Tag Archives: Small Business Runway Extension Act of 2018

Congress Should Codify–and Expand–SBA’s Solution to the “Runway Extension” Small Business Size Calculation Problem

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In January 2022, the rules regarding calculating small business size status for federal procurements will change dramatically. Companies operating under receipts-based size standards will be required to use their last five completed fiscal years–not three. And businesses operating under employee-based size standards will be made to use their last 24 months of payroll, instead of 12.

These changes will benefit growing businesses, allowing stay small longer by including older numbers in their averages. But the new size rules–what Congress has termed a small business “runway extension”–actually penalize some businesses, forcing them to stay large longer, and freezing these companies out of the very small business set-aside opportunities that could help reverse their declining fortunes. That can’t be what Congress intended!

Fortunately, the SBA has come up with a simple, elegant solution to the problem, and I think Congress should codify it before January.

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SmallGovCon Year in Review: The Top Ten

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As we reflect on the end of 2019 and look forward to what 2020 will bring, it’s interesting to see what was noteworthy to our readers in 2019. To that end, I’ve compiled a list of some of our most popular posts from 2019.

2020 will certainly bring many more changes in the federal contracting world and SmallGovCon will be here to provide insight on all of them.

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SBA’s Receipts Calculation Transition Period: Is It Legal?

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When the SBA issued its final rule implementing the Runway Extension Act’s 5-year receipts calculation period earlier this month, it allowed for a two-year transition: until January 6, 2022, the SBA will allow businesses to choose either a 3-year or a 5-year receipts calculation period.

This transition phase is helpful, the SBA noted, to small businesses that might be adversely affected by an abrupt change to the receipts calculation period—namely, businesses with declining revenues over the preceding five years that are nonetheless close to the applicable size standard cap.

SBA’s accommodation of these companies is, by any measure, a commonsense solution to prevent inadvertent harm caused by the Runway Extension Act. But notwithstanding this laudable policy objective, is the new transition period legal?

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5-Year Receipts Calculation Period Effective January 6, 2020

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At SmallGovCon, we’ve closely followed the SBA’s implementation of the Small Business Runway Extension Act. After much confusion caused by the delayed implementation of the Act, there’s finally a light at the end of the tunnel: the 5-year receipts calculation period will become effective January 6, 2020.

Importantly, the SBA’s final rule implements relief for businesses that will be adversely affected by the change to a 5-year receipts calculation period.

Let’s take a look.

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GAO Defers to SBA’s Interpretation of Runway Extension Act

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The Runway Extension Act has been a hot topic for federal government contractors. And as of this writing, the issue of the Act’s effectiveness hasn’t been conclusively decided—though SBA says the Act isn’t yet effective, others (including us, in various posts on this blog) have disagreed with this analysis.

A recent GAO decision decided a protest based on the Runway Extension Act.

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SBA Issues Proposed Rule Implementing Small Business Runway Extension Act

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On Monday, June 24, SBA will issue its long-awaited proposed rule implementing the Small Business Runway Extension Act. We intend to explore the proposed rule and the accompanying commentary more fully over the next few days (as we have been doing over the past few months), but we wanted to provide a quick update to our readers on the main changes in the proposed rule.

The key takeaway is that, once the rule is in place, SBA size standards will be based on a 5-year average. SBA “proposes to change its regulations on the calculation of annual average receipts for all receipts-based SBA size standards and other agencies’ proposed size standards for service-industry firms from a 3-year averaging period to a 5-year averaging period.”

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Runway Extension Act: Return of the SBA

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Congress and the SBA continue to disagree about the timing for the implementation of the Runway Extension Act (conveniently allowing my Star Wars references to continue).

SBA recently provided testimony before the U.S. Senate Committee on Small Business & Entrepreneurship. Senator Marco Rubio called the hearing to address, among other things, why the “SBA has refused to follow the Runway Extension Act.” (We have wondered the same thing.)

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