[House Report 112-720]
[From the U.S. Government Printing Office]
112th Congress Rept. 112-720
HOUSE OF REPRESENTATIVES
2d Session Part 1
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GOVERNMENT EFFICIENCY THROUGH SMALL BUSINESS CONTRACTING ACT OF 2012
_______
December 21, 2012.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Graves of Missouri, from the Committee on Small Business, submitted
the following
R E P O R T
[To accompany H.R. 3850]
The Committee on Small Business, to whom was referred the
bill (H.R. 3850) to amend the Small Business Act with respect
to goals for procurement contracts awarded to small business
concerns, and for other purposes, having considered the same,
report favorably thereon with an amendment and recommend that
the bill as amended do pass.
CONTENTS
Page
I. Amendment........................................................1
II. Purpose of the Bill and Summary..................................5
III. Background and the Need for Legislation..........................6
IV. Hearings.........................................................9
V. Committee Consideration..........................................9
VI. Section-by-Section Analysis of H.R. 3850........................10
VII. Unfunded Mandates...............................................16
VIII.New Budget Authority, Entitlement Authority, and Tax Expenditure16
IX. Oversight Findings..............................................17
X. Statement of Constitutional Authority...........................17
XI. Congressional Accountability Act................................17
XII. Federal Advisory Committee Statement............................17
XIII.Statement of No Earmarks........................................17
XIV. Performance Goals and Objectives................................17
XV. Changes in Existing Law Made by the Bill, as Reported...........00
I. Amendment
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Government Efficiency through Small
Business Contracting Act of 2012''.
SEC. 2. GOALS FOR PROCUREMENT CONTRACTS AWARDED TO SMALL BUSINESS
CONCERNS.
(a) In General.--Section 15(g) of the Small Business Act (15 U.S.C.
644(g)) is amended by striking the subsection enumerator and inserting
the following:
``(g) Goals for Procurement Contracts Awarded to Small Business
Concerns.--''.
(b) Governmentwide Goals.--Paragraph (1) of section 15(g) of such Act
(15 U.S.C. 644(g)) is amended to read as follows:
``(1) Governmentwide goals.--The President shall annually
establish Governmentwide goals for procurement contracts
awarded to small business concerns, small business concerns
owned and controlled by service-disabled veterans, qualified
HUBZone small business concerns, small business concerns owned
and controlled by socially and economically disadvantaged
individuals, and small business concerns owned and controlled
by women in accordance with the following:
``(A) The Governmentwide goal for participation by
small business concerns shall be established at not
less than 25 percent of the total value of all prime
contract awards for each fiscal year and 40 percent of
the total value of all subcontract awards for each
fiscal year.
``(B) The Governmentwide goal for participation by
small business concerns owned and controlled by
service-disabled veterans shall be established at not
less than 3 percent of the total value of all prime
contract and at not less than 3 percent of the total
value of all subcontract awards for each fiscal year.
``(C) The Governmentwide goal for participation by
qualified HUBZone small business concerns shall be
established at not less than 3 percent of the total
value of all prime contract and at not less than 3
percent of the total value of all subcontract awards
for each fiscal year.
``(D) The Governmentwide goal for participation by
small business concerns owned and controlled by
socially and economically disadvantaged individuals
shall be established at not less than 5 percent of the
total value of all prime contract and at not less than
5 percent of the total value of all subcontract awards
for each fiscal year.
``(E) The Governmentwide goal for participation by
small business concerns owned and controlled by women
shall be established at not less than 5 percent of the
total value of all prime contract and at not less than
5 percent of the total value of all subcontract awards
for each fiscal year.''.
(c) Agency Goals.--Paragraph (2) of section 15(g) of such Act (15
U.S.C. 644(g)) is amended to read as follows:
``(2) Agency goals.--
``(A) Establishment.--The head of each Federal agency
shall annually establish, for the agency that
individual heads, goals for procurement contracts
awarded to small business concerns, small business
concerns owned and controlled by service-disabled
veterans, qualified HUBZone small business concerns,
small business concerns owned and controlled by
socially and economically disadvantaged individuals,
and small business concerns owned and controlled by
women.
``(B) Relationship to governmentwide goals.--
``(i) Scope.--The goals established by the
head of a Federal agency under subparagraph (A)
shall be in the same format as the goals
established by the President under paragraph
(1) and shall address both prime contract and
subcontract awards.
``(ii) Requirement to meet or exceed
governmentwide goals.--With respect to each
goal for a fiscal year established under
subparagraph (A) for a category of small
business concern, the participation percentage
applicable to such goal may not be less than
the participation percentage applicable to the
Governmentwide goal for such fiscal year
established under paragraph (1) for such
category.
``(C) Consultation required.--
``(i) In general.--In establishing goals
under subparagraph (A), the head of each
Federal agency shall consult with the
Administrator.
``(ii) Disagreements.--If the Administrator
and the head of a Federal agency fail to agree
on a goal established under subparagraph (A),
the disagreement shall be submitted to the
Administrator for Federal Procurement Policy
for final determination.
``(D) Plan for achieving goals.--After establishing
goals under subparagraph (A) for a fiscal year, the
head of each Federal agency shall develop a plan for
achieving such goals, which shall apportion
responsibilities among the employees of such agency
having procurement powers.
``(E) Expanded participation.--In establishing goals
under subparagraph (A), the head of each Federal agency
shall make a consistent effort to annually expand
participation by small business concerns from each
industry category in procurement contracts of such
agency, including participation by small business
concerns owned and controlled by service-disabled
veterans, qualified HUBZone small business concerns,
small business concerns owned and controlled by
socially and economically disadvantaged individuals,
and small business concerns owned and controlled by
women.
``(F) Consideration.--The head of each Federal
agency, in attempting to attain expanded participation
under subparagraph (E), shall consider--
``(i) contracts awarded as the result of
unrestricted competition; and
``(ii) contracts awarded after competition
restricted to eligible small business concerns
under this section and under the program
established under section 8(a).
``(G) Communication regarding goals.--
``(i) Importance of achieving goals.--Each
procurement employee or program manager
described in clause (ii) shall communicate to
the subordinates of the procurement employee or
program manager the importance of achieving
goals established under subparagraph (A).
``(ii) Procurement employees or program
managers described.--A procurement employee or
program manager described in this clause is a
senior procurement executive, senior program
manager, or Director of Small and Disadvantaged
Business Utilization of a Federal agency having
contracting authority.''.
(d) Enforcement; Determinations of the Total Value of Contract
Awards.--Section 15(g) of the Small Business Act (15 U.S.C. 644(g)), as
amended by this Act, is further amended by adding at the end the
following:
``(3) Enforcement.--If the Administrator does not issue the
report required in subsection (h)(2) on or before the date that
is 120 days after the end of the prior fiscal year, the
Administrator may not carry out or establish any pilot program
until the date on which the Administrator issues the report.
``(4) Determinations of the total value of contract awards.--
For purposes of the goals established under paragraphs (1) and
(2), the total value of contract awards for a fiscal year may
not be determined in a manner that excludes the value of a
contract based on--
``(A) where the contract is awarded;
``(B) where the contract is performed;
``(C) whether the contract is mandated by Federal law
to be performed by an entity other than a small
business concern;
``(D) whether funding for the contract is made
available in an appropriations Act, if the contract is
subject to the Competition in Contracting Act of 1984;
or
``(E) whether the contract is subject to the Federal
Acquisition Regulation.''.
SEC. 3. REPORTING ON GOALS FOR PROCUREMENT CONTRACTS AWARDED TO SMALL
BUSINESS CONCERNS.
Subsection (h) of section 15 of the Small Business Act (15 U.S.C.
