[House Report 114-704]
[From the U.S. Government Publishing Office]
114th Congress } { Rept. 114-704
HOUSE OF REPRESENTATIVES
2d Session } {Part 1
======================================================================
DEFENDING AMERICA'S SMALL CONTRACTORS ACT OF 2016
_______
July 25, 2016.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Chabot, from the Committee on Small Business, submitted the
following
R E P O R T
[To accompany H.R. 4341]
The Committee on Small Business, to whom was referred the
bill (H.R. 4341) to amend the Small Business Act to improve
transparency and clarity for small businesses, to clarify the
role of small business advocates, to increase opportunities for
competition in subcontracting, and for other purposes, having
considered the same, report favorably thereon with an amendment
and recommend that the bill as amended do pass.
CONTENTS
I. Amendment.......................................................1
II. Purpose of the Bill and Summary................................15
III. Background and the Need for Legislation........................15
IV. Hearings.......................................................47
V. Committee Consideration........................................48
VI. Committee Votes................................................49
VII. Section-by-Section Analysis of H.R. 3850.......................49
VIII. Congressional Budget Cost Estimate.............................58
IX. Unfunded Mandates..............................................58
X. New Budget Authority, Entitlement Authority, and Tax Expenditur58
XI. Oversight Findings.............................................58
XII. Statement of Constitutional Authority..........................58
XIII. Congressional Accountability Act...............................59
XIV. Federal Advisory Committee Statement...........................59
XV. Statement of No Earmarks.......................................59
XVI. Performance Goals and Objectives...............................59
XVII. Changes in Existing Law Made by the Bill, as Reported..........59
I. Amendment
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
(a) Short Title.--This Act may be cited as the ``Defending America's
Small Contractors Act of 2016''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title.
TITLE I--IMPROVING TRANSPARENCY AND CLARITY FOR SMALL BUSINESSES
Sec. 101. Plain language rewrite of requirements for small business
procurements.
Sec. 102. Improving reporting on small business goals.
Sec. 103. Transparency in small business goals.
Sec. 104. Uniformity in procurement terminology.
TITLE II--CLARIFYING THE ROLES OF SMALL BUSINESS ADVOCATES
Sec. 201. Scope of review by procurement center representatives.
Sec. 202. Responsibilities of Commercial Market Representatives.
Sec. 203. Duties of the Office of Small and Disadvantaged Business
Utilization.
Sec. 204. Improving contractor compliance.
Sec. 205. Responsibilities of Business Opportunity Specialists.
TITLE III--STRENGTHENING OPPORTUNITIES FOR COMPETITION IN
SUBCONTRACTING
Sec. 301. Good faith in subcontracting.
Sec. 302. Pilot program to provide opportunities for qualified
subcontractors to obtain past performance ratings.
TITLE IV--MENTOR-PROTEGE PROGRAMS
Sec. 401. Amendments to the Mentor-Protege Program of the Department of
Defense.
Sec. 402. Improving cooperation between the mentor-protege programs of
the Small Business Administration and the Department of Defense.
TITLE V--MISCELLANEOUS
Sec. 501. Improving education on small business regulations.
Sec. 502. Protecting task order competition.
Sec. 503. Improvements to size standards for small agricultural
producers.
Sec. 504. Uniformity in service-disabled veteran definitions.
Sec. 505. GAO review of the Office of Government Contracting and
Business Development of the Small Business Administration.
Sec. 506. Required reports pertaining to capital planning and
investment control.
Sec. 507. GAO review of surety bonds.
TITLE I--IMPROVING TRANSPARENCY AND CLARITY FOR SMALL BUSINESSES
SEC. 101. PLAIN LANGUAGE REWRITE OF REQUIREMENTS FOR SMALL BUSINESS
PROCUREMENTS.
Section 15(a) of the Small Business Act (15 U.S.C. 644(a)) is amended
to read as follows:
``(a) Small Business Procurements.--
``(1) In general.--For purposes of this Act, small business
concerns shall receive any award or contract if such award or
contract is, in the determination of the Administrator and the
contracting agency, in the interest of--
``(A) maintaining or mobilizing the full productive
capacity of the United States;
``(B) war or national defense programs; or
``(C) assuring that a fair proportion of the total
purchase and contracts for goods and services of the
Government in each industry category (as described
under paragraph (2)) are awarded to small business
concerns.
``(2) Industry category defined.--
``(A) In general.--In this subsection, the term
`industry category' means a discrete group of similar
goods and services, as determined by the Administrator
in accordance with the North American Industry
Classification System codes used to establish small
business size standards, except that the Administrator
shall limit an industry category to a greater extent
than provided under the North American Industry
Classification codes if the Administrator receives
evidence indicating that further segmentation of the
industry category is warranted--
``(i) due to special capital equipment needs;
``(ii) due to special labor requirements;
``(iii) due to special geographic
requirements, except as provided in
subparagraph (B);
``(iv) due to unique Federal buying patterns
or requirements; or
``(v) to recognize a new industry.
``(B) Exception for geographic requirements.--The
Administrator may not further segment an industry
category based on geographic requirements unless--
``(i) the Government typically designates the
geographic area where work for contracts for
goods or services is to be performed;
``(ii) Government purchases comprise the
major portion of the entire domestic market for
such goods or services; and
``(iii) it is unreasonable to expect
competition from business concerns located
outside of the general geographic area due to
the fixed location of facilities, high
mobilization costs, or similar economic
factors.
``(3) Determinations with respect to awards or contracts.--
Determinations made pursuant to paragraph (1) may be made for
individual awards or contracts, any part of an award or
contract or task order, or for classes of awards or contracts
or task orders.
``(4) Increasing prime contracting opportunities for small
business concerns.--
``(A) Description of covered proposed procurements.--
The requirements of this paragraph shall apply to a
proposed procurement that includes in its statement of
work goods or services currently being supplied or
performed by a small business concern and, as
determined by the Administrator--
``(i) is in a quantity or of an estimated
dollar value which makes the participation of a
small business concern as a prime contractor
unlikely;
``(ii) in the case of a proposed procurement
for construction, if such proposed procurement
seeks to bundle or consolidate discrete
construction projects; or
``(iii) is a solicitation that involves an
unnecessary or unjustified bundling of contract
requirements.
``(B) Notice to procurement center representatives.--
With respect to proposed procurements described in
subparagraph (A), at least 30 days before issuing a
solicitation and concurrent with other processing steps
required before issuing the solicitation, the
contracting agency shall provide a copy of the proposed
procurement to the procurement center representative of
the contracting agency (as described in subsection (l))
along with a statement explaining--
``(i) why the proposed procurement cannot be
divided into reasonably small lots (not less
than economic production runs) to permit offers
on quantities less than the total requirement;
``(ii) why delivery schedules cannot be
established on a realistic basis that will
encourage the participation of small business
concerns in a manner consistent with the actual
requirements of the Government;
``(iii) why the proposed procurement cannot
be offered to increase the likelihood of the
participation of small business concerns;
``(iv) in the case of a proposed procurement
for construction, why the proposed procurement
cannot be offered as separate discrete
projects; or
``(v) why the agency has determined that the
bundling of contract requirements is necessary
and justified.
``(C) Alternatives to increase prime contracting
opportunities for small business concerns.--If the
procurement center representative believes that the
proposed procurement will make the participation of
small business concerns as prime contractors unlikely,
the procurement center representative, within 15 days
after receiving the statement described in subparagraph
(B), shall recommend to the contracting agency
alternative procurement methods for increasing prime
contracting opportunities for small business concerns.
``(D) Failure to agree on an alternative procurement
method.--If the procurement center representative and
the contracting agency fail to agree on an alternative
procurement method, the Administrator shall submit the
matter to the head of the appropriate department or
agency for a determination.
``(5) Contracts for sale of government property.--With
respect to a contract for the sale of Government property,
small business concerns shall receive any such contract if, in
the determination of the Administrator and the disposal agency,
the award of such contract is in the interest of assuring that
a fair proportion of the total sales of Government property be
made to small business concerns.
``(6) Sale of electrical power or other propery.--Nothing in
this subsection shall be construed to change any preferences or
priorities established by law with respect to the sale of
electrical power or other property by the Federal Government.
``(7) Costs exceeding fair market price.--A contract may not
be awarded under this subsection if the cost of the contract to
the awarding agency exceeds a fair market price.''.
SEC. 102. IMPROVING REPORTING ON SMALL BUSINESS GOALS.
Section 15(h)(2)(E) of the Small Business Act (15 U.S.C.
644(h)(2)(E)) is amended--
(1) in clause (i)--
(A) in subclause (III), by striking ``and'' at the
end; and
(B) by adding at the end the following new
subclauses:
``(V) that were purchased by another
entity after the initial contract was
awarded and as a result of the
purchase, would no longer be deemed to
be small business concerns for purposes
of the initial contract; and
``(VI) that were awarded using a
procurement method that restricted
competition to 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, small business concerns
owned and controlled by women, or a
subset of any such concerns;'';
(2) in clause (ii)--
(A) in subclause (IV), by striking ``and'' at the
end; and
(B) by adding at the end the following new
subclauses:
``(VI) that were purchased by another
entity after the initial contract was
awarded and as a result of the
purchase, would no longer be deemed to
be small business concerns owned and
controlled by service-disabled veterans
for purposes of the initial contract;
and
``(VII) that were awarded using a
procurement method that restricted
competition to qualified HUBZone small
business concerns, small business
concerns owned and controlled by
socially and economically disadvantaged
individuals, small business concerns
owned and controlled by women, or a
subset of any such concerns;'';
(3) in clause (iii)--
(A) in subclause (V), by striking ``and'' at the end;
and
(B) by adding at the end the following new
subclauses:
``(VII) that were purchased by
another entity after the initial
contract was awarded and as a result of
the purchase, would no longer be deemed
to be qualified HUBZone small business
concerns for purposes of the initial
contract; and
``(VIII) that were awarded using a
procurement method that restricted
competition to small business concerns
owned and controlled by service-
disabled veterans, small business
concerns owned and controlled by
socially and economically disadvantaged
individuals, small business concerns
owned and controlled by women, or a
subset of any such concerns;'';
(4) in clause (iv)--
(A) in subclause (V), by striking ``and'' at the end;
and
(B) by adding at the end the following new
subclauses:
``(VII) that were purchased by
another entity after the initial
contract was awarded and as a result of
the purchase, would no longer be deemed
to be small business concerns owned and
controlled by socially and economically
disadvantaged individuals for purposes
of the initial contract; and
``(VIII) that were awarded using a
procurement method that restricted
competition to small business concerns
owned and controlled by service-
disabled veterans, qualified HUBZone
small business concerns, small business
concerns owned and controlled by women,
or a subset of any such concerns;'';
(5) in clause (v)--
(A) in subclause (IV), by striking ``and'' at the
end;
(B) in subclause (V), by inserting ``and'' at the
end; and
(C) by adding at the end the following new subclause:
``(VI) that were purchased by another
entity after the initial contract was
awarded and as a result of the
purchase, would no longer be deemed to
be small business concerns owned by an
Indian tribe other than an Alaska
Native Corporation for purposes of the
initial contract;'';
(6) in clause (vi)--
(A) in subclause (IV), by striking ``and'' at the
end; and
(B) by adding at the end the following new subclause:
``(VI) that were purchased by another
entity after the initial contract was
awarded and as a result of the
purchase, would no longer be deemed to
be small business concerns owned by a
Native Hawaiian Organization for
purposes of the initial contract;'';
(7) in clause (vii)--
(A) in subclause (IV), by striking ``and'' at the
end; and
(B) by adding at the end the following new subclause:
``(VI) that were purchased by another
entity after the initial contract was
awarded and as a result of the
purchase, would no longer be deemed to
be small business concerns owned by an
Alaska Native Corporation for purposes
of the initial contract; and''; and
(8) in clause (viii)--
(A) in subclause (VII), by striking ``and'' at the
end;
(B) in subclause (VIII), by striking ``and'' at the
end; and
(C) by adding at the end the following new
subclauses:
``(IX) that were purchased by another
entity after the initial contract was
awarded and as a result of the
purchase, would no longer be deemed to
be small business concerns owned and
controlled by women for purposes of the
initial contract; and
``(X) that were awarded using a
procurement method that restricted
competition to 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, or a subset of any such
concerns; and''.
SEC. 103. TRANSPARENCY IN SMALL BUSINESS GOALS.
Section 15(g) of the Small Business Act is amended by adding at the
end the following new paragraph:
``(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 requirements of chapter 33 of title 41,
United States Code, or chapter 137 of title 10, United
States Code, and the Federal Acquisition Regulation; or
``(E) whether the contract is otherwise subject to
the Federal Acquisition Regulation.''.
SEC. 104. UNIFORMITY IN PROCUREMENT TERMINOLOGY.
(a) In General.--Section 15(j)(1) of the Small Business Act (15
U.S.C. 644(j)(1)) is amended by striking ``greater than $2,500 but not
greater than $100,000'' and inserting ``greater than the micro-purchase
threshold, but not greater than the simplified acquisition threshold''.
(b) Technical Amendment.--Section 3(m) of the Small Business Act (15
U.S.C. 632(m)) is amended to read as follows:
``(m) Definitions Pertaining to Contracting.--In this Act:
``(1) Prime contract.--The term `prime contract' has the
meaning given such term in section 8701(4) of title 41, United
States Code.
``(2) Prime contractor.--The term `prime contractor' has the
meaning given such term in section 8701(5) of title 41, United
States Code.
``(3) Simplified acquisition threshold.--The term `simplified
acquisition threshold' has the meaning given such term in
section 134 of title 41, United States Code.
``(4) Micro-purchase threshold.--The term `micro-purchase
threshold' has the meaning given such term in section 1902(a)
of title 41, United States Code.
``(5) Total purchase and contracts for property and
services.--The term `total purchases and contracts for property
and services' shall mean total number and total dollar amount
of contracts and orders for property and services.''.
TITLE II--CLARIFYING THE ROLES OF SMALL BUSINESS ADVOCATES
SEC. 201. SCOPE OF REVIEW BY PROCUREMENT CENTER REPRESENTATIVES.
Section 15(l) of the Small Business Act (15 U.S.C. 644(l)) is amended
by adding at the end the following:
``(9) Scope of review.--The Administrator shall not limit the
scope of review by the Procurement Center Representative for
any solicitation of a contract or task order without regard to
whether the contract or task order or part of the contract or
task order is set aside for small business concerns, whether 1
or more contract or task order awards are reserved for small
business concerns under a multiple award contract, or whether
or not the solicitation would result in a bundled or
consolidated contract (as defined in subsection (s)) or a
bundled or consolidated task order.''.
SEC. 202. RESPONSIBILITIES OF COMMERCIAL MARKET REPRESENTATIVES.
Section 4(h) of the Small Business Act (as added by section 865 of
the National Defense Authorization Act for Fiscal Year 2016 (Public Law
114-92)) is amended--
(1) in the subsection heading, by striking ``Certification
Requirements for'';
(2) in paragraph (2), by redesignating subparagraphs (A) and
(B) as clauses (i) and (ii), respectively (and conforming the
margins accordingly);
(3) by amending clause (ii) (as so redesignated) to read as
follows:
``(ii) Application.--The requirements of
clause (i) shall be included in any initial job
posting for the position of a commercial market
representative and shall apply to any person
appointed as a commercial market representative
after November 25, 2015.'';
(4) in clause (i) (as so redesignated), by striking
``paragraph (1)'' and inserting ``subparagraph (A)'';
(5) by redesignating paragraphs (1) and (2) as subparagraphs
(A) and (B), respectively (and conforming the margins
accordingly);
(6) in subparagraph (A) (as so redesignated), by striking
``paragraph (2)'' and inserting ``subparagraph (B)''; and
(7) by inserting before subparagraph (A) (as so redesignated)
the following:
``(1) Duties.--The principal duties of a Commercial Market
Representative employed by the Administrator and reporting to
the senior official appointed by the Administrator with
responsibilities under sections 8, 15, 31, and 36 (or the
designee of such official) shall be to advance the policies
established in section 8(d)(1) relating to subcontracting. Such
duties shall include--
``(A) helping prime contractors to find small
business concerns that are capable of performing
subcontracts;
``(B) for contractors awarded contracts containing
the clause described in section 8(d)(3), providing--
``(i) counseling on the contractor's
responsibility to maximize subcontracting
opportunities for small business concerns;
``(ii) instruction on methods and tools to
identify potential subcontractors that are
small business concerns; and
``(iii) assistance to increase awards to
subcontractors that are small business concerns
through visits, training, and reviews of past
performance;
``(C) providing counseling on how a small business
concern may promote its capacity to contractors awarded
contracts containing the clause described in section
8(d)(3); and
``(D) conducting periodic reviews of contractors
awarded contracts containing the clause described in
section 8(d)(3) to assess compliance with
subcontracting plans required under section 8(d)(6).
``(2) Certification requirements.--''.
SEC. 203. DUTIES OF THE OFFICE OF SMALL AND DISADVANTAGED BUSINESS
UTILIZATION.
Section 15(k) of the Small Business Act (15 U.S.C. 644(k)), as
amended by section 870 of the National Defense Authorization Act for
Fiscal Year 2016 (Public Law 114-92), is amended--
(1) by striking ``section 8, 15 or 44'' and inserting
``section 8, 15, 31, 36, or 44'';
(2) by striking ``sections 8 and 15'' each place such term
appears and inserting ``sections 8, 15, 31, 36, and 44'';
(3) in paragraph (10), by striking ``section 8(a)'' and
inserting ``section 8, 15, 31, or 36'';
(4) by redesignating paragraphs (15), (16), and (17) as
paragraphs (16), (17), and (18), respectively;
(5) by inserting after paragraph (14) the following new
paragraph:
``(15) shall review purchases made by the agency greater than
the micro-purchase threshold, and less than the simplified
acquisition threshold to ensure that the purchases have been
made in compliance with the provisions of this Act and have
been properly recorded in the Federal Procurement Data System,
if the method of payment is a purchase card issued by the
Department of Defense pursuant to section 2784 of title 10,
United States Code, or by the head of an executive agency
pursuant to section 1909 of title 41, United States Code;'';
and
(6) in paragraph (17) (as so redesignated)--
(A) in subparagraph (B), by striking ``and'' at the
end;
(B) in subparagraph (C), by striking the period at
the end and inserting ``; and''; and
(C) by adding at the end the following new
subparagraph:
``(D) any failure of the agency to comply with
section 8, 15, 31, or 36.''.
SEC. 204. IMPROVING CONTRACTOR COMPLIANCE.
(a) Requirements for the Office of Small and Disadvantaged Business
Utilization.--Section 15(k) of the Small Business Act (15 U.S.C.
644(k)(8)), as amended by section 203, is further amended--
(1) by redesignating paragraphs (16), (17), and (18) as
paragraphs (17), (18), and (19), respectively; and
(2) by inserting after paragraph (15) the following new
paragraph:
``(16) shall provide assistance to a small business concern
awarded a contract or subcontract under this Act or under title
10 or title 41, United States Code, in finding resources for
education and training on compliance with contracting
regulations (including the Federal Acquisition Regulation)
after award of such a contract or subcontract.''.
(b) Requirements Under the Mentor-Protege Program of the Department
of Defense.--Section 831(e)(1) of the National Defense Authorization
Act for Fiscal Year 1991 (Public Law 101-510; 104 Stat. 1607; 10 U.S.C.
2302 note) is amended--
(1) in subparagraph (B), by striking ``and'' at the end;
(2) in subparagraph (C), by striking the period at the end
and inserting ``; and''; and
(3) by inserting at the end the following new subparagraph:
``(D) the assistance the mentor firm will provide to
the protege firm in understanding contract regulations
of the Federal Government and the Department of Defense
(including the Federal Acquisition Regulation and the
Defense Federal Acquisition Regulation Supplement)
after award of a subcontract under this section, if
applicable.''.
(c) Resources for Small Business Concerns.--Section 15 of the Small
Business Act (15 U.S.C. 644) is amended by adding at the end the
following new subsection:
``(t) Post-Award Compliance Resources.--The Administrator shall
provide to small business development centers and entities
participating in the Procurement Technical Assistance Cooperative
Agreement Program under chapter 142 of title 10, United States Code,
and shall make available on the website of the Administration, a list
of resources for small business concerns seeking education and
assistance on compliance with contracting regulations (including the
Federal Acquisition Regulation) after award of a contract or
subcontract.''.
(d) Requirements for Procurement Center Representatives.--Section
15(l)(2) of the Small Business Act (15 U.S.C. 644(l)(2)) is amended--
(1) by redesignating subparagraph (I) as subparagraph (J);
(2) in subparagraph (H), by striking ``and'' at the end; and
(3) by inserting after subparagraph (H) the following new
subparagraph:
``(I) assist small business concerns with finding
resources for education and training on compliance with
contracting regulations (including the Federal
Acquisition Regulation) after award of a contract or
subcontract; and''.
(e) Requirements Under the Mentor-Protege Program of the Small
Business Administration.--Section 45(b)(3) of the Small Business Act
(15 U.S.C. 657r(b)(3)) is amended by adding at the end the following
new subparagraph:
``(K) The extent to which assistance with compliance
with the requirements of contracting with the Federal
Government after award of a contract or subcontract
under this section.''.
SEC. 205. RESPONSIBILITIES OF BUSINESS OPPORTUNITY SPECIALISTS.
Section 4(g) of the Small Business Act (as added by section 865 of
the National Defense Authorization Act for Fiscal Year 2016 (Public Law
114-92)) is amended--
(1) in the subsection heading, by striking ``Certification
Requirements for'';
(2) in paragraph (2), by redesignating subparagraphs (A) and
(B) as clauses (i) and (ii), respectively (and conforming the
margins accordingly);
(3) by amending clause (ii) (as so redesignated) to read as
follows:
``(ii) Application.--The requirements of
clause (i) shall be included in any initial job
posting for the position of a Business
Opportunity Specialist and shall apply to any
person appointed as a Business Opportunity
Specialist after January 3, 2013.'';
(4) in clause (i) (as so redesignated), by striking
``paragraph (1)'' and inserting ``subparagraph (A)''
(5) by redesignating paragraphs (1) and (2) as subparagraphs
(A) and (B), respectively (and conforming the margins
accordingly);
(6) in subparagraph (A) (as so redesignated), by striking
``paragraph (2)'' and inserting ``subparagraph (B)''; and
(7) by inserting before subparagraph (A) (as so redesignated)
the following:
``(1) Duties.--The exclusive duties of a Business Opportunity
Specialist employed by the Administrator and reporting to the
senior official appointed by the Administrator with
responsibilities under sections 8, 15, 31, and 36 (or the
designee of such official) shall be to implement sections 7, 8,
and 45 and to complete other duties related to contracting
programs under this Act. Such duties shall include--
``(A) with respect to small business concerns
eligible to receive contracts and subcontracts pursuant
to section 8(a)--
``(i) providing guidance, counseling, and
referrals for assistance with technical,
management, financial, or other matters that
will improve the competitive viability of such
concerns;
``(ii) identifying causes of success or
failure of such concerns;
``(iii) providing comprehensive assessments
of such concerns, including identifying the
strengths and weaknesses of such concerns;
``(iv) monitoring and documenting compliance
with the requirements of sections 7 and 8 and
any regulations implementing those sections;
``(v) explaining the requirements of sections
7, 8, 15, 31, 36 and 45; and
``(vi) advising on compliance with
contracting regulations (including the Federal
Acquisition Regulation) after award of such a
contract or subcontract;
``(B) reviewing and monitoring compliance with
mentor-protege agreements under section 45;
``(C) representing the interests of the Administrator
and small business concerns in the award, modification,
and administration of contracts and subcontracts
awarded pursuant to section 8(a); and
``(D) reporting fraud or abuse under section 7, 8,
15, 31, 36 or 45 or any regulations implementing such
sections.
``(2) Certification requirements.--''.
TITLE III--STRENGTHENING OPPORTUNITIES FOR COMPETITION IN
SUBCONTRACTING
SEC. 301. GOOD FAITH IN SUBCONTRACTING.
(a) Transparency in Subcontracting Goals.--Section 8(d)(9) of the
Small Business Act (15 U.S.C. 637(d)(9)) is amended--
(1) by striking ``(9) The failure'' and inserting the
following:
``(9) Material breach.--The failure'';
(2) in subparagraph (A), by striking ``or'' at the end;
(3) in subparagraph (B), by inserting ``or'' at the end; and
(4) by inserting after subparagraph (B) the following:
``(C) assurances provided under paragraph (6)(E),''.
(b) Authority of the Administrator of the Small Business
Administration.--Section 8(d)(11) of the Small Business Act (15 U.S.C.
