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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.
Boom times in Brazil
Brazil is the world’s seventh largest economy. It is also one of the fastest growing economies with a GDP growth rate of about 5 percent. Interesting news tidbits have been surfacing about contract archaeology in Brazil. Dr. Janet Levy (UNC Charlotte) recently told me that she learned at the last American Anthropological Association meeting that there is a demand for archaeology faculty in Brazil because archaeologists are selecting to work in the private sector instead of academia. I found this interesting and interviewed Dr. Eduardo Góes Neves, a Brazilian archaeologist, at the Society for American Archaeology’s conference in Panamá a few weeks ago. Indeed, he reported that private-sector archaeology is doing very well in Brazil driven by strong federal laws and the strong economy. There are mature companies across the country, some of which are quite large with multiple office locations. He also noted that there is currently a wave of acquisition of these firms taking place by companies based in Spain and Portugal.
Given this interesting business news from Brazil, I’m pleased to note that Dr. Renato Kipnis is joining Heritage Business Journal to cover the heritage industry in Brazil. Dr. Kipnis is a Director of Scientia Consultoria Científica Ltda. in São Paulo and will be keeping us up-to-date on business issues.
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