[Senate Report 114-288]
[From the U.S. Government Publishing Office]
Calendar No. 106
114th Congress } { Report
SENATE
2d Session } { 114-288
======================================================================
SMALL BUSINESS FAIRNESS ACT OF 2015
_______
June 28, 2016.--Ordered to be printed
_______
Mr. Vitter, from the Committee on Small Business and Entrepreneurship,
submitted the following
R E P O R T
[To accompany S. 958]
The Committee on Small Business and Entrepreneurship, to
which was referred the bill (S. 958) to amend the Small
Business Act to provide for team and joint venture offers for
certain contracts, having considered the same, reports
favorably thereon with an amendment in the nature of a
substitute and recommends that the bill, as amended, do pass.
I. INTRODUCTION
The Small Business Fairness Act (S. 958) was introduced by
Senator Enzi, with original co-sponsorship from Senator Casey,
on April 15, 2015.
The Small Business Fairness Act enhances small businesses'
ability to compete for federal contracting opportunities. It
does so by changing how agencies consider small business
teaming and joint ventures in relation to small business
contracting goals and prior experience of the small business
within the teaming or joint venture.
During the markup of the bill, the Vitter amendment to the
bill was approved unanimously by voice vote. The Vitter
amendment provides that prior experience shall be taken into
consideration when assessing a firm's ability to bid as part of
a team. The bill, as amended, was also approved unanimously by
voice vote.
II. HISTORY (PURPOSE & NEED FOR LEGISLATION)
Teaming and joint venture allowances for small businesses
are designed to enhance small businesses' ability to compete
for federal contracting opportunities. The Small Business Act
encourages small businesses to team and joint venture, and the
SBA will approve joint ventures to facilitate small businesses
participating on federal contracts. In the 112th Congress, the
Committee-passed legislation that was included in the FY 2012
National Defense Authorization Act to make it easier for small
businesses to team by changing the limitations on
subcontracting. However, small businesses that do team and
joint venture are often unsuccessful at winning contracts when
the agency will only consider the past performance or financial
responsibility of the joint venture or the prime contractor,
not the small business members of the joint venture or the
parties to the team. As many joint ventures are unpopulated,
this all but disqualifies the small business from competition.
Similar or identical legislation was introduced by Senators
Enzi and Casey in June of 2013 (S. 1190) and May of 2011 (S.
1110).
III. HEARINGS & ROUNDTABLES
112th Congress
In the 112th Congress, the Committee held a hearing
entitled ``Creating Jobs and Growing the Economy: Legislative
Proposals to Strengthen the Entrepreneurial Ecosystem'' on
November 29, 2012. Various testimonies recognized the need for
reforming the way in which government contracts with small
businesses are implemented and regulated, and discussed a
number of potential improvements that could be made via
legislation. However, the vast majority of the changes
discussed only dealt with the size and scope of contracts,
rather than how the businesses are considered and selected.
IV. DESCRIPTION OF BILL
The bill permits agencies to count towards their small
business contracting goals contracts awarded under teaming
arrangements where a small business works with a prime
contractor to perform the work under the agreement. This
legislation requires agencies to give due consideration to the
capabilities and past performance of the small businesses that
submit offers as teams or joint ventures. This will allow more
small businesses to compete for contracts.
The amendment clarifies that prior experience shall be
taken into consideration when assessing a firm's ability to bid
as part of a team.
V. COMMITTEE VOTE
In compliance with rule XXVI (7)(b) of the Standing Rules
of the Senate, the following vote was recorded on April 23,
2015.
A motion to adopt the Small Business Fairness Act of 2015,
a bill to amend the Small Business Act to provide for team and
joint venture offers for certain contracts, as amended by the
Vitter amendment, was approved unanimously by voice vote with
the following Senators present: Senators Vitter, Risch,
Fischer, Gardner, Ernst, Ayotte, Enzi, Shaheen, Cantwell,
Cardin, Heitkamp, Booker, Coons, Hirono, and Peters.
VI. COST ESTIMATE
In compliance with rule XXVI (11)(a)(1) of the Standing
Rules of the Senate, the Committee estimates the cost of the
legislation will be equal to the amounts discussed in the
following letter from the Congressional Budget Office:
June 9, 2015.
Hon. David Vitter,
Chairman, Committee on Small Business and Entrepreneurship,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 958, the Small
Business Fairness Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Matthew
Pickford.
Sincerely,
Keith Hall.
Enclosure.
S. 958--Small Business Fairness Act
Summary: S. 958 would amend the Small Business Act to allow
small businesses to join together to submit bids for federal
contracts. The Small Business Administration (SBA) would have
one year to issue regulations to implement this authority.
CBO estimates that implementing S. 958 would increase the
administrative costs of federal agencies by $25 million over
the 2016-2020 period, assuming the availability of appropriated
funds. Enacting S. 958 could affect direct spending by some
agencies (such as the Tennessee Valley Authority) because they
are authorized to use receipts from the sale of goods, fees,
and other collections to cover their operating costs.
Therefore, pay-as-you-go procedures apply. Because most of
those agencies can make adjustments to the amounts collected as
operating costs change, CBO estimates that any net changes in
direct spending by those agencies would not be significant.
Enacting the bill would not affect revenues.
S. 958 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would not affect the budgets of state, local, or tribal
governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of S. 958 is shown in the following table. The
costs of this legislation would fall within budget functions
050 (national defense), 800 (general government) and all other
budget functions that include administrative costs for
procurement.
