New Bill Would Change Eligibility for Small Manufacturer Classification

Jan 13, 2020

by ASME.org

A new bill has been introduced that aims to change the standards for classifying manufacturing businesses as “small.” Currently, to be labeled as a small manufacturer, businesses use the average number of employees per year. The new bill, H.R. 5130, the Capturing All Small Businesses Act, would change the classification to be determined by averaging the number of employees over a two year period instead of a one year period.

Congressmen Marc Veasey (D-TX) and Kevin Hern (R-OK) introduced the bill to adjust the employment size standard requirements for determining whether a manufacturing concern is a small business concern. In a press release announcing the legislative effort, Congressman Veasey writes that the bill is intended to “mitigate the effects of sudden growth, protecting small businesses from being prematurely forced out of the small business category. Moreover, this legislation would grant small businesses additional time to transition before competing in the open market.”

Businesses that are considered small are given preference for many Federal contracts. Once the small manufacturer increases in size, they are no longer eligible for specific Federal assistance. This could stifle the growth of the business and put undue pressure on the business just as it is scaling and learning how to succeed in its new capacity. This bill intends to allow these business to hold the designation of “small” longer, so that they can transition more stably.

For the full text of the bill, please visit: https://www.congress.gov/116/bills/hr5130/BILLS-116hr5130rh.pdf.