637(d)(11)) is amended--
(1) by striking ``(11) In the case of'' and inserting the
following:
``(11) Authority of administrator.--In the case of''; and
(2) in subparagraph (B), by striking ``, which shall be
advisory in nature,''.
(c) Review and Acceptance of Subcontracting Plans.--Section 8(d) of
the Small Business Act (15 U.S.C. 637(d)) is amended by adding at the
end the following:
``(17) Review and acceptance of subcontracting plans.--
``(A) Definition.--In this paragraph, the term
`covered small business concerns' means--
``(i) small business concerns;
``(ii) qualified HUBZone small business
concerns;
``(iii) small business concerns owned and
controlled by veterans;
``(iv) small business concerns owned and
controlled by service-disabled veterans;
``(v) small business concerns owned and
controlled by socially and economically
disadvantaged individuals, as defined in
paragraph (3)(C); and
``(vi) small business concerns owned and
controlled by women.
``(B) Delayed acceptance of plan.--Except as provided
in subparagraph (E), if a procurement center
representative or commercial market representative
determines that a subcontracting plan required under
paragraph (4) or (5) fails to provide the maximum
practicable opportunity for covered small business
concerns to participate in the performance of the
contract to which the plan applies, the representative
may delay acceptance of the plan in accordance with
subparagraph (C).
``(C) Process for delayed acceptance.--
``(i) In general.--Except as provided in
clause (ii), a procurement center
representative or commercial market
representative who makes a determination under
subparagraph (B) with respect to a
subcontracting plan may delay acceptance of the
plan for a 30-day period by providing written
notice of the determination to the head of the
procuring activity of the contracting agency
that includes recommendations for altering the
plan to provide the maximum practicable
opportunity described in that subparagraph.
``(ii) Exception.--In the case of the
Department of Defense--
``(I) a procurement center
representative or commercial market
representative who makes a
determination under subparagraph (B)
with respect to a subcontracting plan
may delay acceptance of the plan for a
15-day period by providing written
notice of the determination to
appropriate personnel of the Department
of Defense that includes
recommendations for altering the plan
to provide the maximum practicable
opportunity described in that
subparagraph; and
``(II) the authority of a procurement
center representative or commercial
market representative to delay
acceptance of a subcontracting plan as
provided in subparagraph (B) does not
include the authority to delay the
award or performance of the contract
concerned.
``(D) Disagreements.--If a procurement center
representative or commercial market representative
delays the acceptance of a subcontracting plan under
subparagraph (C) and does not reach agreement with the
head of the procuring activity of the contracting
agency to alter the plan to provide the maximum
practicable opportunity described in subparagraph (B)
not later than 30 days after the date on which written
notice was provided, the disagreement shall be
submitted to the head of the contracting agency by the
Administrator for a final determination.
``(E) Exception.--A procurement center representative
or commercial market representative may not delay the
acceptance of a subcontracting plan if the head of the
contracting agency certifies that the need of the
agency for the supplies or services is of such an
unusual and compelling urgency that the United States
would be seriously injured unless the agency is
permitted to accept the subcontracting plan.''.
(d) Good Faith Compliance.--Not later than 270 days after the date of
enactment of this Act, the Administrator of the Small Business
Administration shall issue regulations providing examples of activities
that would be considered a failure to make a good faith effort to
comply with the requirements imposed on an entity (other than a small
business concern as defined under section 3 of the Small Business Act
(15 U.S.C. 632)) that is awarded a prime contract containing the
clauses required under paragraph (4) or (5) of section 8(d) of the
Small Business Act (15 U.S.C. 637(d)).
SEC. 302. PILOT PROGRAM TO PROVIDE OPPORTUNITIES FOR QUALIFIED
SUBCONTRACTORS TO OBTAIN PAST PERFORMANCE RATINGS.
Section 8(d) of the Small Business Act (15 U.S.C. 637(d)), as amended
by section 301, is further amended by adding at the end the following
new paragraph:
``(18) Pilot program providing past performance ratings for
other small business subcontractors.--
``(A) Establishment.--The Administrator shall
establish a pilot program for a small business concern
performing as a first tier subcontractor for a covered
contract (as defined in paragraph 13(A)) to request a
past performance rating in the system used by the
Federal Government to monitor or record contractor past
performance.
``(B) Application.--A small business concern
described in subparagraph (A) shall submit an
application to the appropriate official for a past
performance rating. Such application shall include
written evidence of the past performance factors for
which the small business concern seeks a rating and a
suggested rating.
``(C) Determination.--The appropriate official shall
submit the application from the small business concern
to the contracting officer (or a designee of such
officer) for the covered contract and to the prime
contractor for review. The contracting officer (or
designee) and the prime contractor shall, not later
than 30 days after receipt of the application, submit
to the appropriate official a response regarding the
application.
``(i) Agreement on rating.--If the
contracting officer (or designee) and the prime
contractor agree on a past performance rating,
or if either the contracting officer (or
designee) or the prime contractor fail to
respond and the responding individual agrees
with the rating of the applicant small business
concern, the appropriate official shall enter
the agreed-upon past performance rating in the
system described in subparagraph (A).
``(ii) Disagreement on rating.--If the
contracting officer (or designee) and the prime
contractor fail to respond within 30 days or if
they disagree about the rating, or if either
the contracting officer (or designee) or the
prime contractor fail to respond and the
responding individual disagrees with the rating
of the applicant small business concern, the
contracting officer (or designee) or the prime
contractor shall submit a notice contesting the
application to appropriate official. The
appropriate official shall follow the
requirements of subparagraph (D).
``(D) Procedure for rating.--Not later than 14
calendar days after receipt of a notice under
subparagraph (C)(ii), the appropriate official shall
submit such notice to the applicant small business
concern. Such concern may submit comments, rebuttals,
or additional information relating to the past
performance of such concern not later 14 calendar days
after receipt of such notice. The appropriate official
shall enter the into the system described in
subparagraph (A) a rating that is neither favorable nor
unfavorable along with the initial application from the
small business concern, the responses of the
contracting officer (or designee) and the prime
contractor, and any additional information provided by
the small business concern.
``(E) Use of information.--A small business
subcontractor may use a past performance rating given
under this paragraph to establish its past performance
for a prime contract.
``(F) Duration.--The pilot program established under
this paragraph shall terminate 3 years after the date
on which the first small business concern receives a
past performance rating for performance as a first tier
subcontractor.
``(G) Report.--The Comptroller General of the United
States shall begin an assessment of the pilot program 1
year after the establishment of such program. Not later
than 6 months after beginning such assessment, the
Comptroller General shall submit a report to the
Committee on Small Business and Entrepreneurship of the
Senate and the Committee on Small Business of the House
of Representatives, which shall include--
``(i) the number of small business concerns
that have received past performance ratings
under the pilot program;
``(ii) the number of applications in which
the contracting officer (or designee) or the
prime contractor contested the application of
the small business concern;
``(iii) any suggestions or recommendations
the Comptroller General or the small business
concerns participating in the program have to
address disputes between the small business
concern, the contracting officer (or designee),
and the prime contractor on past performance
ratings; and
``(iv) any suggestions or recommendation the
Comptroller General has to improve the
operation of the pilot program.
``(H) Appropriate official defined.--In this
paragraph, the term `appropriate official' means a
Commercial Market Representative or other individual
designated by the senior official appointed by the
Administrator with responsibilities under sections 8,
15, 31, and 36.''.
TITLE IV--MENTOR-PROTEGE PROGRAMS
SEC. 401. AMENDMENTS TO THE MENTOR-PROTEGE PROGRAM OF THE DEPARTMENT OF
DEFENSE.
Section 831 of the National Defense Authorization Act for Fiscal Year
1991 (Public Law 101-510; 104 Stat. 1607; 10 U.S.C. 2302 note) is
amended--
(1) in subsection (d)--
(A) by amending paragraph (1) to read as follows:
``(1) prior to the approval of that agreement, the
Administrator of the Small Business Administration had made no
finding of affiliation between the mentor firm and the protege
firm;'';
(B) by redesignating paragraph (2) as paragraph (3);
and
(C) by inserting after paragraph (1) the following
new paragraph:
``(2)(A) the Administrator of the Small Business
Administration does not have a current finding of affiliation
between the mentor firm and protege firm; or
``(B) the Secretary, after considering the regulations
promulgated by the Administrator of the Small Business
Administration regarding affiliation--
``(i) does not have reason to believe that the mentor
firm affiliated with the protege firm; or
``(ii) has received a formal determination of no
affiliation between the mentor firm and protege firm
from the Administrator after having submitted a
question of affiliation to the Administrator; and'';
(2) in subsection (n), by amending paragraph (9) to read as
follows:
``(9) The term `affiliation', with respect to a relationship
between a mentor firm and a protege firm, means a relationship
described under section 121.103 of title 13, Code of Federal
Regulations (or any successor regulation).''; and
(3) in subsection (f)(6)--
(A) in subparagraph (B), by striking ``or'' at the
end;
(B) in subparagraph (C), by striking the period at
the end and inserting ``; or''; and
(C) by adding at the end the following:
``(D) women's business centers described in section
29 of the Small Business Act (15 U.S.C. 656).''.
SEC. 402. IMPROVING COOPERATION BETWEEN THE MENTOR-PROTEGE PROGRAMS OF
THE SMALL BUSINESS ADMINISTRATION AND THE
DEPARTMENT OF DEFENSE.
Section 45(b)(4) of the Small Business Act (15 U.S.C. 657r(b)(4)) is
amended by striking subparagraph (A) and redesignating subparagraphs
(B) and (C) as subparagraphs (A) and (B), respectively.
TITLE V--MISCELLANEOUS
SEC. 501. IMPROVING EDUCATION ON SMALL BUSINESS REGULATIONS.
Section 15 of the Small Business Act (15 U.S.C. 644), as amended by
section 204(c), is further amended by adding at the end the following
new subsection:
``(u) Regulatory Changes and Training Materials.--Not less than
annually, the Administrator shall provide to the Defense Acquisition
University (established under section 1746 of title 10, United States
Code), the Federal Acquisition Institute (established under section
1201 of title 41, United States Code), the individual responsible for
mandatory training and education of the acquisition workforce of each
agency (described under section 1703(f)(1)(C) of title 41, United
States Code), small business development centers, and entities
participating in the Procurement Technical Assistance Cooperative
Agreement Program under chapter 142 of title 10, United States Code--
``(1) a list of all changes made in the prior year to
regulations promulgated--
``(A) by the Administrator that affect Federal
acquisition; and
``(B) by the Federal Acquisition Council that
implement changes to this Act; and
``(2) any materials the Administrator has developed to
explain, train, or assist Federal agencies or departments or
small business concerns to comply with the regulations
specified in paragraph (1).''.
SEC. 502. PROTECTING TASK ORDER COMPETITION.
Section 4106(f) of title 41, United States Code, is amended by
striking paragraph (3).
SEC. 503. IMPROVEMENTS TO SIZE STANDARDS FOR SMALL AGRICULTURAL
PRODUCERS.
(a) Amendment to Definition of Agricultural Enterprises.--Paragraph
(1) of section 18(b) of the Small Business Act (15 U.S.C. 647(b)(1)) is
amended by striking ``businesses'' and inserting ``small business
concerns''.
(b) Equal Treatment of Small Farms.--Paragraph (1) of section 3(a) of
the Small Business Act (15 U.S.C. 632(a)(1)) is amended by striking
``operation: Provided,'' and all that follows through the period at the
end and inserting ``operation.''.
(c) Updated Size Standards.--
(1) In general.--Not later than 18 months after the date of
enactment of this section, the Administrator of the Small
Business Administration shall, by rule, establish size
standards in accordance with section 3 of the Small Business
Act (15 U.S.C. 632) for agricultural enterprises (as such term
is defined in section 18(b)(1) of such Act).
(2) Review.--Size standards established under subsection (a)
are subject to the rolling review procedures established under
section 1344(a) of the Small Business Jobs Act of 2010 (15
U.S.C. 632 note).
SEC. 504. UNIFORMITY IN SERVICE-DISABLED VETERAN DEFINITIONS.
(a) Small Business Definition of Small Business Concern
Consolidated.--Section 3(q) of the Small Business Act (15 U.S.C.
632(q)) is amended--
(1) by amending paragraph (2) to read as follows:
``(2) Small business concern owned and controlled by service-
disabled veterans.--The term `small business concern owned and
controlled by service-disabled veterans' means any of the
following:
``(A) A small business concern--
``(i) not less than 51 percent of which is
owned by one or more service-disabled veterans
or, in the case of any publicly owned business,
not less than 51 percent of the stock (not
including any stock owned by an ESOP) of which
is owned by one or more service-disabled
veterans; and
``(ii) the management and daily business
operations of which are controlled by one or
more service-disabled veterans or, in the case
of a veteran with permanent and severe
disability, the spouse or permanent caregiver
of such veteran.
``(B) A small business concern--
``(i) not less than 51 percent of which is
owned by one or more service-disabled veterans
with a disability that is rated by the
Secretary of Veterans Affairs as a permanent
and total disability who are unable to manage
the daily business operations of such concern;
or
``(ii) in the case of a publicly owned
business, not less than 51 percent of the stock
(not including any stock owned by an ESOP) of
which is owned by one or more such veterans.
``(C)(i) During the time period described in clause
(ii), a small business concern that was a small
business concern described in subparagraph (A) or (B)
immediately prior to the death of a service-disabled
veteran who was the owner of the concern, the death of
whom causes the concern to be less than 51 percent
owned by one or more service-disabled veterans, if--
``(I) the surviving spouse of the deceased
veteran acquires such veteran's ownership
interest in such concern;
``(II) such veteran had a service-connected
disability (as defined in section 101(16) of
title 38, United States Code) rated as 100
percent disabling under the laws administered
by the Secretary of Veterans Affairs or such
veteran died as a result of a service-connected
disability; and
``(III) immediately prior to the death of
such veteran, and during the period described
in clause (ii), the small business concern is
included in the database described in section
8127(f) of title 38, United States Code.
``(ii) The time period described in this clause is
the time period beginning on the date of the veteran's
death and ending on the earlier of--
``(I) the date on which the surviving spouse
remarries;
``(II) the date on which the surviving spouse
relinquishes an ownership interest in the small
business concern; or
``(III) the date that is 10 years after the
date of the death of the veteran.''; and
(2) by adding at the end the following new paragraphs:
``(6) ESOP.--The term `ESOP' has the meaning given the term
`employee stock ownership plan' in section 4975(e)(7) of the
Internal Revenue Code of 1986 (26 U.S.C. 4975(e)(7)).
``(7) Surviving spouse.--The term `surviving spouse' has the
meaning given such term in section 101(3) of title 38, United
States Code.''.
(b) Veterans Affairs Definition of Small Business Concern
Consolidated.--
(1) In general.--Section 8127 of title 38, United States
Code, is amended--
(A) by striking subsection (h) and redesignating
subsections (i) through (l) as subsections (h) through
(k), respectively; and
(B) in subsection (k), as so redesignated--
(i) by amending paragraph (2) to read as
follows:
``(2) The term `small business concern owned and controlled
by veterans' has the meaning given that term under section
3(q)(3) of the Small Business Act (15 U.S.C. 632(q)(3)).''; and
(ii) by adding at the end the following new
paragraph:
``(3) The term `small business concern owned and controlled
by veterans with service-connected disabilities' has the
meaning given the term `small business concern owned and
controlled by service-disabled veterans' under section 3(q)(2)
of the Small Business Act (15 U.S.C. 632(q)(2)).''.
(2) Conforming amendments.--Such section is further amended--
(A) in subsection (b), by inserting ``or a small
business concern owned and controlled by veterans with
service-connected disabilities'' after ``a small
business concern owned and controlled by veterans'';
(B) in subsection (c), by inserting ``or a small
business concern owned and controlled by veterans with
service-connected disabilities'' after ``a small
business concern owned and controlled by veterans'';
(C) in subsection (d) by inserting ``or small
business concerns owned and controlled by veterans with
service-connected disabilities'' after ``small business
concerns owned and controlled by veterans'' both places
it appears; and
(D) in subsection (f)(1), by inserting ``, small
business concerns owned and controlled by veterans with
service-connected disabilities,'' after ``small
business concerns owned and controlled by veterans''.
(c) Technical Correction.--Section 8(d)(3) of the Small Business Act
(15 U.S.C. 637(d)(3)), is amended by adding at the end the following
new subparagraph:
``(H) In this contract, the term `small business concern
owned and controlled by service-disabled veterans' has the
meaning given that term in section 3(q).''.
(d) Regulations Relating to Database of the Secretary of Veterans
Affairs.--
(1) Requirement to use certain small business administration
regulations.--Section 8127(f)(4) of title 38, United States
Code, is amended by striking ``verified'' and inserting
``verified, using regulations issued by the Administrator of
the Small Business Administration with respect to the status of
the concern as a small business concern and the ownership and
control of such concern,''.
(2) Prohibition on secretary of veterans affairs issuing
certain regulations.--Section 8127(f) of title 38, United
States Code, is amended by adding at the end the following new
paragraph:
``(7) The Secretary may not issue regulations related to the status
of a concern as a small business concern and the ownership and control
of such small business concern.''.
(e) Delayed Effective Date.--The amendments made by subsections (a),
(b), (c), and (d) shall take effect on the date on which the
Administrator of the Small Business Administration and the Secretary of
Veterans Affairs jointly issue regulations implementing such sections.
Such date shall be not later than 18 months after the date of enactment
of this Act.
(f) Appeals of Inclusion in Database.--
(1) In general.--Section 8127(f) of title 38, United States
Code, as amended by section 504(d)(2), is further amended by
adding at the end the following new paragraph:
``(8)(A) If the Secretary does not verify a concern for inclusion in
the database under this subsection based on the status of the concern
as a small business concern or the ownership or control of the concern,
the concern may appeal the denial of verification to the Office of
Hearings and Appeals of the Small Business Administration (as
established under section 5(i) of the Small Business Act). The decision
of the Office of Hearings and Appeals shall be considered a final
agency action.
``(B)(i) If an interested party challenges the inclusion in the
database of a small business concern owned and controlled by veterans
or a small business concern owned and controlled by veterans with
service-connected disabilities based on the status of the concern as a
small business concern or the ownership or control of the concern, the
challenge shall be heard by the Office of Hearings and Appeals of the
Small Business Administration as described in subparagraph (A). The
decision of the Office of Hearings and Appeals shall be considered
final agency action.
``(ii) In this subparagraph, the term `interested party' means--
``(I) the Secretary; and
``(II) in the case of a small business concern that is
awarded a contract, the contracting officer of the Department
or another small business concern that submitted an offer for
the contract that was awarded to the small business concern
that submitted an offer under clause (i).
``(C) For each fiscal year, the Secretary shall reimburse the
Administrator of the Small Business Administration in an amount
necessary to cover any cost incurred by the Office of Hearings and
Appeals of the Small Business Administration for actions taken by the
Office under this paragraph. The Administrator is authorized to accept
such reimbursement. The amount of any such reimbursement shall be
determined jointly by the Secretary and the Administrator and shall be
provided from fees collected by the Secretary under multiple-award
schedule contracts. Any disagreement about the amount shall be resolved
by the Director of the Office of Management and Budget.''.
(2) Effective date.--Paragraph (8) of subsection (f) of title
38, United States Code, as added by paragraph (1), shall apply
with respect to a verification decision made by the Secretary
of Veterans Affairs on or after the date of the enactment of
this Act.
SEC. 505. GAO REVIEW OF THE OFFICE OF GOVERNMENT CONTRACTING AND
BUSINESS DEVELOPMENT OF THE SMALL BUSINESS
ADMINISTRATION.
(a) Study.--Not later than 60 days after the date of the enactment of
this Act, the Comptroller General of the United States shall initiate a
review of the Office of Government Contracting and Business Development
of the Small Business Administration. Such review shall examine--
(1) the extent to which the personnel of the Small Business
Administration who carry out procurement and business
development programs report to the Office of Government
Contracting and Business Development;
(2) whether greater efficiency and consistency in the
certification process of procurement and business development
programs could be achieved by creating a single organizational
unit of employees to process all certifications required by
procurement and business development programs;
(3) whether greater efficiency and efficacy in the
performance of procurement and business development programs
could be achieved by improving the alignment of the field
personnel assigned to such programs;
(4) how the Office of Government Contracting and Business
Development could improve its staffing of regulatory drafting
functions and its coordination with the Federal Acquisition
Regulatory Council to ensure timely rulemaking by the Small
Business Administration; and
(5) any other areas in which the Comptroller General
determines that the Small Business Administration could improve
its performance with respect to procurement and business
development programs.
(b) Report.--Not later than 1 year after initiating the review
required by paragraph (1), the Comptroller General shall submit a
report including the results of the review, along with any
recommendations for improvements or other suggestions with respect to
procurement and business development programs, to the Committee on
Small Business of the House of Representatives and the Committee on
Small Business and Entrepreneurship of the Senate.
(c) Procurement and Business Development Program Defined.--In this
Act, the term ``procurement and business development program'' means a
program related to procurement or business development established
under section 7, 8, 15, 31, 36, 44, 45, or 46 of the Small Business Act
(15 U.S.C. 631 et seq.).
SEC. 506. REQUIRED REPORTS PERTAINING TO CAPITAL PLANNING AND
INVESTMENT CONTROL.
The information described in 11302(c)(3)(B)(ii) of title 40, United
States Code, shall be submitted to the Senate Committee on Small
Business and Entrepreneurship and the Committee on Small Business of
the House of Representatives within 10 days of transmittal to the
Director.
SEC. 507. GAO REVIEW OF SURETY BONDS.
Not later than 60 days after the date of the enactment of this Act,
the Comptroller General of the United States shall initiate a review of
surety bonds as they apply to federal small business procurement
contracts. The review shall examine how frequently bonding requirements
are waived by federal agencies, an explanation of the standard and
process for waiving the requirements, an explanation of the review
process for such waivers, and in cases when bond requirements are
waived, how results compare to instances where requirements are not
waived, and the process that whistleblowers go through when instances
of fraud related to surety bonds are reported.
II. Purpose and Bill Summary
The purpose of H.R. 4341, the ``Defending America's Small
Contractors Act of 2016,'' is to amend the Small Business Act
(the Act)\1\ and titles 10, 38 and 41 of the United States Code
to reduce barriers to the participation of small businesses as
prime contractors and subcontractors on federal procurements.
Small business\2\ participation brings necessary competition to
the government marketplace, adds innovation, and creates 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 300,000
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, 72 Stat. 384 (1958). The Act is codified at 15
U.S.C. Sec. Sec. 631-657s.
\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.''
---------------------------------------------------------------------------
H.R. 4341 seeks to promote small business contracting in
five ways. First, improves transparency by ensuring that terms
used throughout federal procurement are used consistently in
the Act, and by improving the process by which small business
participation in federal procurement are reported. Second, it
clarifies the roles of the small business advocates at the
Small Business Administration (SBA) and in other federal
agencies, while improving compliance assistance. Third, it
promotes opportunities for small subcontractors, including a
pilot program to provide past performance experience to first
tier subcontractors, which will assist small subcontractors
seeking to transition to prime contracting. Fourth, it
strengthens the mentor-protege program at the Department of
Defense (DOD), and increases coordination between the SBA
mentor-protege program and the DOD program. Finally, H.R. 4341
improves the process by which agencies are educated on small
business rules, promotes competition on task orders, allows SBA
to use reasonable size standards for small agricultural
producers, reduces the confusion between the service-disabled
veteran-owned small business (SDVOSB) contracting program run
by SBA and a similar program at the Department of Veterans
Affairs (VA), and asks the Comptroller General to review
operational issues at SBA.
III. 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.''\3\ Second,
small business contracting is ``in the interest of war or
national defense programs.''\4\ 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.''\5\
Ensuring that small businesses can compete for federal
contracts offers several benefits--business growth, job
creation, greater competition, lower prices, and innovation.
During the 114th Congress, the Small Business Committee has
held numerous hearings on small businesses in the industrial
base. As shown in Chart 1, the use of small businesses is
declining even as the percentage of dollars awarded to small
businesses increases.\6\
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\3\Small Business Act, Sec. 15(a), 15 U.S.C. Sec. 644(a).
\4\Id.
\5\Id.
\6\Additionally, it is worth noting that in obtaining its A grade,
the federal government did not meet half of its numerical goals SBA,
``FY 2013 Procurement Scorecard,'' available at https://www.sba.gov/
sites/default/files/files/FY13_Government-
Wide_SB_Procurement_Scorecard_ Public_View_2014-04-28.pdf.
\7\Id.
