IT Industry Group Wants Increase in Size Standards The Information Technology Association of America is urging SBA to increase small business size standards for IT contractors. The association recommends that SBA adopt a size standard of a maximum of 500 employees or $50 million in annual revenues. It argued the current revenue cap of $23 million is “an unrealistic limitation in today’s marketplace of multi-billion dollar IT procurements.” In a letter to Gary Jackson, SBA’s assistant administrator for size standards, ITAA said the current standard “forces many small businesses to exit the marketplace prematurely. Rather than face competition from large IT companies, they choose to sell or merge with other businesses, thereby eliminating themselves from the pool of eligible small businesses.” ITAA said the current restrictive size standards “appear to be fueling the heated mergers and acquisitions market.” It cited more than 200 acquisitions involving federal IT services contractors over the past two years, with the majority of the targets being small firms. The association said the increase in contract bundling is another justification for a larger standard. In the letter, the association also urged SBA to adopt separate size standards for federal procurement, larger from those that apply to other federal programs, and to redefine its IT services category to include professional services, reflecting changes in the industry. It said, “SBA’s restructured size standards need to reflect and promote today’s small business, and continue to permit the federal government to rely on small businesses as the source of innovation, competition, and job growth.” SBA proposed an across-the-board revision of size standards in March 2004. The proposal would have based most standards on the number of employees rather than revenues, but most categories of services would have been subject to a cap on both employment and revenues. The proposed rule would have set a cap of 150 employees and $30 million in revenue for IT services SBA withdrew its proposal three months later in the face of widespread criticism and asked for another round of industry comments. No new proposal has been released.