SBA changes to aid IT, testing lab industries

Two rule changes proposed by the U.S. Small Business Administration will help more small businesses in the information technology and testing lab industries to qualify for small-business contracting opportunities and SBA assistance.

Both rules were effective Jan. 28.

The SBA established a new industry category for information technology value-added resellers, and set the maximum size standard for qualification as "small" at 150 employees. Under the new rule, a small business is classified as an IT value-added reseller if it provides IT equipment, multivendor hardware and software, and significant services on federal contracts.

The SBA also increased the receipts-based size standard for small businesses in the testing lab industry from $6 million in average annual receipts to $10 million.

"After an in-depth analysis of those industries, we recognized their potential for growth," said SBA Administrator Hector V. Barreto in a news release. Barreto said that the rule changes ensure that the firms affected receive access to capital and a fair share of federal contracting opportunities.

Prior to the IT reseller change, small businesses that contracted with the government to provide IT equipment and computer-related services were classified as manufacturers or nonmanufacturers (distributors) with a size standard based on employees. Small businesses that provided services along with information technology equipment were classified as computer service providers with a size standard based on receipts.

With the new rule, for the purposes of receiving SBA assistance other than federal procurement, an IT value-added reseller must be primarily engaged in providing IT equipment and computer software, and provide value-added services, which account for at least 15 percent of its receipts but not more than 50 percent. Value-added services include systems integration, configuration consulting and design, training and product technical support.

The change allows smaller IT firms to better compete for IT-related federal contracts and may result in an additional $10 million to $25 million in contracts. The SBA estimates that more than 1,700 small businesses will qualify for SBA assistance as a result of the new rule.

The testing lab rule change is the result of requests from testing laboratories to review the size standard because of upgraded capacities and skills that federal agencies have recently required of laboratories. SBA examined factors including average firm size, distribution of firms by size, start-up costs, industry competition and patterns of federal procurement. Under the new rule, the SBA estimates that 120 additional firms generating 10 percent of sales in the lab testing industry will obtain small-business status.