644) is amended to read as follows:
``(h) Reporting on Goals for Procurement Contracts Awarded to Small
Business Concerns.--
``(1) Agency reports.--At the conclusion of each fiscal year,
the head of each Federal agency shall submit to the
Administrator a report describing--
``(A) the extent of the participation by small
business concerns, small business concerns owned and
controlled by veterans (including service-disabled
veterans), qualified HUBZone small business concerns,
small business concerns owned and controlled by
socially and economically disadvantaged individuals,
and small business concerns owned and controlled by
women in the procurement contracts of such agency
during such fiscal year;
``(B) whether the agency achieved the goals
established for the agency under subsection (g)(2)(A)
with respect to such fiscal year; and
``(C) any justifications for a failure to achieve
such goals.
``(2) Reports by administrator.--Not later than 60 days after
receiving a report from each Federal agency under paragraph (1)
with respect to a fiscal year, the Administrator shall submit
to the President and Congress, and to make available on a
public website, a report that includes--
``(A) a copy of each report submitted to the
Administrator under paragraph (1);
``(B) a determination of whether each goal
established by the President under subsection (g)(1)
for such fiscal year was achieved;
``(C) a determination of whether each goal
established by the head of a Federal agency under
subsection (g)(2)(A) for such fiscal year was achieved;
``(D) the reasons for any failure to achieve a goal
established under paragraph (1) or (2)(A) of subsection
(g) for such fiscal year and a description of actions
planned by the applicable agency to address such
failure, except that the Administrator must concur with
each remediation plan;
``(E) for the Federal Government and each Federal
agency, an analysis of the number and dollar amount of
prime contracts awarded during such fiscal year to--
``(i) small business concerns--
``(I) in the aggregate;
``(II) through sole source contracts;
``(III) through competitions
restricted to small business concerns;
and
``(IV) through unrestricted
competition;
``(ii) small business concerns owned and
controlled by service-disabled veterans--
``(I) in the aggregate;
``(II) through sole source contracts;
``(III) through competitions
restricted to small business concerns;
``(IV) through competitions
restricted to small business concerns
owned and controlled by service-
disabled veterans; and
``(V) through unrestricted
competition;
``(iii) qualified HUBZone small business
concerns--
``(I) in the aggregate;
``(II) through sole source contracts;
``(III) through competitions
restricted to small business concerns;
``(IV) through competitions
restricted to qualified HUBZone small
business concerns;
``(V) through unrestricted
competition where a price evaluation
preference was used; and
``(VI) through unrestricted
competition where a price evaluation
preference was not used;
``(iv) small business concerns owned and
controlled by socially and economically
disadvantaged individuals--
``(I) in the aggregate;
``(II) through sole source contracts;
``(III) through competitions
restricted to small business concerns;
``(IV) through competitions
restricted to small business concerns
owned and controlled by socially and
economically disadvantaged individuals;
``(V) through unrestricted
competition; and
``(VI) by reason of that concern's
certification as a small business owned
and controlled by socially and
economically disadvantaged individuals;
``(v) small business concerns owned by an
Alaska Native Corporation--
``(I) in the aggregate;
``(II) through sole source contracts;
``(III) through competitions
restricted to small business concerns;
``(IV) through competitions
restricted to small business concerns
owned and controlled by socially and
economically disadvantaged individuals;
and
``(V) through unrestricted
competition; and
``(vi) small business concerns owned and
controlled by women--
``(I) in the aggregate;
``(II) through competitions
restricted to small business concerns;
``(III) through competitions
restricted using the authority under
section 8(m)(2);
``(IV) through competitions
restricted using the authority under
section 8(m)(2) and in which the waiver
authority under section 8(m)(3) was
used; and
``(V) through unrestricted
competition; and
``(F) for the Federal Government and each Federal
agency, the number, dollar amount, and distribution
with respect to the North American Industry
Classification System of subcontracts awarded during
such fiscal year to small business concerns, small
business concerns owned and controlled by service-
disabled veterans, qualified HUBZone small business
concerns, small business concerns owned and controlled
by socially and economically disadvantaged individuals,
and small business concerns owned and controlled by
women.''.
SEC. 4. SENIOR EXECUTIVES.
(a) Training.--Programs established for the development of senior
executives under section 3396(a) of title 5, United States Code, shall
include training with respect to Federal procurement requirements,
including contracting requirements under the Small Business Act (15
U.S.C. 631 et seq.).
(b) Sabbaticals.--If a Federal agency does not achieve, with respect
to a fiscal year, a goal established by the head of such agency under
section 15(g)(2)(A) of the Small Business Act (15 U.S.C. 644(g)(2)(A)),
a senior executive within that agency may not be granted, during the
succeeding fiscal year, a sabbatical under section 3396(c) of title 5,
United States Code.
(c) Incentive Awards.--If a Federal agency does not achieve, with
respect to a fiscal year, a goal established by the head of such agency
under section 15(g)(2)(A) of the Small Business Act (15 U.S.C.
644(g)(2)(A)), a senior executive within that agency may not receive,
during the succeeding fiscal year, any incentive award under subchapter
I of chapter 45 of title 5, United States Code.
(d) Senior Executive Defined.--In this section, the term ``senior
executive'' has the meaning given that term in section 3132(a) of title
5, United States Code.
SEC. 5. SENSE OF CONGRESS.
It is the sense of Congress that the contracting provisions of the
Small Business Act shall apply to the leasing of buildings and office
space by the United States, and shall not apply to any leasing
transaction between private parties.
II. Purpose and Bill Summary
The purpose of H.R. 3850, the ``Government Efficiency
through Small Business Contracting Act of 2012,'' is to amend
the Small Business Act (the Act)\1\ to increase prime
contracting and subcontracting opportunities for small
businesses. Small business contractors bring necessary
competition to the government marketplace, add innovation, and
create new jobs. Contracting officers, however, generally
prefer contractors with whom they have experience; typically,
this preference hampers the ability of small businesses to
obtain federal contracts. Thus, the top 100 contractors to the
federal government routinely receive 25 percent of the total
value of contracts spent in a fiscal year, whereas the over
350,000 small businesses competing for federal contracts
struggle to eclipse the 20 percent mark. This overreliance on a
limited corps of contractors is not good for the industrial
base, competition, innovation, job creation, or the needs of
the federal government.
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\1\Originally, title II of the Act of July 30, 1953, c. 282, 67
Stat. 232 was designated as the Small Business Act of 1953. A plethora
of amendments in subsequent Congresses led to a rewrite in 1958. Pub.
L. No. 85-536, Sec. 1, 72m Stat. 384 (1958). The Act is codified at 15
U.S.C. Sec. Sec. 631-657q.
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H.R. 3850 seeks to promote small business contracting in
five ways. First, it increases the prime contracting goal for
small business concerns\2\ from 23 percent of all federal prime
contract dollars to 25 percent.\3\ Second, it establishes a
government-wide small business subcontracting goal of 40
percent because the administratively set goals for small
businesses have been decreasing. Third, it ensures that no
department or agency is allowed to have a small business prime
contracting goal that is less than the government-wide small
business prime contracting goal of 25 percent. Fourth, it
defines the universe of contracts that are to be used to
calculate achievement of procurement goals, in order to counter
the Small Business Administration's (SBA) decision (which
contradicts the plain language of the Act) to exclude
approximately 20 percent of contract dollars from the goal
calculation.\4\ Finally, H.R. 3850 creates an incentive for
executives to ensure that the small business goals are met by
denying them performance awards or sabbaticals should an agency
fail to meet those goals.
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\2\The Act uses the term ``small business concern.'' However, this
report will use the terms ``small business'' and ``small business
concern'' interchangeably unless the context requires a specific
reference to the term ``small business concern.''
