The Professional Services Council has voiced support for the Small Business Administration’s plan to increase monetary-based size standards for small businesses, while warning that any future reductions could harm competition and limit growth opportunities for federal contractors.
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Why Does PSC Support SBA’s Proposal?
In formal comments on SBA’s proposed rule, “Small Business Size Standards: Monetary-Based Industry Size Standards,” PSC said the plan to increase 263 monetary-based standards, retain 249 and eliminate one receipts-based standard is a fair adjustment reflecting inflation, higher labor costs and market shifts over the past five years.
The organization also noted that many mid-sized firms, particularly those affected by reduced contract scopes and budget pressures, now fall back into the small business range, underscoring the need for updated benchmarks.
PSC Warns Against Market Imbalance
While backing the increases, PSC cautioned that some size thresholds may be rising faster than actual company growth, creating barriers for new entrants and smaller firms. It noted that preparing bids for major “best-in-class” or governmentwide acquisition contracts can cost $75,000 to $100,000, discouraging participation by early-stage companies.
PSC said these trends, combined with the decade-long decline of small business prime contractors, risk tilting the marketplace toward the upper end of the “small” category, making it harder for newer firms to compete.
Council Opposes Reductions, Seeks Added Market Growth Factor
The trade group urged the SBA to maintain its policy against lowering size thresholds, saying that reductions would penalize successful small firms and run counter to SBA’s goal of reversing the drop in small prime contractors. PSC also opposed removing the marine engineering and naval architecture exception under North American Industry Classification System 541330, arguing that it would reduce opportunities rather than expand them.
PSC supported SBA’s continued use of equal weighting for its five main assessment factors but recommended that the agency add a “market growth” factor in future reviews. The new metric would capture how small businesses progress after growing out of their eligibility, reenter the small business pool or exit the federal marketplace, providing a clearer picture of long-term economic performance.
How Should SBA Balance Growth and Opportunity?
PSC concluded that while the current proposals are reasonable, the SBA must ensure that future updates sustain competition, foster innovation and promote fair access for new entrants. The organization said effective size standards should maintain a stable growth environment while continuing to strengthen the small business industrial base supporting federal missions.
