, these are proposed changes that are not yet in effect. Companies have until September 21, 2026 to submit feedback related to SBA’s proposed changes. For more information on potential next steps, read Clark Hill’s SBA Proposes Sweeping Overhaul of Small-Business Size Standards: Prepare for a Shifting Competitive Landscape.