\3\If contract spending remains constant, this will result in
approximately $11 billion in new contracts being awarded to small
businesses each year, and if contract spending declines, it will ensure
that small businesses are not the first to have their contracts cut.
\4\A discussion of which contracts are excluded may be found in
Section 2(d) of the section-by-section analysis.
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III. Background and Need for Legislation
The Act finds that awarding prime contracts to small
businesses serves the nation in three ways. First, small
business contracting is in ``the interest of maintaining or
mobilizing the Nation's full productive capacity.''\5\ Second,
small business contracting is ``in the interest of war or
national defense programs.''\6\ Third, it serves ``the interest
of assuring that a fair proportion of the total purchases and
contracts for property and services for the government in each
industry category are placed with small-business concerns.''\7\
To fulfill these three objectives, statutorily based small
business goals have been used for approximately thirty-four
years.
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\5\Small Business Act, Sec. 15(a), 15 U.S.C. Sec. 644(a).
\6\Id.
\7\Id.
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Since the enactment of Public Law 95-507\8\ in 1978, the
SBA has been responsible for negotiating small business
contracting and subcontracting goals with federal departments
and agencies. A decade later, President Reagan signed the
Business Opportunity Development Reform Act of 1988 (BODRA),
which for the first time established a statutorily mandated
government-wide small business goal of ``not less than 20
percent of the total value of all prime contract awards for
each Fiscal Year.'' This goal was increased to 23 percent by
the Small Business Reauthorization Act of 1997 (SBRA).
According to the SBA, in Fiscal Year 2010, small businesses
received 22.7 percent of all prime contract dollars. Therefore,
this bill continues the work of the past 34 years by increasing
the goal to 25 percent. Each time the goal has previously been
increased, small business contracting, with its inherent
benefits, has increased. Additionally, given decreases in
federal contract spending, this increase will protect small
businesses against losing hard gotten gains. Thus, after 15
years of a 23 percent goal, the bill will provide additional
support for small business contractors.
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\8\This Act has no common name and is simply An Act of October 24,
1978.
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The bill also furthers the goals of Public Law 95-507,
BODRA and SBRA by mandating that no agency have a goal less
than the government-wide goal. Agencies, due to their varying
missions, contract for different goods and services. However,
if the intention of the Act is to ensure that a fair portion
all government contracts ``in each industry category'' are
placed with small businesses, then no agency should be allowed
to shirk its responsibility towards small businesses.
In the recent past, SBA has allowed some agencies to have
goals that are lower than the government-wide goal, which means
that small businesses may not have the same opportunities in
some industries as they do in others. Thus, by failing to honor
the third purpose of the Act in respect to contracting,
agencies neuter the first two objectives--maintaining the full
productive capacity and supporting national defense programs.
This is particularly the case with the Department of Defense
(DoD) and the Department of Energy (DOE). For fiscal year 2010,
SBA and DoD negotiated a DoD goal of 22.8 percent,\9\ and SBA
and DOE negotiated a goal of only 6 percent.\10\ Combined,
these two agencies accounted for nearly 75 percent of
government-wide contracting dollars spent that year.\11\ Even
if DoD and DOE had met their respective goals, this still would
have meant that each of the other agencies needed to contract
at least 30 percent of their spend to small businesses to meet
the overall goal. Moreover, the lower goals for DoD and DOE
would have further denied small businesses opportunities in the
very areas most crucial to the war and defense programs the Act
is meant to address.\12\
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\9\SBA, Department of Defense Procurement Scorecard FY 2010 (2011)
available at http://www.sba.gov/sites/default/files/files/
FY10%20SB%20Procurement%20Scorecard_FINAL_DoD.pdf.
\10\SBA, Department of Energy Procurement Scorecard FY 2010 (2011)
available at http://www.sba.gov/sites/default/files/files/
FY10%20SB%20Procurement%20Scorecard_FINAL_ ENERGY.pdf.
\11\DoD spent $375.5 billion on contracts, DOE $25 billion out of a
federal total of $536 billion. See http://usaspending.gov/.
\12\15 U.S.C. Sec. 644(a).
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When the concept of goals was introduced through the 1978
and 1988 legislation, none of the Congressional authors
believed that the phrase ``the total value of all prime
contract awards for each fiscal year'' needed further
explanation to define the types of contracts to which the goal
applied, or that agencies needed encouragement to reach the
goals. However, in 1991 the Office of Federal Procurement
Policy (OFPP) began allowing\13\ DOE to count subcontracts
awarded by its management and operations (M&O) contractors as
if they were prime contracts awarded by the DOE.\14\ This
allowed DOE to count 18 percent of its prime contract dollars
as being awarded to small businesses until 1999, when OFPP
reversed its decision on the M&O contracts,\15\ and it became
apparent that DOE had only been awarding 3 percent of its prime
contract dollars to small businesses. As previously noted, over
a decade later, DOE only has a goal of 6 percent small business
participation, so the goals are clearly not motivating the
agency to improve its performance.
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\13\OFPP Policy Letter 91-1 (1991)
\14\See, e.g., Acquisition Regulation: Implementation of Section
3021 of the Energy Policy Act of 1992, Notice of Proposed Rulemaking,
59 Fed. Reg. 35,294, 35,295 (July 11, 1994).
\15\OFPP Policy Letter 99-1 (1999) rescinding OFPP Policy Letter
91-1.
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After OFPP changed course on the inclusion of M&O
subcontracts, SBA in rules published in 2003\16\ began allowing
agencies to exclude certain types of contracts from
consideration before the goal achievements were calculated.
Under this method, approximately 20 percent of all prime
contract dollars are excluded from the contracting base before
the goals are calculated, thus inflating the performance of all
agencies. Even with these exclusions, agencies are failing to
meet their goals, and the government-wide goal has not been met
since 2005.
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\16\SBA, Goaling Guidelines for the Small Business Preference
Programs for Prime and Subcontract Federal Procurement Goals and
Achievements, 68 Fed. Reg. 43,566 (July 23, 2003).
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To make the goals themselves more meaningful, the
Government Efficiency Though Small Business Contracting Act of
2012 does three things. First, it defines what types of
contracts must be included in the goaling base. Examining
Fiscal Year 2010 data, this essentially adds $100 billion to
the denominator and $10 billion to the numerator when
calculating small business goal achievement. Recalculating
using the more appropriate universe of contracts indicates that
the federal government achievement is only 20.3 percent.
Second, the bill holds senior executives in agencies
accountable for meeting the goals, and imposes consequences for
the failure to do so. Specifically, these senior executives
will not be eligible for performance awards, commonly referred
to as bonuses, nor will they be allowed to take paid
sabbaticals if the goals are not met. This will encourage
senior executives to remove barriers to small business
participation and will finally give teeth to the achievement of
the goals. Finally, the bill also adds granularity to the
report on goal achievement currently provided by the SBA.
Instead of simply reporting a dollar value and percentage for
each category of goals, as SBA currently does, the new reports
will be more nuanced, explaining whether a small business
concern won a contract through full and open+ competition or as
the result of a contracting program established in the Act.
This data will be invaluable as the Committee assesses the
health of the small business contracting programs.
Public Law 95-507 also sought to increase subcontracting
opportunities for small businesses by requiring that other than
small businesses receiving prime contracts negotiate
subcontracting plans with the federal government that would
incorporate goals for the use of small businesses.\17\
According to Committee reports, this requirement was added
because small businesses were receiving only 37.5 percent of
subcontract dollars.\18\ Since that time, it has been the
responsibility of the SBA to establish a government-wide
subcontracting goal. However, the current SBA-established goal
is 35.9 percent, which is 1.6 percent less than the actual
results thirty-five years ago that spurred the creation of
government-wide subcontracting goals. To prevent further
backsliding, the bill establishes the government-wide goal at
40 percent.