CHART 1. SMALL BUSINESS CONTRACTING FY10-FY14\7\
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Average Value Average Value
Total Contract Total Small Total DoD Total DoD Total Number of Small of DoD Small
FY Dollars (in Business (SB) Total Number Contract Small Business of DoD SB Business Business
Billions) Dollars of SB Actions Dollars Dollars Actions Contract Contract
Action Action
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
11.............................................................. $549.6 $103.6 3,346,553 $374.1 $60.4 2,325,622 $30,957.23 $25,971.55
12.............................................................. 518.3 100.0 2,584,893 290.1 60.2 1,453,952 38,686.32 41,404.39
13.............................................................. 462.3 91.9 1,560,467 308.5 50.0 711,998 58,892.63 70,224.92
14.............................................................. 444.7 98.9 1,390,987 284.7 55.6 745,626 71,100.59 74,568.22
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
From FY11 through FY14, the percentage of dollars awarded
to small businesses increased each year, from just over 18
percent to approximately 22.25 percent.\8\ At the same time,
despite a decline in overall federal spending, the dollars
awarded to small businesses remained fairly constant during
this period. While this would normally be heralded as a
success, a deeper dive into the numbers shows that the number
of small business contract actions fell by almost 60 percent
and the average size of a contract action increased 230
percent. This reflects that fewer small businesses are winning
contracts, but those contracts are worth more, which may
indicate that some small businesses are doing very well but
many others are losing opportunities to compete.
---------------------------------------------------------------------------
\8\Analysis based upon FPDS, available at https://www.fpds.gov
(last accessed January 28, 2015). Copies of reports are on file with
the Committee.
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Alarmingly, at the Department of Defense (DoD), which is
arguably a better reflection of the federal government's
ability to maintain a healthy industrial base capable of
supporting defense programs, the results were worse. The
percentage of contract dollars awarded to small businesses at
DoD increased from just over 16 percent to just over 19
percent, but the actual dollars only fluctuated by about 10
percent. The number of small business contract actions at DoD
fell by almost 70 percent, and the value of those contract
actions rose by nearly 290 percent.
The declining number of contract actions with small
businesses cannot simply be explained by shrinking budgets or
sequestration, because during the same period, the number of
contract actions with large businesses increased by 8 percent.
However, the dollar value of the average contract action with a
small business increased 230 percent, meaning that fewer small
companies are getting contracts, but the contracts they get are
getting much bigger.
Furthermore, the number of companies registered to do
business with the federal government has dropped by over
100,000 from 2012, so that only 273,072 small businesses are
still registered to compete for federal contracts.\9\ This
speaks to a greater problem in the industrial base--a declining
participation rate.
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\9\Data retrieved from the System for Award Management, available
at www.sam.gov (last accessed January 28, 2015). This number is down by
over 100,000 small businesses from 2012, when DSBS reported 382,092
active small businesses.
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Therefore, all the provisions in H.R. 4341 support the
better opportunities for small contractors and the
replenishment of the industrial base. However, the need for
specific provisions varies, and will be discussed thematically.
A. TITLE I
1. Sections 101 and 104
First, H.R. 4341 attempts to make the Act more accessible.
Indeed, the provision in the Act that explains why federal
small business contracting is importation--section 15(a) of the
Act--is itself well-nigh unintelligible. It exists as a series
of run-on sentences in one subsection that cover issues as
diverse as how industries should be defined, geographic
requirements in contracting, the use of set-aside contracts,
the federal government's policy on contract bundling and
consolidation, the process by which bundling is appealed,
contracts for the sale of federal property, sales of timber,
sales of electric power, and the requirement that the
government not pay more than fair market price. As critical as
these policies are, it is nearly impossible to locate or
discuss them in the current format. Likewise, the use of
procurement terminology in the Act that differs from terms with
the same meaning in titles 10, 38, and 41 of the United States
Code and SBA's own regulations creates unnecessary confusion
for small businesses. Thus, 32 years after the rest of the
government decided to adopt uniform procurement terminology,
sections 101 and 104 of H.R. 4341 amend the Act to make use the
same words adopted by the rest of the federal government.
2. Sections 102 and 103
Second, H.R. 4341 addresses the reporting on the use of
small businesses. Since the enactment of Public Law 95-507,\10\
the SBA has been responsible for negotiating on small business
contracting and subcontracting goals with federal departments
and agencies and then reporting on the attainment of these
goals. These requirements became stricter in 1988, when
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). However, there is still
little transparency into how the numbers reported by SBA are
achieved. Sections 102 and 103 of H.R. 4341 continue the work
of the past 38 years.
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\10\Pub. L. No. 95-507 (1978). This Act has no common name and is
simply An Act of October 24, 1978.
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H.R. 4341 does so by requiring that SBA count all dollars
awarded federal prime contracts each year, rather than
excluding 19 percent of those dollars before it calculates the
percentage awarded to small businesses. 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\11\ DOE to
count subcontracts awarded by its management and operations
(M&O) contractors as if they were prime contracts awarded by
the DOE.\12\ 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,\13\
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.
---------------------------------------------------------------------------
\11\OFPP Policy Letter 91-1 (1991).
\12\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).
\13\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\14\ 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. It is these exclusions that have allowed the federal
government to meet the 23 percent goal.
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\14\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 Defending
America's Small Contractors Act defines what types of contracts
must be included in the goaling base. Examining Fiscal Year
2014 data, this essentially adds nearly $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 22.25 percent, rather than the
24.99 percent reported by SBA.\15\
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\15\SBA, FY 2014 Scorecard Summary (2015) available at https://
www.sba.gov/sites/default/files/files/
FY14_Scorecard_Summary_by_Prime_Spend_Subk_and_Plan_Progress_
Scores_2015-05-04.pdf.
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Likewise, the bill requires that SBA report on how the
goals are achieved in two meaningful ways. First, it requires
that SBA report separately on contracts counted as awards to
small businesses if the company has since lost its small
business status. Second, it asks the SBA to segregate dollars
attributed to any of the socio-economic subgoals if a
procurement preference for another program was used. Take, for
example, a firm that qualifies as a SDVOSB and historically
underutilized business zone (HUBZone) participant. If that firm
wins an award using a SDVOSB set-aside procurement, when SBA
reports the award for purposes of the HUBZone goaling report,
it does not distinguish this award from one that used a HUBZone
set-aside procurement. This masks important information about
the health of the small business programs.
B. TITLE II
The bill also furthers the goals of the National Defense
Authorization Acts (NDAA) of FY 13, 14, 15, and 16, which have
attempted to elevate the roles of small business advocates
within SBA and at other federal agencies.\16\ The FY 13 NDAA
modernized the responsibilities of the Offices of Small and
Disadvantaged Business Utilization and the Procurement Center
Representatives (PCR).\17\ It further implemented minimum
training standards for the PCRs and the Business Opportunity
Specialists (BOS).\18\ Likewise, the FY 16 NDAA provided
minimum requirements for the Commercial Market Representatives
(CMR).\19\ Title II of H.R. 4341 builds on this foundation.
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\16\FY 13 NDAA, Pub. L. No. 112-239 (2013); FY 14 NDAA, Pub. L. No.
113-66 (2013); FY 15 NDAA, Pub. L. No. 113-291 (2014); FY 16 NDAA Pub.
L. No. 114-92 (2015).
\17\FY 13 NDAA at Sec. Sec. 1621, 1691.
\18\Id. at Sec. 1622.
\19\FY 16 NDAA at Sec. 865 (2015).
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1. Section 201
First, H.R. 4341 addresses a problem with the regulatory
functions of PCRs. The PCR is the last best defense of small
businesses when contracts are being structured in a way that
limits small business participation. The Committee and its
Subcommittee on Contracting and Workforce have held numerous
hearings exploring how contracts that include small business
set-asides, partial set-asides, or small business reserves may
still be harmful to small businesses and to principles of
competition, specifically in cases of strategic sourcing and
consolidation. Indeed, a contract may be a total small business
contract and still be consolidated, meaning that many small
businesses were unable to compete.
Therefore, it is problematic that SBA's regulations provide
that the PCR will only ``review all acquisitions that are not
set-aside or reserved for small businesses above or below the
Simplified Acquisition Threshold.''\20\ Thus, none of the
consolidated Federal Strategic Sourcing Contracts--which have
excluded thousands of small competitors--are subject to PCR
review.\21\ Section 201 of H.R. 4341 terminates this
prohibition.
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\20\13 C.F.R. Sec. 125.2(b)(i).
\21\See, e.g., Committee Memorandum, ``Contracting and Industrial
Base II: Bundling, Goaling, and the Office of Hearings and Appeals'' 2-
18 (2015), available at http://smbiz.house.gov/uploadedfiles/3-17-
2015_hearing_memo.pdf.
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2. Sections 202 and 205
Both the CMR and the BOS lack clear, up to date job
descriptions. While, as previously mentioned, the 24 CMRs at
SBA have educational requirements in the Act, there is no other
job description of their roles in statute.\22\ Instead, their
responsibilities are covered by SBA's Standard Operating
Procedure (SOP) for the Subcontracting Assistance Plan.\23\
Unfortunately, this job description has not been updated to
reflect significant legislative changes to the subcontracting
requirements. For example, the FY 13 NDAA changed the
requirements for subcontracting plans.\24\ The FY 14 NDAA
allowed prime contractors to take credit for lower tier
subcontracts awarded to small businesses--something the current
SOP does not reflect.\25\ The FY 15 NDAA altered subcontracting
requirements for some of the largest defense contractors.\26\
The FY 16 NDAA made senior agency executives responsible for
subcontracting goals.\27\ None of these changes are reflected
in the SOP or the job description. Indeed, the SOP does not
even recognize the existence of the federal subcontracting
reporting system (FSRS) which has been in place for nearly ten
years.
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\22\15 U.S.C. Sec. -633(h).
\23\SBA, SOP 60-03 (2006).
\24\FY 13 NDAA at Sec. 1653.
\25\FY 14 NDAA at Sec. 1614.
\26\FY 15 NDAA at Sec. 821.
\27\FY 16 NDAA at Sec. 871.
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Likewise, the BOS has educational requirements imposed by
statute, and is tangentially referenced in the Act without a
job description or a clear statement of responsibilities.\28\
So, like the CMR, the BOS is reduced to an out-of-date SOP to
understand the full job description.\29\ However, to understand
their role, it is first necessary to understand the SBA's 8(a)
Business Development Program (8(a) program).
---------------------------------------------------------------------------
\28\15 U.S.C. Sec. 633(g).
\29\SBA, SOP 80-05-3A (2008).
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The 8(a) program is a subset of the small and disadvantaged
business (SDB) program. SDBs are small businesses at least 51
percent unconditionally owned by one or more socially and
economically disadvantaged individuals.\30\ Social disadvantage
is presumed for members of designated groups, or may be
established by a preponderance of the evidence for any other
individual. Economic disadvantage is defined as a net worth of
less than $750,000, after excluding the value of the
individual's ownership interest the small business and the
value of the individual's equity in a primary personal
residence.\31\ A firm certifies as an SDB to either the
procuring agency or to a third-party certifier, although all
8(a) firms are automatically considered SDBs.\32\ There is a
statutory goal of awarding five percent of all prime contract
and five percent of all subcontract dollars to SDBs.\33\
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\30\13 C.F.R. Sec. 124.1002.
\31\13 C.F.R. Sec. 124.
\32\Id.
\33\15 U.S.C. Sec. 633(g).
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The 8(a) program is an important subset of the SDB program.
8(a) firms are small businesses owned and controlled by
socially and economically disadvantaged individuals who have
applied for and been accepted into a nine-year business
development program at SBA.\34\ While the definition of social
disadvantage is the same in the 8(a) program as it is in the
SDB program, the definition of economic disadvantage is much
stricter, with a $250,000 cap on assets outside of the business
and primary residence, and a requirement that the individual
demonstrate a limited access to capital.\35\ Participation in
the 8(a) program provides important contracting preferences
such as sole-source contracts up to $4 million ($6.5 million
for manufacturing contracts) are the preferred contracting
method, although competitive 8(a) awards are allowed with the
permission of the SBA.\36\
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\34\13 C.F.R. Sec. 124.
\35\Id. at Sec. 124.104.
\36\Id. at Sec. 124.506.
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In the 8(a) program, SBA is considered the prime
contractor, and the 8(a) firm is its subcontractor, which
requires agencies to negotiate awards with SBA.\37\ However,
since the 1990s, SBA has been entering into Memorandums of
Understanding (MOUs) with agencies, allowing agencies to bypass
SBA and award contracts directly to the 8(a) firms.\38\ The
8(a) certification is processed by SBA, and annual reviews are
required throughout the nine years of program participation to
ensure a firm's continued eligibility.\39\ Unlike other small
business programs, the eligibility of an 8(a) participant
cannot be challenged by another 8(a) firm or any other
party.\40\ It is the BOS who monitors 8(a) firms to ensures
their continued eligibility for the program, negotiate
contracts, and otherwise protect the firms and the taxpayers.
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\37\There is a rebuttable presumption that ``Black Americans;
Hispanic Americans; Native Americans (American Indians, Eskimos,
Aleuts, or Native Hawaiians); Asian Pacific Americans (persons with
origins from Burma, Thailand, Malaysia, Indonesia, Singapore, Brunei,
Japan, China (including Hong Kong), Taiwan, Laos, Cambodia (Kampuchea),
Vietnam, Korea, The Philippines, U.S. Trust Territory of the Pacific
Islands (Republic of Palau), Republic of the Marshall Islands,
Federated States of Micronesia, the Commonwealth of the Northern
Mariana Islands, Guam, Samoa, Macao, Fiji, Tonga, Kiribati, Tuvalu, or
Nauru); Subcontinent Asian Americans (persons with origins from India,
Pakistan, Bangladesh, Sri Lanka, Bhutan, the Maldives Islands or
Nepal)'' are socially disadvantaged. 13 C.F.R. Sec. 124.103.
\38\15 U.S.C. Sec. 637(a).
\39\13 C.F.R. Sec. 124.508.
\40\Id. at Sec. 124.201, 124.601.
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Unlike the CMR and the PCR, there is no comprehensive list
of BOS available from SBA. Instead, a small business concern
must visit each district office's website. A visit to these
sites reveals that while an average of two to three BOS are
assigned to each office, most of these BOS are also serve as
the HUBZone program liaison, veteran-owned small business
liaison, and woman-owned small business liaison. However, the
BOS have an incredibly important responsibility that should not
be diluted: they are able to authorize sole source contracts,
and last year these contracts exceeded $9 billion.\41\ The BOS
are the government's defense against waste, fraud and abuse in
these programs--necessary as federal data shows that over $115
million in 8(a) contracts went to companies that are not 8(a)
firms.\42\
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\41\Data from the Federal Procurement Data System (on file with the
Committee).
\42\Id.
---------------------------------------------------------------------------
Sections 202 and 205 remedy this issue by providing
statutory job descriptions for both the CMRs and the BOSs,
including lines of authority and incorporating changes made to
the contracting programs in recent legislation. This should
standardize the assistance provided to small businesses, make
it easier to deter bad actors, and prevent SBA from diverting
these individuals to fill other roles.
3. Section 203
Section 203 of the bill provides updates to the OSDBU
program. When Public Law 95-507 was first enacted and created
the OSDBU, there were no programs in the Act to help SDVOSB or
HUBZone companies. Therefore, section 203 updates the Act to
include responsibility for providing assistance to SDVOSBs and
HUBZones as part of the job description for the OSDBU.
Additionally, this section provide an opportunity to limit
waste, fraud and abuse. In 2015, the Senior Procurement
Executive of the VA testified that the agency had intentionally
concealed at least $6 billion, and as much as $12 billion, in
purchases each year.\43\ VA accomplished this by illegally
using government purchase cards without an underlying contract
vehicle for purchases above $3,000 and below $150,000.\44\
Compounding this injury, small businesses have priority for
contracts for less than $150,000 but were excluded from even
bidding on these purchases.\45\ The VA OSDBU also claimed
ignorance of the existence of these purchases. Therefore,
section 203 allows OSDBUs to access credit card data and
hopefully prevent a repeat of this travesty.
---------------------------------------------------------------------------
\43\Committee Memorandum, ``Manipulation and Fraud in the Reporting
of VA Small Business Goals'' (2015), available at http://
smbiz.house.gov/uploadedfiles/6-23-2015_hearing_memo.pdf.
\44\Id.
\45\15 U.S.C. Sec. 644(j).
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4. Section 204
Further, the PCRs, BOS, and OSDBUs exert a great deal of
effort to help small businesses obtain contracts, but very
little effort is made to help small businesses understand the
compliance requirements that come with that contract. This can
lead to the small business giving the government the good or
service it desires in a successful fashion, but failing to
successfully fulfill the contract due to a miscomprehension of
regulatory peculiarities. There are private sector resources
available to assist these small companies, including the
Defense Industries Initiative and the Procurement Technical
Assistance Center program. Therefore, section 204 of the bill
requires that SBA and these advocates help small businesses
connect with these resources.
C. TITLE III
1. Section 301
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.\46\
According to Committee reports, this requirement was added
because small businesses were receiving only 37.5 percent of
subcontract dollars.\47\ 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 34.06 percent, which is more than 3 percent less than the
actual results thirty-eight years ago that spurred the creation
of government-wide subcontracting goals.\48\
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\46\15 U.S.C. Sec. 637(d).
\47\H.R. Rep. No. 95-949, at 5 (1978).
\48\FY 2014 Scorecard Summary.
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As the graph below illustrates, while SBA has steadily
decreased the subcontracting goals from 36 percent to 34
percent over the last five years, subcontracting achievements
have fallen from 35 percent to 33 percent. Each time SBA
decreases the goals, agencies manage to subcontract less with
small businesses. This results in real losses to small
businesses. For example, FY 2013, small businesses received
$86.7 billion in subcontracts, which is just about $5 billion
less than they received in prime contracts. If federal agencies
had met the then-goal of 36 percent, subcontract would have
accounted for more dollars to small business than prime
contracts. The fact that the goal keeps decreasing indicates
that less and less is being provided to small subcontractors.
Subcontracting Goals versus Results\49\
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
To figure out why this backsliding is occurring, it is
important to understand how subcontracting opportunities are
established and tracked. According to the Act, any procurement
exceeding $700,000 ($1.5 million for construction) that is
awarded to an other-than-small business must include a
negotiated subcontracting plan detailing opportunities for
small business participation.\50\ While PCRs may review these
plans, they may not protest a solicitation or award on belief
that the goals are inadequate. The prime contractor is then
required to report its subcontracting, including the percentage
awarded to each type of small business, either every six months
or once a year, depending on the type of plan.\51\ Failure to
make a good faith effort to comply with the plan can result in
a prime contractor being assessed liquidated damages.\52\
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\49\Graph based on data from FY 2014 Procurement Scorecard, FY 2013
Procurement Scorecard; SBA ``FY 2012 Procurement Scorecard,'' available
at https://www.sba.gov/sites/default/files/files/
FY12_Final_Scorecard_Government_Wide_2013-06-20.pdf (last accessed
November 16, 2015); SBA, ``FY 2011 Procurement Scorecard,'' available
at https://www.sba.gov/sites/default/files/files/
FY11%20Final%20Scorecard%20Government-Wide_2012-06-29.pdf (last
accessed November 16, 2015); SBA, ``FY 2010 Procurement Scorecard,''
available at https://www.sba.gov/sites/default/files/files/
FY10%20SB%20Procurement%20Scorecard_FINAL_ GOVERNMENT%20WIDE.pdf (last
accessed November 16, 2015).
\50\15 U.S.C. Sec. 637(d).
\51\FAR Sec. 19.7.
\52\15 U.S.C. Sec. 637(d).
However, reviews of the data submitted to the combined
federal subcontracting reporting system (FSRS) and the
electronic subcontracting reporting system (eSRS) demonstrate
that approximately 40 percent of companies required to have
with subcontracting plans are not reporting the required data.
This means that the 32 percent achievement level reported by
SBA is overinflated, since it does not account for those
---------------------------------------------------------------------------
contractors not reporting any data.
Recent audits by the DoD Inspector General (DODIG) also
found discrepancies.\53\ For example, the DODIG reviewed seven
contracts at the National Capital Region (NCR) that under the
Act needed to have a subcontracting plan.\54\ Of these, only
one contract met the statutory and regulatory requirements.\55\
NCR awarded two contracts without any subcontracting plan, and
two contracts that had a subcontracting plan that failed to
include any small business subcontracting goals.\56\ These four
contracts were valued at $58.2 million.\57\ Additionally, the
NCR review found that there were two contracts valued at $790
million where the contracting officers had met the requirements
to incorporate a subcontracting plan and goals only to fail to
track whether the prime contractors met the subcontracting
requirements.\58\ The DODIG concluded that ``small businesses
may not have received subcontract work that large businesses
were required to provide, and NCR officials may have missed an
opportunity to recoup potential liquidated damages of up to
$153.5 million which they may have been entitled to.''\59\
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\53\DODIG, Small Business Contracting at Regional Contracting
Office--National Capital Region Needs Improvement (DODIG-2015-095),
available at http://www.dodig.mil/pubs/documents/DODIG-2015-095.pdf
[hereinafter ``NCR Report'']; DODIG, Small Business Contracting at
Marine Corps Systems Command Needs Improvement (DODIG 2016-019),
available at http://www.dodig.mil/pubs/documents/DODIG-2016-019.pdf
[hereinafter ``MCSC Report''].
\54\NCR Report at 10.
\55\Id.
\56\NCR Report at 10-11. One of the contracts without a
subcontracting plan was a follow on to a contract that also lacked a
subcontracting plan. Id.
\57\Id.
\58\Id.
\59\Id. at 10.
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Similarly, in its review of the Marine Corps Systems
Command, (MCSC), the DODIG's results were similar. Of the 19
contracts worth $1.3 billion reviewed, six were awarded without
subcontracting plans and two were awarded without verifying
that there was an approved subcontracting plan.\60\ On four
contracts, MCSC failed to track compliance with the
subcontracting plan, and on two contracts knew the prime
contractor was not meeting its small business goals but failed
to inquire into why the promised subcontracting opportunities
had not materialized.\61\ In one of these cases, the prime
contractor had committed to $19 million in subcontracts with
small businesses, but delivered only $1.3 million--less than 10
percent of the contractually agreed to amount.\62\ On the other
contract, only 25 percent of the promised small business
subcontracting dollars materialized.\63\
---------------------------------------------------------------------------
\60\MCSC Report at 11.
\61\Id.
\62\Id. at 15.
\63\Id. at 16.
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To address these issues, section 301 makes three changes to
the Act. First, it requires that failure to submit a
subcontracting report may be considered a material breach of
the Act. Second, it allows PCRs to protest an absent or
insufficient subcontracting plan. Finally, it requires that SBA
issue regulations that explain what it means to fail to make a
good faith effort to comply, including the fact that failure to
file a required report is itself evidence of a lack of good
faith.
2. Section 302
Small subcontractors often complain that any efforts to
transition to prime contractor status are hampered by the lack
of a past performance rating. As such, it may only receive a
neutral rating in that category, meaning that if all other
factors are equal it may well lose a contract during proposal
evaluations. To address this problem without creating a
significant bureaucracy, H.R. 4341 creates a pilot program for
small subcontractors seeking a past performance rating.
D. TITLE IV
1. Section 401
The FY 2016 NDAA made significant changes to the DoD
mentor-protege program established by the FY 1991 NDAA.\64\
While most were positive, there were a few unintended
consequences. The statutory purpose of the DoD program is ``to
provide incentives for major Department of Defense contractors
to furnish disadvantaged small business concerns with
assistance designed to enhance the capabilities of
disadvantaged small business concerns to perform as
subcontractors and suppliers under Department of Defense
contracts and other contracts and subcontracts in order to
increase the participation of such business concerns as
subcontractors and suppliers under Department of Defense
contracts, other Federal Government contracts, and commercial
contracts.''\65\ The FY 16 NDAA altered the purpose to add a
requirement that the assistance ``increase the participation of
such business concerns as subcontractors and suppliers under
Department of Defense contracts, other Federal Government
contracts, and commercial contracts.''\66\ This change altered
the program's purpose to better reflect the goals of the SBA
and civilian mentor-protege programs.
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\64\FY 2016 NDAA at Sec. 861; FY 1991 NDAA, Pub. L. No. 101-510
Sec. 831 (1990).
\65\10 U.S.C. Sec. 2302 note; Pub. L. No. 101-510 Sec. 831(a), as
amended.
\66\H.R. 1481 at Sec. 861(a).
