Clarifying the Small Business Runway Extension Act

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 2345) to amend the Small Business Act to clarify the intention of Congress that the Administrator of the Small Business Administration is subject to certain requirements with respect to establishing size standards for small business concerns, and for other purposes, as amended.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days in which to revise and extend their remarks and include extraneous material on the measure under consideration.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise in support of H.R. 2345, the Clarifying the Small Business Runway Extension Act of 2019.

The Federal Government recognizes two categories of businesses: small and other-than small. Since there is no Federal definition for ``other- than small,'' this category can encompass firms that barely exceed the SBA's small business size standards, up to the multibillion-dollar household names.

To ease the transition from ``small'' to ``other-than small'' to give growing businesses a real chance at competing against some of the biggest companies in the world, we enacted the Small Business Runway Extension Act last year.

By increasing the average-receipts-based calculation for SBA size standards, transitioning firms will have more time to grow and develop their competitiveness and infrastructure.

However, since the Runway Extension Act became law, its interpretation and implementation have been thwarted by the agency responsible for its implementation. This conflict between law and regulation has created much confusion in the Federal contracting community.

The bill before us today clearly and unequivocally states Congress' intention regarding the Runway Extension Act of 2018. It sets forth a specific date by which SBA must complete their rulemaking process while also creating a transition plan for small firms caught up in this tug of war.

Mr. Speaker, I commend Representatives Stauber and Golden for collaborating to find a resolution to this issue, and I urge my colleagues to support the bill.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 5 minutes to the gentleman from Maine (Mr. Golden).

Mr. Speaker, I yield myself the balance of my time.

Mr. Speaker, I thank Representative Stauber and Representative Golden for working together on this important bill to ensure that congressional intent is not thwarted when it comes to the adequate and prompt implementation of the Small Business Runway Extension Act of 2018. That law was intended to make it easier for small Federal contractors to transition into the open marketplace.

The SBA has interpreted that the Small Business Runway Extension Act of 2018 applies to every other agency adopting its own size standard but not the SBA itself. Many small businesses and legal experts disagreed with the SBA's position, as did our committee.

This bipartisan bill reiterates that the law has been effective since its enactment and requires the SBA to issue a final rule for its implementation before the end of this year.

Mr. Speaker, I urge my colleagues to support the bill, and I yield back the balance of my time.

Mr. Speaker, I appreciate the opportunity to speak about the Clarifying the Small Business Runway Extension Act, a bill that I am proud to lead alongside the gentleman from Minnesota (Mr. Stauber).

Mr. Speaker, Americans expect our government to work efficiently and to follow through. They believe, and I agree with them, that when Congress passes a law, Federal agencies should implement it.

Our goal with this bill is quite simple: to make sure that the Small Business Administration respects the will of Congress as expressed in the Small Business Runway Extension Act of 2018, a law that was enacted in December 2018.

The bipartisan law was designed to ease the transition for businesses between SBA's small and other-than-small categories for the purposes of determining Federal contracting preferences.

Prior to the law, SBA evaluated eligibility by looking at 3 years of a business' gross receipts. In the law, SBA was instructed to extend that period to 5 years. The idea is that year-to-year changes in a small business' receipts will now be less likely to create a sudden loss of eligibility for this important contracting preference for small businesses.

As I have heard many times from small business owners in Maine, certainty is key to growth, and that is what the 5-year calculation is designed to provide.

Unfortunately, SBA has dragged its feet implementing the law, claiming that the fact that the law lacked an explicit effective date meant that SBA did not have to implement it immediately. Aside from being a questionable reading of the law, SBA's delay has created a lost opportunity to improve the ability of SBA-eligible small businesses to transition and grow in a predictable and sustainable way.

As chair and ranking member of the Subcommittee on Contracting and Infrastructure of the House Committee on Small Business, Congressman Stauber and I heard firsthand from experts and small business owners at a March hearing about the uncertainty that has been created by this delay in SBA's implementation of the 5-year change.

While we followed up on that hearing with a letter to SBA in April, we have yet to resolve this issue, so we are turning to a legislative solution. Our Nation's small businesses should be able to access the contracting opportunities that they deserve.

The bill will require SBA to issue implementing regulations no later than December of this year while creating a transition period for businesses to grow and compete.

Mr. Speaker, I recognize Mr. Stauber, as well as Chair Velazquez and Ranking Member Chabot, for their bipartisan work on this issue.

I particularly thank Congressman Stauber. I think the opportunity to work together in our subcommittee has been a great one. I appreciate his bipartisan focus and his desire to push through a real solution for small businesses. I had a great time, as well, out in Minnesota, having field hearings about small business issues. I can't wait to have him up in Maine in the near future.