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\17\15 U.S.C. Sec. 637(d).
\18\H.R. Rep. No. 95-949, at 5 (1978).
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Ideally, the changes to the Act will result in $11 billion
in new contracting opportunities for small businesses. However,
based on President Obama's projected defense spending cuts and
cuts that may occur as a result of the Budget Control Act of
2011, small business contracts at DoD alone are expected to
fall by approximately $7.5 billion per year.\19\ This does not
account for spending cuts at civilian agencies, or the fact
that contracting officers find it easier to cut small business
contracts than those held by large businesses simply because
small businesses lack the clout to complain. However, DoD
contracting accounts for approximately 70 percent of federal
contract spending, so if similar cuts occur in other agencies,
the increased goal in this bill should simply mitigate the
effect of the reduced contracting on small businesses.
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\19\Center for Security Policy, The National Defense Breakdown
Economic Impact Report, (Feb. 2012). The full report can be found at
http://forthecommondefense.org/reports/National% 202%20pager%20pdf.pdf.
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IV. Hearings
In the 112th Congress, the Committee held two hearings that
looked at the prime contract and subcontract goals. On
September 14, 2011, the Committee held a hearing titled,
``Beyond the Size Standards: The Sustainability of Small
Businesses Graduates.'' At the hearing, witnesses testified
that the small business goals are not being met, that there are
no consequences for this failure, and that the numbers being
reported exclude approximately $100 billion in contracts. The
Subcommittee on Contracting and the Workforce then met on
October 6, 2011, for a hearing titled ``Subpar Subcontracting:
Challenges for Small Businesses Contractors.'' In this case,
the witnesses told the Committee about the declining
subcontracting goals, and the lack of commitment to meeting the
goals by agencies and some subcontractors. At each hearing, the
small business witnesses and the trade associations
representing them were adamant that the goals needed to be
strengthened.
V. Committee Consideration
The Committee on Small Business met in open session, with a
quorum being present, on March 7, 2012 and ordered H.R. 3850
reported, as amended, to the House by a voice vote at 3:50 pm.
During the markup, five amendments were offered. Three
amendments were adopted and two amendments were withdrawn.
Disposition of the amendments is addressed below and is based
on the order amendments were filed with the Clerk of the
Committee and not necessarily in the order that they were
considered at the markup.
Amendment Number One filed by Ms. Hahn (D-CA) requires the
annual report issued by the SBA on goaling achievement be made
publicly available using the Internet, and made technical
amendments. The amendment was adopted by voice vote at 1:20 pm.
Amendment Number Two filed by Ms. Chu (D-CA) requires that
the annual goaling report subdivide the portion of the report
on achievement of the goal for contracts awarded to small
business concerns owned and controlled by socially and
economically disadvantaged individuals (SDB) goal by socio-
economic category. The amendment was adopted by voice vote at
1:24 pm.
Amendment Number Three filed by Mr. Peters (D-MI) will
increase the government-wide prime contracting and
subcontracting goals for SDB from 5 percent to 7.5 percent for
each fiscal year. The amendment was withdrawn by unanimous
consent.
Amendment Number Four filed by Ms. Ellmers (R-NC) expressed
a sense of Congress that the contracting provisions of the
Small Business Act shall apply to commercial leasing services.
The amendment was withdrawn by unanimous consent.
Amendment Number Five filed by Ms. Ellmers (R-NC) expressed
a sense of Congress that the contracting provisions of the
Small Business Act shall apply to the leasing of commercial
buildings and office space by the federal government but not to
transactions between private parties. The amendment was adopted
by voice vote at 3:49 pm.
Amendment to H.R. 3850
Offered by Ms. Hahn of California
Page 8, line 5, strike ``paragraph (2)'' and insert
``subsection (h)(2)''.
Page 8, beginning on line 23, strike ``competition in the
Contract Act'' and insert ``the Competition in Contracting Act
of 1984''.
Page 10, line 11, insert after ``President and Congress'' the
following: ``, and to make available on a public website,''.
Amendment to H.R. 3850
Offered by Ms. Chu of California
Page 13, line 9, strike ``and''.
Page 13, line 11, insert ``and'' at the end.
Page 13, insert after line 11 the following (and redesignate
provisions accordingly):
(VI) by reason of that
concern's certification as a
small business owned and
controlled by socially and
economically disadvantaged
individuals;
Amendment to H.R. 3850
Offered by Mr. Peters of Michigan
Page 3, line 18, strike ``5 percent'' and insert ``7.5
percent''.
Page 3, line 19, strike ``5 percent'' and insert ``7.5
percent''.
VI. Section-by-Section Analysis of H.R. 3850 as Amended
Section 1. Short Title
This Section designates the bill as the ``Government
Efficiency through Small Business Contracting Act of 2012.''
Section 2. Goals for Procurement Contracts Awarded to Small Business
Concerns
Subsection (a)--Subsection Enumerator
This subsection designates section 15(g) of the Small
Business Act (the Act), 15 U.S.C. Sec. 644(g), as ``Goals for
Procurement Contracts Awarded to Small Business Concerns.''
Subsection (b)--Government-wide Goals
Paragraph (1) of subsection 15(g) of the Act currently
requires the President to annually establish a government-wide
goal of awarding at least 23 percent of the total value of
prime contracts awards for each fiscal year to small business
concerns. The Act also established goals for various
subcategories of small businesses: small business concerns
owned and controlled by service disabled veterans (SDVOSBs);
qualified HUBZone small business concerns (HUBZone firms);
small businesses owned by socially and economically-
disadvantaged individuals (SDBs); and small business concerns
owned and controlled by women (WOSBs). It further requires the
President to establish a minimum goal of awarding 3 percent of
the total value of all prime contract and subcontract awards
for each fiscal year to SDVOSBs. The current statutory goal for
HUBZone firms is 3 percent of the total value of all prime
contract and subcontract awards. The government-wide goals for
SDBs and WOSBs are each established as at least 5 percent of
the total value of all prime contract and subcontract awards
for each fiscal year.
Section 2(b) of the bill modifies the structure of section
15(g)(1) of the Act by creating separate subparagraphs for each
specific goal. Unless specified below, the change is made to
provide clarity rather than make substantive changes.
Subparagraph (A) increases the government-wide goal from 23
percent of the total value of prime contracts awards for each
fiscal year to 25 percent of the total value of prime contract
awards. Subparagraph (A) also establishes a government-wide
goal of awarding small business concerns 40 percent of the
total value of subcontract awards for each fiscal year. This is
necessary because the voluntary subcontracting goal established
by the Executive Branch has been declining, from 40 percent in
fiscal year 2003 to 35.9 in fiscal year 2010.\20\ Given that
the Executive Branch has failed to institute goals leading to
an increase in opportunities for small businesses, this bill
will legislate a more aspirational goal.
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\20\SBA, Governmentwide 2010 Small Business Procurement Scorecard
(2011). Interestingly, in 2003, the goal was 40 percent. See also SBA,
Goaling Guidelines for the Small Business Preference Programs for Prime
and Subcontract Federal Procurement Goals and Achievements, 6 (2003).
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Subparagraphs (B)-(E) restate the current small business
goals for SDVOSB, HUBZone, SDBs and WOSBs. However, in
subparagraph (C), the language pertaining to HUBZone goals no
longer includes the goals from fiscal years 1999 through 2003.
Now that the program is fully operational, goals prior to 2003
clutter an already overcluttered Act.
