Here’s What You Need to Know About the Small Business Runway Extension Act of 2018!

Just before the year ends, the Small Business Runway Extension Act was signed. But what is this law and how does this affect small businesses? Read this article to learn more!

THE SMALL BUSINESS RUNWAY EXTENSION ACT

On December 17, 2018, the President of the United States signed the Small Business Runway Extension Act of 2018 into law.

The Bill is a total of 10 lines that amend the Small Business Act to modify the method for prescribing size standards for business concerns.

It also modifies the determination for size standards from evaluating small businesses on a 3-year average to now looking at their 5-year average.

So, what does this mean? This means that small businesses can rein as small businesses for a longer period of time. 

Consider that in the old system, the Small Business Administration typically determines small businesses based on the number of employees or dollar amount of revenues from a three-year average.

However, with this new law, they’re already looking at a five-year average which means that the government is now taking your previous five years of history and they’re using that to determine whether or not you’re a small business under the respective primary NAICS code.

HOW DOES THIS AFFECT US?

So, this is great news because existing small businesses who are growing quickly can now remain smaller for longer periods.

Let’s say if you start off in the year zero with no revenues yet and you start winning contracts years later, you can’t directly be bumped up into the large business status because of that. 

This is why, you can still take advantage of being a small business for a little bit longer as you’re continuously growing and getting contracts. 

To give you more information, we have an example below:

NAICS 238910 – Site Preparation Contractor – $15M

Company A (High growth Small Business)

  • Year 1 – $500k
  • Year 2 – $1M
  • Year 3 – $10M
  • Year 4 – $22M
  • Year 5 – $25M

3-year average – $19M (large business)

5-year average – $11.7M (small business)

On the other hand, this new law does hurt large businesses that have declining revenues because they’re going to remain large businesses for a longer period of time.

To give you an idea, we have this another example below:

Using the same NAICS code 238910, Site preparation Contractor – $15M.

Company B (Large Business)

  • Year 1 – $25M
  • Year 2 – $22M
  • Year 3 – $15M
  • Year 4 – $10M
  • Year 5 – $8M

3-year average – $11M (small business)

5-year average – $16M (large business)

Hence, depending whether you are the little guy taking on Goliath or the big guy who just recently lost a few large contracts, this rule can impact your business moving forward.

RESOURCES

Some attorney’s even suggested modifying the rule to use both formulas and take the smaller of the averages as your size, but I disagree with that evaluation.

“I think it is time that someone started introducing policies to help small companies effectively compete in this arena. I do not believe that we can ever do enough for small upstart firms. I am happy for the new policy and thank everyone who participated in it.”

With this in mind, if you want to learn more about certain federal contracting rules or how to navigate the federal marketplace overall, then check the resources below. 

You can also join us here at GovCon Giants or check the new GovCon Edu where you learn everything about government contracting!

Congress give Small Businesses a Boost with new 2018 Act

https://youtu.be/8xhjUQWtMOA

Similarly Situated Entity helps Limitations on SUBCONTRACTING for small firms 

https://www.youtube.com/watch?v=8-4Lml2bZj4&t=132s

Explaining the rules for subcontracting small business contracts

https://www.youtube.com/watch?v=ajwQiCAS1No

Boeing is No Boy Scout!

Let’s practice fiscal responsibility and consider that Boeing, like any other huge corporations, Boeing are no boy scouts!

THE CONTROVERSY BEHIND TRUMP’S TWEET

Donald Trump’s December 2016 tweet saying that, “Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!” became massive controversy.

Donald Trump Tweet

Is he attempting to reel in costs to US taxpayers or just making another outrageous outburst, spewing a narrow opinion on such a complex topic?

I read the twitter replies and watched CNN, MSNBC, and other sources that offer up their take on the matter. It seems that everyone is touting Boeing as the backbone of America, when in fact they are the fox guarding the henhouse.

“Boeing are no boy scouts.”

Having dabbled in the world of federal contracting since 2007, three words come to my mind: fraud, waste, and abuse. These are common languages for anyone working in the federal arena. I would even compare them to the mafia and gang because of the way they tout our government officials and the U.S. system.

Besides, the government’s wasteful spending is not new news. Policies like “use it or lose it” are not effective ways to curtail egregious spending for a country drowning in a mountain of debt.

Just Google the terms ‘use it or lose it government spending,’ and you’ll find no advocates of how these policies benefit U.S. taxpayers or better yet, how this is an efficient responsible manner for handling the largest budget in the world.

Just take a look at the 2015 article and testimony by Jason J. Fichtner before the Senate Committee on Homeland Security and Governmental Affairs wherein he reports how to curb wasteful year-end federal government spending and reforms the “use it or lose it” rules.

Also, consider the report from the Government Accountability Office (GAO) that in 2014, alone, the government wasted $125 billion, citing duplicate spending as the primary driver.

You see, this stuff is not new and Boeing, the #2 U.S government contractor, with its over 50 DUNS numbers is at the top of the list of benefactors.

“They have been abusing US taxpayers for decades with their ‘too big to fail mentality’ and backbone of America slogan.”

LET’S DIG INTO THEIR HISTORY A LITTLE BIT…

In a lawsuit filed by SpaceX against the US government, the company contends that they only wanted the opportunity to compete for a slice of the government’s $11 billion evolved expendable launch vehicle (EELV) contract award. 

The California-based firm even offers a low cost alternative that could save taxpayers’ billions of dollars. This alternative was the Falcon 9 rocket which Elon Musk claims can fly the same payload into space for 25% of the cost.  

Fact: The SpaceX Falcon 9 engine and the majority of its components are made in the USA, while Boeing Atlas 5 rocket relies on the Russian RD-180 first-stage engine to launch the U.S. national security payloads.

You see, unlike their counterparts at Boeing, SpaceX’ suit was an attempt to level the playing field and eliminate exclusive non-compete sole source contract awards that are “fiscally irresponsible and offensive to American values of fairness and competition.”

However, they were sidestepped by the Washington beltway machine. The sole source contract, aimed to build 27 rockets for U.S. taxpayers, was given to the United Launch Alliance (ULA).

ULA is a joint venture between Boeing and Lockheed Martin, currently #2 and #1, respectively, of the top 100 government contractors for 2018.

This is only the tip of the iceberg. You don’t have to go that far to find proof of the multi-billion dollar conglomerate abusing U.S. taxpayers. Here are two examples:

  1. Boeing paid $18 million amid overcharging the government for lunch breaks while maintaining Air Force’s C-17 aircraft. Read the article here
  2. Boeing and ULA sued the Air Force for $385 million over Delta 4 costs. Read the article here.

LET’S CLARIFY THINGS UP!

To add clarity to the matter, I do support the government spending measures, but I object how it is done.

“It is my belief that we can accomplish more with the money that we spend.”

There is no need to replace supplies and equipment that are in working order and that have not exceeded their useful life, just to satisfy some wacky budget policy.

Besides, better planning must take place and remove the figure heads from Washington that want to keep the establishment in place and not question decisions or practice fiscal responsibility so Boeing are no Boy scouts.

Note: This article was written way back in December 2016, however it wasn’t until now that I had the courage to share it with the world.