New Rules for Small Business Government Contractors

2019-01-30T05:30:24-07:00January 30th, 2019|Blog|0 Comments

A new law measuring a business’s size by the length of time in operation has been signed, which could affect contractors working for the federal government. JD Supra wrote the following:

On Dec. 17, 2018, President Trump signed the Small Business Runway Extension Act of 2018 into law. It amends § 3(a)(2)(C)(i)(II) of the Small Business Act “by striking ‘3 years’ and inserting ‘5 years,’” so a contractor’s size will be measured by the annual average of its previous five years’ revenue, instead of the annual average of its previous three years’ revenue.

Notably, the amendment does not alter employee-based size standards, or the definition of a small business concern using a headcount rather than average revenue.

…According to a House Committee on Small Business report on the bill before its Dec. 17 signing, the purpose of the amendment is to “help advanced-small contractors successfully navigate the middle market as they reach the upper limits of their small size standard.” Since many small businesses have initially lean operating years, this change may allow overgrown businesses (i.e., other than small business concerns) to potentially qualify as small businesses when their earlier revenue is considered.

…For now, small businesses and overgrown, other than small business concerns operating in the federal contracting arena should consider recalculating their revenue over the past five years, and determine whether they meet the requirements to properly self-certify as small under any revenue-based NAICS Code they work under, and any SBA-administered program (e.g., 8(a), HUBZone and Economically-Disadvantaged Women-Owned Small Business). However, contractors should not be surprised to see contracting officers and SBA representatives continue to apply the old three-year average until a new SBA rule is implemented.

Read the rest: JD Supra

If you are a contractor and have questions about the new law, contact VEDC’s small business experts to find out if your business is affected. Call 1-800-304-1755.

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