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The DoD program allows small disadvantaged businesses,
HUBZone business concerns, service-disabled veteran-owned small
business concerns and women-owned small business concerns to
participate as proteges.\67\ These entities may participate as
proteges at any time.\68\ The FY 16 NDAA altered eligibility so
that firms could only participate as proteges for five years
after they enter their first mentor protege agreement.\69\ It
also stated that protege firms must be less than half the SBA
size standard assigned to the corresponding NAICS code, and
that the small business either be a nontraditional defense
contractor or be currently provide goods or services in the
private sector that are critical to enhancing the capabilities
of the defense supplier base and fulfilling key Department of
Defense needs.
---------------------------------------------------------------------------
\67\It is worth noting that DoD considers organizations employing
the severely disabled, tribal businesses, historically black colleges
and universities and minority institutions of higher learning to be
small disadvantaged businesses for purposes of this program. Pub. L.
No. 101-510 Sec. 831(l).
\68\Id. at (c)(2).
\69\FY 2016 NDAA at Sec. 861(a).
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Likewise, while firms with more than $100 million in
receipts are permitted to act as mentors if the ``mentor firm
demonstrates the capability to assist in the development of
protege firms,''\70\ the FY 16 NDAA also requiree that the
mentor not be affiliated with the protege, and that the mentor
demonstrate that it: (1) is qualified to provide assistance in
keeping with the purposes of the program; (2) is in good
financial health and has not been suspended or debarred; and
(3) ``can impart value to a protege firm because of experience
gained as a Department of Defense contractor or through
knowledge of general business operations and government
contracting.''\71\ The legislation continues to define
affiliation using the principles delineated by the SBA in
regulation. Each of these would lead to greater alignment with
the SBA program, but does raise questions about having DoD
determine affiliation. It is to this change that H.R. 4341
first addresses itself.
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\70\Pub. L. No. 101-510 Sec. 831(d).
\71\FY 2016 NDAA at Sec. 861(a).
---------------------------------------------------------------------------
If DoD is allowed to determine affiliation of small
business, and thus determine when a business is small or other-
than-small, it creates the possibility of a conflict. Thus, DoD
could find that a firm is unaffiliated, and therefore small,
while SBA could determine that the firm was affiliated and
therefore other-than-small. Such a conflict could become
untenable, since it would affect which contracts are counted
towards the governmentwide procurement goals, or the
eligibility of these companies for other contracts. It also
creates a workload for DoD's OSDBU office, when the SBA's
Office of Hearings and Appeals (OHA) already has expertise in
these areas. Therefore, section 401 allows DoD to send cases of
possible affiliation to SBA rather than resolving them
internally.
DoD mentor-protege agreement must detail the assistance to
be provided to the protege.\72\ This must include a
developmental plan, a program participation term, and
termination procedures. The FY 16 NDAA provided greater
specificity for the contents of the developmental plan. It
required that the plan provide: (1)``factors to assess the
protege firm's developmental progress;'' (2) qualitative and
quantitate benefits'' to DoD, if any; and (3) ``goals for
additional awards that the protege firm can compete for''
outside of the DoD program.\73\ These measures create higher
expectations for program performance.
---------------------------------------------------------------------------
\72\Id.
\73\Id.
---------------------------------------------------------------------------
Finally, to incentivize mentors, DoD offers reimbursements
and credits. DoD reimburses mentors for progress payment or
advance payment made to proteges under the program if the
protege is acting as a subcontractors on a DoD contract held by
the mentor. Additionally, DoD may reimburse costs associated
with six types of eligible assistance provided by the mentor.
First, DoD allows the protege to use mentor personnel to aid
with, general business management, engineering and technical
matters, and other areas detained in the developmental
plan.\74\ The statute explicitly allows business development
assistance. Second, it allows the protege to receive
noncompetitive subcontracts from its mentor. Third, it allows
mentors to pay progress payments for the protege. Fourth, it
allows advance payments. Fifth, it allows loans. Sixth, it
allows the mentor to purchase up to ten percent of the protege.
Until the FY 2016 NDAA, mentors could be reimbursed for
referring the protege to a small business development center
(SBDC), procurement technical assistance center (PTAC), or a
historically Black college or university or a minority
institution of higher education (HBCU/MI).\75\ While H.R. 4341
leaves the exclusion for reimbursement in place for this last
category of technical assistance, it does expand the sources of
technical assistance to include Women's Business Centers (WBC).
---------------------------------------------------------------------------
\74\Pub. L. No. 101-510 Sec. 831(f).
\75\FY 2016 NDAA at Sec. 861(a).
---------------------------------------------------------------------------
2. Section 402
The FY 16 NDAA added reporting requirements for mentor
firms and review requirements for the DoD OSDBU.\76\ First, it
required that mentors annual report on the assistance provided
to protege firms. Second, it required OSBP to review the
reports and program participants, and terminate those not
furthering the purpose of the program. This was done to bring
the DoD program and objectives further in line with the
government wide mentor-protege program managed by SBA.
---------------------------------------------------------------------------
\76\Id.
---------------------------------------------------------------------------
Currently, DoD measures success in its program by looking
at three factors which it tracks for up to two years after
completion of the mentor-protege agreement.\77\ First, it
examines whether the dollar value of contracts, subcontracts
and revenue received by the protege has increased. Second, DoD
tracks increases in number and dollar value of subcontracts
awarded to protege firms and former protege firms by the mentor
firm. Third, it looks for an increase in the employment levels
of the protege firm. As of July 31, 2015, DoD had published the
following performance results for program.
---------------------------------------------------------------------------
\77\OSBP, DoD Mentor-Protege Program 9 (2015), available at http://
www.acq.osd.mil/osbp/docs/DoD%20MPP%20Briefing-v07%20-
%2031%20JUL%2015.pdf.
FY 10-FY 14 DoD Mentor-Protege Results78
--------------------------------------------------------------------------------------------------------------------------------------------------------
Net Employee Net Revenue Gains/ Net Employee
FY Program Budget Net Revenue Gains Gains Company Gains/Company
--------------------------------------------------------------------------------------------------------------------------------------------------------
14....................................................... $20.1 M $396 M 808 $6.6 M 13.5
13....................................................... 25.4 M 238 M 743 3.6 M 11.4
12....................................................... 28.0 M 700 M 660 11.3 M 10.6
11....................................................... 27.6 M 633 M 1,531 7.6 M 18.4
10....................................................... 26.3 M 660 M 1,223 6.7 M 12
--------------------------------------------------------------------------------------------------------------------------------------------------------
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\78\Id. at 14.
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While this chart demonstrates growth in each category, it
fails to control for the involvement of the DoD. Specifically,
if DoD is paying companies to subcontract with specific small
businesses, it cannot come as a surprise that those small
businesses hire employees and increase their revenues. As the
mentor firm was required to subcontract with small businesses
in any case, would the companies receiving the subcontracts
have received similar benefits without a mentor-protege
agreement? Further, since DoD continues to reward mentors for
subcontracting with proteges after the proteges leave the
program, tracking two years post program completion does not
capture whether the benefits are sustainable.
To further promote better reconciliation of the measures of
success and data sharing, H.R. 4341 amends the Act to remove
the exemption previously granted to DoD.
E. TITLE V
1. Section 501
As previously noted in this document, the FY 2013-FY 2016
NDAAs contained substantial reforms to the Act. The SBA has
been less than prompt in implementing these changes. As of
April 14, 2016, the SBA still was missing seven proposed rules,
13 final rules, and 17 other actions. Unfortunately, once SBA
issues a final rule, the Federal Acquisition Council still
needs to itself issue proposed and then final rules. At the
current rate, it is taking in excess of seven years to get
statutory changes fully implemented.
As expected, this has led to confusion among small
contractors and contracting offices who are unsure which rules
and provisions are in effect. Thus, section 501 requires the
SBA to annually report to the Federal Acquisition Institute and
the Defense Acquisition University on any new laws or
regulations affecting small business contracting.
2. Section 502
In FY 2015, the federal government purchased more than $186
billion in goods and services using task order contracts.\79\
Since 2008, offerors have been able to protest task orders
above $10 million at the Government Accountability Office.\80\
This has resulted in an increase of less than a thousand
additional protests being filed per year, but provides
important protections for competition.\81\ The FY 2012 NDAA
made this authority permanent for DoD, but the authority is set
to expire on September 30, 2016 for civilian agencies.\82\ This
would leave over $64 billion in procurements without protest
authority.\83\ Section 502 makes the authority permanent for
civilian agencies.
---------------------------------------------------------------------------
\79\FPDS Data (April 14, 2016).
\80\Pub. L. No. 110-181, Sec. 843(a)(2)(C).
\81\Compare GAO, GAO Bid Protest Annual Report to Congress for
Fiscal Year 2015 (2015) with GAO, GAO Bid Protest Annual Report to
Congress for Fiscal Year 2007 (2007).
\82\Pub. L. No. 111-383, Sec. 825 (2012).
\83\FPDS Data (April 14, 2016).
---------------------------------------------------------------------------
3. Section 503
The SBA size standards establish the maximum size a
business can be and still be considered small. Section 3(a)(1)
of the Act provides that ``a small business concern . . . shall
be deemed to be one which is independently owned and operated
and which is not dominant in its field of operation.''\84\ This
definition includes ``enterprises that are engaged in the
business of production of food and fiber, ranching and raising
of livestock, agriculture, and all other farming and
agricultural related industries,'' although the Act never
defines the term ``agricultural related industries.''\85\
However, the Act further states that, ``notwithstanding any
other provision of law, an agricultural enterprise shall be
deemed to be a small business concern if it (including its
affiliates) has annual receipts not in excess of
$750,000.''\86\ For all other industries, the Act authorizes
the Administrator of the SBA to establish small business size
standards for the purposes of the Small Business Act and any
other statute.\87\
---------------------------------------------------------------------------
\84\15 U.S.C. Sec. 632(a)(1).
\85\Id.
\86\Id.
\87\Id. at Sec. 632(a)(2). The Administrator's size standards apply
to all other federal programs unless that program contains its own
definition of small business. Id. at Sec. 632(a)(2)(C).
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Small business size standards determine whether small
businesses may qualify for special treatment in the sale of
goods and services to the federal government;\88\ access to
guaranteed loans and other types of financial assistance; and
obtain technical advice through various SBA resource partners.
They also may be utilized by federal agencies as part of their
regulatory analyses during the rulemaking process.
---------------------------------------------------------------------------
\88\There are numerous procurement programs available to small
businesses that restrict competition for federal contracts or give
small businesses a preference. See Comm. on Small Bus., Small Business
Act Programs for Small Federal Contractors (2013), available at http://
smallbusiness.house.gov/uploadedfiles/
small_business_act_programs_for_small_federal_ contractors.pdf, for a
discussion of small business procurement programs.
---------------------------------------------------------------------------
Before 1985, the size standard for agricultural enterprises
was established by the SBA through the notice and comment
rulemaking process. On February 9, 1984, the SBA published a
final rule establishing the size standard for agricultural
producers as $100,000.\89\ However, Congress soon expressed
concerns with the $100,000 size standard for agricultural
enterprises.
---------------------------------------------------------------------------
\89\SBA, Small Business Size Standards, Final Rule, 49 Fed. Reg.
5024 (Feb. 9, 1984).
---------------------------------------------------------------------------
A report issued by the Senate Committee on Small Business
in early 1985 stated, ``this standard is much lower than that
used for any other industry, and it excludes virtually all
viable family farms in many areas of the country.''\90\ The
report additionally stated that while Senators Tom Harkin, Max
Baucus and Dale Bumpers had offered an amendment to raise the
size standard to $500,000, they later withdrew the amendment in
favor of an assurance that SBA would immediately revisit the
issue.\91\ Later that year, the Senate Committee on Small
Business recommended to the Senate Committee on the Budget that
the amendment be incorporated into omnibus budget legislation
and noted that the amendment would have no budgetary
impact.\92\
---------------------------------------------------------------------------
\90\S. Rep. No. 99-20, at 48 (1985).
\91\Id.
\92\S. Rep. No. 99-146, at 530 (1985).
---------------------------------------------------------------------------
The recommended amendment was included in the omnibus
legislation that was enacted in 1986. The definition of a small
business concern was amended to state, ``[p]rovided, [t]hat
notwithstanding any other provision of law, an agricultural
enterprise shall be deemed to be a small business concern if it
(including its affiliates) has annual receipts not in excess of
$500,000.''\93\ The $500,000 size standard was increased to
$750,000 in 2000.\94\ The statutory size standard applies to 46
diverse categories of agricultural enterprises including:
cotton farming; orange groves; tree nut farming; beef cattle
ranching and farming; and shellfish farming.\95\
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\93\Consolidated Omnibus Budget Reconciliation Act of 1985, Pub. L.
No. 99-272, Tit. XVIII, Sec. 18016, 100 Stat. 82, 371 (1986).
\94\Consolidated Appropriations Act of 2001, Pub. L. No. 106-544,
App. I, Tit. VIII, Sec. 806, 114 Stat. 2763, 2763A-706 (2000).
Unfortunately, there is no discussion of the provision in the
accompanying report.
\95\These industry categories are delineated under the North
American Industry Classification System (NAICS), which is the standard
used by federal statistical agencies to classify business
establishments for the purposes of collecting, analyzing, and
publishing statistical data related to the United States economy.
https://www.census.gov/eos/www/naics/.
---------------------------------------------------------------------------
The consequences associated with establishing a single size
standard for agricultural enterprises via statute may not have
been fully realized or appreciated when the decision was made
30 years ago. For example, the authors included no forcing
mechanism to require periodic review of the agricultural
producer size standard to determine whether it was still
appropriate. Periodic review of all other size standards--at
least once every five years--is now required pursuant to the
Small Business Jobs Act of 2010.\96\ The purpose of
periodically reviewing size standards is to account for changes
in industry structure and economic conditions, such as
inflation.\97\ Commodity prices and production inputs can
fluctuate dramatically. Moreover, the single standard for 46
different agricultural industry subsectors does not distinguish
between the various types of agricultural enterprises that may
have significantly different economic characteristics. A
statutory standard leaves it up to future Congresses to review
and update the standard, which has not been done with any
regularity.
---------------------------------------------------------------------------
\96\Pub. L. No. 111-240, Sec. 1344, 124 Stat. 2504, 2545-46 (2010).
\97\SBA White Paper supra note 8, at 38.
---------------------------------------------------------------------------
For non-agricultural industries, the SBA size standard
methodology can best be described as a granular analysis of
specific industry characteristics.\98\ The agency performs a
statistical analysis of primary and secondary factors to
establish a size standard for a specific industry, and that
standard is expressed as the number of full-time employees at
the concern over 12 months, the average annual receipts of the
business over three years, or as an alternate size standard
that looks at the level of production.\99\
---------------------------------------------------------------------------
\98\A detailed explanation of SBA's size standard methodology may
be found in SBA, SBA Size Standard Methodology (2009) [hereinafter SBA
White Paper], available at http://www.sba.gov/sites/default/files/
size_standards_methodology.pdf.
\99\Id. at 10. This mirrors the grant of authorization in the
statute. 15 U.S.C. Sec. 632(a)(2)-(3).
---------------------------------------------------------------------------
The primary factors assessed by the SBA include an
examination of four economic characteristics of the industry,
such as average firm size, startup costs and entry barriers,
industry competition, and the distribution of firms by
size.\100\ An additional factor is the impact of a size
standard change on SBA's federal contract assistance to small
businesses.\101\ The SBA also may assess industry specific
considerations, such as technological changes and industry
growth trends.\102\
---------------------------------------------------------------------------
\100\SBA White Paper, supra note 8, at 11.
\101\Id. Despite the applicability of these size standards across
federal agencies, the SBA does not examine the implications of such
change on other federal statutes or programs.
\102\Id. at 12.
---------------------------------------------------------------------------
Upon completing its analysis, the SBA then publishes a
proposed size standard in the Federal Register. Final size
standards are selected after input from the public through
notice and comment rulemaking. In addition, size standards are
subject to periodic review and revision every five years,\103\
again through notice and comment rulemaking.
---------------------------------------------------------------------------
\103\Id. at 1.
---------------------------------------------------------------------------
In 2013, Congress enacted reforms to the Act that codify
the factors SBA must consider and address when revising,
modifying, or establishing size standards. As part of the
notice of the proposed and final rule, the SBA must include:
(1) a detailed description of the industry; (2) an analysis of
the competitive environment for that industry; (3) the approach
and sources of all data used to develop the proposed
rulemaking; and (4) the anticipated effects of the proposed
rule on the industry.\104\ This ensures that the size standard
setting process is transparent and interested parties have
adequate information on which to comment.
---------------------------------------------------------------------------
\104\FY 2013 NDAA at Sec. 1661.
---------------------------------------------------------------------------
In short, the process established by Congress as
implemented by the SBA for determining size standards creates a
logical method for establishing small business size standards
in order to facilitate the accomplishment of federal policy
objectives as they relate to small business concerns.
Unfortunately, the definition of a small business agricultural
enterprise does not follow the same granular analysis as it is
set by statute and only would be subject to periodic review if
Congress acted regularly. As the production of agricultural
goods has changed and is likely to change, a static definition
of small business agricultural enterprise may not achieve
various policy objectives designed to help small businesses.
Specifically, the modern structure of agricultural
operations has evolved so that a single dollar size standard is
no longer appropriate. The United States agriculture industry
continues to be defined by a large number of closely-held,
family-owned operations.\105\ Of the nation's approximately 2.1
million farms and ranches, approximately 97.6 percent of farms
are family-owned.\106\ These family farms account for 85
percent of domestic agricultural production.\107\
---------------------------------------------------------------------------
\105\Erik J. O'Donoghue, Economic Research Service, United States
Dep't of Agriculture, Exploring Alternative Farm Definitions:
Implications for Agricultural Statistics and Program Eligibility 22-23
(2009), available at http://www.ers.usda.gov/publications/eib-economic-
information-bulletin/eib49.aspx.
\106\James MacDonald, Economic Research Service, United States
Dep't of Agriculture, Family Farming in the United States (2014)
[hereinafter USDA Family Farms], available at http://www.ers.usda.gov/
amber-waves/2014-march/family-farming-in-the-united-
states.aspx#.U8K3pk1OW70. However, it should be noted that the relative
share of production these farms contribute varies depending on
commodity group, with family-owned farms accounting for 96 percent of
corn, cotton, wheat and soybean production, 75 percent of dairy
production, and 62 percent of fruits, vegetables and nursery
production. Id.
\107\Id.
---------------------------------------------------------------------------
However, over the past few decades, a number of factors
have altered the structure of farms and industry dynamics. New
technologies and production methods have increased the
productivity of the agriculture sector.\108\ This productivity
also has resulted in increased competition\109\ among producers
which has resulted in more output per acre and lower relative
prices for agriculture commodities.
---------------------------------------------------------------------------
\108\Elizabeth Bechdol, Allan Gray, and Brent Gloy, Forces
Affecting Crop Production Agriculture, 25 Choices 2 (2010), available
at http://www.choicesmagazine.org/magazine/pdf/article_152.pdf. In
addition to increased competition, there are relatively low barriers to
entry into agriculture markets. Id. These factors are accounted for in
the SBA's size standard methodology, but not in the statutory
definition.
\109\Id.
---------------------------------------------------------------------------
These changes compel agricultural enterprises to achieve
larger economies of scale in comparison to their predecessors
in order to maintain a viable agriculture production
enterprise.\110\ Achieving these economies of scale often
requires the addition of more lands or livestock in order to
justify investments in new production technologies.\111\ As the
Subcommittee previously examined at a February 2, 2012
hearing,\112\ many individually family-owned farms have
consolidated their individual operations into larger,
enterprise unit family-owned operations in order to achieve
economies of scale.\113\ However, on 86.1 percent of farms,
families still provide the majority of the labor.\114\
---------------------------------------------------------------------------
\110\Id.
\111\Id.
\112\The Future of the Family Farm: The Effect of Proposed DOL
Regulations on Small Business Producers: Before the Subcomm. on
Agriculture, Energy and Trade of the H. Comm. on Small Bus., 112th
Cong. (2012), available at http://www.gpo.gov/fdsys/pkg/CHRG-
112hhrg76459/pdf/CHRG-112hhrg76459.pdf.
\113\Carolyn Dimitri, et. al., Economic Research Service, United
States Dep't of Agriculture, the 20th Century Transformation of U.S.
Agriculture and Farm Policy 12 (2005), available at http://
www.ers.usda.gov/publications/eib-economic-information-bulletin/
eib3.aspx.
\114\USDA Family Farms, supra note 16.
---------------------------------------------------------------------------
Unfortunately, the influences of these changes may not
fully be reflected in the current size standard for small
agricultural enterprises. If the current definition does not
encapsulate these changes in the agricultural sector, there
could be negative consequences for small agricultural
enterprises. An incorrect size standard may result in negative
effects on federal small business policymaking objectives.
Primary among these are procurement opportunities, as
procurement represents the sole scenario when alternative
federal programs or standards are not available.\115\
---------------------------------------------------------------------------
\115\Generally speaking, size standards also are used to determine
eligibility for SBA's loan programs, technical assistance programs, and
as agencies attempt to assess the effects of regulations on small
business concerns under the Regulatory Flexibility Act, 5 U.S.C.
Sec. Sec. 601-12 (RFA). However, since agricultural enterprises receive
the vast majority of financial and technical assistance from the United
States Department of Agriculture (USDA), these are not relevant to the
memorandum. See, e.g. USDA, Rural Development, Business and Industry
Guaranteed Loans (2014), available at http://www.rurdev.usda.gov/
bcp_gar.html. Likewise, if USDA believes the size standard is incorrect
for purposes of the RFA, a process exists to establish an alternative
size standard. However, USDA has not utilized this process in the past
ten years, and doing so would likely only create additional work for
USDA. See Office of Advocacy, SBA: How to Comply with the Regulatory
Flexibility Act 14 (2012), available at http://www.sba.gov/sites/
default/files/rfaguide_0512_0.pdf. To the extent that agencies utilize
the SBA's standard, a too low standard may lead agencies to improperly
conclude and certify their proposed regulations as not affecting a
substantial number of small businesses. Letter from the Hon. Donald
Manzullo and the Hon. Nydia Velazquez to Gary M. Jackson, Assistant
Administrator for Size Standards, SBA, Comment Proposed Rule, Proposed
Rule: Small Business Size Standards: Restructuring Size Standards (July
8, 2004) (on file with the Committee Chief Counsel). The USDA's 2010
proposed livestock marketing rule is an example of an agency adopting
the statutory definition of small agricultural enterprise when
conducting its threshold analysis for a proposed rule. USDA,
Implementation of Regulations Required Under Title XI of the Food,
Conservation and Energy Act of 2008; Conduct in Violation of the Act,
75 Fed. Reg. 35,338, 35,348 (June 22, 2010).
---------------------------------------------------------------------------
In terms of contracting and procurement opportunities, a
more accurate definition of small agricultural enterprises
would increase competition, thereby reducing prices, and
strengthen our industrial base. In FY 2014, the federal
government spent nearly $400 million on raw agricultural
goods.\116\ Small businesses received over 89 percent of the
awards in agricultural industries where SBA had established
size standards.\117\ However, in those industries using the
$750,000 statutory size standard, small businesses received
only 27 percent of awards.\118\ If more concerns were easily
identifiable as small businesses, it could increase the
opportunity for competition limited to small businesses, or at
a minimum for outreach to small agricultural producers.
---------------------------------------------------------------------------
\116\Report generated on November 4, 2015, using the Federal
Procurement Data System. [Hereinafter FPDS Report]. Report on file with
the Committee.
\117\Id. Small businesses received $263,647, 420.29 out of
$295,699,071.59.
\118\Id. Small businesses received $25,265,178.86 out of
$92,239,568.96.
---------------------------------------------------------------------------
While the $92 million in prime contracting opportunities
awarded to industries with a $750,000 size standard is not a
large amount in terms of federal contract spending, a
definitional change also could affect subcontracting and grant
opportunities. States receive agricultural block grants may
choose to prioritize purchases from small businesses, using the
SBA definition. At a federal level, programs such as the Food
for Peace Program\119\ may create opportunities for small
business sales. Most importantly, though, are subcontracting
opportunities.
---------------------------------------------------------------------------
\119\7 U.S.C. Sec. 1691.
