Statement of Chairman Jared Golden on Implementation of the Small Business Runway Extension Act
Washington, March 26, 2019
We thank everyone for joining us this morning and I want to especially thank the witnesses for being here today. I also wanted to take an opportunity to thank my Ranking Member, Representative Stauber. I’m glad to be getting to know you and look forward to working together to create bipartisan solutions to help small businesses all across the country – from Belfast, Maine to Brainerd, Minnesota.
America’s small businesses are economic engines that drive growth and jobs in the U.S. economy. The nearly 30 million small firms in the U.S., represent 99.7 percent of all employers and generate two-thirds of all net new jobs. Because of these firms’ crucial role in our economy, it is critical that Congress enact policies that promote small business entrepreneurship, job creation and also provide opportunities for growth.
In fact, Congress has created tax preferences, and loan programs to help small businesses thrive. And as one of the largest purchasers of goods and services in the world, the Federal Government is in a unique position to support small businesses by providing contracting opportunities to help small businesses succeed.
When we establish policies that are aimed at helping small businesses, one of the decisions Congress has to make is how to define a small business – and therefore eligible for contracting opportunities and other incentives designed to help small businesses compete
Getting that target right is important, as it can be too narrow, pushing a firm outside the size standard, or it can be too broad, allowing large firms to compete in these programs and over power the small business. The end result is the same: small firms deprived of Federal contracting opportunities.
Last year, this committee and congress as a whole addressed this very issue by passing the Small Business Runway Extension Act, which requires SBA to use the gross receipts of a small business over 5 years as opposed to 3 years when considering granting federal contracts.
This change was designed to assist small businesses successfully bridge the gap between competing in the small business space and the open marketplace against larger companies.
The Small Business Runway Extension Act is a move in the right direction to ensure that small businesses can mature, become prosperous, and create additional jobs that spur economic growth, without having one or two particularly good years or contracts bump that firm out of the small business category before its ready to compete with larger firms.
Unfortunately, since the Runway Extension Act became law last year, its interpretation and implementation has been contested. Shortly after the bill was passed, questions arose as to whether the bill was to take immediate effect.
Businesses benefiting from the 5-year change hoped the change would take effect immediately, so they may continue to certify as a small business in 2019.
Surprisingly, the SBA has suggested that the Runway Extension Act applies to every other agency adopting its own size standard but not the SBA itself.
While the merit of that argument is debated by legal experts, the SBA is working on regulations to implement the law and we are doing our own analysis by holding today’s hearing. It is my intent that this hearing ensure that Congressional intent is not thwarted, and small businesses have the federal contracting opportunities that Congress has decided that they deserve.
I look forward to our hearing from our witnesses and exploring the controversies surrounding the implementation of the Act, discussing potential solutions to mitigate these challenges, and examine additional steps, if any, that may be necessary to ensure that Congresses’ intent is implemented
I thank all the witnesses for their attendance and insights into this important topic.