Subsection (c)--Agency Goals
Paragraph (2) of subsection 15(g) of the Act currently
requires the head of each Federal agency, in consultation with
the Administrator, to establish agency-specific prime
contracting and subcontracting goals for small business
concerns and the subcategories thereof. In cases where the head
of the Federal agency and the Administrator disagree, the
Administrator of the Office of Federal Procurement makes the
final goal determination. The Act also requires each agency to
continually strive to increase participation by small
businesses in each industry category, and to increase contracts
awarded through full and open competition as well as through
restricted competition. Finally, paragraph (2) requires that
agency employees with procurement or program management
functions be educated on the importance of the goals so that
they will be better prepared to meet those goals.
Historically, the Administrator refused to negotiate agency
specific goals that were lower than the government-wide goal.
Clearly, it is more difficult to achieve the government-wide
goal if some agencies have lower goals. Allowing some agencies
to have goals that are lower than the government-wide goal
means that small businesses may not have the same opportunities
in some industries as they do in others, which, in turn,
results in a less vibrant industrial base, as might be the case
for small businesses providing goods and services to DoD and
DOE, as already discussed.
Consequently, subsection (c) of the bill amends paragraph
(2) to require that each agency has a goal at least as high as
the government-wide goal. It further requires that each agency
develop a plan for achieving its goals, and that the plans
apportion responsibility for the goals among the agency
employees with procurement powers. These changes will create
more opportunities for small businesses at the agencies
responsible for most federal contracting, improve the
likelihood of achieving the government-wide goal, and require
that each agency has a plan for how it will achieve the goals.
It also furthers the aims of the Act regarding the health of
the industrial base by making sure the federal government has
access to a diverse group of small businesses ready to assist
the nation in times of crisis.
Subsection (d)--Enforcement; Determination of the Total
Value of Contract Awards
Subsection (d) of the bill adds two new paragraphs to
section 15(g) of the Act. The first, paragraph (3), requires
that the Administrator issue the annual report to Congress
detailing how the government performed in contracting with
small business concerns no later than 120 days after the end of
the fiscal year. In fiscal year 2010, this report was not
issued until June 2011; in prior years the report came out even
later. A report that is issued after two-thirds of the fiscal
year has elapsed leaves agencies with very little time to
adjust their behavior and improve their small business
performance. Thus, the Administrator issuing the report in a
timely fashion will enable agencies to meet their goals in
subsequent years and achieve the objectives set forth in the
Act.
Section 15(g)(1) currently requires that the goal is based
on the ``total value of all prime contract awards for each
fiscal year.'' Although the term ``all'' seems to be abundantly
clear, it is not self-evident to the Administrator, who
currently excludes about 20 percent of all prime contract
dollars spent in a fiscal year, arguing that these contracts
are not suitable for award to small businesses based on their
place of award, performance, use of non-appropriated funds, or
applicability of the Federal Acquisition Regulation.\21\ In
addition, the Administrator excludes contracts that are
required by statute to be performed by entities other than
small businesses, such as Unicor--the federal prison industries
program.\22\ In each case, the exclusion is unwarranted because
there is no statutory basis for the exclusions since the term
``all'' is not ambiguous.
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\21\SBA, Goaling Guidelines for the Small Business Preference
Programs 3 (2003). Apparently, the Administrator's understanding of the
word ``all'' is akin to that of the animals in George Orwell's classic
novel Animal Farm, in which all animals are created equal but some are
more equal than others.
\22\Id., see also 18 U.S.C. Sec. 4124.
---------------------------------------------------------------------------
Even if the term ``all'' does not mean ``all'' as Orwell
might have concluded, the exclusions still make no sense. For
those contracts that the Administrator determined were not
suitable to award to small businesses, Committee staff analysis
indicates that small businesses won approximately 10 percent of
such contracts in fiscal year 2010.\23\ For statutory
exclusions, it simply means that additional contracts must be
awarded to make up for those prime contracts that must be
awarded to mandatory sources such as Unicor.
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\23\Generated through a report run using the Federal Procurement
Data System, on file with the Committee.
---------------------------------------------------------------------------
Consequently, the bill adds a paragraph (4) that seeks to
clarify what is meant by the words ``total value of all prime
contract awards for each fiscal year.'' The bill specifies that
for the purposes of the government-wide and agency-specific
contracting goals, the total dollar value of contracts awarded
must include contracts without respect to their place of award,
place of performance, the applicability of the FAR, or whether
a mandatory source is used. Furthermore, any contract that is
subject to the Competition in Contracting Act\24\ (CICA) is
covered, even if it is awarded using nonappropriated funds. By
using a reference to CICA, the Committee intends to exclude
those contracts awarded by non-appropriated funding
instrumentalities that are not considered contracts with the
federal government.
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\24\98 Stat. 1175 (1984), codified at 41 U.S.C. 3301 et seq.
---------------------------------------------------------------------------
Section 3. Reporting on Goals for Procurement Contracts Awarded to
Small Business Concerns
Section 3 amends section 15(h) of the Act, which addresses
reporting on goals enumerated in section 15(g). Currently,
section 15(h)(1) requires that the head of each agency report
to the Administrator on an annual basis, detailing the agency's
accomplishments for each of the small business goals, and
justifying any failure to meet the goals. The Administrator is
then directed in section 15(h)(2) to analyze and compile the
diverse reports into an annual report providing the government-
wide goal results to the Committee on Small Business, Committee
on Small Business and Entrepreneurship (the Committees), and
the President. In addition to providing the overall goals, the
report also includes the number and dollar value of contracts
awarded to firms covered by the goals that are awarded through
sole source contracts, through SDB set-asides, through HUBZone
set-asides, and through full and open competition.
The bill retains the concept of agency-level reports
consolidated into a government-wide report, but makes one minor
change to the agency-level reports, and four important changes
to the government-wide report. For the agency-level reports,
the Administrator must forward the reports to the Committees
within 60 days as part of the government-wide report. For the
government-wide report, the Administrator is directed to
include a remediation plan for any agency not meeting its
goals, with such plan to be developed by the head of the
contracting agency and concurred with by the Administrator.
Additionally, the government-wide report must provide much
greater detail regarding how awards to small business concerns
and the subcategories thereof were made. Specifically, for each
group, the Administrator must now report the aggregate results
as well as those using each of the possible procurement
methods, such as sole source contracting, set-aside
contracting, or full and open competition. For SDBs, the
Administrator must also identify which socio-economic
categories the firms used to qualify for the program. The
additional detail should not incur extra costs because the data
already are available through the Federal Procurement Data
System. This will provide Congress and the federal procurement
community more granular data on the effectiveness of all the
contracting programs in the Act.
The bill requires that the subcontracting data reported to
the Committees and the President analyze the industry category
of the subcontractor. This is important because subcontracting
is often used to mitigate for a lack of prime contracting
opportunities, but if the subcontracting is in an unrelated or
only tangentially-related industry, it may not successfully
accomplish this aim. Again, this will provide greater insight
into the assistance offered to small businesses through the
different types of subcontracting plans\25\ and the types of
businesses that benefit from subcontracts. Finally, the bill
requires that the goaling report be made publicly available on
a website. Although the report is made publicly available on
the website of the Federal Procurement Data System, such
placement is at the discretion of the Executive Branch. Given
the importance of the report, public availability should not
rest on the whims of federal agency officials and codification
of Internet availability is appropriate.
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\25\For example, this should help the Congress assess whether
different types of small businesses benefit from commercial type
subcontracting plans than benefit from contract specific subcontracting
plans of the DoD comprehensive test subcontracting plans.
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Section 4. Senior Executives
The issues in section 4 are not currently addressed in the
Act. Senior executives or members of the Senior Executive
Service (SES), are federal employees serving in political and
career managerial, supervisory, and policy positions classified
above civil service's General Schedule grade 15 or equivalent
positions in the Executive Branch.\26\ For 2012, these
positions pay a base salary between $119,554 and $179,700, and
with bonuses may receive compensation up to $230,700.\27\
Additionally, career SES employees may take sabbaticals of up
to 11 months to pursue study or uncompensated work, during
which time the employee retains salary, benefits and
potentially travel and per diem costs.\28\
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\26\5 U.S.C. Sec. 3132(a).