---------------------------------------------------------------------------
Pursuant to the Act, federal prime contractors, other than
small business concerns, receiving prime contracts in excess of
$650,000 must negotiate a subcontracting plan with the
government detailing how they will use small businesses as
subcontractors.\120\ This requirement also applies to
subcontractors other than small businesses who receive
subcontracts in excess of $650,000.\121\ This is important
because in FY 2014, federal government spent $5.8 billion on
food manufacturing. This included nearly $4 billion in
contracts requiring subcontracting plans.\122\ Given that the
current administratively set goal for subcontracting with small
businesses is 34.06 percent of all subcontracted dollars, and
food manufacturing requires that the contractor obtain raw
agricultural products, the application of subcontracting rules
to these contracts could result in billions of dollars of
subcontracts being competed among small agricultural
enterprises.\123\ Holding all else constant, to the extent that
an updated size standard increases the number of small
agriculture enterprises, more small firms would be able to
compete for these contracts, which would strengthen the base of
small agricultural enterprises.
---------------------------------------------------------------------------
\120\15 U.S.C. Sec. 637(d)(4).
\121\Id.
\122\FPDS Report, supra note 35.
\123\SBA, Government-Wide Procurement Scorecard (2015), available
at https://www.sba.gov/sites/default/files/files/FY14_Government-
Wide_SB_Procurement_Scorecard_Public_View_2015-04-29.pdf.
---------------------------------------------------------------------------
In the 113th Congress, the Subcommittee on Agriculture,
Energy and Trade and held a hearing to examine whether the
existing statutory size standard for agricultural enterprises
meets the needs of small agricultural businesses.\124\ The
Subcommittee received testimony from the SBA, a farmer, a
cattle rancher, and an agriculture industry representative. The
witnesses discussed how the input and labor costs of producing
crops and livestock has risen and that the annual receipts of
agricultural operations can vary significantly from year to
year. Furthermore, the witnesses representing agricultural
enterprises recommended that Congress consider eliminating the
statutory size standard and allowing the SBA to establish size
standards through the rulemaking process.\125\ In his
testimony, Mr. John Shoraka, the Associate Administrator for
Government Contracting at the SBA, stated that the agency was
capable of conducting the analyses to establish size standards
for agricultural enterprises, and if given the authority, the
SBA would use the same notice and comment process it currently
uses to establish size standards for other industries.\126\ As
a result, section 503 will abolish the $750,000 size standard
in favor of one regulatorily established by SBA.
---------------------------------------------------------------------------
\124\Modernizing Agriculture Producer Size Standards: Before the
Subcomm. on Agriculture, Energy and Trade of the H. Comm. on Small
Bus., 113th Cong. (2014), available at http://www.gpo.gov/fdsys/pkg/
CHRG-113hhrg88924/pdf/CHRG-113hhrg88924.pdf.
\125\Id. at 5-10.
\126\Id. at 4.
---------------------------------------------------------------------------
4. Section 504
Both the SBA and the VA operate procurement programs for
SDVOSBs. The SBA program applies to procurements at all
agencies other than VA, whereas the VA program applies only to
VA contracts. While both programs apply nearly identical
statutory definitions of a SDVOSB, the Committee has received
complaints that the application of the statutory programs is
resulting in disparate decisions.
The Veterans Benefits Act of 2003 (VBA) amended the Act to
create a government wide procurement program for small
businesses,\127\ while the Veterans Benefits, Health Care, and
Information Technology Act of 2006 (VBHCITA) created the SDVOSB
contracting program at VA.\128\ The statutory foundations of
the two SDVOSB programs vary in three principal ways. First,
the definition of a SDVOSB is slightly different. Second, the
scope of the contracts to be awarded differs. Finally, the
relationship between the SDVOSB program and other small
business contracting programs is different.
---------------------------------------------------------------------------
\127\Pub. L. No. 108-183, Title III, Sec. 308, 117 Stat. 2662
(2003) (codified at 15 U.S.C. Sec. 657f).
\128\Pub. L. No. 109-461, 120 Stat. 3431 (2006) (codified at 38
U.S.C. Sec. Sec. 8127-8128). The VBHCITA also create a set-aside
program for Veteran-Owned Small Businesses (VOSBs). While there is only
a subcontracting goal for VOSBs under the Small Business Act, the
certification issues described herein are generally applicable to VOSBs
except for the lack of a prime contracting certification process at
SBA.
---------------------------------------------------------------------------
With a few important exceptions, the VBA and the VBHCITA
use the same definitions, relying on the VA's definitions of
veteran or service-disabled veteran (SDV) to determine whether
an individual qualifies for the program, and using the Small
Business Act definitions of small business.\129\ This is
eminently sensible, as it entrusts to each agency that which
the agency has the most experience defining. The only
difference occurs when the two concepts are combined in an
attempt to define SDVOSBs. Both statutes agree that the term
means a small business concern that is at least 51 percent
owned by one or more SDVs or, in the case of any publicly owned
business, not less than 51 percent of the stock of which is
owned by one or more SDVs.\130\ However, there are three
critical differences. First, the VBA, but not the VBHCITA,
explicitly extends benefits to firms that, ``in the case of a
veteran with permanent and severe disability, the spouse or
permanent caregiver of such veteran.''\131\ The discrepancy
regarding permanent caregivers is addressed by VA in its
regulations, which extends rights to these individuals.\132\
Second, the VBHCITA but not the VBA allows the surviving spouse
of a veteran to continue participating as a SDVOSB for up to
ten years if, after the death of a veteran, the surviving
spouse of such veteran acquires ownership rights.\133\ Third,
the VBA permits self-certification by SDVOSBs, subject to
protests, while the VBHCITA requires that VA maintain a
database of SDVOSBs that are certified as such by the VA.\134\
While these differences may seem minor, the result is that a
firm may qualify as a SDVOSB at VA but not for a contract at
another agency, or vice versa. For these reasons, section 504
reconciles the definitions between the Act and title 38 of the
United States Code.
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\129\Section 3(q) of the Small Business Act defines ``veteran'' in
accordance with 38 U.S.C. Sec. 101(2) and service-disabled veteran is
defined per 38 U.S.C. Sec. 101(16). VBHCITA adds the definition of
small business found in Section 3(a) of the Small Business Act to 38
U.S.C. Sec. 8127(k)(1).
\130\Small Business Act, Sec. 3(q)(2)(A); 38 U.S.C.
Sec. 8127(k)(2). c.f., The VBHCITA actually requires that the service
disabled veterans ``are unable to manage the daily business operations
of such concern,'' but in regulation this has been interpreted to
require the management of the daily business operations. 38 C.F.R.
Sec. 74.1.
\131\Small Business Act, Sec. 3(q)(2)(B).
\132\38 C.F.R. Sec. 74.1.
\133\38 U.S.C. Sec. 8127(h).
\134\Small Business Act, Sec. 36(q)(2)(B). 38 U.S.C. Sec. 8127(f).
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Reconciling the statutory divergence is the first obstacle,
as SBA and VA have both received criticism alleging that the
regulatory differences between the two SDVOSB programs exceed
those differences that would be expected given the statutory
discrepancies. Thus, SBA and VA have undertaken joint review of
the regulations governing each program and produced a chart
that provides a section-by-section comparison of the existing
regulations each believes are relevant (VA Chart).\135\ VA has
stated that this analysis demonstrates that there are only
three differences between the regulations: (1) VA allows
surviving spouses to inherit limited benefits; (2) VA requires
change of ownership notification; and (3) VA has a program for
veteran-owned small businesses (VOSB).\136\ Furthermore, VA
stated that they were aware of only one interpretive difference
in the application of the regulations, and that concerned a
question of whether SDVs control a company with a three-person
board if one SDV and one non-SDV could align against a second
SDV.\137\ Based on this, the conflict would appear minimal at
best. However, SBA has stated ``while it is true that the
wording of the regulations pertaining to the VA's and SBA's
eligibly [sic] requirements is similar, there are some key
differences in interpretations.''\138\
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\135\On file with the Committee.
\136\Comments of Tom Leney, Executive Director of the Veterans and
Small Business Programs for VA, to VET-Force (Feb. 12, 2013).
\137\Id.
\138\GAO, Veteran-Owned Small Businesses: Planning and Data System
for VA'S Verification Program Need Improvement 56 (2013) (GAO-13-95)
(hereinafter Planning and Data).
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The VA Chart compares three sources of regulations--VA's
SDVOSB regulations, SBA's SDVOSB regulations, and SBA's 8(a)
business development (8(a)) program regulations.\139\ This
framing of the discussion itself presents two problems. First,
looking at the regulations regarding the 8(a) program may be
informative, but should not be controlling since the programs
have different statutory purposes. The 8(a) program is a time-
limited program intended to assist socially and economically
disadvantaged individuals trying to establish successful small
businesses, and contracting is used as a tool in the
development process.\140\ In contrast, both SDVOSB programs are
contracting programs intended to help the federal government
meet its statutory goals of awarding at least 3 percent of all
prime contract and subcontract dollars to SDVOSBs.\141\ When VA
patterned its rules off of the 8(a) program regulations, it
failed to recognize this dichotomy. This has led to situations
such as that where VA requires SDVOSB living in community
property states to have their spouses preemptively relinquish
any interest in the firm lest the spouse be considered an
owner, even though VBHCITA will allow the same spouse to
qualify for the program after the SDV's death--a requirement
not found in SBA's SDVOSB program.\142\ Additionally, like the
8(a) program, VA requires that SDVs receive the majority of the
pay or profits of the firm.\143\ SBA has not included this
requirement in the SDVOSB regulations, although distribution of
profits would be considered in analyzing control, because pay
itself is not always determinative of control.
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\139\38 C.F.R. Sec. 74; 13 C.F.R. Sec. Sec. 125.8-125.29; 13 C.F.R.
Sec. 124. See Small Business Act Programs at 4-5 for additional
information on this program.
\140\13 C.F.R. Sec. 124.1.
\141\Small Business Act, Sec. 15(g); 38 U.S.C. Sec. 8127(c).
\142\13 C.F.R. Sec. 121.105(k); 38 C.F.R. Sec. 74.3(f); supra note
7.
\143\38 C.F.R. Sec. 74.3(d)
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Perhaps more egregiously though, the VA Chart excludes the
relevant SBA's regulations that address issues fundamental to
whether a SDV owns and controls a firm and whether the firm is
itself small, which are found at 13 C.F.R. Sec. 121. These
regulations provide the underpinnings for the ownership and
control provisions found in SBA's SDVOSB and 8(a) programs. For
example, it is this additional section of regulation that tells
firms how stock ownership will be used to determine control of
a company, and how board composition affects this
calculus\144\--the very situation VA admitted caused
interpretive differences.\145\ However, these regulations go
far beyond that one example--they address when agreements to
act in the future will be given present effect, how to treat
companies with common management, companies with substantially
identical business or economic interests, companies spun off
from other companies, joint ventures, companies that are unduly
reliant on an ostensible subcontractor, companies with
franchise and license agreements, or companies where the
totality of the circumstances indicate that the business is not
independently owned and controlled.\146\ To attempt to
determine if a firm is a SDVOSB without examining it in light
of these regulations belies VBHCITA's direction to use SBA's
definition of a small business, because these are the
regulations that define whether a firm is small.\147\
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\144\13 C.F.R. Sec. 121.103(c). For an in depth discussion of
affiliation and control issues, see Committee on Small Business, ``What
is a Small Business for Purpose of Federal Contracting?'' 6-16 (2013),
available at http://smallbusiness.house.gov/resources/committee-
publications.htm.
\145\Supra note 17.
\146\13 C.F.R. Sec. Sec. 121.103(a)(5); 121.103 (d)-(i).
\147\Supra note 3.
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This has led to bright line rules at VA that do not exist
at SBA. For example, VA will deny SDVOSB status if ownership in
the entity carries with it the requirement that a right of
first refusal to purchase the SDV's ownership interest will be
offered to another owner or third party.\148\ While SBA does
consider agreements regarding transfer of ownership, it looks
at each agreement to determine whether its terms mean that the
SDV does not unconditionally control the company. Similarly, VA
requires that that at least one SDV who ``manage[s] the
applicant or participant must devote full-time to the business
during the normal working hours of firms in the same or similar
line of business.''\149\ SBA does not require this, as long as
SDVs can prove actual ownership and control over day-to-day
decisions.
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\148\VA, Verification Assistance Brief--Transfer Restrictions,
available at http://www.va.gov/osdbu/veteran/
transferRestrictionsBrief.asp.
\149\38 C.F.R. Sec. 74.4(c)(4).
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Indeed, the regulatory and interpretive differences are
being borne out by case law. Within SBA, any appeal regarding a
firm's size or status is heard by OHA, a body of administrative
judges that provides final agency action through published
decisions. Recently, OHA identified fourteen cases:
in connection with SDVO set-asides where (1) OHA
determined the subject business concern was not small
and thus was ineligible for the contract at issue, and
(2) had the [VA regulations] been the sole governing
rules, the business concern would have been eligible
for the contract. In each of these 14 cases, the
different outcome is owed to the operation of SBA's
affiliation rule at 13 C.F.R. Sec. 121.103. The
affiliation rule, an integral part of small business
size analysis, is not a part of the DVA's SDVO status
regulations.\150\
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\150\Email from SBA to Committee Staff, ``OHA decisions on Service-
Disabled Veteran-Owned Status and Size Cases,'' (Feb. 12, 2013). The
cases are: Size Appeal of Chu & Gassman, Inc., SBA No. SIZ-5394 (2012);
Size Appeal of Chu & Gassman, Inc., SBA No. SIZ-5344 (2012); Size
Appeal of EarthCare Solutions, Inc., SBA No. SIZ-5183 (2011); Size
Appeal of Specialized Veterans, LLC, SBA No. SIZ-5138 (2010); Size
Appeal of A1 Procurement, LLC, SBA No. SIZ-5121 (2010); Size Appeal of
J.M. Waller Associates, Inc., SBA No. SIZ-5108 (2010); Size Appeal of
DooleyMack Government Contracting, LLC, SBA No. SIZ-5086 (2009); Size
Appeal of DooleyMack Government Contracting, LLC, SBA No. SIZ-5085
(2009); Size Appeal of Blue Cord Construction, Inc., SBA No. SIZ-5077
(2009); Size Appeal of Taylor Consultants, Inc., SBA No. SIZ-5049
(2009); Size Appeal of Heritage of America, LLC, SBA No. SIZ-5017
(2008); Size Appeal of Mission Solutions, Inc., SBA No. SIZ-4828
(2006); Size Appeal of B & M Construction, Inc., SBA No. SIZ-4805
(2006) Size Appeal of Catapult Technology, Ltd., SBA No. SIZ-4795
(2006).
These cases should not be seen as an exhaustive list, since
OHA does not have the ability to review cases that VA denies,
nor does OHA see each case that VA approves. However, it does
illustrate how different applications of regulations by even
the most well-intentioned parties can lead to regulatory and
interpretive discrepancies. Therefore, section 504 requires
that VA and SBA decide questions of ownership and control, but
not of veteran status, using SBA's regulations.
Both SBA and VA processes for certifying SDVOSBs are
imperfect. SBA relies upon a process of self-certification, but
allows contracting officers, SBA, or other interested parties
to raise a protest to the SBA Director of the Office of
Government Contracting (DGC).\151\ The DGC then has 15 days to
investigate and issue a decision.\152\ Appeals of the DGC's
decision are heard by OHA and decided in 15 days, at which time
a published decision is made publicly available.\153\ While
this process has the advantage of allowing nearly 13,000
SDVOSBs to quickly begin competing for contracts, it also
leaves open the door for fraud.\154\
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\151\13 C.F.R. Sec. 125.24-25.
\152\13 C.F.R. Sec. 125. 25-27.
\153\13 C.F.R. Sec. 134-514.
\154\SDVOSB numbers are taken from the SBA's Dynamic Small Business
Search tool, available at www.dsbs.sba.gov; for information on fraud,
see, e.g. GAO, Case Studies Show Fraud and Abuse Allowed Ineligible
Firms to Obtain Millions of Dollars in Contracts (2009)(GAO-10-108)
(hereinafter Case Studies).
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In contrast, VA's SDVOSB program has 4,102 SDVOSBs
currently certified in its database, each of which must be
certified yearly.\155\ Additionally, in fiscal year 2012, VA
received 4,900 new initial applications for both the SDVOSB and
VOSB program.\156\ VA uses over 200 full time equivalents and
spends $33 million a year running a four step certification
process after an application is submitted:
---------------------------------------------------------------------------
\155\www.vip.vetbiz.gov; 38 C.F.R. Sec. 74.15; c.f. http://
www.va.gov/osdbu/faqs/verification.asp (recertification is required
every two years).
\156\Planning and Data at 44.
---------------------------------------------------------------------------
VA employees screen it to ensure that it
meets the minimum eligibility requirements;
VA contractors conduct an initial evaluation
and make a preliminary recommendation for approval,
denial or additional review;
VA contractors and employees review the
initial recommendation, and if necessary, conduct site
visits; and
VA supervisors make a formal determination
and issue a letter decision to the applicant.\157\
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\157\Planning and Data at 8.
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This process takes approximately 85 days, and 61 percent of
applicants are accepted.\158\ Those that are rejected may
appeal the decision through a Request for Consideration, which
is conducted by the VA's Office of General Counsel.\159\
Requests for reconsideration are granted on 48 percent of
appeals, but generally take an additional 147 days. In contrast
with SBA's process where appeals are decided by independent
judges ``where the standard of review is whether the
determination of eligibility was based on a clear error of fact
or law or whether the decision was arbitrary, capricious or
contrary to law[, VA] has no such appellate procedure.''\160\
VA's decisions are not published, and do not represent legal
precedent.
---------------------------------------------------------------------------
\158\Id. at 14, 44.
\159\Id. at 44; supra note 16. VA's regulations require a decision
in 60 days. 38 C.F.R. Sec. 74.11.
\160\Planning and Data at 56.
---------------------------------------------------------------------------
GAO and the federal courts have taken issue with VA's
process. GAO recently found that while ``VA has made progress
toward reducing its vulnerability to fraud and abuse,'' the
agency's strategic planning and data capabilities necessary to
prevent that fraud remain inadequate.\161\ The Court of Federal
Claims (COFC), when examining transfer restrictions and appeals
under the VA process, found that VA's appeals process does not
allow ``basic procedural due process'' and that the examination
``contravened the minimal requirements for informal
adjudication set forth in Section 555 of the [Administrative
Procedures Act (APA)].''\162\ While the GAO finding highlighted
the lack of long term planning and data systems that allow VA
to monitor applications and processes to ensure consistence,
the COFC holdings go to a more crucial question--whether the
verification system is able to address the tension between
providing due process to SDVs firms and preventing fraudulent
contracting.
---------------------------------------------------------------------------
\161\Id. at 33-34.
\162\Miles Construction, LLC v. United States, No. 12-597C 13, 25
(Fed. Cl. 2013); see also KWV, Inc. v. United States, No. 12-882C (Fed.
Cl. 2013).
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To insure that the new regulations are uniformly
implemented and to protect the due process rights of all
potential SDVOSBs, section 504 provides that OHA will hear all
appeals dealing with ownership and control. VA will continue to
hear appeals dealing with an individual's status as a veteran.
5. Section 505
The Office of Government Contracts and Business Development
(GCBD) at SBA is overseen by an associate administrator
appointed by the President, supported by five senior executives
and a head of operations. It is depicted in the following
chart.
Office of Government Contracts and Business Development\163\
The GCBD programs exist within five suboffices: Policy,
Planning and Liaison (PPL), Government Contracting (GC),
Business Development (BD), HUBZone (HZ) and Operations. PPL has
three primary responsibilities: (1) regulations; (2) goaling;
and (3) size standards. On the regulatory front, PPL drafts all
the amendments to the contracting regulations within chapter 13
of the Code of Federal Regulations.\164\ Additionally, PPL
represents SBA on the Civilian Agency Acquisition Council
(CAAC). The CAAC and its defense counterpart, the Defense
Acquisition Regulatory Council (DARC) draft all of the
regulations promulgated as part of the Federal Acquisition
Regulation, which governs almost all federal contracts.
---------------------------------------------------------------------------
\163\All charts are based on information provided by SBA.
\164\It is worth noting that position responsible for drafting
regulations has been vacant since 2014, despite the high backlog of
regulations waiting for SBA action.
---------------------------------------------------------------------------
Additionally, PPL creates specific size standards for each
industry that determine which businesses qualify as small
businesses. The office assigns revenue- or employee-based size
standards to each of the more than 1,100 North American
Industrial Classification System (NAICS) codes, as further
discussed in section 502.\165\ These size standards then govern
which firms can compete for restricted contracts.
---------------------------------------------------------------------------
\165\15 U.S.C. Sec. 632(a). In a few instances, other factors are
also considered, such as production or assets. For further information,
please see the Committee Memorandum, ``What is a Small Business for
Purposes of Federal Contracting?'' (2013), available at http://
smbiz.house.gov/uploadedfiles/
what_is_a_small_business_for_purpose_of_federal_contracting.pdf.
---------------------------------------------------------------------------
Finally, PPL develops and negotiates prime contracting and
subcontracting goals with each of the federal agencies. SBA is
required to report to Congress annually on the goal
achievements.\166\
---------------------------------------------------------------------------
\166\Id. at Sec. 644(h)(2).
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The GC office oversees the contracting assistance programs
and most of GCBD's field operations, including the six area
offices. The best known function of GC is that its area offices
house the Procurement Center Representatives (PCRs) and
Commercial Market Representatives (CMRs) discussed most
recently during the December 9, 2015 Subcommittee on
Contracting and Workforce Hearing titled, ``Supporting Success:
Empowering Small Business Advocates.'' As explained in that
hearing memorandum, the PCRs are located at major federal
procurement activities and review solicitations to ensure that
small businesses have the chance to compete.\167\ Likewise, the
CMRs help small businesses compete for federal
subcontracts.\168\
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\167\Committee Staff Memorandum, Supporting Success: Empowering
Small Business Advocates 1-2 (2015), available at http://
smbiz.house.gov/uploadedfiles/12-09-2015_hearing_memo.pdf.
\168\Id. at 3.
---------------------------------------------------------------------------
Additionally, GC oversees the Certificate of Competency
Program, Natural Resources Assistance Program, Waivers of the
Nonmanufacturer Rule, and the Small Business Size Determination
Program. The Certificate of Competency Program allows
contracting officers unsure of whether a small business has the
ability to complete a task to refer the contract to SBA for
evaluation.\169\ The Natural Resources Assistance Program aids
small businesses seeking to purchase timber from the federal
government.\170\ The nonmanufacturer rule requires that any
contract for goods in which competition is limited to small
businesses or a subset thereof require that the goods delivered
be the product of a domestic small business unless SBA has
determined that no such businesses are available.\171\ The
Small Business Size Determinations Program applies the size
standards promulgated by PPL to adjudicate whether a firm is
small for purposes of a specific contract.\172\ C also manages
four contracting programs: the small business prime contracting
program, the small business subcontracting program, the
Service-Disabled Veteran-Owned Small Business (SDVOSB) Program,
and the Women-Owned Small Business (WOSB) Program.
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\169\15 U.S.C. Sec. 637(b)(7).
\170\15 U.S.C. Sec. 644(a).
\171\15 U.S.C. Sec. 637(a)(17); 15 U.S.C. Sec. 657s(a)(4).
\172\13 C.F.R. Sec. Sec. 121.1001 through 121.1009.
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The BD Office has oversight of the 8(a) business
development program (8(a) program) and the small disadvantaged
business program as described in sections 202 and 205.
A HUBZone is a geographic area with high poverty or high
unemployment, as defined through a complicated statutory
framework.\173\ HUBZone small business concerns are small
businesses whose principal office is located in a HUBZone, that
are at least 51 percent owned by United States citizens, and
which draw at least 35 percent of their employees from
HUBZones.\174\ These firms can receive set-aside contracts if
two or more HUBZone concerns are expected to make a fair and
reasonable offer.\175\ Sole-source awards are permitted for
contracts below $4 million ($6.5 million for manufacturing
contracts).\176\ A price evaluation adjustment of 10 percent is
granted when bidding on contracts offered through full and open
competition.\177\ To certify as a HUBZone firm, a small
business must apply on the SBA website, recertify every three
years, certify through SAM, and qualify at the time of offer
and the time of award.\178\ SBA has the authority to conduct
program examinations of firms to verify their continued
eligibility\179\ or to hear appeals regarding a firm's
size\180\ or eligibility for the program.\181\ There is a
statutory goal of awarding three percent of all prime contract
dollars and three percent of all subcontract dollars to HUBZone
firms\182\ The HUBZone office at SBA publishes the lists and
maps of eligible HUBZones, reviews applications, and conducts
reviews of firms. SBA does not provide details of the
organizational structure.
