A new small business size standard became effective January 1, 1957. It was formulated by an interagency task force for procurement purposes and represents the unanimous judgment of the 14 Government agencies chiefly concerned with procurement procedures and the Small Business Administration. Under the new ruling, for purposes of Government procurement, a manufacturing concern is a small business if (a) it is not dominant in its field of operations and, with its affiliates, employs fewer than 500 employees, or (b) it is certified as a small business by the Small Business Administration. To be classified as a small-business concern, a nonmanufacturing firm bidding on Government purchases must meet the same criteria as a manufacturer, plus two additional requirements: (1) It must be defined as a regular dealer under the Walsh-Healey Public Contracts Act, and (2) in the case of a Government purchase reserved for award to small business, or in appropriate cases involving equal bids, it must furnish the product of a small manufacturer or producer in the performance of the contract. When submitting a bid or proposal on a Government procurement, a concern which meets the above criteria, and which has not previously been denied smallbusiness status by the Small Business Administration, may represent in the appropriate place on the bidding form that it is a small firm. The concern will then be deemed to be a small firm for the purpose of the specific Government purchase, unless another bidder protests to the contracting officer and the Small Business Administration about the firm's size status, or the contracting officer himself questions its representation. If the firm's representation that it is a small business is challenged, it may then apply to the nearest Small Business Administration office for a certificate that it qualifies as a small firm. If granted, this small-business certificate is conclusive. If a firm is in doubt as to whether it meets the small-business criteria, it may apply to the nearest Small Business Administration office for a smallbusiness certificate. This definition differs from the old less-than-500-employees standard in the following respects: 1. The factor of dominance in an industry is added. Under the new definition firms having more than 500 employees in some industries may be determined to be small business if they are nondominant in the industry. Conversely, a firm and its affiliates having fewer than 500 employees may be considered large if they are dominant in the field. 2. A nonmanufacturing firm must itself be classed as a small-business concern, and also must furnish the product of a small-business manufacturer or producer in the performance of the Government contract. 3. The number of employees formerly was the total number of the firm and its affiliates at the time of submission of the bid. Under the new definition, number of employees means the quarterly employment of the concern in question and its affiliates based (1) on the average number of employees reported for the preceding 4 quarters to the United States Treasury Department under the old-age and survivors insurance program; or (2) the number of employees as of the most recent quarterly report, whichever more correctly reflects the size of the concern in question. It is believed that the new definition will be more equitable to small-business firms and will provide the flexibility necessary to handle inequities on an individual basis. Insofar as the definition for business loans and purposes other than Government procurement are concerned, the Small Business Administration will continue to use the definition of small business adopted by it on June 10, 1954. This definition provides: Manufacturing concerns.-Any manufacturing concern is classified as small if it has 250 or fewer employees, including employees of affiliates; as large if it employs more than 1,000 persons. A manufacturing firm which has more than 250 but not more than 1,000 employees may be classified as either small or large, depending upon the size standard which the Small Business Administration has developed for its particular industry. Nonmanufacturing concerns.-Any wholesale concern is considered small if its annual dollar volume of sales is $5 million or less; any retail or service trades concern as small if its annual sales or receipts are $1 million or less. (The reguation also provides certain exceptions.) The dividing line between large and small for other industries for purposes other than Government procurement: Construction: Average annual receipts of $5 million or less for the preceeding 3 years; Trucking and warehousing: Annual receipts of $2 million or less with exceptions based on economic data in individual instances; Taxicabs: Annual receipts of $1 million or less. IX. SMALL BUSINESS ADMINISTRATION LIAISON OFFICER WITH DEPARTMENT OF DEFENSE A Small Business Administration liaison officer is assigned to the Department of Defense to help achieve greater coordination of the two agencies' small business programs. The SBA representative participates in conferences and in the preparation of directives relating to small business policies of the Defense Department and the three military services. Defense officials have given this liaison officer excellent cooperation and his participation at the Defense Department's policy level has resulted in a number of changes beneficial to small business. This SBA representative participates with the policy level officials of the Department of Defense by reviewing proposed policies, instructions, procedures and implementations that affect small business and makes recommendations with respect to such