Runway Extension Act: Congress Strikes Back

A short time ago in a blog not too far away, we wrote about the newly passed Small Business Runway Extension Act.

Shortly after passage of the Runway Extension Act confusion struck the government contracting world when the SBA openly stated that it would not implement the Runway Extension Act. Recently, the House Committee on Small Business passed H.R. 2345, “Clarifying the Small Business Runway Extension Act” which, in no uncertain terms, tells SBA it has to implement the Runway Extension Act before the end of 2019.

If you have followed us for any length of time then you know that we, along with many others in the small business community, have been closely following the Small Business Runway Extension Act. You may have noticed that on May 1, 2019, the House Committee on Small Business passed H.R. 2345.

While the bill is fairly short, it is clear that Congress is slapping SBA on its wrist and telling the SBA to get in line with the legislative intent of the Runway Extension Act.

We have waxed eloquently on the Runway Extension Act before (here and here, to provide a few examples), so I will skip the summary and jump straight into the heart of H.R. 2345.

The bill contains a few nuggets worth noting.

First, H.R. 2345, in its current form, would mandate the SBA “issue a final rule implementing” the Runway Extension Act “not later than December 17, 2019.” The House Committee on Small Business emphasizes, as we have been saying for months, that SBA’s inaction is “creating confusion and challenges for small businesses competing for federal contracts.”

Second, the committee unanimously approved Mr. Hagedorn’s (R-MN 1st District) amendment stating that “the Small Business Runway Extension Act of 2018 has been effective since the date it was signed into law, on December 17, 2018.” While this may seem obvious, the lack of an “effective date” in the original law, in part, led to SBA concluding that the Runway Extension Act “is not presently effective[.]” You can read Matt Schoonover’s detailed write-up for our thoughts on this confusing stance.

Third, H.R. 2345 requires SBA to implement a transition plan to assist businesses and other federal agencies navigate compliance concerns stemming from the Runway Extension Act. The transition plan would generally give a six-month window after the rule is implement to continue using a three-year look back period if it kept the company small.

As of this blog, H.R. 2345 has only passed through the House Committee on Small Business. As with all proposed laws, there is plenty of time for change. We recommend reaching out to your local representatives in the House and Senate to make your voice heard.

In the meantime, we will keep you updated on the ongoing adventures of the Runway Extension Act . . .