Resellers protest size standard change

Several dozen vendors are objecting to the Small Business Administration’s proposed change in size standards for Information Technology Value-Added Resellers (ITVAR) under NAICS Code 541519.

Currently, under that exception, vendors with 150 or fewer employees are considered small businesses. Under the SBA proposed rule, that would change to a $25.5 million revenue standard.

The current standard is a sub-industry size standard exception that applies to vendors offering a significant proportion of value-added services. The SBA said the exception has created inconsistencies, misuse and confusion. The SBA also estimates that 99% of the firms that currently qualify as small would continue to qualify as small under the new standard.

However, the American Small Business League, led by Lloyd Chapman, has spearheaded a campaign to object to the proposed rule.

More than two dozen vendors have written to the SBA protesting the new standard.

“With this change my company, a small ITVAR, will lose its small business size status under NAICS Code 541519,” wrote Augustine Riolo in a comment submitted on Oct. 30. “We strongly and urgently recommend that SBA abandon its plans to eliminate the 150-employee exception to ITVAC NAICS 541519.” Riolo did not identify the company.

“In the computer industry a small business partner with revenues in excess of $25 million is still considered within small parameters, due to the fact that computer equipment is so expensive. Our profit margins are low, and if the regulations change this will have an adverse effect,” wrote Danielle Mucaro on Nov. 3.

At least one comment was in favor of the SBA’s change: “It is about time this exception is removed. There are numerous large businesses hiding under this exclusion, taking business away from actual small businesses. The biggest problem has been validating if the companies are actually performing the 15% to 50% value-added service,” wrote Michael Hall on Oct. 28.

While several dozen comments were submitted in protest of the ITVAR change, many of those comments appear to be form letters because they have the same sentences, word for word.

More information: Regulations.gov docket browser http://goo.gl/zzvuZE

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