American Society of Landscape Architects opposed SBA’s proposed size increases
for small landscape architecture firms.
Background and Analysis
On September 27, 2010, President Barack Obama signed the
Small Business Jobs Act of 2010, which, among other things, directs the Small
Business Administration (SBA) to conduct a review of all size standards and to
make appropriate adjustments to reflect market conditions. The last comprehensive review of size standards
occurred in the early 1980s and the last size standards review of landscape
architecture was performed in 1998.
As part of this comprehensive review, SBA proposed a
change to its size standards for all professions in the North American Industry
Classification System (NAICS) Sector 54, the professional, scientific and
technical services industries, including architecture, landscape architecture,
engineering, planning, and a host of other professions. Under the proposed
rule, SBA recommended that small landscape architecture firms be capped at
$19 million instead of the current $7 million.
For purposes of the new size standards calculations, SBA
grouped architecture, engineering, landscape architecture, and planning
together because they believe there is a tremendous overlap in the type of work
that the professions perform for federal procurement projects. With this
analysis in mind, SBA recommends that all three professions be grouped together
with a common size standard of $19 million.
Below are the current size standards, the proposed common
size standards, and the calculated industry specific size standards in millions
Current Proposed Calculated Industry Specific
$7 $19 $5
Architecture $4.5 $19 $7
Engineering $4.5 $19 $25.5
ASLA heard from a number of members and firms and
learned that the vast majority of them believe that SBA’s proposed new standard
of $19 million is too high and would have a devastating impact on their ability
to compete for any small business opportunities and could decimate their
businesses. Also, according to the most
recent Economic Census (U.S. Census Bureau), approximately 99 percent of
landscape architecture firms operating in the United States have annual
receipts less than ten million dollars. With only about thirty-three landscape
architecture firms operating with revenue more than $10 million, increasing the
size cap to $19 million would only benefit a handful of firms.
ASLA submitted comments to the SBA that opposes the agency’s recommendation of increasing the cap on landscape
architecture firms to $19 million and instead recommends that SBA maintain the
current $7 million threshold. ASLA urged SBA not to group the landscape
architecture profession with other design professions who may perform similar
work, including the professions of architecture and engineering and instead to
perform size standards analysis based on the specific data from each
profession. Finally, ASLA urged SBA to
take any necessary steps to exclude “pass through” payments to third party
subcontractors in a landscape architecture firm’s annual receipts.
On February 11, 2012, the Small Business Administration (SBA) issued a final rule for size standards affecting the North American Industry Classification System (NAICS) Sector 54, the professional, scientific and technical services industries, including architecture, landscape architecture, engineering, planning, and a host of other professions. As recommended by ASLA, the final rule will maintain the current $7 million threshold to be considered a small landscape architecture firm.
The final rule increases the size standard for architecture services to $7 million and $14 million for engineering services. The rule is effective March, 2012. In future rulemakings ASLA will continue to work with SBA to ensure that agency does not increase small business size standards for the landscape architecture profession.
SBA’s Size Standards: Professional, Technical, and Scientific Services Final Rule, February 11, 2012.
Proposed National Rulemaking to Increase Size Standards for Professional,
Scientific and Technical Services (Sector 54)
SBA’s Size Standards
Subcommittee Hearing: “Professional Services: Proposed Changes to the Small Business Size
Standards,” May 5, 2011 U.S. House of Representatives Small Business Committee’s Subcommittee on Economic
Growth, Capital Access and Tax Hearing