\27\Id. at Sec. 5307.
\28\Id. at Sec. 3396.
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Given their senior role within each agency, the Committee
recognizes that SES members play a special role in creating
contracting opportunities for small businesses. First, the
Chief Acquisition Officer and Senior Procurement Executives
create the agency's procurement policies and oversee the
contracting staff, thus creating the initial framework for
small business participation. Furthermore, all SES members
create or oversee those developing the actual procurement
requirements. Contracting personnel only can make purchases to
fulfill the requirements of the office generating the request
and have limited ability to change those requirements to make
the resultant contract suitable for small businesses. It is the
SES members working in the program office, as the Chief
Financial Officer, as the Chief Information Officer or the
like, who oversee the initial determination of the
requirements. It is the definition of requirements that often
controls a small business's opportunity to compete.
Subsection (a)--Training
Given the important role of SES, subsection (a) requires
that the SES development program provide training to SES
candidates on procurement in general and small business
contracting in particular. This will ensure that new SES
members are cognizant of the rules regarding procurement and
the tools available that allow small business concerns to
compete in the federal procurement arena.
Subsection (b)--Sabbaticals
As discussed above, sabbaticals are a unique benefit to SES
members. Such opportunities only should be available to
successful agencies as a reward and agencies that do not meet
their small business goals should not be able to reward their
most senior personnel if they fail to meet the standards
established by Congress for contracting with small business
concerns.\29\ Therefore, subsection (b) denies this benefit to
any SES employed by an agency that failed to meet the agency
level goals in the revised section 15(g)(2) of the Act.
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\29\While it is true that private sector executives receive perks
and salary increases even when their companies are performing poorly,
federal employees serve a higher interest (the public good) and should
not be rewarded for failing to achieve the objectives set by Congress.
---------------------------------------------------------------------------
Subsection (c)--Incentive Awards
SES performance appraisals rate SES members on their fiscal
year's accomplishments. The rating scale is from Level 1 to
Level 5, with Level 1 deemed ``unsatisfactory'' and Level 5 as
``outstanding.''\30\ Only SES employees with a rating above
Level 3, thereby deemed ``fully successful,'' are eligible for
incentive awards or bonuses. While each SES employee is rated
on program specific factors, they are all rated on five
critical elements as well: leading change, leading people,
business acumen, building coalitions and results driven.\31\ Of
these, the results driven factor counts for at least 40
percent, meaning that an SES employee cannot receive a bonus if
the employee fails to achieve ``measurable outputs and outcomes
clearly aligned to organizational goals and objectives'' that
have a ``transparent alignment to relevant agency or
organizational goals.''\32\ However, despite this guidance, SES
employees continue to receive bonuses at agencies that are not
successfully meeting the relevant agency's small business
goals.
---------------------------------------------------------------------------
\30\Memorandum from John Berry, Director, Office of Personnel
Management and Jeffrey Zients, Chief Performance Officer, Office of
Management and Budget, ``Senior Executive Service Performance Appraisal
System'' (Jan. 2012), available at http://www.chcoc.gov/transmittals/
TransmittalDetails.aspx?TransmittalID=4514.
\31\Id.
\32\Id.
---------------------------------------------------------------------------
Consequently, Subsection (c) does not allow SES to receive
bonuses if their agency does not meet the agency level goals in
the revised section 15(g)(2) of the Act. No agency is fully
successful, nor is any SES fully successful, if obligations to
small businesses are not met. Further, the Committee believes
that this change may have the additional benefit of encouraging
SES members to embrace the first of their performance
elements--leading change--to seek out and remove barriers to
small business participation in federal procurement. While some
have cautioned that this may lead to the use of small
businesses that are not qualified to perform contracts, no
contracting officer would put his or her authority to issue
contracts in jeopardy by ignoring the requirements of Part 9 of
the Federal Acquisition Regulations dealing with contractor
responsibility. Although at first blush this may seem unduly
punitive, many agencies already meet or exceed their small
business goals, so the consequences of this section should fall
only on the most senior and highly compensated employees of a
few agencies. It will not jeopardize their salaries, only their
incentive payments, and will lead to a culture of
accountability as it relates to small business opportunities.
Section 5. Sense of Congress
Section 5 is sense of Congress that the contracting
provisions of the Act ``shall apply to the leasing of buildings
and offices space by the United States, and shall not apply to
any leasing transaction between private parties.'' The
Committee has learned that the General Services Administration
(GSA) has bundled all contracts for real property brokerage
services to the exclusion of small businesses. While contract
bundling will be addressed through other legislation, this
sense of Congress reflects the Committee's frustration that the
agency with almost exclusive purview over leasing and other
real estate transaction services for buildings, space, land and
property would act in a way that excludes small business
participation as prime contractors. Therefore, this section
states the opinion of Congress that all the provisions of the
Act apply to GSA's procurement of real property on behalf of
the federal government.
VII. Unfunded Mandates
H.R. 3850 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act, Pub.
L. No. 104-4, and would impose no costs on state, local or
tribal governments.
VIII. New Budget Authority, Entitlement Authority and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House, the Committee provides the following opinion and
estimate with respect to new budget authority, entitlement
authority and tax expenditures. While the Committee has not
received an estimate of new budget authority contained in the
cost estimate prepared by the Director of the Congressional
Budget Office pursuant to Sec. 402 of the Congressional Budget
Act of 1974, the Committee does not believe that any additional
appropriation will be required due to the enactment of H.R.
3850. H.R. 3850 does not direct new spending, but instead
addresses the apportionment of current spending between small
businesses and other-than-small businesses. Tying senior
executive bonuses to attainment of the small business goals may
instead save money that would otherwise have been expended.
IX. Oversight Findings
In accordance with clause 2(b)(1) of Rule X of the rules of
the House, the oversight findings and recommendations of the
Committee on Small Business with respect to the subject matter
contained in H.R. 3850 are incorporated into the descriptive
portions of this report.
X. Statement of Constitutional Authority
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds that the
authority for this legislation in Art. I, Sec. 8, cls. 1, 3,
and 18 and Art. IV, Sec. 3, cl. 2 of the Constitution of the
United States.
XI. Congressional Accountability Act
H.R. 3850 does not relate to the terms and conditions of
employment or access to public services or accommodations
within the meaning of Sec. 102(b)(3) of Pub. L. No. 104-1.
XII. Federal Advisory Committee Act Statement
H.R. 3850 does not establish or authorize the establishment
of any new advisory committees as that term is defined in the
Federal Advisory Committee Act, 5 U.S.C. App. 2.
XIII. Statement of No Earmarks
Pursuant to clause 9 of rule XXI, H.R. 3850 does not
contain any congressional earmarks, limited tax benefits or
limited tariff benefits as defined in subsections (d), (e) or
(f) of clause 9 of rule XXI of the Rules of the House.
XIV. Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House, the Committee establishes the following performance-
related goals and objectives for this legislation:
H.R. 3850 includes a number of provisions designed to
improve the competitive viability of small businesses
as federal prime and subcontractors and to improve
agency compliance with the Small Business Act.