Mr. Speaker, I encourage my colleagues to support this bill. Let's make sure there is no doubt about Congress' intent in this area.

Mr. Speaker, I thank Ranking Member Chabot for yielding.

Mr. Speaker, my bill, H.R. 2345, the Clarifying the Small Business Runway Extension Act, is a bill that does exactly what it says: makes clear the intent of the Small Business Runway Extension Act of 2018. The Small Business Runway Extension Act of 2018 was simple, straightforward, and unambiguous. It simply extended the Small Business Administration's receipts-based size calculation from a 3-year average to 5 years. Recognizing the significance of this bill for small businesses, the Small Business Runway Extension Act of 2018 easily passed through both the House and Senate and became law on December 17, 2018.

Within 4 days of the law's passage, the SBA stalled its implementation, issuing an information notice that effectively contradicted the Small Business Runway Extension Act of 2018 by maintaining the 3-year calculation until the agency could go through the rulemaking process. Coincidentally, or perhaps because of the pressure exerted by Congress and the public, the SBA issued its proposed rule for the Small Business Runway Extension Act of 2018 mere days before Chairman Golden and I held a hearing in the Subcommittee on Contracting and Infrastructure to hold the SBA accountable for its delay. Unfortunately, the proposed rule still maintains the current 3- year standard in SBA regulations.

During this hearing, we highlighted how this conflict in law versus SBA regulation imposes significant, real-world challenges for small businesses that may be teetering on the edge between small and other- than-small business status. The need for clarity was a constant and recurring theme, and this bill provides that clarity.

First, H.R. 2345 makes clear that the Small Business Runway Extension Act of 2018 does, in fact, apply to the SBA and, therefore, should have become effective on the date it was signed into law. Thus, businesses relying on the 5-year average to remain in their small business status were correct in their assessment and may continue to hold this status.

Second, the bill requires the Small Business Administration to develop a transition plan for small businesses and Federal agencies as they shift to the 5-year rule. The transition plan shall include a buffer period in which firms that benefit from the old 3-year calculation may continue to rely on that formula for a set amount of time as they prepare for the eventual shift to the 5-year average calculation.

In short, H.R. 2345 restates the intent of Congress as written in the Small Business Runway Extension Act of 2018 and adopts solutions that will create a smooth transition for all parties involved. This will allow more businesses to retain access to SBA benefits, including loans and contracts, that have allowed our small businesses to grow, thrive, and greatly contribute to our economy.

Mr. Speaker, I thank Chairman Golden for his leadership on this act. It was and is a privilege to work with him on the Small Business Committee.

Mr. Speaker, I urge my colleagues to support H.R. 2345, the Clarifying the Small Business Runway Extension Act.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise in support of H.R. 2345, the Clarifying the Small Business Runway Extension Act.

This important bipartisan legislation holds the SBA accountable for implementing the will of Congress.

In the previous Congress, this committee undertook a deep-dive examination of the effects of entering the middle market on small contractors, and the Runway Extension Act of 2018 was the direct result of these actions.

It was clear, under no uncertain terms, that the intent of the bill was to apply to the SBA's own calculation of its receipts-based size standards to small firms. However, the SBA took an opposing view, which resulted in a conflict between law and regulation.

H.R. 2345 is critical in that it mitigates this confusion and restates the original intent of the Small Business Runway Extension Act of 2018 to make clear that the law does, in fact, apply to the Small Business Administration.

Additionally, H.R. 2345 responds to concerns raised by small businesses and stakeholders after the bill's passage, such as its effect on declining-revenue businesses and the need to provide the executive branch and small businesses time to adjust to the new rule. The transition plan offered by this bill will make significant strides in easing the path for small businesses and Federal agencies alike.

I thank the gentleman from Minnesota (Mr. Stauber) and the gentleman from Maine (Mr. Golden) for their leadership.

Mr. Speaker, I urge my colleagues to support the bill, and I reserve the balance of my time.

Mr. Speaker, I yield such time as he may consume to the gentleman from Minnesota (Mr. Stauber), the ranking member of the Subcommittee on Contracting and Infrastructure.

Mr. Speaker, I yield myself the balance of my time.

Mr. Speaker, I would like to reiterate that H.R. 2345 is important not only to help small contractors once they graduate, but it also holds the SBA accountable to the will of the people through an act of Congress.

Small businesses have told us they need a runway to grow and they need that runway now. We need to ensure that this is done, that the SBA takes swift action. H.R. 2345 gets us there.

Mr. Speaker, I urge my colleagues to support the bill, and I yield back the balance of my time.