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SBA Extends Comment Period on Proposed Small Business Size Standards Following ASA Request – ASA Advocacy Helps Secure Additional Time for Construction Industry to Review Sweeping Proposed Changes

The U.S. Small Business Administration (SBA) has extended the public comment period for its proposed changes to federal small-business size standards, giving construction contractors, subcontractors, trade associations, and other stakeholders an additional 60 days to review the proposal and submit comments.

On September 21, SBA formally extended the comment periods for both its proposed Small Business Size Standards rule and its Revised Size Standards Methodology. The new deadline for comments is November 20, 2026, replacing the original September 21 deadline. The extension is effective immediately and is scheduled to be published in the Federal Register on September 24.

The extension follows advocacy from ASA and other stakeholders seeking additional time to understand the potential impact of the proposed changes. ASA submitted a letter to SBA last week requesting that the comment period be extended by at least 60 days, specifically asking that the deadline be moved from September 21 to November 20. While SBA’s notice does not identify individual organizations whose requests contributed to the decision, the agency specifically cited requests for additional time to comment as a reason for the extension. SBA also referenced the need to provide additional time following clarification of the impacts of the proposed changes.

The additional 60 days will give ASA members and chapters more time to evaluate how the proposal could affect small construction subcontractors and specialty trade contractors and to provide SBA with meaningful, industry-specific information.

The SBA proposal represents more than a routine adjustment to existing size standards. SBA is proposing changes to both the methodology used to establish size standards and the standards themselves. The proposed rule would establish new size standards for 338 industry groups and industries.  Among the most significant changes are the consolidation of many existing six-digit NAICS classifications into broader four- and five-digit classifications and the conversion of numerous industries from receipts-based size standards to employee-based standards.

ASA is particularly concerned about how these changes could affect small construction subcontractors. Construction is a highly specialized industry, with businesses ranging from general building contractors to electrical, plumbing, drywall, painting, flooring, tile, finish carpentry, and other specialty trades. These businesses can have very different business models, revenue levels, workforce requirements, bonding capacity, capital resources, and competitive capabilities.

Under SBA’s proposed approach, many of these distinct specialty trades would be grouped under broader NAICS classifications. For example, drywall, painting and wall covering, flooring, tile and terrazzo, and finish carpentry contractors would fall under the broader NAICS 2383 – Building Finishing Contractors classification, which would have a proposed size standard of 600 employees. ASA believes SBA needs to carefully evaluate whether broader classifications accurately reflect the differences among these businesses and whether consolidation could result in substantially larger companies competing with genuinely small specialty contractors for federal small-business opportunities.

ASA also raised concerns about SBA’s proposal to move many industries from receipts-based standards to employee-based standards. For construction, employee count may not accurately reflect the economic size or competitive capacity of a business. Construction revenues can vary significantly based on material costs, project size, subcontracted work, geography, and the type of work being performed. Two contractors with the same number of employees can have dramatically different annual revenues, bonding capacity, capital resources, equipment, purchasing power, and administrative capabilities. ASA believes SBA should provide additional analysis demonstrating why an employee-based standard is appropriate for construction and whether it accurately distinguishes genuinely small contractors from substantially larger businesses.

Another concern involves SBA’s proposed methodology for receipts-based size standards, which establishes a minimum standard of $30.6 million. Although many construction standards under the proposal would be expressed in terms of employees, ASA is concerned about the broader effect of expanding the number and size of companies that could qualify as “small.”

A locally owned subcontractor with 20, 30, or 50 employees may face a very different competitive environment than a company with substantially greater revenue, bonding capacity, purchasing power, workforce, administrative resources, and access to capital. If significantly larger companies qualify as small, they could compete for federal small-business set-asides and subcontracting opportunities alongside businesses that are considerably smaller in both size and resources. 

The proposed changes could therefore have a direct impact on federal construction procurement. If more businesses qualify as small, the number of companies competing for small-business set-asides could increase. The changes could also affect federal subcontracting goals, where prime contractors rely on small specialty subcontractors to meet their small-business participation requirements. ASA believes SBA should evaluate not only how many additional businesses would qualify as small under the proposal, but also how those businesses compete in the federal marketplace and what effect the changes could have on existing small-business participation.

The additional 60 days will allow ASA and its members to conduct a more thorough review of the proposal and develop substantive comments supported by real-world construction industry experience. Among the issues ASA plans to further evaluate are:

  • The number of construction firms that would newly qualify as small;
  • The impact of converting receipts-based standards to employee-based standards;
  • The consolidation of six-digit construction NAICS codes;
  • The impact on federal small-business set-asides;
  • The effect on federal subcontracting goals;
  • The competitive differences between general contractors and specialty subcontractors; and
  • Whether separate size standards are appropriate for substantially different construction trades.

ASA supports SBA’s mission to promote opportunities for small businesses and recognizes the importance of periodically reviewing and updating size standards. However, the association believes the definition of “small” must remain meaningful and reflect the actual competitive environment faced by small businesses. The new comment deadline is November 20, 2026.