In the midst of evaluating the U.S. Small Business Administration’s (“SBA”) proposed size-standard overhaul, government contractors now face a second concerning development at SBA: a change in how SBA will engage with the public when publishing new or revised rules. In its most recent final rule, “Rescinding Unnecessary Notice and Comment Procedures,” published August 31, 2026, SBA removed its longstanding commitment to seek public comment on rulemaking actions. The final rule went into effect the same day.

As a result, government contractors and other stakeholders who may be affected by SBA’s regulations and policies should expect fewer opportunities to participate in SBA’s rulemaking processes moving forward. Indeed, the final rule itself, which SBA characterizes as a “general statement of policy” or as a mere procedural rule, was issued without a notice and comment opportunity and without any delay in its effective date. SBA asserts the nonsubstantive nature of the rule and the fact that it “relieves a restriction” as justification for its immediate effectiveness under § 553(d) of the Administrative Procedure Act, ‎5 U.S.C. § 551‎ et seq. (“APA”).

The APA generally requires agencies to engage with the public and allow an opportunity for stakeholders to comment on agency rulemaking actions prior to those actions becoming final; it specifically exempts matters falling within the SBA’s rulemaking authority, including those relating to public property, loans, grants, benefits, or contracts. Nevertheless, in 1974, the SBA published a rule under which it voluntarily waived its public participation exemptions from the APA and committed SBA to follow the notice and comment requirements in rulemakings relating to public property, loans, grants, benefits, or contracts.

The final rule removes that provision while retaining SBA’s discretion to solicit comments for the applicable rulemaking actions where SBA determines such public participation to be advantageous. In its analysis of the final rule, SBA claims the rescission will allow SBA to act in accordance with its new policy of acting “more nimbly in response to changing circumstances[.]” SBA also cites greater regulatory efficiency and responsiveness to “evolving programmatic or operational needs” of SBA as a benefit of the final rule. SBA will continue to comply with the APA’s notice and comment requirements where required.

The most consequential risk of the final rule is that contractors may lose the opportunity to expose an unworkable requirement before it disrupts their business. Where advance public participation is no longer required, a firm could commit substantial resources to a procurement, transaction, or teaming arrangement only to encounter a final rule that changes a critical assumption before the firm can adjust. Seeking a correction afterward can require expensive litigation or agency intervention, neither of which guarantees relief before an opportunity is lost. That burden will fall hardest on smaller contractors with limited legal budgets and greater dependence on individual awards.

While the practical consequence is potentially significantly less public participation in future SBA rulemaking, certain SBA actions, like the pending size-standard overhaul, remain subject to separate statutory safeguards and SBA remains obligated to adhere to those safeguards where applicable. However, although the pending size-standard proposal remains subject to independent statutory public-participation requirements, it illustrates the stakes: a contractor could remain “small” while facing substantially larger competitors, and subsequent implementation decisions could compound that disruption. SBA’s assurance that it can still request comments when useful offers limited comfort as SBA retains complete discretion to decide whether industry input is “advantageous” before hearing the operational realities that could reveal a problem with its rulemaking action.

Fortunately, a rule’s connection to government contracting does not automatically eliminate public participation. For example, 41 U.S.C. § 1707 independently requires publication and comments for procurement measures meeting its appropriated-funds and external-effect or contractor-impact tests, subject to its exceptions. Future SBA rules still therefore require an examination of their substance and governing statutes; a reference to the APA’s contracts and benefits exemption is not the end of that analysis.

Impact on SBA’s Proposed Rule to Modify Size Calculation Methodology and Increase Size Standards

As indicated above, the SBA’s size-standard proposal has its own statutory requirements. SBA published that proposal on August 20, 2026. It would establish standards for 338 industry groups and industries, predominantly at broader four- and five-digit NAICS levels, with substantial changes in thresholds and, for some industries, the measurement used. SBA simultaneously requested comments on the methodology supporting the proposal. Both notices specify September 21, 2026, as the comment deadline. The rescission does not amend either notice, and contractors should remain vigilant in preparing and submitting comments on that rule.

Specifically, contractors should consider submitting methodology objections in both relevant dockets, explaining their effect on the standards being proposed and connecting concerns about assumptions, industry aggregation, measurement, or productivity adjustments to an actual regulatory outcome. Whatever procedural latitude SBA may assert for a standalone methodology document, it cannot use that label to dispense with the statutory explanation required for the resulting size standards. This is an important limit on the rescission’s potential effect: changes to the analytical framework remain relevant to whether the final standards have adequate support.

The rescission also does not establish that SBA may disregard significant comments or introduce an unforeseeable final approach without further process. Whether additional notice is required depends on the applicable requirements and whether the final approach was reasonably foreseeable from the proposal. Not every revision requires another comment round; responding to comments is part of rulemaking. Contractors should therefore identify missing information and request any needed supplemental analysis now, without counting on another opportunity.

SBA’s small-business impact analysis remains another point of engagement. The Regulatory Flexibility Act’s analysis requirements can be triggered by notice requirements under the APA or another law, subject to statutory exceptions, including a properly supported certification of no significant impact on a substantial number of small entities. The rescission therefore does not automatically eliminate that analysis for size standards.

Submitting comments on the proposed size-standard rule gives contractors an opportunity to identify these risks while SBA can still address them in the final rule. Useful comments might connect a subsequent rule to concrete business consequences such as the impact of future 8(a) certification and eligibility rules or how implementing rules could disrupt pending bids, transactions, and teaming arrangements. These submissions not only help build a record against which SBA’s final analysis and explanation can be evaluated but may support requiring public participation for future SBA rulemaking under 41 U.S.C. § 1707 by exposing ancillary regulatory problems before implementation.

Comments for the proposed size standards should be submitted to SBA–2026–0199 for the size standards and to SBA–2026–0265 for the methodology. The published deadline for both is September 21, 2026.

This article summarizes aspects of the law and does not constitute legal advice. For legal advice for your situation, you should contact an attorney.