The government’s current approach does not acknowledge the reality of a shrinking industrial base. While the government is one customer, it operates within a broader marketplace where commercial contractors like us must compete and adapt. Over the past five years, our cost of goods sold (COGS) and SG&A expenses have risen at double-digit rates nearly every year. Materials alone now represent more than 40% of project costs, and labor expenses continue to rise in step with inflation. Just this week, we reviewed our 2026 health insurance renewal showing a 32% year-over-year increase. Many of these increasing costs are caused, in part, by actions of the government (tariffs, health insurance).
None of these escalating costs are accounted for in the proposed size standards. Business owners must be able to adjust pricing to keep pace with the true costs of doing business. Instead, the government penalizes contractors by capping growth potential and restricting the ability to offset these pressures. As a result, more small businesses will be pushed toward the size standard ceiling simply because of rising market costs. Without adjusting for these realities, the government risks accelerating the erosion of its industrial base.
Moreover, the proposed rules funnel greater resources toward large firms through the mentor-protégé program, which disproportionately benefits mentors while doing little to strengthen protégés. This dynamic further reduces competition, as most true small businesses cannot compete with MPP teams. For example, in the U.S. Army Corps of Engineers National Roofing Program, over 60% of task orders are awarded to mentor-protégé partnerships, where the mentor is a large business.
The government states it wants increased competition in the small business space, but these proposed rules move in the opposite direction. Rather than sustaining and expanding the small business industrial base, they risk consolidating more work into the hands of larger enterprises.
Sam; Thank you, I never really understood the size standards process during my time at SBA and now I understand better what that process was and is. Much appreciated. Bill Elmore
The government’s current approach does not acknowledge the reality of a shrinking industrial base. While the government is one customer, it operates within a broader marketplace where commercial contractors like us must compete and adapt. Over the past five years, our cost of goods sold (COGS) and SG&A expenses have risen at double-digit rates nearly every year. Materials alone now represent more than 40% of project costs, and labor expenses continue to rise in step with inflation. Just this week, we reviewed our 2026 health insurance renewal showing a 32% year-over-year increase. Many of these increasing costs are caused, in part, by actions of the government (tariffs, health insurance).
None of these escalating costs are accounted for in the proposed size standards. Business owners must be able to adjust pricing to keep pace with the true costs of doing business. Instead, the government penalizes contractors by capping growth potential and restricting the ability to offset these pressures. As a result, more small businesses will be pushed toward the size standard ceiling simply because of rising market costs. Without adjusting for these realities, the government risks accelerating the erosion of its industrial base.
Moreover, the proposed rules funnel greater resources toward large firms through the mentor-protégé program, which disproportionately benefits mentors while doing little to strengthen protégés. This dynamic further reduces competition, as most true small businesses cannot compete with MPP teams. For example, in the U.S. Army Corps of Engineers National Roofing Program, over 60% of task orders are awarded to mentor-protégé partnerships, where the mentor is a large business.
The government states it wants increased competition in the small business space, but these proposed rules move in the opposite direction. Rather than sustaining and expanding the small business industrial base, they risk consolidating more work into the hands of larger enterprises.
Sam; Thank you, I never really understood the size standards process during my time at SBA and now I understand better what that process was and is. Much appreciated. Bill Elmore