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\173\17 HUBZone are defined as any area located in a qualified
census tract, qualified nonmetropolitan county, within the external
boundaries of an Indian reservation or an area subject to the Base
Realignment and Closure Act (BRAC). 15 U.S.C. Sec. 632(p). Qualified
census tracts are tracts designated by the Department of Housing and
Urban Development (HUD) in which either 50 percent or more of the
households have an income which is less than 60 percent of the area
median gross income for such year or which has a poverty rate of at
least 25 percent, but no more than 20 percent of a metropolitan
statistical area may qualify. 26 U.S.C. Sec. 42(d)(5)(B)(ii). Qualified
nonmetropolitan counties are those in which median household income is
at less than 80 percent of the nonmetropolitan State median household
income, the unemployment rate at least 140 percent of the average
unemployment rate for the United States or for the State in which such
county is located, whichever is less, or which is located in a
difficult development area, as designated by HUD. 15 U.S.C.
Sec. 632(p).
\174\15 U.S.C. Sec. 632(p)(5).
\175\48 C.F.R. Sec. 19.1305-1307.
\176\Id.
\177\Id.
\178\13 C.F.R. Sec. 126.300.
\179\Id. at Sec. 126.401.
\180\Id.
\181\Id at Sec. 121.1001. SBA, the contracting officer, or any
other interested party may protest the apparent successful offeror's
qualified HUBZone SBC status. 13 C.F.R. Sec. 126.801.
\182\15 U.S.C. Sec. 644(g)(1).
---------------------------------------------------------------------------
Finally, GCBD's operations group manages the information
technology and develops training to support the GCBD offices.
It provides additional administrative support to the Associate
Administrator.
The recent GAO report examining challenges at SBA
identified a number of open recommendations for GCBD, but it
also identified broad reaching issues within SBA that are
affecting the ability of GCBD to perform its mission.\183\ The
following is a brief overview of the specific open
recommendations, and of the systemic issues.
---------------------------------------------------------------------------
\183\GAO, Small Business Administration: Leadership Attention
Needed to Overcome Management Challenges (GAO-15-347) (2015), available
at http://www.gao.gov/products/GAO-15-347 [hereinafter ``GAO Management
Report''].
---------------------------------------------------------------------------
In a 2011 report, GAO stated that:
[t]o help ensure that [Government Contracting Area
Report (GCAR)] data are accurate and that SBA reliably
can use the data to monitor PCR and CMR performance and
determine whether established goals have been achieved,
we recommend that SBA's Director of Government
Contracting take the following two steps:
provide clear and complete guidance to PCRs
and CMRs on accurately recording and maintaining the
appropriate backup documentation for accomplishments
reported in the GCAR monthly report, and
require that monthly GCAR data are verified
and that documentation for PCR and CMR records are
periodically reviewed for quality and
completeness.''\184\
---------------------------------------------------------------------------
\184\GAO, Improvements Needed to Help Ensure Reliability of SBA's
Performance Data on Procurement Center Representatives 9 (GAO-11-549R)
(2011).
---------------------------------------------------------------------------
While additional guidance has been provided, GAO in its
Management Report still recommends that ``[t]o help ensure that
[GCAR] data are accurate and that SBA reliably can use the data
to monitor [PCR] and [CMR] performance and determine whether
established goals have been achieved, SBA's Director of
Government Contracting should require that monthly GCAR data
are verified and that documentation for PCR and CMR records are
periodically reviewed for quality and completeness.''\185\ As
discussed in a 2011 hearing of this Subcommittee, GCAR data is
essential for tracking instances of bundling, consolidation,
and failure of contracting agencies to follow the Act.\186\
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\185\Management Report at 106.
\186\See Helping Small Businesses Compete: Challenges Within
Programs Designed to Assist Small Contractors Subcommittee on
Contracting and Workforce (2011).
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In a 2013 report, GAO found that agencies did not
understand the rule regarding bundling and consolidation and
were not fully complying with the law.\187\ GAO recommended
that SBA submit the statutorily required bundling reports to
Congress to increase accountability and promote
compliance.\188\ While SBA agreed, the recommendation had not
been complied with at the time of the Management Report,
prompting GAO to again recommend that SBA file the required
reports.\189\ Given the increased attention this Subcommittee
has focused on bundling and consolidation, most recently at a
March 17, 2015 hearing, and requiring in law that agencies
improve their reporting on bundling and consolidation\190\ it
would improve the Committee's oversight if SBA were to provide
timely reports.
---------------------------------------------------------------------------
\187\GAO, Small Business Contracting: Updated Guidance and
Reporting Needed for Consolidated Contracts 8 (GAO-14-36) (2013).
\188\Id. at 19.
\189\Management Report at 106.
\190\The FY 2015 and FY 2016 NDAAs each included a data quality
improvement plan for bundling and consolidation. See Pub. L. No. 113-
291 Sec. 822 and Pub. L. No. 114-92 Sec. 862.
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The use of third-party certifiers for WOSB and EDWOSB
programs came under scrutiny in a 2014 report that led to two
outstanding recommendations.\191\ Specifically, GAO found that
the lack of clear guidance and oversight allowed for abuse of
the program.\192\ However, despite language in the FY 2015 NDAA
requiring SBA to move to discontinue self-certification,\193\
SBA has not closed two recommendations. Specifically, the
Management Report echoed the recommendation that ``[t]o improve
management and oversight of the [WOSB] program, and to help
ensure the effective oversight of third-party certifiers, the
[SBA] should establish and implement comprehensive procedures
to monitor and assess performance of certifiers in accord with
the requirements of the third-party certifier agreement and
program regulations.''\194\ Further, GAO recommended that
``[t]o improve management and oversight of the WOSB program,
and to provide reasonable assurance that only eligible
businesses obtain WOSB set-aside contracts, [SBA] should
enhance examination of businesses that register to participate
in the WOSB program, including actions such as: (1) promptly
completing the development of procedures to conduct annual
eligibility examinations and implementing such procedures; (2)
analyzing examination results and individual businesses found
to be ineligible to better understand the cause of the high
rate of ineligibility in annual reviews, and determine what
actions are needed to address the causes; and (3) implementing
ongoing reviews of a sample of all businesses that have
represented their eligibility to participate in the
program.''\195\ If any set-aside program fails to implement the
appropriate controls, it opens itself to waste, fraud and
abuse. Therefore, these recommendations remain critical.
---------------------------------------------------------------------------
\191\GAO, Woman-Owned Small Business Program: Certifier Oversight
and Additional Eligibility Controls Are Needed (GAO-15-54) (2014).
\192\Id. at 15.
\193\Pub. L. No. 113-291 Sec. 825.
\194\Management Report at 106.
\195\Id.
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While the HUBZone program does not rely upon third-party
verification programs, the outstanding GAO recommendations are
very similar. Based on a 2015 report that examined lacks of
controls and communication in the HUBZone program, GAO made two
recommendations.\196\ First, GAO recommended that ``[t]o
improve SBA's administration and oversight of the [HUBZone]
program and reduce the risk that firms that no longer meet
program eligibility criteria receive HUBZone contracts, [SBA]
should conduct an assessment of the recertification process and
implement additional controls, such as developing criteria and
guidance on using a risk-based approach to requesting and
verifying firm information, allowing firms to initiate the
recertification process, and ensuring that sufficient staff
will be dedicated to the effort so that a significant backlog
in recertifications does not recur.''\197\ Further, GAO
recommended that ``SBA should establish a mechanism to better
ensure that firms are notified of changes to HUBZone
designations that may affect their participation in the
program, such as ensuring that all certified firms and newly
certified firms are signed up for the broadcast e-mail system
or including more specific information in certification letters
about how location in a redesignated area can affect their
participation in the program.''\198\ Given that factors such as
the residences of employees can change daily, and that the
HUBZone program was designed to continually shift between
locations so that only the most underutilized areas would
qualify, both recommendations are common sense.
---------------------------------------------------------------------------
\196\GAO, Small Business Contracting: Opportunities Exist to
Further Improve Hubzone Oversight (GAO-15-234) (2015).
\197\Management Report at 106.
\198\Id. at 106-107.
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In September 2011 and again in 2015, the Subcommittee on
Contracting and Workforce held hearings examining mentor-
protege programs. This was spurred in part by a 2011 GAO
report,\199\ which has led to legislation reforming the mentor-
protege programs.\200\ The crux of the report was that, while
well-intentioned, there was little to no tracking of protege
firms to see if the programs produced lasting benefits.\201\
Thus, GAO recommended and SBA agreed that the program would
benefit from post award tracking. However, nearly six years
later, the recommendation that ``[t]o more fully evaluate the
effectiveness of their mentor-protege programs, . . . the
Mentor-Protege Program Directors of the . . . SBA . . . should
consider collecting and maintaining protege postcompletion
information'' remains open.\202\ This is particularly
problematic now that SBA has been given statutory authority
over all civilian agency mentor-protege programs.
---------------------------------------------------------------------------
\199\GAO, Mentor-Protege Programs Have Policies That Aim to Benefit
Participants but Do Not Require Postagreement Tracking (GAO-11-548R)
(2011).
\200\NDAA for Fiscal Year 2013, Pub. L. No. 112-239 Sec. 1641
(2013).
\201\Mentor-Protege Programs Have Policies That Aim to Benefit
Participants but Do Not Require Postagreement Tracking at 9.
\202\Management Report at 107.
---------------------------------------------------------------------------
In addition to the specific recommendations that were
outstanding for GCBD, other agency-wide issues are posing
challenges to the effectiveness of the GCBD programs and
organization. Specifically, human capital, contracting and
information technology and organizational structure are
hampering GCBD. GAO noted in its management report that SBA's
Inspector General (OIG) ``has included human capital as one of
the most serious management challenges at SBA since fiscal year
2001.''\203\ Within GCBD, this has led to the use of Voluntary
Early Retirement Authority and Voluntary Separation Incentive
Payments (VERA/VSIP) programs for fiscal years 2012 and
2014.\204\ In a VERA/VSIP action, the agency pays employees up
to $25,000 to retire, but then may only replace a fraction of
the retiring employees to achieve cost savings. GAO notes that
``SBA officials stated that each program office was consulted
to determine which positions were eligible for VERA/
VSIP.''\205\ However, in GCBD the VERA/VSIP action led to the
loss of statutorily mandated positions, such as PCRs, and the
loss of numerous senior executives. As a consequence, GCBD has
been operating without a Deputy, PPL lost its director of
Policy and Research, the BD program lost its head of management
and technical assistance, and numerous PCRs, BOS, and CMRs
left. Sixteen months later these positions have not been
filled. This has led to a backlog of regulations: based on the
FY13-FY16 NDAAs, SBA still needs to produce seven proposed
rules, thirteen final rules, and take seventeen other actions.
Fewer than fifty PCRs are responsible for over $400 billion in
contracts each year, and the majority of those PCRs carry other
job assignments. GCBD's ability to fulfill its mission is
jeopardized, which begs the question of why GCBD leadership
approved buyouts for crucial positions.
---------------------------------------------------------------------------
\203\Management Report at 20.
\204\Id. at 49.
\205\Id. at 43 footnote 103.
---------------------------------------------------------------------------
While information technology (IT) remains a challenge for
SBA generally, within GCBD it has led to a lack of oversight of
the 8(a) and HUBZone programs. Specifically, GAO cites a
February 2014 report by the OIG in which SBA failed to follow
contracting law when purchasing its OneTrack system.\206\ One
Track was intended to track participants in the 8(a) and
HUBZone programs, as well as SBA's loan programs, to reduce
fraud. However, since SBA ``failed to perform market research
or use a modular contracting strategy intended to reduce
acquisition risks'' the agency was left with a system that
still is not deployed and which does not meet the needs of
GCBD.\207\
---------------------------------------------------------------------------
\206\Id. at 28-29.
\207\Id.
---------------------------------------------------------------------------
In a 2003 report, GAO criticized SBA's organizational
structure as creating complex overlapping relationships among
offices that contributed to challenges in delivering services
to small businesses.\208\ GAO again specified that the
``working relationships between headquarters and field offices
. . . differ from reporting relationships, potentially posing
programmatic challenges.''\209\ A''[d]istrict officials
work[ing] with program offices at SBA's headquarters to
implement the agency's programs, but [reporting] to regional
administrators, who themselves report to the Office of Field
Operations,'' GAO cited the BOS ``in the district offices [who]
work with [GCBD] at SBA headquarters to assist small businesses
with securing government contracts but report to district
office management.''\210\
---------------------------------------------------------------------------
\208\Management Report at 58, citing GAO, Major Management
Challenges and Program Risks: SBA (GAO-03-116) (2003).
\209\Id.
\210\Id.
---------------------------------------------------------------------------
GAO also cited as problem that ``some officials have the
same duties.''\211\ While not identified as such by GAO, within
GCBD the delineation between GC and PPL is tenuous, as
illustrated by SBA's own website. PPL does not have a website,
but GC does.\212\ The GC website says that it is responsible
for goaling, and that it plays a major role in federal
regulations on government contracting.\213\ Indeed, PPL and GC
have previously been a single organization as recently as 2015.
---------------------------------------------------------------------------
\211\Id.
\212\https://www.sba.gov/offices/headquarters/ogc/about-us.
\213\Id.
---------------------------------------------------------------------------
Given this myriad of organizational and operational issues,
section 505 requires that the Comptroller General conduct a
substantial review of the GCBD and report back with
recommendations on how to restructure the office to achieve
greater efficiencies.
6. Section 506
Section 506 requires that reports SBA provides to the
Office of Management and Budget regarding data security be
provided to the Committee as well. This will help the Committee
perform better oversight of important IT security issues.
7. Section 507
Surety bonds protect the government and small businesses
alike by providing a third party guarantee that the prime
contractor will complete construction, commonly called a
performance bond, and that the prime contractor will pay its
suppliers and subcontractors, commonly called a payment bond.
Under federal law, to bid on most federal construction and
architectural or engineering projects above $150,000, the prime
contractor must provide the contracting officer with a surety
bond, and both the performance and payment bonds become binding
upon contract award.\214\ Thus, when bonds are issued by a
surety, the surety vouches for the creditworthiness and
capacity of the contractor, protects the government against
uncompleted projects and liens, and protects subcontractors
against unscrupulous or over extended prime contractors.
However, when the requirement to bond is waived, it may expose
the federal government, subcontractors and taxpayers to risk.
Section 507 requires that the Comptroller General assess
whether better outcomes are obtained when surety bonds are
required.
---------------------------------------------------------------------------
\214\40 USC Sec. 3131(b).
---------------------------------------------------------------------------
IV. Hearings
In the 114th Congress, the Committee held numerous hearings
that looked at the issues covered by H.R. 4341.
In the 114th Congress, the Committee held thirteen hearings
that looked at the issues covered by H.R. 4341. On February 12,
2015, the Full Committee held a hearing titled ``Contracting
and the Industrial Base'' that examined surety bond issues. On
March 7, 2015, the Subcommittee on Contracting and Workforce
held a hearing titled ``Contracting and the Industrial Base II:
Bundling, Goaling and the Office of Hearings and Appeals'' that
looked at the use of subcontracting, and at the role of the
PCR. On March 19, 2015, the Subcommittee on Contracting and
Workforce held a hearing on ``Contracting and the Industrial
Base III: Reverse Auctions, Verification and the SBA's Role in
Rulemaking,'' that examined the SDVOSB verification process,
and GCBD organizational issues. On June 4, 2015, the
Subcommittee on Contracting and Workforce held a hearing titled
``Sizing Up Small Businesses: SBA's Failure to Implement
Congressional Direction,'' that looked at size standards and
GCBD organizational issues. On June 23, 2015, the Subcommittee
on Oversight and Investigations held a joint hearing with the
Veterans' Affairs Committee of the House of Representatives
(HVAC) Subcommittee on Oversight and Investigations called
``Manipulation and Fraud in Reporting VA Small Business Goals''
that looked at the role of the OSDBU and the use of purchase
cards. On October 27, 2015, at a hearing called ``Maximizing
Mentoring: How are the SBA and DoD Mentor-Protege Programs
Serving Small Businesses?'' the Subcommittee on Contracting and
Workforce examined the DoD and SBA mentor-protege programs. At
a hearing called ``An Examination of Continued Changes in VA's
Vets First Verification Process,'' on November 4, 2015, the
Subcommittee on Contracting and Workforce and the HVAC
Subcommittee on Investigations, Oversight and Regulations
examined the VA and SBA verification programs for SDVOSB
contractors. On November 18, 2015, the Subcommittee on
Contracting and Workforce held a hearing called ``Continuing
Challenges for Small Contractors,'' that examined
subcontracting issues and goaling and transparency challenges.
The Subcommittee on Agriculture, Energy and Trade held a
hearing on size standards for agricultural producers on
November 19, 2015 called ``Improving Size Standards for Small
Farmers and Ranchers.'' The PCR, OSDBU, CMR, and BOS programs
were the subject of a hearing of the Subcommittee on
Contracting and Workforce on December 9, 2015 called
``Supporting Success: Empowering Small Business Advocates.'' On
February 3, 2016, the Subcommittee on Contracting and Workforce
held a hearing called ``SBA Management Review: Office of
Government Contracts and Business Development'' that looked at
the management of GCBD. On February 25, 2016, the Subcommittee
on Contracting and Workforce looked at compliance with
subcontracting plans in a hearing called ``Hotline Truths:
Issues Raised by Recent Audits of Defense Contracting.''
Finally, on April 5, 2016, the Subcommittee on Contracting and
Workforce held a hearing on ``Challenges for Small Defense
Contractors'' that examined compliance challenges and other
issues.
V. Committee Consideration
The Committee on Small Business met in open session, with a
quorum being present, on January 13, 2016 and ordered H.R. 4341
reported, as amended, to the House by a voice vote at 10:36
a.m. During the markup, seven amendments were offered. All
amendments were adopted. 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. Velazquez (D-NY) added
section 205 to H.R. 4341 and provide the roles and
responsibilities of the BOS at SBA. The amendment was adopted
by voice vote at 10:16 a.m.
Amendment Number Two filed by Ms. Lawrence (D-MI) added
section 506 to H.R. 4341 and requires that SBA share data on IT
security with the Committee. The amendment was adopted by voice
vote at 10:19 a.m.
Amendment Number Three filed by Mr. Takai (D-HI) allows
mentors participating in DoD mentor-protege programs to refer
protege firms to Women's Business Centers for technical
assistance. The amendment was adopted by voice vote at 10:22
a.m.
Amendment Number Four filed by Mr. Chabot (R-OH) made
technical corrections. The amendment was adopted by voice vote
at 10:35 a.m.
Amendment Number Five filed by Ms. Hahn (D-CA) clarified
that a task order is a contract for purposes of section 15 of
the Act. The amendment was adopted by voice vote at 10:28 a.m.
Amendment Number Six filed by Ms. Chu (D-CA) clarified that
SBA may create additional industry groups and new size
standards to reflect federal buying patterns. The amendment was
adopted by voice vote at 10:31 a.m.
Amendment Number Seven filed by Mr. King (R-IA) required
that GAO conduct a review on the use of surety bonds on small
business contracts. After the adoption of a perfecting
amendment by unanimous consent, the amendment was adopted by
voice vote at 10:33 a.m.
VI. Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the recorded
votes on the motion to report the legislation and amendments
thereto. There were no recorded votes on H.R. 4341.
VII. Section-by-Section Analysis of H.R. 527
SECTION-BY-SECTION ANALYSIS OF H.R. 4341 AS AMENDED
Section 1. Short title
This Section designates the bill as the ``Defending
America's Small Contractors Act of 2016''
Section 2. Table of contents
This section provides the table of contents, and divided
the bill into five titles.
TITLE I--IMPROVING TRANSPARENCY AND CLARITY FOR SMALL BUSINESSES
Section 101. Plain language rewrite of requirements for small business
procurements
This section strikes and replaces the current section
15(a). It makes no substantive changes to the Act, but merely
restructures the subsection to aid with comprehension.
Section 102. Improving reporting on small business goals
This section amends section 15(h)(2)(E) of the Act in eight
paragraphs.
Paragraph (1)
Paragraph (1) amends clause (i) of section 15(h)(2)(E) of
the Act by adding two new subclauses. The new subclause (V)
requires that when SBA reports on annual prime contract awards
to small business, it must also report on awards to small
businesses that were purchased by another entity after the
initial contract was awarded and as a result of the purchase,
would no longer be deemed to be small businesses. The new
subclause (VI) requires that when SBA reports on annual prime
contract awards to small business, it must also report on
awards to small businesses that were awarded using a
procurement method other than a small business set-aside or
full and open competition.
Paragraph (2)
Paragraph (2) amends clause (ii) of section 15(h)(2)(E) of
the Act by adding two new subclauses. The new subclause (VI)
requires that when SBA reports on annual prime contract awards
to SDVOSBs, it must also report on awards to SDVOSBs that were
purchased by another entity after the initial contract was
awarded and as a result of the purchase, would no longer be
deemed to be SDVOSBs. The new subclause (VII) requires that
when SBA reports on annual prime contract awards to SDVOSBs, it
must also report on awards to SDVOSBs that were awarded using a
procurement method other than a SDVOSB set-aside or full and
open competition.
Paragraph (3)
Paragraph (3) amends clause (iii) of section 15(h)(2)(E) of
the Act by adding two new subclauses. The new subclause (VII)
requires that when SBA reports on annual prime contract awards
to HUBZones, it must also report on awards to SDVOSBs that were
purchased by another entity after the initial contract was
awarded and as a result of the purchase, would no longer be
deemed to be HUBZones. The new subclause (VIII) requires that
when SBA reports on annual prime contract awards to HUBZones,
it must also report on awards to SDVOSBs that were awarded
using a procurement method other than a HUBZones set-aside or
full and open competition.
Paragraph (4)
Paragraph (4) amends clause (iv) of section 15(h)(2)(E) of
the Act by adding two new subclauses. The new subclause (VII)
requires that when SBA reports on annual prime contract awards
to SDBs, it must also report on awards to SDBs that were
purchased by another entity after the initial contract was
awarded and as a result of the purchase, would no longer be
deemed to be SDBs. The new subclause (VIII) requires that when
SBA reports on annual prime contract awards to SDBs, it must
also report on awards to SDBs that were awarded using a
procurement method other than a preference for SDBs or full and
open competition.
Paragraph (5)
Paragraph (5) amends clause (v) of section 15(h)(2)(E) of
the Act by adding two new subclauses. The new subclause (VI)
requires that when SBA reports on annual prime contract awards
to Indian Tribes other than Alaska Native Corporations (ANC),
it must also report on awards to Indian Tribes that were
purchased by another entity after the initial contract was
awarded and as a result of the purchase, would no longer be
deemed to be Indian Tribes. The new subclause (VII) requires
that when SBA reports on annual prime contract awards to Indian
Tribes other than ANCs, it must also report on awards to Indian
Tribes that were awarded using a procurement method other than
a preference for SDBs or full and open competition.
Paragraph (6)
Paragraph (6) amends clause (vi) of section 15(h)(2)(E) of
the Act by adding two new subclauses. The new subclause (VI)
requires that when SBA reports on annual prime contract awards
to Native Hawaiian Organizations (NHO), it must also report on
awards to NHOs that were purchased by another entity after the
initial contract was awarded and as a result of the purchase,
would no longer be deemed to be NHOs. The new subclause (VII)
requires that when SBA reports on annual prime contract awards
to NHOs, it must also report on awards to Indian Tribes that
were awarded using a procurement method other than a preference
for SDBs or full and open competition.
Paragraph (7)
Paragraph (7) amends clause (vii) of section 15(h)(2)(E) of
the Act by adding two new subclauses. The new subclause (VI)
requires that when SBA reports on annual prime contract awards
to ANCs, it must also report on awards to ANCs that were
purchased by another entity after the initial contract was
awarded and as a result of the purchase, would no longer be
deemed to be ANCs. The new subclause (VII) requires that when
SBA reports on annual prime contract awards to ANCs, it must
also report on awards to ANCs that were awarded using a
procurement method other than a preference for SDBs or full and
open competition.
Paragraph (8)
Paragraph (8) amends clause (viii) of section 15(h)(2)(E)
of the Act by adding two new subclauses. The new subclause (IX)
requires that when SBA reports on annual prime contract awards
to WOSBs, it must also report on awards to WOSBs that were
purchased by another entity after the initial contract was
awarded and as a result of the purchase, would no longer be
deemed to be WOSBs. The new subclause (X) requires that when
SBA reports on annual prime contract awards to WOSBs, it must
also report on awards to WOSBs that were awarded using a
procurement method other than a preference for WOSBs or full
and open competition.
