Congress May Set Size Standards Congress may set small business size standards by law when it reauthorizes SBA programs later this year, said Rep. Donald Manzullo, chairman of the House Small Business Committee. An interagency task force is now working to simplify the 32 existing size standards for different industries. The group is considering basing standards for all industries on the number of employees rather than revenues. (SAA, 5/2) Manzullo (R-IL) said, “We’ve got to get rid of the lobbying efforts that go into setting (size) standards… The system of classification has become so complicated that the big boys are conning the system.” At a May 7 hearing before his committee, Manzullo said he is leaning toward setting size standards for all manufacturers at 500 employees, with no exceptions. Some industries have succeeded in persuading SBA to allow companies with as many as 1,500 employees to qualify as small. They include courier services, paging and telecommunications firms, oil and gas pipeline operators and oil refineries. Manzullo acknowledged that a 500-employee ceiling is “arbitrary,” but said it would be an improvement over the present system. Standards in most industries are based on a company’s gross receipts. Those dollar-based standards were increased by 15.8% last year to keep up with inflation, the first increase in eight years. The standards determine eligibility for federal small-business programs, including set-aside contracts and SBA loans. SBA officials have acknowledged that the standards are too complicated, but efforts to change them pit “small small” businesses against “not so small” ones. The standards encourage companies to practice “gamesmanship” and “size management,” said Steven Schooner, a law professor at George Washington University and a former official of the Office of Federal Procurement Policy. “A textile manufacturer, highly dependent upon government contracts, has every reason to avoid hiring its 501st employee, and might instead subcontract out certain tasks…to avoid crossing the size threshold,” he told the committee.