XV. Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
SMALL BUSINESS ACT
* * * * * * *
Sec. 15. (a) * * *
* * * * * * *
[(g)(1) The President shall annually establish Government-
wide goals for procurement contracts awarded to small business
concerns, small business concerns owned and controlled by
service disabled veterans, qualified HUBZone small business
concerns, small business concerns owned and controlled by
socially and economically disadvantaged individuals, and small
business concerns owned and controlled by women. The
Government-wide goal for participation by small business
concerns shall be established at not less than 23 percent of
the total value of all prime contract awards for each fiscal
year. The Government-wide goal for participation by small
business concerns owned and controlled by service-disabled
veterans shall be established at not less than 3 percent of the
total value of all prime contract and subcontract awards for
each fiscal year. The Governmentwide goal for participation by
qualified HUBZone small business concerns shall be established
at not less than 1 percent of the total value of all prime
contract awards for fiscal year 1999, not less than 1.5 percent
of the total value of all prime contract awards for fiscal year
2000, not less than 2 percent of the total value of all prime
contract awards for fiscal year 2001, not less than 2.5 percent
of the total value of all prime contract awards for fiscal year
2002, and not less than 3 percent of the total value of all
prime contract and subcontract awards for fiscal year 2003 and
each fiscal year thereafter. The Government-wide goal for
participation by small business concerns owned and controlled
by socially and economically disadvantaged individuals shall be
established at not less than 5 percent of the total value of
all prime contract and subcontract awards for each fiscal year.
The Government-wide goal for participation by small business
concerns owned and controlled by women shall be established at
not less than 5 percent of the total value of all prime
contract and subcontract awards for each fiscal year.
Notwithstanding the Government-wide goal, each agency shall
have an annual goal that presents, for that agency, the maximum
practicable opportunity for small business concerns, small
business concerns owned and controlled by service-disabled
veterans, qualified HUBZone small business concerns, small
business concerns owned and controlled by socially and
economically disadvantaged individuals, and small business
concerns owned and controlled by women to participate in the
performance of contracts let by such agency. The Administration
and the Administrator for Federal Procurement Policy shall,
when exercising their authority pursuant to paragraph (2),
insure that the cumulative annual prime contract goals for all
agencies meet or exceed the annual Government-wide prime
contract goal established by the President pursuant to this
paragraph.
[(2)(A) The head of each Federal agency shall, after
consultation with the Administration, establish goals for the
participation by small business concerns, by small business
concerns owned and controlled by service-disabled veterans, by
qualified HUBZone small business concerns, by small business
concerns owned and controlled by socially and economically
disadvantaged individuals, and by small business concerns owned
and controlled by women in procurement contracts of such
agency.
[(B) Goals established under this subsection shall be jointly
established by the Administration and the head of each Federal
agency and shall realistically reflect the potential of small
business concerns, small business concerns owned and controlled
by service-disabled veterans, qualified HUBZone small business
concerns, small business concerns owned and controlled by
socially and economically disadvantaged individuals, and small
business concerns owned and controlled by women to perform such
contracts and to perform subcontracts under such contracts.
[(C) Whenever the Administration and the head of any Federal
agency fail to agree on established goals, the disagreement
shall be submitted to the Administrator for Federal Procurement
Policy for final determination.
[(D) For the purpose of establishing goals under this
subsection, the head of each Federal agency shall make
consistent efforts to annually expand participation by small
business concerns from each industry category in procurement
contracts of the agency, including participation by small
business concerns owned and controlled by service-disabled
veterans, by qualified HUBZone small business concerns, by
small business concerns owned and controlled by socially and
economically disadvantaged individuals, and by small business
concerns owned and controlled by women.
[(E) The head of each Federal agency, in attempting to attain
the participation described in subparagraph (D), shall
consider--
[(i) contracts awarded as the result of unrestricted
competition; and
[(ii) contracts awarded after competition restricted
to eligible small business concerns under this section
and under the program established under section 8(a).
[(F)(i) Each procurement employee or program manager
described in clause (ii) shall communicate to the subordinates
of the procurement employee or program manager the importance
of achieving small business goals.
[(ii) A procurement employee or program manager described in
this clause is a senior procurement executive, senior program
manager, or Director of Small and Disadvantaged Business
Utilization of a Federal agency having contracting authority.
[(h)(1) At the conclusion of each fiscal year, the head of
each Federal agency shall report to the Administration on the
extent of participation by small business concerns, small
business concerns owned and controlled by veterans (including
service-disabled veterans), qualified HUBZone small business
concerns, small business concerns owned and controlled by
socially and economically disadvantaged individuals, and small
business concerns owned and controlled by women in procurement
contracts of such agency. Such reports shall contain
appropriate justifications for failure to meet the goals
established under subsection (g) of this section.
[(2) The Administration shall annually compile and analyze
the reports submitted by the individual agencies pursuant to
paragraph (1) and shall submit to the President and the
Committee on Small Business and Entrepreneurship of the Senate
and the Committee on Small Business of the House of
Representatives the compilation and analysis, which shall
include the following:
[(A) The Government-wide goals for participation by
small business concerns, small business concerns owned
and controlled by service-disabled veterans, qualified
HUBZone small business concerns, small business
concerns owned and controlled by socially and
economically disadvantaged individuals, and small
business concerns owned and controlled by women and the
performance in attaining such goals.
[(B) The goals in effect for each agency and the
agency's performance in attaining such goals.
[(C) An analysis of any failure to achieve the
Government-wide goals or any individual agency goals
and the actions planned by such agency (and approved by
the Administration) to achieve the goals in the
succeeding fiscal year.
[(D) The number and dollar value of contracts awarded
to small business concerns, small business concerns
owned and controlled by service-disabled veterans,
qualified HUBZone small business concerns, small
business concerns owned and controlled by socially and
economically disadvantaged individuals, and small
business concerns owned and controlled by women
through--
[(i) noncompetitive negotiation,
[(ii) competition restricted to small
business concerns owned and controlled by
socially and economically disadvantaged
individuals,
[(iii) competition restricted to small
business concerns, qualified HUBZone small
business concerns, and
[(iv) unrestricted competitions, for each
agency and on a Government-wide basis.
[(E) The number and dollar value of subcontracts
awarded to small business concerns, small business
concerns owned and controlled by service-disabled
veterans, qualified HUBZone small business concerns,
small business concerns owned and controlled by
socially and economically disadvantaged individuals,
and small business concerns owned and controlled by
women.
[(F) The number and dollar value of prime contracts
and subcontracts awarded to small business concerns
owned and controlled by women.
[(3) The President shall include the information required by
paragraph (2) in each annual report to the Congress on the
state of small business prepared pursuant to section 303(a) of
the Small Business Economic Policy Act of 1980 (15 U.S.C.
631b(a)).]
(g) Goals for Procurement Contracts Awarded to Small Business
Concerns.--
(1) Governmentwide goals.--The President shall
annually establish Governmentwide goals for procurement
contracts awarded to small business concerns, small
business concerns owned and controlled by service-
disabled veterans, qualified HUBZone small business
concerns, small business concerns owned and controlled
by socially and economically disadvantaged individuals,
and small business concerns owned and controlled by
women in accordance with the following:
(A) The Governmentwide goal for participation
by small business concerns shall be established
at not less than 25 percent of the total value
of all prime contract awards for each fiscal
year and 40 percent of the total value of all
subcontract awards for each fiscal year.
(B) The Governmentwide goal for participation
by small business concerns owned and controlled
by service-disabled veterans shall be
established at not less than 3 percent of the
total value of all prime contract and at not
less than 3 percent of the total value of all
subcontract awards for each fiscal year.
(C) The Governmentwide goal for participation
by qualified HUBZone small business concerns
shall be established at not less than 3 percent
of the total value of all prime contract and at
not less than 3 percent of the total value of
all subcontract awards for each fiscal year.
(D) The Governmentwide goal for participation
by small business concerns owned and controlled
by socially and economically disadvantaged
individuals shall be established at not less
than 5 percent of the total value of all prime
contract and at not less than 5 percent of the
total value of all subcontract awards for each
fiscal year.
