New SBA Size Standards Reflect Architects’ Concerns

© 2006, The American Institute of Architects. All rights reserved.
© 2006, The American Institute of Architects. All rights reserved.

The Small Business Administration (SBA) announced on Feb. 10, 2012, that it will abandon plans to increase by 400 percent the size standard for architects eligible for SBA set-asides.  The decision reflects the concerns expressed in the more than 1,200 comments received by the agency during the comment period on the original SBA proposal.

The AIA filed comments in June strenuously opposing the SBA’s original proposal to raise the size standard to $19 million from $4.5 million in gross annual receipts for architects to qualify as a small business. This regulation is crucial for firms which do federal work as $190 billion of the $700 billion in contracts goes to firms that qualify as small businesses. The new size standard will take effect on March 12, 2012.

“We appreciate the SBA listening to the small business community’s opposition to its original proposal, which would have hurt many of the AIA’s small business members,” said AIA President Jeff Potter, FAIA. “With the SBA’s announcement today, we now have a size standard that better reflects the reality of the profession.”

The SBA received more than 1,200 comments on its original proposal. Over 90 percent of those comments rejected the $19 million cap for architects originally proposed by the agency.

“I’m so proud of our members for standing up and letting our collective voices be known on an issue of major importance to our profession,” added Potter. “And while the decision doesn’t solve the entire size standard issue, we look forward to working with the SBA and Capitol Hill in continuing to make our profession’s views known on other small business concerns.”

The SBA’s original proposal would have been devastating to many small firms and sole practitioners because it would have lumped architecture, engineering, interior design, landscape architecture and mapping into the same $19 million bucket. The SBA’s proposal would have let large architectural firms with a variety of disciplines qualify for small business benefits, at a time when such aggregated firms do not represent the current demographic for architecture firms, 80 percent of which have 10 or fewer employees.

Virginia Firm Urges AIA Action on SBA Proposal

In part at the urging of Commonwealth Architects in Richmond, the national AIA Government Advocacy team has been working with the Small Business Administration (SBA) to revise its definition of an architecture small business. 

The agency’s latest proposal will move the definition to $19 million annual gross receipts from the current $4.5 million.  As of 2009, a majority of firms qualified for SBA business status based on their billings.  Should this change go through, 97.7 percent of the firms responding to the 2009 AIA firm survey would fall within the architecture small business category.

At risk are the special set-asides included within federal contracts for firms within the small business category.  With the change, more firms will qualify for such set asides and more large contractors may qualify for contracts through the greater number of small business sub-contractors. 

More information can be found on the AIA website:  http://www.aia.org/advocacy/federal/AIAB088628?dvid=&recspec=AIAB088628.  Included are links to discussion groups on the topic and a request to send comments, stories and empirical data to be used by the AIA to strengthen its discussions with the agency and congressional leaders.