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
------------------------------------------------------------
2016 2017 2018 2019 2020 2016-2020
----------------------------------------------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Estimated Authorization Level...................... 10 6 3 3 3 25
Estimated Outlays.................................. 10 6 3 3 3 25
----------------------------------------------------------------------------------------------------------------
Basis of estimate: For this estimate, CBO assumes that S.
958 will be enacted in late 2015 and that spending will follow
historical patterns for similar activities.
S. 958 would amend the Small Business Act to allow small
businesses to join together to submit bids for bundled,
consolidated, and multiple-award federal contracts. When
evaluating procurement bids, the legislation would require
agencies to consider the capabilities, prior experience, and
past performance of the joint team of small businesses
collectively. A small business participating in such a joint
bid would still be considered a small business.
Using information from the Office of Personnel Management,
CBO estimates that more than 36,000 federal employees are
responsible for administering the procurement of goods and
services for the government at a cost of more than $3 billion
annually. Based on information from SBA and the General
Services Administration (GSA) about the costs of prior
modifications to federal procurement laws, CBO estimates that
implementing S. 958 would cost $25 million over the 2016-2020
period. Most of those amounts would be used to train
procurement staff on new rules for evaluating procurement bids
from teams of small businesses. Federal agencies also would
need to modify their computer systems used in the procurement
process to accommodate the small business teams. In subsequent
years federal procurement offices would need to issue new
certifications to confirm that teams of small businesses
qualify as small businesses under procurement laws. Under S.
958, CBO expects that agencies would continue to procure goods
and services at the lowest price available; therefore, we
estimate that implementing S. 958 would not significantly
increase the cost of goods and services procured by the federal
government.
Pay-As-You-Go considerations: The Statutory Pay-As-You-Go
Act of 2010 establishes budget-reporting and enforcement
procedures for legislation affecting direct spending or
revenues. Enacting S. 958 could affect direct spending by some
agencies (such as the Tennessee Valley Authority) because they
are authorized to use receipts from the sale of goods, fees,
and other collections to cover their operating costs.
Therefore, pay-as-you-go procedures apply. Because most of
those agencies can adjust the amounts collected as operating
costs change, CBO estimates that any net changes in direct
spending by those agencies would not be significant. Enacting
the bill would not affect revenues.
Intergovernmental and private-sector impact: S. 958
contains no intergovernmental or private-sector mandates as
defined in UMRA and would not affect the budgets of state,
local, or tribal governments.
Estimate prepared by: Federal costs: Matthew Pickford;
Impact on state, local, and tribal governments: Logan Smith;
Impact on the private sector: Melissa Merrell.
Estimate approved by: Theresa Gullo, Assistant Director for
Budget Analysis.
VII. EVALUATION OF REGULATORY IMPACT
In compliance with rule XXVI (11)(b) of the Standing Rules
of the Senate, it is the opinion of the Committee that no
significant additional regulatory impact will be incurred in
carrying out the provisions of this legislation. There will be
no additional impact on the personal privacy of companies or
individuals who utilize the services provided.
VIII. SECTION-BY-SECTION ANALYSIS
Section 1. Title
This section provides the title, the ``Small Business
Fairness Act of 2015''.
Section 2. Joint venturing and teaming
Section 2(a)--Amends Section 15(e)(4) of the Small Business
Act, which allows small businesses to bid as a joint venture or
team on a bundled or consolidated contract. While the Small
Business Act already allows small business teams and joint
ventures to bid on consolidated or bundled contracts, it does
not address how agencies should evaluate these proposals.
New paragraph (4)(A)--Reaffirms that small businesses may
joint venture and team for these contracts, as currently
provided in paragraph (4).
New paragraph (4)(B)--Requires agencies to consider the
capability of all members of a small business joint venture or
team. Specifically, clause (i) requires that agencies consider
the capabilities of first tier subcontractors when a small
business prime contractor teams with other small businesses.
Clause (ii) requires that when two or more small businesses
form a joint venture to bid on a bundled or consolidated
contract, the agency must consider the capabilities, prior
experience, and past performance of the members of the joint
venture. This is particularly important, since most small
business joint ventures are not populated.
New paragraph (4)(C)--Reaffirms that when small businesses
joint venture or team to compete for bundled and consolidated
contracts, the Small Business Administration (SBA) cannot find
that they are no longer small as a result of that joint venture
or team.
Section 2(b)--Amends Section 15(q)(1) of the Small Business
Act, which allows small businesses to bid as a joint venture or
team on multiple award contracts. While the Small Business Act
already allows small business teams and joint ventures to bid
on multiple award contracts, it does not address how agencies
should evaluate these proposals.
Paragraph (1)--Changes the title of subsection (q)(1) to
better reflect its purpose.
Paragraph (2)--Renumbers the subsection and adds:
The new paragraph (B) requires that agencies consider the
capabilities of first tier subcontractors when a small business
prime contractor teams with other small businesses.
New paragraph (C) requires that when two or more small
businesses form a joint venture to bid on a bundled or
consolidated contract, the agency must consider the
capabilities, prior experience, and past performance of the
members of the joint venture.
New paragraph (D) requires that if competition for the
contract was limited to small businesses, women-owned small
businesses, HUBZones, or service-disabled veteran-owned small
businesses, the composition of the team or joint venture must
be reassessed each year to make sure the team or joint venture
qualifies for the contact, unless the contract was awarded
under an approved mentor-protege program.
Section 2(c)--Requires that SBA complete any necessary
rulemakings to implement this change within one year.
[all]