The U.S. Small Business Administration has proposed new small business size standards for 338 industry groups and industries. SBA describes the proposal published in the Federal Register on August 20, 2026, as a simplification of small business size standards to address the overall competitiveness with specific industry group subsectors. SBA estimates the proposed rule would result in a net increase of about 114,541 businesses classified as small. Additionally, this rule change will consolidate the number of size standards across industry group subsectors.
This question guide is designed to help industry answer the SBA’s request for public comment before the September 21, 2026 deadline. Size standards shape small business eligibility and competition. The practical effects of SBA expanding the definition of small business are likely important to corporations of all sizes in how this impacts their participation in the federal government market.
The Baroni Center takes no position in this question guide on whether SBA should adopt, modify, or withdraw the proposed rule. The purpose is informational and educational: to help stakeholders both identify implications for the government contracting industry’s composition and competition as well as share evidence-based comments during the public comment period.
How to use this question guide
Use the five questions below to:
- assess how the proposal changes the competitive pool for federal work;
- frame internal discussions with acquisition, business development, capture, legal, small business, or policy teams;
- identify affected NAICS codes or industry groupings;
- gather procurement-specific evidence before submitting comments;
- help SBA understand any unidentified consequences of the proposed standards and how they may operate in federal markets.
Until a final rule takes effect, current size standards and acquisition rules continue to govern solicitations. Under FAR 19.102, contracting officers assign one NAICS code and corresponding size standard based on the principal purpose of the acquisition, and they apply the size standard in effect on the date the solicitation is issued. Under FAR 19.502-2, total small business set-asides depend on a reasonable expectation of offers from responsible small business concerns and award at fair market prices.
1. Would the proposed standard change the pool of firms that are eligible and capable of competing for federal work?
Size standards help determine which firms qualify as small for a given industry and may be eligible for small business set-asides, preferences, and related programs.
Eligibility, federal market participation, procurement-specific interest, and demonstrated capability are separate gates. Agencies should assess whether a changed eligible pool would translate into a viable pool for particular requirements. Small businesses should examine whether the proposal changes their eligibility, likely competitors, or credible opportunity set. Mid-tier and other-than-small firms should consider whether the proposal changes the available pool of small business teammates, subcontractors, or set-aside competitors.
Use this question to develop an affected-market snapshot including which firms may become newly eligible, which already participate in the federal market, which are likely bidders, and which appear capable of performing the relevant work.
2. How could the proposal reshape small business growth paths and competition within set-aside markets?
SBA states that the proposal would expand the pool of employer small businesses and give growing firms additional room to qualify under higher thresholds. SBA also proposes to avoid reductions in industry size standards, including industries where its analysis may otherwise support a decrease.
The proposal may give some firms more room to grow while also changing the composition of competitors within set-aside markets. Some companies may gain eligibility, retain eligibility longer, or avoid a near-term graduation cliff. Others may remain small while facing larger or more mature competitors within the same set-aside market. Mid-tier and other-than-small firms may need to reassess mentor-protégé relationships, joint ventures, subcontracting pools, acquisition targets, and small business partner strategies.
Agencies may also need to consider whether evaluation criteria, past performance requirements, and responsibility determinations are calibrated to a broader range of eligible small business competitors.
Use this question to map market effects across different firm cohorts including new entrants, very small firms, growth-stage firms, incumbent small businesses, newly eligible firms, mid-tier companies, other-than-small partners, mentor-protégé teams, joint ventures, and subcontractors.
3. What acquisition planning assumptions may need to be revisited if the proposed standards are finalized?
Changed size standards would still require Contracting officers to select the NAICS code that best reflects the principal purpose of the procurement, conduct procurement-specific market research, coordinate small business considerations, and document the rationale for the acquisition strategy.
If the proposal changes who qualifies as small in a market, agencies may need to revisit planning assumptions about the available vendor base. Contracting officers should connect any expanded nominal small business pool to procurement-specific evidence. The acquisition file should show how the agency moved from requirement definition to NAICS selection, market research, small business participation strategy, and the set-aside or unrestricted competition decision.
Use this question to identify assumptions that may need review if the rule is finalized including new processes necessary for recurring NAICS choices, sources sought practices, set-aside histories, small business coordination, market research templates, and acquisition planning documentation.
4. Where would broader 4- and 5-digit NAICS groupings improve clarity, and where may additional market detail be useful?
SBA describes the proposed shift to broader 4- and 5-digit groupings as a simplification measure intended to reduce confusion around similar 6-digit categories. The proposal would also remove all size standard exceptions.
The policy question is whether broader groupings fit the way firms actually compete. In some markets, broader groupings may reduce unnecessary complexity. In others, additional market detail may help distinguish firms with different labor models, capital requirements, geographic markets, customer bases, technical specialization, or performance risks.
Stakeholders should comment on whether the proposed grouping reflects the competitive market for the work agencies buy.
Use this question to assess classification fit including whether the proposed grouping reflects the way firms compete for federal and commercial work, including labor model, capital intensity, customer base, geography, technical specialization, and performance risk.
5. What comments and evidence submitted before September 21st will make the rulemaking record more useful to SBA and industry?
SBA seeks comments on the proposed changes and has tied the proposal to a revised methodology that examines market structure, including national industry size, geographic markets, import/export adjustments, and average market size.
Stakeholders should consider providing evidence specific to the affected NAICS code or industry grouping. Useful comments may address actual competitor pools, employee or receipts data, industry cost structures, capital intensity, barriers to entry, geographic competition, subcontracting patterns, sources sought results, recurring NAICS selection issues, set-aside outcomes, or examples showing how the proposed standard would affect meaningful competition.
The most helpful comments will explain procurement consequences alongside any effect on the commenter’s own eligibility.
SBA states that it will post all comments on the proposed rule and provides separate instructions for submitting confidential business information. Stakeholders should avoid including confidential business information in public comments unless they follow SBA’s instructions for submitting confidential material.
Use this question to connect a specific proposed standard or grouping to evidence about market structure, procurement history, competitive effects, and likely acquisition outcomes.
Bottom line
The proposed rule reaches across small business eligibility, acquisition planning, market research, NAICS selection, set-aside decisions, teaming, and competition. Government and industry stakeholders have a short window to assess how the proposal would operate in real procurement markets and to submit comments that are specific, evidence-based, and useful to the rulemaking record.
Submit public comments: Comments are due September 21, 2026. To submit electronically, go to Regulations.gov and search for Docket No. SBA-2026-0199 or RIN 3245-AI67. SBA states that comments should identify the docket number or RIN and that public comments will be posted on Regulations.gov. Stakeholders should follow SBA’s separate instructions for confidential business information.