ECPC Responses to Public Comments Regarding Changes for 2007

Docket Number 07-0056

Sector 56 Administrative and Support and Waste Management and Remediation Services — Remediation

07-0056 requested a new industry for environmental remediation services. The request is to bring together a range of activities currently classified in Sector 23, Construction; Subsector 562, Waste Management and Remediation Services; and Sector 54 - Professional, Scientific, and Technical Services. The proposal is based on the application of the NAICS system by the Small Business Administration (SBA) when certifying small and minority-owned businesses for remediation contracts.

In order to be classified under Environmental Remediation Services, SBA regulations require government contracts to cover activities in three or more separate industries with separate NAICS codes. Also, the company being awarded the contract may not derive 50 percent or more of its revenues, and may not dedicate 50 percent or more of its employees to one sole industry. Thus, the SBA has distinguished between industries in which companies primarily provide a single type of remediation service from those in which companies provide an array of services including remediation.

According to their proposal, this array of services could originate from industries throughout the following NAICS areas: Subsector 237, Heavy and Civil Engineering Construction; Subsector 238, Specialty Trade Contractors; Industry 541330, Engineering Services; Industry 541310, Architectural Services; NAICS Industry 54161, Management Consulting Services; Subsector 562, Waste Management and Remediation Services; Industry 541380, Testing Laboratories; and Industry 541710 - Research and Development in the Physical , Engineering, and Life Sciences.

NAICS was developed as a statistical classification system for the collection and tabulation of economic data. For this purpose each reporting unit is assigned one NAICS code. Most importantly, NAICS is constructed on a single conceptual framework -- economic units that have similar production processes are classified in the same industry. Any revisions to NAICS must adhere to this production process principal. The proposal is to assist a non-statistical use of NAICS. While that alone is enough to reject the proposal, the ECPC notes that the proposal violates the underlying principles of NAICS, and therefore is not recommended for action.