Section 103. Transparency in small business goals
This section amends section 15(g) of the Act by adding a
new paragraph (4). The new paragraph directs that the
Administrator of the SBA may not, when calculating whether the
federal government met the 23 percent goal for federal prime
contracting, exclude contracts from the base for any of five
reasons. Those reasons are based on where the contract as
awarded, where it was performed, whether another law directs
that the contract go to another entity, such as Federal Prison
Industries, or whether funding for the contract is from fees
collected by the agency rather than appropriations if the
contract is subject to a bid protest, and finally whether the
contract is covered by the Federal Acquisition Regulation. This
will prohibit the current practice of excluding nearly twenty
percent of federal contract dollars and artificially inflating
the goals.
Section 104. Uniformity in procurement terminology
Subsection (a)--In General
This subsection amends section 15(j)(1) of the Act (15
U.S.C. 644(j)(1)) to replace the words ``greater than $2,500
but not greater than $100,000'' with the phrase ``greater than
the micro-purchase threshold, but not greater than the
simplified acquisition threshold.'' Given that the dollar
thresholds applicable to this program adjust every five years
and so no longer reflect the values provided in the Act, the
implementing regulations have already adopted the terms micro-
purchase threshold and simplified acquisition threshold. This
change keeps the statute and the regulations consistent.
Subsection (b)--Technical Amendment
This subsection amends section 3(m) of the Small Business
Act to ensure that the definitions used for the terms prime
contract, prime contractor, simplified acquisition threshold,
and micro-purchase threshold are given the same meaning as they
are in title 41 of the United States Code. Further, it
clarifies that the term ``total purchase and contracts for
property and services'' means ``total number and total dollar
amount of contracts and orders for property and services.''
TITLE II--CLARIFYING THE ROLES OF SMALL BUSINESS ADVOCATES
Section 201. Scope of review by procurement center representatives
This section amends section 15(l) of the Act to add a new
paragraph (9). The new paragraph directs that the SBA
Administrator may not prevent PCRs from reviewing contracts and
task orders that are set aside for small business concerns,
partially set aside for small business concerns, contain a
small business reserve, or would result in a bundled or
consolidated contract.
Section 202. Responsibilities of commercial market representatives
This section amends section 4(h) of the Act.
Paragraph (1)
Paragraph (1) retitles the subsection ``Commercial Market
Representatives.''
Paragraph (2)
Paragraph (2) redesignates subparagraphs (A) and (B) as
clauses (i) and (ii).
Paragraph (3)
Paragraph (3) amends the new clause (ii) to state the
educational requirements must be included in any posting
seeking to hire a CMR.
Paragraph (4)
Paragraph (4) amends the new clause (i) by striking
``paragraph (2)'' and inserting ``paragraph (1).''
Paragraph (5)
Paragraph (5) redesignates paragraphs (1) and (2) as
subparagraphs (A) and (B).
Paragraph (6)
Paragraph (6) strikes ``paragraph (2)'' the new
subparagraph (A) and inserts ``subparagraph (B).''
Paragraph (7)
Paragraph (7) by inserts a new paragraph (1). The new
paragraph provides that CMR should report to GCBD. It further
explains that their responsibilities are to advance the use of
small business concerns on federal subcontractors, including
helping prime contractors find qualified subcontractors and
assisting prime contractors with meeting their responsibilities
under their subcontracting plans. Further, the CMR should help
small business concerns improve their capacity to perform as
subcontractors.
Section 203. Duties of the Office of Small and Disadvantaged Business
Utilization
This section amends section 15(k) of the Act.
Paragraph (1)
Paragraph (1) strikes the references to section 8, 15 or 44
in section 15(k) of the Act and replaces it with section 8, 15,
31, 36, or 44. This allows the OSDBU to provide assistance to
SDVOSBs and HUBZones.
Paragraph (2)
Paragraph (2) strikes references to section 8 or 15 in
section 15(k) of the Act and replaces it with section 8, 15,
31, 36, or 44. This allows the OSDBU to provide assistance to
SDVOSBs and HUBZones and to provide assistance with bundling
and consolidation.
Paragraph (3)
Paragraph (3) strikes the reference to section 8 paragraph
(10) of section 15(k) of the Act and replaces it with section
8, 15, 31, 36, or 44. This allows the OSDBU to provide
assistance to small businesses, SDVOSBs and HUBZones and to
provide assistance with bundling and consolidation.
Paragraph (4)
Paragraph (4) redesignates paragraphs (15), (16), and (17)
as paragraphs (16), (17), and (18).
Paragraph (5)
Paragraph (5) inserts as new paragraph (15) that requires
the OSDBU to review purchases exceeding the micro-purchase
threshold but below the simplified acquisition threshold made
using purchase cards to ensure that the purchases follow the
laws related to small businesses and that they have been
entered into the Federal Procurement Data System.
Paragraph (6)
Paragraph (6) amends the new paragraph (17) to requires
that the OSDBU annually report on any violations of the Act by
their agency.
Section 204. Improving contractor compliance
Subsection (a)--Requirements for the Office of Small and
Disadvantaged Business Utilization
Subsection (a) amends section 15(k) of the Act by
redesignating paragraphs (16), (17), and 7 (18) as paragraphs
(17), (18), and (19). It then adds a new paragraph (16) that
requires that the OSDBU should assist small businesses
receiving federal contracts or subcontracts in finding
resources for education and training on compliance with
contracting regulations.
Subsection (b)--Requirements Under the Mentor-Protege
Program of the Department of Defense
Subsection (B) amends section 831(e)(1) of the FY 1991 NDAA
by adding a new subparagraph (D). The new subparagraph requires
that mentors in approved mentor-protege agreements shall
provide compliance assistance to proteges.
Subsection (c)--Resources for Small Business Concerns
This subsection amends section 15 of the Act by adding a
new subsection (t), titled ``Post-Award Compliance
Assistance.'' The new subsection requires that SBA provide
small business development centers and Procurement Technical
Assistance Centers a list of resources for small businesses
seeking education and assistance with complying with federal
procurement regulations. Further, SBA is required to put the
list on its website.
Subsection (d)--Requirements for Procurement Center
Represenatives
This subsection amends section 15(l)(2) of the Act by
adding a new subparagraph (I) to requires that PCRs assist
small business concerns with finding resources for education
and training on compliance with federal contracting
regulations.
Subsection (e)--Requirements under the the Mentor-Protege
Program of the Department of the Small Business
Administration
This subsection amends section 45(b)(3) of the Act by
adding a new subparagraph (K) the new subparagraph requires
that a mentor protege agreement should address the extent to
which the mentor will provide the protege with assistance
complying with federal contracting regulations.
Section 205. Responsibilities of Business Opportunity Specialists
This section amends section 4(g) of the Act.
Paragraph (1)
This paragraph changes the heading for the subsection to
``Business Opportunity Specialists.''
Paragraph (2)
This paragraph makes technical amendments.
Paragraph (3)
This paragraph amends clause (ii) to require that any job
advertisement for BOSs must include the educational
requirements.
Paragraph (4)--Paragraph (6)
These paragraphs make technical amendments.
Paragraph (7)
This paragraph inserts a new paragraph (1) that enumerates
the duties of the BOS. First, it requires that BOSs report to
GCBD, not to field operations. Second, it makes it clear that
the primary duties of the BOS shall be to implement the 8(a)
and mentor-protege programs. In doing so, the BOS is required
to provide eligible firms with counseling, referrals,
identifying why firms succeed or fail, and assessing the
strengths and weaknesses of the firms. Further, the BOS should
monitor and document the firm's compliance with theprogram, and
explain the contracting programs of the Act to participant. The
BOS may also assist with post-award compliance assistance, and
shall represent the SBA's interests in negotiations regarding
8(a) contracts.
TITLE III--STRENGTHENING OPPORTUNITIES FOR COMPETITION IN
SUBCONTRACTING
Section 301. Good faith in subcontracting
Subsection (a)--Transparency in Subcontracting Goals
This subsection amends section 8(d)(9) of the Act to
provide that failure to submit a required subcontracting report
may be a material breach of the contract.
Subsection (b)--Authority of the Administrator of the Small
Business Administration
This subsection amends section 8(d)(11) of the Act to state
that reviews by PCRs and CMRs of subcontracting plans are not
advisory in nature.
Subsection (c)--Review and Acceptance of Subcontracting
Plans
This subsection adds a new subsection 8(d)(17) to the Act
that provides authority for a PCR or CMR to assess whether a
proposed subcontracting plan provides the maximum practicable
opportunity for small business concerns to participate. If the
PCR or CMR believes that the plan does not provide sufficient
opportunities for small business participation, the PCR or CMR
is permitted to delay acceptance of the subcontracting plan for
up to 30 days. However, if the PCR or CMR fails to reach an
agreement with the contracting agency's personnel on a plan to
provide the maximum practicable opportunity; this subsection
provides that the disagreement shall be decided by the head of
the contracting agency.
Subsection (d)--Good Faith Compliance
This subsection directs the SBA to issue rules explaining
what it means to fail to make a good faith effort to comply
with a subcontracting plan. It directs that failure to submit a
report shall be considered failure to make a good faith effort.
Section 302. Pilot program to provide opportunities for qualified
subcontractors to obtain past performance ratings
This section amends section 8(d) of the Act to add a new
paragraph (18). The new paragraph establishes a three year
pilot program by which small first tier subcontractors may
obtain a past performance rating. The pilot requires that the
subcontractor make the application to SBA, and that SBA
coordinate the response of the contracting agency and the prime
contractor. Any dispute between the entities shall result in a
neutral past performance rating. The GAO is also directed to
review the success of the pilot and offer recommendations on
how it could be improved.
TITLE IV--MENTOR-PROTEGE PROGRAMS
Section 401. Amendments to the Mentor-Protege Program of the Department
of Defense
This section amends section 831 of the FY 1991 NDAA.
Paragraph (1)
This paragraph amends paragraph (1) of section 831 to
require that DoD ascertain that any potential protege not have
been found affiliated with the proposed mentor. It further adds
a new paragraph (2) that requires that if there is any reason
to believe that there may be affiliation between the potential
mentor and protege, that DoD refer the case to SBA's OHA.
Paragraph (2)
This paragraph removes the definition of behaviors that
could lead to a finding of affiliation and replaces it with a
reference to the SBA's affiliation regulations.
Paragraph (3)
Paragraph (3) clarifies that mentors may refer protege
firms to Women's Business Centers for technical assistance.
Section 402. Improving cooperation between the mentor-protege programs
of the Small Business Administration and the Department of
Defense
This section amends section 45(b) of the Act to remove the
exemption previously provided to DoD. This will require that
DoD coordinate its mentor-protege program with the SBA's
government wide program.
TITLE V--MISCELLANEOUS
Section 501. Improving education on small business regulations
This section adds a new subsection (u) to section 15 of the
Act. The new subsection requires that the SBA annually report
to the Federal Acquisition Institute, Defense Acquisition
University, small business development centers, Procurement
Technical Assistance Centers, and the acquisition workforce
trading coordinator in each agency on regulations promulgated
during the prior year that affect small business contracting.
Further, the SBA must provide any training materials it has
developed.
Section 502. Protecting task order competition
This section makes permanent the authority in section
4106(f) of title 41, United States Code, that allows
contractors to protest the award of task orders above $10
million. Currently, the authority is set to expire on September
30, 2016.
Section 503. Improvements to size standards for small agricultural
producers
Subsection (a)--Amendment to definition of agricultural
enterprises
This subsection amends section 18(b) of the Act to
uniformly use the term ``small business concerns'' rather than
``small businesses.''
Subsection (b)--Treatment of small farms
This subsection amends section 3(a) to remove the statutory
cap of $750,000 currently applied to small agricultural
producers.
Subsection (c)--Updated size standards
This subsection directs SBA to issue new size standards for
agricultural producers within 18 months. It further clarifies
that these size standards shall be reviewed and updated every
five years.
Section 504. Uniformity in service-disabled veteran definitions
Subsection (a)--Small business definition of small business
concerns consolidated
This subsection amends the definition of SDVOSB found in
section 3(q) of the Act. It changes it to clarify that
ownership by an employee stock ownership plan shall not
automatically disqualify a firm from the program. It further
adds a provision allowing that the surviving spouse of a
completely disabled veteran may continue the program for ten
years or until the surviving spouse remarries, or relinquishes
ownership.
Subsection (b)--Veterans Affairs definition of small
business concern consolidated
This subsection amends section 8127 of title 38, United
States Code. It replaces the current definition of SDVOSB and
VOSB with the definitions found in section 3 of the Act.
Subsection (c)--Technical correction
This subsection corrects disparities in how the term SDVOSB
is used in title 38.
Subsection (d)--Regulations relating to database of the
Secretary of Veterans Affairs
This subsection requires that VA use the regulations
promulgated by SBA to determine whether a firm is owned or
controlled by veterans or service-disabled veterans. It allows
VA to use its own regulations to determine whether individuals
are veterans or service-disabled veterans.
Subsection (e)--Delayed effective date
This subsection delays the effect of these changes until
the regulations are promulgated.
Subsection (f)--Appeals of inclusion in the database
This subsection allows SBA's OHA to hear appeals of a
firm's eligibility as a SDVOSB or VOSB. It also requires VA to
reimburse SBA for hearing these appeals.
Section 505. GAO review of the Office of Government Contracting and
Business Development of the Small Business Administration
This section requires that GAO evaluate the operation of
the GCBD Office at SBA. It further asks GAO to recommend
improvements to the operations of this office.
Section 506. Required reports pertaining to capital planning and
investment control
This section requires that SBA provide the Committees of
jurisdiction with copies of reports relating to IT security.
Section 507. GAO review of surety bonds
This section requires GAO to evaluate small business
contracts to assess whether the use of a surety bond increases
the success of the contract, and whether waivers of surety
bonds threaten performance.
VIII. Congressional Budget Office Cost Estimate
At the time H.R. 4341 was reported to the House, the
Congressional Budget Office had not provided a cost estimate.
IX. Unfunded Mandates
H.R. 4341 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.
X. 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.
4341. H.R. 4341 does not direct new spending, but instead
addresses the opportunity to increase competition for federal
contractors. Increased competition may save taxpayer funds.
XI. 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. 4341 are incorporated into the descriptive
portions of this report.
XII. 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.
XIII. Congressional Accountability Act
H.R. 4341 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.
XIV. Federal Advisory Committee Act Statement
H.R. 4341 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.
XV. Statement of No Earmarks
Pursuant to clause 9 of rule XXI, H.R. 4341 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.
XVI. 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. 4341 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.
XVII. 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, and existing law in which no
change is proposed is shown in roman):
SMALL BUSINESS ACT
* * * * * * *
SEC. 3. DEFINITIONS.
(a) Small Business Concerns.--
(1) In general.--For the purposes of this Act, a
small-business concern, including but not limited to
enterprises that are engaged in the business of
production of food and fiber, ranching and raising of
livestock, aquaculture, and all other farming and
agricultural related industries, shall be deemed to be
one which is independently owned and operated and which
is not dominant in its field of [operation: Provided,
That notwithstanding any other provision of law, an
agricultural enterprise shall be deemed to be a small
business concern if it (including its affiliates) has
annual receipts not in excess of $750,000.] operation.
(2) Establishment of size standards.--
(A) In general.--In addition to the criteria
specified in paragraph (1), the Administrator
may specify detailed definitions or standards
by which a business concern may be determined
to be a small business concern for the purposes
of this Act or any other Act.
(B) Additional criteria.--The standards
described in paragraph (1) may utilize number
of employees, dollar volume of business, net
worth, net income, a combination thereof, or
other appropriate factors.
(C) Requirements.--Unless specifically
authorized by statute, no Federal department or
agency may prescribe a size standard for
categorizing a business concern as a small
business concern, unless such proposed size
standard--
(i) is proposed after an opportunity
for public notice and comment;
(ii) provides for determining--
(I) the size of a
manufacturing concern as
measured by the manufacturing
concern's average employment
based upon employment during
each of the manufacturing
concern's pay periods for the
preceding 12 months;
(II) the size of a business
concern providing services on
the basis of the annual average
gross receipts of the business
concern over a period of not
less than 3 years;
(III) the size of other
business concerns on the basis
of data over a period of not
less than 3 years; or
(IV) other appropriate
factors; and
(iii) is approved by the
Administrator.
(3) Variation by industry and consideration of other
factors.--When establishing or approving any size
standard pursuant to paragraph (2), the Administrator
shall ensure that the size standard varies from
industry to industry to the extent necessary to reflect
the differing characteristics of the various industries
and consider other factors deemed to be relevant by the
Administrator.
(4) Exclusion of certain security expenses from
consideration for purpose of small business size
standards.--
(A) Determination required.--Not later than
30 days after the date of enactment of this
paragraph, the Administrator shall review the
application of size standards established
pursuant to paragraph (2) to small business
concerns that are performing contracts in
qualified areas and determine whether it would
be fair and appropriate to exclude from
consideration in the average annual gross
receipts of such small business concerns any
payments made to such small business concerns
by Federal agencies to reimburse such small
business concerns for the cost of subcontracts
entered for the sole purpose of providing
security services in a qualified area.
(B) Action required.--Not later than 60 days
after the date of enactment of this paragraph,
the Administrator shall either--
(i) initiate an adjustment to the
size standards, as described in
subparagraph (A), if the Administrator
determines that such an adjustment
would be fair and appropriate; or
(ii) provide a report to the
Committee on Small Business and
Entrepreneurship of the Senate and the
Committee on Small Business of the
House of Representatives explaining in
detail the basis for the determination
by the Administrator that such an
adjustment would not be fair and
appropriate.
(C) Qualified areas.--In this paragraph, the
term ``qualified area'' means--
(i) Iraq,
(ii) Afghanistan, and
(iii) any foreign country which
included a combat zone, as that term is
defined in section 112(c)(2) of the
Internal Revenue Code of 1986, at the
time of performance of the relevant
Federal contract or subcontract.
(5) Alternative Size Standard.--
(A) In general.--The Administrator shall
establish an alternative size standard for
applicants for business loans under section
7(a) and applicants for development company
loans under title V of the Small Business
Investment Act of 1958 (15 U.S.C. 695 et seq.),
that uses maximum tangible net worth and
average net income as an alternative to the use
of industry standards.
(B) Interim rule.--Until the date on which
the alternative size standard established under
subparagraph (A) is in effect, an applicant for
a business loan under section 7(a) or an
applicant for a development company loan under
title V of the Small Business Investment Act of
1958 may be eligible for such a loan if--
(i) the maximum tangible net worth of
the applicant is not more than
$15,000,000; and
(ii) the average net income after
Federal income taxes (excluding any
carry-over losses) of the applicant for
the 2 full fiscal years before the date
of the application is not more than
$5,000,000.
(6) Proposed rulemaking.--In conducting rulemaking to
revise, modify or establish size standards pursuant to
this section, the Administrator shall consider, and
address, and make publicly available as part of the
notice of proposed rulemaking and notice of final rule
each of the following:
(A) a detailed description of the industry
for which the new size standard is proposed;
(B) an analysis of the competitive
environment for that industry;
(C) the approach the Administrator used to
develop the proposed standard including the
source of all data used to develop the proposed
rule making; and
(D) the anticipated effect of the proposed
rulemaking on the industry, including the
number of concerns not currently considered
small that would be considered small under the
proposed rule making and the number of concerns
currently considered small that would be deemed
other than small under the proposed rulemaking.
(7) Common size standards.--In carrying out this
subsection, the Administrator may establish or approve
a single size standard for a grouping of 4-digit North
American Industry Classification System codes only if
the Administrator makes publicly available, not later
than the date on which such size standard is
established or approved, a justification demonstrating
that such size standard is appropriate for each
individual industry classification included in the
grouping.
(8) Number of size standards.--The Administrator
shall not limit the number of size standards
established pursuant to paragraph (2), and shall assign
the appropriate size standard to each North American
Industry Classification System Code.
(9) Petitions for reconsideration of size
standards.--
(A) In general.--A person may file a petition
for reconsideration with the Office of Hearings
and Appeals (as established under section 5(i))
of a size standard revised, modified, or
established by the Administrator pursuant to
this subsection.
(B) Time limit.--A person filing a petition
for reconsideration described in subparagraph
(A) shall file such petition not later than 30
days after the publication in the Federal
Register of the notice of final rule to revise,
modify, or establish size standards described
in paragraph (6).
(C) Process for agency review.--The Office of
Hearings and Appeals shall use the same process
it uses to decide challenges to the size of a
small business concern to decide a petition for
review pursuant to this paragraph.
(D) Judicial review.--The publication of a
final rule in the Federal Register described in
subparagraph (B) shall be considered final
agency action for purposes of seeking judicial
review. Filing a petition for reconsideration
under subparagraph (A) shall not be a condition
precedent to judicial review of any such size
standard.
(b) For purposes of this Act, any reference to an agency or
department of the United States, and the term ``Federal
agency,'' shall have the meaning given the term ``agency'' by
section 551(1) of title 5, United States Code, but does not
include the United States Postal Service or the General
Accounting Office.
(c)(1) For purposes of this Act, a qualified employee trust
shall be eligible for any loan guarantee under section 7(a)
with respect to a small business concern on the same basis as
if such trust were the same legal entity as such concern.
(2) For purposes of this Act, the term ``qualified employee
trust'' means, with respect to a small business concern, a
trust--
(A) which forms part of an employee stock ownership
plan (as defined in section 4975(e)(7) of the Internal
Revenue Code of 1954)--
(i) which is maintained by such concern, and
(ii) which provides that each participant in
the plan is entitle to direct the plan as to
the manner in which voting rights under
qualifying employer securities (as defined in
section 4975(e)(8) of such Code) which are
allocated to the account of such participant
are to be exercised with respect to a corporate
matter which (by law or charter) must be
decided by a majority vote of outstanding
common shares voted; and
(B) in the case of any loan guarantee under section
7(a), the trustee of which enters into an agreement
with the Administrator of which enters into an
agreement with the Administrator which is binding on
the trust and no such small business concern and which
provides that--
(i) the loan guaranteed under section 7(a)
shall be used solely for the purchase of
qualifying employer securities of such concern.
(ii) all funds acquired by the concern in
such purchase shall be used by such concern
solely for the purposes for which such loan was
guaranteed,
(iii) such concern will provide such funds as
may be necessary for the timely repayment of
such loan, and the property of such concern
shall be available as security for repayment of
such loan, and
(iv) all qualifying employer securities
acquired by such trust in such purchase shall
be allocated to the accounts of participants in
such plan who are entitled to share in such
allocation, and each participant has a
nonforfeitable right, not later than the date
such loan is repaid, to all such qualifying
employer securities which are so allocated to
the participant's account.
(3) Under regulations which may be prescribed by the
Administrator, a trust may be treated as a qualified employee
trust with respect to a small business concern if--
(A) the trust is maintained by an employee
organization which represents at least 51 percent of
the employee of such concern, and
(B) such concern maintains a plan--
(i) which is an employee benefit plan which
is designed to invest primarily in qualifying
employer securities (as defined in section
4975(e)(8) of the Internal Revenue Code of
1954).
(ii) which provides that each participant in
the plan is entitled to direct the plan as to
the manner in which voting rights under
qualifying employer securities which are
allocated to the account of such participant
are to be exercised with respect to a corporate
matter which (by law or charter) must be
decided by a majority vote of the outstanding
common shares voted,
(iii) which provides that each participant
who is entitled to distribution from the plan
has a right, in the case of qualifying employer
securities which are not readily tradable on an
established market, to require that the concern
repurchase such securities under a fair
valuation formula, and
(iv) which meets such other requirements
(similar to requirements applicable to employee
ownership plans as defined in section
4975(e)(7) of the Internal Revenue Code of
1954) as the Administrator may prescribe, and
(C) in the case of a loan guarantee under section
7(a), such organization enters into an agreement with
the Administration which is described in paragraph
(2)(B).
(d) For purposes of section 7 of this Act, the term
``qualified Indian tribe'' means an Indian tribe as defined in
section 4(a) of the Indian Self-Determination and Education
Assistance Act, which owns and controls 100 per centum of a
small business concern.
(e) For purposes of section 7 of this Act, the term ``public
or private organization for the handicapped'' means one--
(1) which is organized under the laws of the United
States or of any State, operated in the interest of
handicapped individuals, the net income of which does
not insure in whole or in part to the benefit of any
shareholder or other individual;
(2) which complies with any applicable occupational
health and safety standard prescribed by the Secretary
of Labor; and
(3) which, in the production of commodities and in
the provision of services during any fiscal year in
which it received financial assistance under this
subsection, employs handicapped individuals for not
less than 75 per centum of the man-hours required for
the production or provision of the commodities or
services.