(E) The Governmentwide goal for participation
by small business concerns owned and controlled
by women shall be established at not less than
5 percent of the total value of all prime
contract and at not less than 5 percent of the
total value of all subcontract awards for each
fiscal year.
(2) Agency goals.--
(A) Establishment.--The head of each Federal
agency shall annually establish, for the agency
that individual heads, goals for procurement
contracts awarded to small business concerns,
small business concerns owned and controlled by
service-disabled veterans, qualified HUBZone
small business concerns, small business
concerns owned and controlled by socially and
economically disadvantaged individuals, and
small business concerns owned and controlled by
women.
(B) Relationship to governmentwide goals.--
(i) Scope.--The goals established by
the head of a Federal agency under
subparagraph (A) shall be in the same
format as the goals established by the
President under paragraph (1) and shall
address both prime contract and
subcontract awards.
(ii) Requirement to meet or exceed
governmentwide goals.--With respect to
each goal for a fiscal year established
under subparagraph (A) for a category
of small business concern, the
participation percentage applicable to
such goal may not be less than the
participation percentage applicable to
the Governmentwide goal for such fiscal
year established under paragraph (1)
for such category.
(C) Consultation required.--
(i) In general.--In establishing
goals under subparagraph (A), the head
of each Federal agency shall consult
with the Administrator.
(ii) Disagreements.--If the
Administrator and the head of a Federal
agency fail to agree on a goal
established under subparagraph (A), the
disagreement shall be submitted to the
Administrator for Federal Procurement
Policy for final determination.
(D) Plan for achieving goals.--After
establishing goals under subparagraph (A) for a
fiscal year, the head of each Federal agency
shall develop a plan for achieving such goals,
which shall apportion responsibilities among
the employees of such agency having procurement
powers.
(E) Expanded participation.--In establishing
goals under subparagraph (A), the head of each
Federal agency shall make a consistent effort
to annually expand participation by small
business concerns from each industry category
in procurement contracts of such agency,
including participation by small business
concerns owned and controlled by service-
disabled veterans, qualified HUBZone small
business concerns, small business concerns
owned and controlled by socially and
economically disadvantaged individuals, and
small business concerns owned and controlled by
women.
(F) Consideration.--The head of each Federal
agency, in attempting to attain expanded
participation under subparagraph (E), shall
consider--
(i) contracts awarded as the result
of unrestricted competition; and
(ii) contracts awarded after
competition restricted to eligible
small business concerns under this
section and under the program
established under section 8(a).
(G) Communication regarding goals.--
(i) Importance of achieving goals.--
Each procurement employee or program
manager described in clause (ii) shall
communicate to the subordinates of the
procurement employee or program manager
the importance of achieving goals
established under subparagraph (A).
(ii) Procurement employees or program
managers described.--A procurement
employee or program manager described
in this clause is a senior procurement
executive, senior program manager, or
Director of Small and Disadvantaged
Business Utilization of a Federal
agency having contracting authority.
(3) Enforcement.--If the Administrator does not issue
the report required in subsection (h)(2) on or before
the date that is 120 days after the end of the prior
fiscal year, the Administrator may not carry out or
establish any pilot program until the date on which the
Administrator issues the report.
(4) Determinations of the total value of contract
awards.--For purposes of the goals established under
paragraphs (1) and (2), the total value of contract
awards for a fiscal year may not be determined in a
manner that excludes the value of a contract based on--
(A) where the contract is awarded;
(B) where the contract is performed;
(C) whether the contract is mandated by
Federal law to be performed by an entity other
than a small business concern;
(D) whether funding for the contract is made
available in an appropriations Act, if the
contract is subject to the Competition in
Contracting Act of 1984; or
(E) whether the contract is subject to the
Federal Acquisition Regulation.
(h) Reporting on Goals for Procurement Contracts Awarded to
Small Business Concerns.--
(1) Agency reports.--At the conclusion of each fiscal
year, the head of each Federal agency shall submit to
the Administrator a report describing--
(A) the extent of the participation by small
business concerns, small business concerns
owned and controlled by veterans (including
service-disabled veterans), qualified HUBZone
small business concerns, small business
concerns owned and controlled by socially and
economically disadvantaged individuals, and
small business concerns owned and controlled by
women in the procurement contracts of such
agency during such fiscal year;
(B) whether the agency achieved the goals
established for the agency under subsection
(g)(2)(A) with respect to such fiscal year; and
(C) any justifications for a failure to
achieve such goals.
(2) Reports by administrator.--Not later than 60 days
after receiving a report from each Federal agency under
paragraph (1) with respect to a fiscal year, the
Administrator shall submit to the President and
Congress, and to make available on a public website, a
report that includes--
(A) a copy of each report submitted to the
Administrator under paragraph (1);
(B) a determination of whether each goal
established by the President under subsection
(g)(1) for such fiscal year was achieved;
(C) a determination of whether each goal
established by the head of a Federal agency
under subsection (g)(2)(A) for such fiscal year
was achieved;
(D) the reasons for any failure to achieve a
goal established under paragraph (1) or (2)(A)
of subsection (g) for such fiscal year and a
description of actions planned by the
applicable agency to address such failure,
except that the Administrator must concur with
each remediation plan;
(E) for the Federal Government and each
Federal agency, an analysis of the number and
dollar amount of prime contracts awarded during
such fiscal year to--
(i) small business concerns--
(I) in the aggregate;
(II) through sole source
contracts;
(III) through competitions
restricted to small business
concerns; and
(IV) through unrestricted
competition;
(ii) small business concerns owned
and controlled by service-disabled
veterans--
(I) in the aggregate;
(II) through sole source
contracts;
(III) through competitions
restricted to small business
concerns;
(IV) through competitions
restricted to small business
concerns owned and controlled
by service-disabled veterans;
and
(V) through unrestricted
competition;
(iii) qualified HUBZone small
business concerns--
(I) in the aggregate;
(II) through sole source
contracts;
(III) through competitions
restricted to small business
concerns;
(IV) through competitions
restricted to qualified HUBZone
small business concerns;
(V) through unrestricted
competition where a price
evaluation preference was used;
and
(VI) through unrestricted
competition where a price
evaluation preference was not
used;
(iv) small business concerns owned
and controlled by socially and
economically disadvantaged
individuals--
(I) in the aggregate;
(II) through sole source
contracts;
(III) through competitions
restricted to small business
concerns;
(IV) through competitions
restricted to small business
concerns owned and controlled
by socially and economically
disadvantaged individuals;
(V) through unrestricted
competition; and
(VI) by reason of that
concern's certification as a
small business owned and
controlled by socially and
economically disadvantaged
individuals;
(v) small business concerns owned by
an Alaska Native Corporation--
(I) in the aggregate;
(II) through sole source
contracts;
(III) through competitions
restricted to small business
concerns;
(IV) through competitions
restricted to small business
concerns owned and controlled
by socially and economically
disadvantaged individuals; and
(V) through unrestricted
competition; and
(vi) small business concerns owned
and controlled by women--
(I) in the aggregate;
(II) through competitions
restricted to small business
concerns;
(III) through competitions
restricted using the authority
under section 8(m)(2);
(IV) through competitions
restricted using the authority
under section 8(m)(2) and in
which the waiver authority
under section 8(m)(3) was used;
and
(V) through unrestricted
competition; and
(F) for the Federal Government and each
Federal agency, the number, dollar amount, and
distribution with respect to the North American
Industry Classification System of subcontracts
awarded during such fiscal year to small
business concerns, small business concerns
owned and controlled by service-disabled
veterans, qualified HUBZone small business
concerns, small business concerns owned and
controlled by socially and economically
disadvantaged individuals, and small business
concerns owned and controlled by women.
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