proposals. X. THE CABINET COMMITTEE ON SMALL BUSINESS During the past year, in addition to the activities of SBA program operations, there has been a coordinated effort among all Government agencies and departments to render specific assistance to small business. A direct result of the administration's small business programs has been the establishment by the President of a Cabinet Committee on Small Business. SBA activities and programs have pinpointed small business problems and have served as a corollary to efforts of small-business men who have in this connection, as expressed by the annual report of the Select Committee on Small Business of the United States Senate, “*** succeeded in placing their problems on the steps of the White House itself." The purpose of the Cabinet Committee on Small Business is that of directing the development and strengthening of Government programs and policies to provide such enterprise with additional constructive assistance. The Administrator of the Small Business Administration was named a member of the Cabinet Commitee on Small Business, and the committee actions reflect the problems and requirements of small business as experienced by the SBA in administering the Small Business Act of 1953. The committee has issued a progress report which sets forth recommendations that are intended to give further constructive steps to aid small business. The recommendations encompass financial assistance; tax benefits; technical services and advice; help in obtaining procurement contracts; discontinuance of Government owned and operated commercial, industrial type facilities; and the preservation of competition. One of the recommendations of this committee, in its progress report submitted to the President in August 1956, was that "the President arrange for a comprehensive review of procurement policies and procedures of all departments and agencies, including the legislation pertaining thereto, with a view to facilitating and extending the participation of small businesses in work on Government contracts." The responsibility for carrying out this recommendation was assigned to the General Services Administration. This agency has established a task force composed of representatives of the principal procurement agencies, including the Department of Defense, Atomic Energy Commission, Veterans' Administration, Post Office Department, Department of the Interior, Department of Agriculture, Department of Commerce, and the General Services Administration. Other procurement agencies also are consulted. A representative of the General Services Administration is chairman of this task force. The task force defines problem areas, to plan corrective action. The Small Business Administration, the Bureau of the Budget, and the General Accounting Office participate in this program as members of the Special Advisory Group. At the invitation of the General Services Administration, the Small Business Administration has also assigned a full-time representative to work with the GSA and the task force in order that SBA procurement assistance programs and related policies, plans, and requirements would be appropriately reflected in task force activities and related recommendations. In addition, SBA staff members serve on subcommittees of the task force, one serving as chairman of the Program Study Group No. 2, Set-Aside Procedures; another as a member of Group No. 5, Implementation of the New Definition of Small Business; one with Group No. 6, Small Business Participation in Government-Sponsored Research and Development Programs, and another subcommittee concerned with drafting proposed legislation. With respect to the work of this task force, the Small Business Administration has recommended a standardized procurement policy and implementing instructions for the establishment of the Small Business Set-Aside Program in all Government procurement agencies. The Small Business Administration has also made available its vast background of experience, in connection with the work of the task force in eliminating inequities, inconsistencies, and complexities from Government procurement, by having its field offices prepare factual information on cases which illustrate the difficulties of small firms in selling to the Government. These cases, in turn, are submitted to the task force. As of the end of December, the agency had submitted 73 specific cases covering such areas of Government procurement as (1) need for specifications and standards, (2) standardization of items, (3) specifying a brand name or equal, (4) inadequate or inaccurate prints, (5) inspection or testing of the product, (6) delay in payment and (7) delay in settlement of claims. EXHIBIT A Procurement and technical assistance activities [For the period Aug. 1 1953, through December 1956 unless otherwise indicated] • Higher priority programs have caused a decrease in the staff time available for this activity. EXHIBIT B Joint set-asides-Comparison of 6-month periods from July 1953 through Amount.... Agreed to: Number.. Procurement s awarded: Number.. Amount... $179,680, 926 $192, 953, 518 $199, 339, 330 $250, 381, 619 $213, 619, 404 $352, 462, 912 $381, 196, 806 562 1, 105 1,483 2, 441 2,171 4,789 3, 904 $129, 326, 007 $118, 274, 535 $172, 566, 059 $214, 044, 530 $192, 813, 867 $304, 864, 565 $345, 274, 449 730 854 1,809 2,028 3,425 256 2,722 $80, 605, 419 $90, 305, 917 $71, 120, 245 $122, 656, 485 $157, 743, 050 $187, 067, 429 $217, 650, 033 1 Includes 1 month of operation under the Small Defense Plants Administration. EXHIBIT C Small Business Administration: Awards under joint set-aside program, by States, cumulative through Dec. 25, 1956 |