On June 24, 2019, the U.S. Small Business Administration (SBA) finally issued proposed new regulations for the implementation of the Small Business Runway Extension Act of 2018.

The stated purpose of the legislation passed by Congress over six months ago was to mandate that the SBA change the formula used for calculating the size of small businesses in the award of service contracts by increasing the time period from the entity’s average revenue for the past three (3) years to an average of revenue for the past five (5) years. Yet the SBA claims in its proposed rule making that the agency already possesses the statutory authority for establishing small business size standards under the original Small Business Act. Nevertheless, for purposes of consistency SBA indicates that it is proposing a uniform standard for the calculation of annual average receipts for all receipts-based SBA size standards from a 3-year averaging period to a 5-year averaging period. So as proposed, the application of the new regulations will not be limited to service based contracts, but will also impact contract awards for all industries that are subject to receipts-based size standards, including the retail trade, agricultural, and construction industries.

The comment period on the new regulations expires on August 23, 2019 and final regulations are expected before the end of the year.

For more information, contact MWL Partner Peter Fish.