New small business thresholds in North America will change competition
Last week in the Federal Register, the United States Small Business Administration increased 37 small business size standards for 34 industries in Sector 54, Professional, Technical, and Scientific Services. Under the North American Industry Classification System (NAICS), used by Canada, Mexico, and the United States, the industry code for Environmental Consulting Services (541620) was increased from $7 to $14 million. The majority of cultural resource consulting firms in North America are in the Environmental Consulting Services category. This change was effective yesterday, 12 March 2012.
Within the United States, many, perhaps the majority, of cultural resource compliance service contracts issued by the federal government are set aside for small businesses. This new, larger, small business size category will change the competitive landscape by allowing firms with annual revenue up to $14 million to compete directly with truly small firms for small business contracts. The American Cultural Resources Association (ACRA), the trade organization for the heritage compliance sector, classifies small firms as those with annual revenue below $400,000, medium firms as those with annual revenue between $400,000 and $1.5 million, and large firms as those having annual revenue above $1.5 million. This new ruling will not provide any protection for truly small heritage firms, those in ACRA’s small and medium categories, and create head-to-head market competition for all firms below the $14 million threshold. For companies who target the federal contracting sector, there is now an advantage to being larger and this may prompt a new round of heritage firm mergers and acquisitions in North America.
Heritage Business Journal 
I work for a multi-disciplinary engineering/environmental consulting firm. What frustrates me about the small-business set asides is that although the Cultural Resources Group at my company would qualify as a small business (or medium, by ACRA’s standards – we generate somewhere between $1-2 million of work for our company in any given year), the company as a whole is above the new $14 million standard. In the engineering world the company is a mid-sized firm, but in the world of CRM the company is relatively large. As a very small part of the company, the Cultural Resources Group is thus stuck in the middle – too small to go after the huge projects that companies like URS can do, but too big to go after most federal small-business set asides.