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.

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Runway Extension Act Update: SBA Says Three-Year Reporting Period Still Applies

In late 2018, Congress passed the Small Business Runway Extension Act, which had a single purpose: change the three-year average annual receipts calculation period (for determining small business eligibility) to a five-year calculation period.

Small businesses, for the most part, have been watching with bated breath for the SBA to comply with the Runway Extension Act. But as we’ve previously written, the SBA has thus far refused to do so (albeit under shifting rationale).

Now, the SBA has cemented its position against applying the Runway Extension Act—according to the SBA, “[b]usinesses must continue to report their annual receipts based on a 3-year average until the SBA amends its regulations.”

I’m not convinced the SBA has it right.

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Say What? SBA Says the Runway Extension Act Doesn’t Apply to SBA

The Small Business Runway Extension Act continues to be a hot topic of conversation among small businesses. For good reason: it revised the receipts calculation period for revenue-based size standards from three years to five.  

In late 2018, the SBA opined that the Runway Extension Act wasn’t applicable because the SBA had not yet updated its regulations. Following industry pushback, the SBA’s position seems to have evolved. During a panel discussion at this year’s National 8(a) Conference, the SBA said that the Runway Extension Act applies to every agency that might adopt its own size standards . . . just not the SBA itself.

This new justification is a bit of a head-scratcher. And I still don’t think the SBA has it right.

Let’s work through the SBA’s position together.

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