Date of Adoption: April 5, 2004.

     Purpose: Change procedures for implementation of chapter 39.19 RCW related to the change of size standards and industry code designations by converting from the standard industrial classification (SIC) codes to the North American Industry Classification System (NAICS) codes.

     Citation of Existing Rules Affected by this Order: Amending WAC 326-20-092, 326-20-094, 326-20-095, 326-20-096, and 326-20-098.

     Statutory Authority for Adoption: RCW 39.19.030.

      Adopted under notice filed as WSR 04-02-041 on January 5, 2004.

     Changes Other than Editing from Proposed to Adopted Version: Correction of sections misnumbered.

     Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 5, Repealed 0.

     Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 5, Repealed 0.

     Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0;      Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 0, Repealed 0.
     Effective Date of Rule: Thirty-one days after filing.

April 5, 2004

Carolyn Crowson

Director

OTS-6896.2

AMENDATORY SECTION(Amending WSR 92-11-007, filed 5/11/92, effective 6/11/92)

WAC 326-20-092   Small business concern requirement.   (1) In addition to meeting the ownership and control requirements of chapter 39.19 RCW and these regulations, a business must qualify as a small business concern to be eligible for certification or recertification.

     (a) Except as otherwise provided in WAC 326-20-096 (for certain federal projects), a small business concern is a business which is independently owned and operated, is not dominant in its field of operations, and which does not exceed the size limitations as set forth in the current table of ((Standard Industrial Classification (SIC))) North American Industrial Classification System (NAICS) codes and corresponding industry size standards as ((adopted by the United States Small Business Administration in Title 13 Code of Federal Regulations, Part 121, on file in the office)) set forth in 49 CFR Part 26 and amendments or inflationary adjustments thereof.

     (b) The number of employees or amount of annual receipts listed as the size standard for each ((SIC)) NAICS code indicates the maximum allowed for a business (including its affiliates) to qualify as a small business concern.

     (c) The office's determination of whether a business qualifies as a small business concern shall be, whenever possible, based on criteria that is consistent with the small business requirements defined under section 3 of the Small Business Act, 15 U.S.C. 632, and its implementing regulations, taking into consideration statewide markets.

     (2) A business which exceeds the small business size limits after certification by the office shall be subject to ((decertification)) graduation.

[Statutory Authority: RCW 39.19.030(7). 92-11-007, § 326-20-092, filed 5/11/92, effective 6/11/92. Statutory Authority: Chapter 39.19 RCW. 88-09-047 (Order 88-5), § 326-20-092, filed 4/18/88.]

     (2) In the event the business plans to expand the areas in which it operates, it must notify the office in writing at least thirty calendar days before the effective date of such expansion.

[Statutory Authority: RCW 39.19.030(7). 92-11-007, § 326-20-094, filed 5/11/92, effective 6/11/92. Statutory Authority: Chapter 39.19 RCW. 88-09-047 (Order 88-5), § 326-20-094, filed 4/18/88.]

     (2) Affiliates. Except as otherwise provided in this chapter, businesses are affiliates of each other when either directly or indirectly:

     (a) One controls or has power to control the other; or

     (b) A third party or parties controls or has the power to control both; or

     (c) Such an "identity of interest" exists between or among them that affiliation may be presumed.

     (3) Annual receipts. Where the maximum size standard is set by reference to "annual receipts," a business that exceeds the annual receipts in that standard is not eligible for certification. Annual receipts includes all revenue in whatever form received or accrued from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees, or commissions, reduced by returns and allowances. However, the term "receipts" excludes proceeds from sales of capital assets and investments, proceeds from transactions between a concern and its domestic and foreign affiliates, proceeds from payments of notes receivable and accounts receivable, and amounts collected as an agent for another, such as gross bookings on which a commission is earned (in which case only the commission earned would constitute revenue) or such as taxes collected for remittance to a taxing authority.

     (4) Period of measurement.

     (a) The size of a business that has completed three or more fiscal years will be determined by averaging the annual receipts of the business for each of the most recent three years.

     (b) The size of a business that has completed less than three fiscal years will be determined by computing the average of the annual receipts from the time the business was formed as follows: Total revenues compiled over the period divided by the number of weeks, including fractions of a week, multiplied by fifty-two.

     (((d))) (c) Method of determining annual receipts. Revenue may be taken from the regular books of account of the concern. If the office so elects or the firm has not kept regular books of account or the Internal Revenue Service has found such records to be inadequate and has reconstructed income of the concern, then revenue as shown on the Federal Income Tax return of the concern may be used in determining annual receipts along with other information the office deems relevant.

     (((4))) (5) Number of employees. Where the size standard is "number of employees" size eligibility requires that the concern may not exceed the number of employees in that standard.

     (a) "Number of employees" means that average employment of the concern, including the employees of its domestic and foreign affiliates, based upon employment during each of the pay periods for the preceding completed twelve calendar months.

     (b) In computing average employment, part-time and temporary employees are counted as full-time employees for each applicable pay period.

     (c) If a concern has not been in business for twelve months, "number of employees" means the average employment of the concern, including its affiliates, during each of the pay periods during which it has been in business.

[Statutory Authority: RCW 39.19.030(7). 92-11-007, § 326-20-095, filed 5/11/92, effective 6/11/92. Statutory Authority: Chapter 39.19 RCW. 88-09-047 (Order 88-5), § 326-20-095, filed 4/18/88.]

     (2) In determining ((what is)) the business's primary industry ((in which an applicant)) (including its affiliates) ((is engaged, primary consideration shall be given to)), the office shall consider the distribution of receipts, employees and costs in the differing industry areas in which the business operated during its most recently completed fiscal year. Other factors (e.g., patents, contract awards, assets) may be considered.

     (3) If the activities of the business encompass two or more ((SIC)) NAICS codes, the first ((SIC)) NAICS code listed in the directory is the primary industry classification of the business.

     (4) A firm which exceeds the small business size limits after certification by the office shall be subject to ((decertification)) graduation.

     (5) For purposes of utilization on projects funded by any operating modal of the ((Federal Highway Administration or under The Surface Transportation and Uniform Relocation Assistance Act of 1987, (P.L. 100-17, or STURAA))) U.S. Department of Transportation the maximum dollar size standard set out in ((STURAA and)) 49 CFR Part ((23)) 26 as may be amended or adjusted for inflation, shall apply, even if the size standard would otherwise be set by reference to number of employees. This standard is a ceiling. Certified businesses are still subject to applicable lower limits on business size as established by the United States Small Business Administration and these regulations.

[Statutory Authority: RCW 39.19.030(7). 92-11-007, § 326-20-096, filed 5/11/92, effective 6/11/92. Statutory Authority: Chapter 39.19 RCW. 88-09-047 (Order 88-5), § 326-20-096, filed 4/18/88.]

[Statutory Authority: RCW 39.19.030(7). 92-11-007, § 326-20-098, filed 5/11/92, effective 6/11/92. Statutory Authority: Chapter 39.19 RCW. 88-09-047 (Order 88-5), § 326-20-098, filed 4/18/88.]

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