(f) For purposes of section 7 of this Act, the term
``handicapped individual'' means an individual--
(1) who has a physical, mental, or emotional
impairment, defect, ailment, disease, or disability of
a permanent nature which in any way limits the
selection of any type of employment for which the
person would otherwise be qualified or qualifiable; or
(2) who is a service-disabled veteran.
(g) For purposes of section 7 of this Act, the term ``energy
measures'' includes--
(1) solar thermal energy equipment which is either of
the active type based upon mechanically forced energy
transfer or of the passive type based on convective,
conductive, or radiant energy transfer or some
combination equipment;
(2) photovoltaic cells and related equipment;
(3) a product or service the primary purpose of which
is conservation of energy through devices or techniques
which increase the energy through devices or techniques
which increase the energy efficiency of existing
equipment, methods of operation, or systems which use
fossil fuels, and which is on the Energy Conservation
Measures list of the Secretary of Energy or which the
Administrator determines to be consistent with the
intent of this subsection;
(4) equipment the primary purpose of which is
production of energy from wood, biological waste,
grain, or other biomass source of energy;
(5) equipment the primary purpose of which is
industrial cogeneration of energy, district heating, or
production of energy from industrial waste;
(6) hydroelectric power equipment;
(7) wind energy conversion equipment; and
(8) engineering, architectural, consulting, or other
professional services which are necessary or
appropriate to aid citizens in using any of the
measures described in paragraph (1) through (7).
(h) For purposes of this Act, the term ``credit elsewhere''
means the availability of credit from non-Federal sources on
reasonable terms and conditions taking into consideration the
prevailing rates and terms in the community in or near where
the concern transacts business, or the homeowner resides, for
similar purposes and periods of time.
(i) For purposes of section 7 of this Act, the term
``homeowners'' includes owners and lessees of residential
property and also includes personal property.
(j) For the purposes of this Act, the term ``small
agricultural cooperative'' means an association (corporate or
otherwise) acting pursuant to the provisions of the
Agricultural Marketing Act (12 U.S.C. 1141j), whose size does
not exceed the size standard established by the Administration
for other similar agricultural small business concerns. In
determining such size, the Administration shall regard the
association as a business concern and shall not include the
income or employees of any member shareholder of such
cooperative.
(k)(1) For the purposes of this Act, the term ``disaster''
means a sudden event which causes severe damage including, but
not limited to, floods, hurricanes, tornadoes, earthquakes,
fires, explosions, volcanoes, windstorms, landslides or
mudslides, tidal waves, commercial fishery failures or fishery
resource disasters (as determined by the Secretary of Commerce
under section 308(b) of the Interjurisdictional Fisheries Act
of 1986), ocean conditions resulting in the closure of
customary fishing waters, riots, civil disorders or other
catastrophes, except it does not include economic dislocations.
(2) For purposes of section 7(b)(2), the term ``disaster''
includes--
(A) drought;
(B) below average water levels in the Great Lakes, or
on any body of water in the United States that supports
commerce by small business concerns; and
(C) ice storms and blizzards.
(l) For purposes of this Act--
(1) the term ``computer crime'' means''--
(A) any crime committed against a small
business concern by means of the use of a
computer; and
(B) any crime involving the illegal use of,
or tampering with, a computer owned or utilized
by a small business concern.
[(m) For purposes of this Act, the term ``simplified
acquisition threshold'' has the meaning given such term in
section 4(11) of the Office of Federal Procurement Policy Act
(41 U.S.C. 403(11)).]
(m) Definitions Pertaining to Contracting.--In this Act:
(1) Prime contract.--The term ``prime contract'' has
the meaning given such term in section 8701(4) of title
41, United States Code.
(2) Prime contractor.--The term ``prime contractor''
has the meaning given such term in section 8701(5) of
title 41, United States Code.
(3) Simplified acquisition threshold.--The term
``simplified acquisition threshold'' has the meaning
given such term in section 134 of title 41, United
States Code.
(4) Micro-purchase threshold.--The term ``micro-
purchase threshold'' has the meaning given such term in
section 1902(a) of title 41, United States Code.
(5) Total purchase and contracts for property and
services.--The term ``total purchases and contracts for
property and services'' shall mean total number and
total dollar amount of contracts and orders for
property and services.
(n) For the purposes of this Act, a small business concern is
a small business concern owned and controlled by women if--
(1) at least 51 percent of small business concern is
owned by one or more women or, in the case of any
publicly owned business, at least 51 percent of the
stock of which is owned by one or more women; and
(2) the management and daily business operations of
the business are controlled by one or more women.
(o) Definitions of Bundling of Contract Requirements and
Related Terms.--In this Act:
(1) Bundled contract.--The term ``bundled contract''
means a contract that is entered into to meet
requirements that are consolidated in a bundling of
contract requirements.
(2) Bundling of contract requirements.--The term
``bundling of contract requirements'' means
consolidating 2 or more procurement requirements for
goods or services previously provided or performed
under separate smaller contracts into a solicitation of
offers for a single contract that is likely to be
unsuitable for award to a small-business concern due
to--
(A) the diversity, size, or specialized
nature of the elements of the performance
specified;
(B) the aggregate dollar value of the
anticipated award;
(C) the geographical dispersion of the
contract performance sites; or
(D) any combination of the factors described
in subparagraphs (A), (B), and (C).
(3) Separate smaller contract.--The term ``separate
smaller contract'', with respect to a bundling of
contract requirements, means a contract that has been
performed by 1 or more small business concerns or was
suitable for award to 1 or more small business
concerns.
(p) Definitions Relating to HUBZones.--In this Act:
(1) Historically underutilized business zone.--The
term ``historically underutilized business zone'' means
any area located within 1 or more--
(A) qualified census tracts;
(B) qualified nonmetropolitan counties;
(C) lands within the external boundaries of
an Indian reservation;
(D) redesignated areas;
(E) base closure areas; or
(F) qualified disaster areas.
(2) HUBZone.--The term ``HUBZone'' means a
historically underutilized business zone.
(3) Hubzone small business concern.--The term
``HUBZone small business concern'' means--
(A) a small business concern that is at least
51 percent owned and controlled by United
States citizens;
(B) a small business concern that is--
(i) an Alaska Native Corporation
owned and controlled by Natives (as
determined pursuant to section 29(e)(1)
of the Alaska Native Claims Settlement
Act (43 U.S.C. 1626(e)(1))); or
(ii) a direct or indirect subsidiary
corporation, joint venture, or
partnership of an Alaska Native
Corporation qualifying pursuant to
section 29(e)(1) of the Alaska Native
Claims Settlement Act (43 U.S.C.
1626(e)(1)), if that subsidiary, joint
venture, or partnership is owned and
controlled by Natives (as determined
pursuant to section 29(e)(2)) of the
Alaska Native Claims Settlement Act (43
U.S.C. 1626(e)(2)));
(C) a small business concern--
(i) that is wholly owned by one or
more Indian tribal governments, or by a
corporation that is wholly owned by one
or more Indian tribal governments; or
(ii) that is owned in part by one or
more Indian tribal governments, or by a
corporation that is wholly owned by one
or more Indian tribal governments, if
all other owners are either United
States citizens or small business
concerns;
(D) a small business concern--
(i) that is wholly owned by one or
more Native Hawaiian Organizations (as
defined in section 8(a)(15)), or by a
corporation that is wholly owned by one
or more Native Hawaiian Organizations;
or
(ii) that is owned in part by one or
more Native Hawaiian Organizations, or
by a corporation that is wholly owned
by one or more Native Hawaiian
Organizations, if all other owners are
either United States citizens or small
business concerns;
(E) a small business concern that is--
(i) wholly owned by a community
development corporation that has
received financial assistance under
part 1 of subchapter A of the Community
Economic Development Act of 1981 (42
U.S.C. 9805 et seq.); or
(ii) owned in part by one or more
community development corporations, if
all other owners are either United
States citizens or small business
concerns; or
(F) a small business concern that is--
(i) a small agricultural cooperative
organized or incorporated in the United
States;
(ii) wholly owned by 1 or more small
agricultural cooperatives organized or
incorporated in the United States; or
(iii) owned in part by 1 or more
small agricultural cooperatives
organized or incorporated in the United
States, if all owners are small
business concerns or United States
citizens.
(4) Qualified areas.--
(A) Qualified census tract.--The term
``qualified census tract'' has the meaning
given that term in section 42(d)(5)(C)(ii) of
the Internal Revenue Code of 1986.
(B) Qualified nonmetropolitan county.--The
term ``qualified nonmetropolitan county'' means
any county--
(i) that was not located in a
metropolitan statistical area (as
defined in section 143(k)(2)(B) of the
Internal Revenue Code of 1986) at the
time of the most recent census taken
for purposes of selecting qualified
census tracts under section
42(d)(5)(C)(ii) of the Internal Revenue
Code of 1986; and
(ii) in which--
(I) the median household
income is less than 80 percent
of the nonmetropolitan State
median household income, based
on the most recent data
available from the Bureau of
the Census of the Department of
Commerce;
(II) the unemployment rate is
not less than 140 percent of
the average unemployment rate
for the United States or for
the State in which such county
is located, whichever is less,
based on the most recent data
available from the Secretary of
Labor; or
(III) there is located a
difficult development area, as
designated by the Secretary of
Housing and Urban Development
in accordance with section
42(d)(5)(C)(iii) of the
Internal Revenue Code of 1986,
within Alaska, Hawaii, or any
territory or possession of the
United States outside the 48
contiguous States.
(C) Redesignated area.--The term
``redesignated area'' means any census tract
that ceases to be qualified under subparagraph
(A) and any nonmetropolitan county that ceases
to be qualified under subparagraph (B), except
that a census tract or a nonmetropolitan county
may be a ``redesignated area'' only until the
later of--
(i) the date on which the Census
Bureau publicly releases the first
results from the 2010 decennial census;
or
(ii) 3 years after the date on which
the census tract or nonmetropolitan
county ceased to be so qualified.
(D) Base closure area.--
(i) In general.--Subject to clause
(ii), the term ``base closure area''
means--
(I) lands within the external
boundaries of a military
installation that were closed
through a privatization process
under the authority of--
(aa) the Defense Base
Closure and Realignment
Act of 1990 (part A of
title XXIX of division
B of Public Law 101-
510; 10 U.S.C. 2687
note);
(bb) title II of the
Defense Authorization
Amendments and Base
Closure and Realignment
Act (Public Law 100-
526; 10 U.S.C. 2687
note);
(cc) section 2687 of
title 10, United States
Code; or
(dd) any other
provision of law
authorizing or
directing the Secretary
of Defense or the
Secretary of a military
department to dispose
of real property at the
military installation
for purposes relating
to base closures of
redevelopment, while
retaining the authority
to enter into a
leaseback of all or a
portion of the property
for military use;
(II) the census tract or
nonmetropolitan county in which
the lands described in
subclause (I) are wholly
contained;
(III) a census tract or
nonmetropolitan county the
boundaries of which intersect
the area described in subclause
(I); and
(IV) a census tract or
nonmetropolitan county the
boundaries of which are
contiguous to the area
described in subclause (II) or
subclause (III).
(ii) Limitation.--A base closure area
shall be treated as a HUBZone--
(I) with respect to a census
tract or nonmetropolitan county
described in clause (i), for a
period of not less than 8
years, beginning on the date
the military installation
undergoes final closure and
ending on the date the
Administrator makes a final
determination as to whether or
not to implement the applicable
designation described in
subparagraph (A) or (B) in
accordance with the results of
the decennial census conducted
after the area was initially
designated as a base closure
area; and
(II) if such area was treated
as a HUBZone at any time after
2010, until such time as the
Administrator makes a final
determination as to whether or
not to implement the applicable
designation described in
subparagraph (A) or (B), after
the 2020 decennial census.
(iii) Definitions.--In this
subparagraph:
(I) Census tract.--The term
``census tract'' means a census
tract delineated by the United
States Bureau of the Census in
the most recent decennial
census that is not located in a
nonmetropolitan county and does
not otherwise qualify as a
qualified census tract.
(II) Nonmetropolitan
county.--The term
``nonmetropolitan county''
means a county that was not
located in a metropolitan
statistical area (as defined in
section 143(k)(2)(B) of the
Internal Revenue Code of 1986)
at the time of the most recent
census taken for purposes of
selecting qualified census
tracts and does not otherwise
qualify as a qualified
nonmetropolitan county.
(E) Qualified disaster area.--
(i) In general.--Subject to clause
(ii), the term ``qualified disaster
area'' means any census tract or
nonmetropolitan county located in an
area for which the President has
declared a major disaster under section
401 of the Robert T. Stafford Disaster
Relief and Emergency Assistance Act (42
U.S.C. 5170) or located in an area in
which a catastrophic incident has
occurred if such census tract or
nonmetropolitan county ceased to be
qualified under subparagraph (A) or
(B), as applicable, during the period
beginning 5 years before the date on
which the President declared the major
disaster or the catastrophic incident
occurred and ending 2 years after such
date, except that such census tract or
nonmetropolitan county may be a
``qualified disaster area'' only--
(I) in the case of a major
disaster declared by the
President, during the 5-year
period beginning on the date on
which the President declared
the major disaster for the area
in which the census tract or
nonmetropolitan county, as
applicable, is located; and
(II) in the case of a
catastrophic incident, during
the 10-year period beginning on
the date on which the
catastrophic incident occurred
in the area in which the census
tract or nonmetropolitan
county, as applicable, is
located.
(ii) Limitation.--A qualified
disaster area described in clause (i)
shall be treated as a HUBZone for a
period of not less than 8 years,
beginning on the date the Administrator
makes a final determination as to
whether or not to implement the
designations described in subparagraphs
(A) and (B) in accordance with the
results of the decennial census
conducted after the area was initially
designated as a qualified disaster
area.
(5) Qualified hubzone small business concern.--
(A) In general.--A HUBZone small business
concern is ``qualified'', if----
(i) the small business concern has
certified in writing to the
Administrator (or the Administrator
otherwise determines, based on
information submitted to the
Administrator by the small business
concern, or based on certification
procedures, which shall be established
by the Administration by regulation)
that--
(I) it is a HUBZone small
business concern--
(aa) pursuant to
subparagraph (A), (B),
(C), (D), (E), or (F)
of paragraph (3), and
that its principal
office is located in a
HUBZone and not fewer
than 35 percent of its
employees reside in a
HUBZone;
(bb) pursuant to
subparagraph (A), (B),
(C), (D), (E), or (F)
of paragraph (3), that
its principal office is
located within a base
closure area and that
not fewer than 35
percent of its
employees reside in
such base closure area
or in another HUBZone;
or
(cc) pursuant to
paragraph (3)(C), and
not fewer than 35
percent of its
employees engaged in
performing a contract
awarded to the small
business concern on the
basis of a preference
provided under section
31(b) reside within any
Indian reservation
governed by one or more
of the tribal
government owners, or
reside within any
HUBZone adjoining any
such Indian
reservation;
(II) the small business
concern will attempt to
maintain the applicable
employment percentage under
subclause (I) during the
performance of any contract
awarded to the small business
concern on the basis of a
preference provided under
section 31(b); and
(III) with respect to any
subcontract entered into by the
small business concern pursuant
to a contract awarded to the
small business concern under
section 31, the small business
concern will ensure that the
requirements of section 46 are
satisfied; and
(ii) no certification made or
information provided by the small
business concern under clause (i) has
been, in accordance with the procedures
established under section 31(c)(1)--
(I) successfully challenged
by an interested party; or
(II) otherwise determined by
the Administrator to be
materially false.
(B) List of qualified small business
concerns.--The Administrator shall establish
and maintain a list of qualified HUBZone small
business concerns, which list shall, to the
extent practicable--
(i) once the Administrator has made
the certification required by
subparagraph (A)(i) regarding a
qualified HUBZone small business
concern and has determined that
subparagraph (A)(ii) does not apply to
that concern, include the name,
address, and type of business with
respect to each such small business
concern;
(ii) be updated by the Administrator
not less than annually; and
(iii) be provided upon request to any
Federal agency or other entity.
(6) Native american small business concerns.--
(A) Alaska native corporation.--The term
``Alaska Native Corporation'' has the same
meaning as the term ``Native Corporation'' in
section 3 of the Alaska Native Claims
Settlement Act (43 U.S.C. 1602).
(B) Alaska native village.--The term ``Alaska
Native Village'' has the same meaning as the
term ``Native village'' in section 3 of the
Alaska Native Claims Settlement Act (43 U.S.C.
1602).
(C) Indian reservation.--The term ``Indian
reservation''--
(i) has the same meaning as the term
``Indian country'' in section 1151 of
title 18, United States Code, except
that such term does not include--
(I) any lands that are
located within a State in which
a tribe did not exercise
governmental jurisdiction on
the date of the enactment of
this paragraph, unless that
tribe is recognized after that
date of the enactment by either
an Act of Congress or pursuant
to regulations of the Secretary
of the Interior for the
administrative recognition that
an Indian group exists as an
Indian tribe (part 83 of title
25, Code of Federal
Regulations); and
(II) lands taken into trust
or acquired by an Indian tribe
after the date of the enactment
of this paragraph if such lands
are not located within the
external boundaries of an
Indian reservation or former
reservation or are not
contiguous to the lands held in
trust or restricted status on
that date of the enactment; and
(ii) in the State of Oklahoma, means
lands that--
(I) are within the
jurisdictional areas of an
Oklahoma Indian tribe (as
determined by the Secretary of
the Interior); and
(II) are recognized by the
Secretary of the Interior as
eligible for trust land status
under part 151 of title 25,
Code of Federal Regulations (as
in effect on the date of the
enactment of this paragraph).
(7) Agricultural commodity.--The term ``agricultural
commodity'' has the same meaning as in section 102 of
the Agricultural Trade Act of 1978 (7 U.S.C. 5602).
(q) Definitions Relating to Veterans.--In this Act, the
following definitions apply:
(1) Service-disabled veteran.--The term ``service-
disabled veteran'' means a veteran with a disability
that is service-connected (as defined in section
101(16) of title 38, United States Code).
[(2) Small business concern owned and controlled by
service-disabled veterans.--The term ``small business
concern owned and controlled by service-disabled
veterans'' means a small business concern--
[(A) not less than 51 percent of which is
owned by one or more service-disabled veterans
or, in the case of any publicly owned business,
not less than 51 percent of the stock of which
is owned by one or more service-disabled
veterans; and
[(B) the management and daily business
operations of which are controlled by one or
more service-disabled veterans or, in the case
of a veteran with permanent and severe
disability, the spouse or permanent caregiver
of such veteran.]
(2) Small business concern owned and controlled by
service-disabled veterans.--The term ``small business
concern owned and controlled by service-disabled
veterans'' means any of the following:
(A) A small business concern--
(i) not less than 51 percent of which
is owned by one or more service-
disabled veterans or, in the case of
any publicly owned business, not less
than 51 percent of the stock (not
including any stock owned by an ESOP)
of which is owned by one or more
service-disabled veterans; and
(ii) the management and daily
business operations of which are
controlled by one or more service-
disabled veterans or, in the case of a
veteran with permanent and severe
disability, the spouse or permanent
caregiver of such veteran.
(B) A small business concern--
(i) not less than 51 percent of which
is owned by one or more service-
disabled veterans with a disability
that is rated by the Secretary of
Veterans Affairs as a permanent and
total disability who are unable to
manage the daily business operations of
such concern; or
(ii) in the case of a publicly owned
business, not less than 51 percent of
the stock (not including any stock
owned by an ESOP) of which is owned by
one or more such veterans.
(C)(i) During the time period described in
clause (ii), a small business concern that was
a small business concern described in
subparagraph (A) or (B) immediately prior to
the death of a service-disabled veteran who was
the owner of the concern, the death of whom
causes the concern to be less than 51 percent
owned by one or more service-disabled veterans,
if--
(I) the surviving spouse of the
deceased veteran acquires such
veteran's ownership interest in such
concern;
(II) such veteran had a service-
connected disability (as defined in
section 101(16) of title 38, United
States Code) rated as 100 percent
disabling under the laws administered
by the Secretary of Veterans Affairs or
such veteran died as a result of a
service-connected disability; and
(III) immediately prior to the death
of such veteran, and during the period
described in clause (ii), the small
business concern is included in the
database described in section 8127(f)
of title 38, United States Code.
(ii) The time period described in this clause
is the time period beginning on the date of the
veteran's death and ending on the earlier of--
(I) the date on which the surviving
spouse remarries;
(II) the date on which the surviving
spouse relinquishes an ownership
interest in the small business concern;
or
(III) the date that is 10 years after
the date of the death of the veteran.
(3) Small business concern owned and controlled by
veterans.--The term ``small business concern owned and
controlled by veterans'' means a small business
concern--
(A) not less than 51 percent of which is
owned by one or more veterans or, in the case
of any publicly owned business, not less than
51 percent of the stock of which is owned by
one or more veterans; and
(B) the management and daily business
operations of which are controlled by one or
more veterans.
(4) Veteran.--The term ``veteran'' has the meaning
given the term in section 101(2) of title 38, United
States Code.
(5) Relief from time limitations.--
(A) In general.--Any time limitation on any
qualification, certification, or period of
participation imposed under this Act on any
program that is available to small business
concerns shall be extended for a small business
concern that--
(i) is owned and controlled by--
(I) a veteran who was called
or ordered to active duty under
a provision of law specified in
section 101(a)(13)(B) of title
10, United States Code, on or
after September 11, 2001; or
(II) a service-disabled
veteran who became such a
veteran due to an injury or
illness incurred or aggravated
in the active military, naval,
or air service during a period
of active duty pursuant to a
call or order to active duty
under a provision of law
referred to in subclause (I) on
or after September 11, 2001;
and
(ii) was subject to the time
limitation during such period of active
duty.
(B) Duration.--Upon submission of proper
documentation to the Administrator, the
extension of a time limitation under
subparagraph (A) shall be equal to the period
of time that such veteran who owned or
controlled such a concern was on active duty as
described in that subparagraph.
(C) Exception for programs subject to federal
credit reform act of 1990.--The provisions of
subparagraphs (A) and (B) shall not apply to
any programs subject to the Federal Credit
Reform Act of 1990 (2 U.S.C. 661 et seq.).
(6) ESOP.--The term ``ESOP'' has the meaning given
the term ``employee stock ownership plan'' in section
4975(e)(7) of the Internal Revenue Code of 1986 (26
U.S.C. 4975(e)(7)).
(7) Surviving spouse.--The term ``surviving spouse''
has the meaning given such term in section 101(3) of
title 38, United States Code.
(r) Definitions Relating to Small Business Lending
Companies.--As used in section 23 of this Act:
(1) Small business lending company.--The term ``small
business lending company'' means a business concern
that is authorized by the Administrator to make loans
pursuant to section 7(a) and whose lending activities
are not subject to regulation by any Federal or State
regulatory agency.
(2) Non-federally regulated sba lender.--The term
``non-Federally regulated SBA lender'' means a business
concern if--
(A) such concern is authorized by the
Administrator to make loans under section 7;
(B) such concern is subject to regulation by
a State; and
(C) the lending activities of such concern
are not regulated by any Federal banking
authority.
(s) Major Disaster.--In this Act, the term ``major disaster''
has the meaning given that term in section 102 of the Robert T.
Stafford Disaster Relief and Emergency Assistance Act (42
U.S.C. 5122).
(t) Small Business Development Center.--In this Act, the term
``small business development center'' means a small business
development center described in section 21.
(u) Region of the Administration.--In this Act, the term
``region of the Administration'' means the geographic area
served by a regional office of the Administration established
under section 4(a).
(v) Multiple Award Contract.--In this Act, the term
``multiple award contract'' means--
(1) a multiple award task order contract or delivery
order contract that is entered into under the authority
of sections 303H through 303K of the Federal Property
and Administrative Services Act of 1949 (41 U.S.C. 253h
through 253k); and
(2) any other indefinite delivery, indefinite
quantity contract that is entered into by the head of a
Federal agency with 2 or more sources pursuant to the
same solicitation.
(w) Presumption.--
(1) In general.--In every contract, subcontract,
cooperative agreement, cooperative research and
development agreement, or grant which is set aside,
reserved, or otherwise classified as intended for award
to small business concerns, there shall be a
presumption of loss to the United States based on the
total amount expended on the contract, subcontract,
cooperative agreement, cooperative research and
development agreement, or grant whenever it is
established that a business concern other than a small
business concern willfully sought and received the
award by misrepresentation.
(2) Deemed certifications.--The following actions
shall be deemed affirmative, willful, and intentional
certifications of small business size and status:
(A) Submission of a bid or proposal for a
Federal grant, contract, subcontract,
cooperative agreement, or cooperative research
and development agreement reserved, set aside,
or otherwise classified as intended for award
to small business concerns.
(B) Submission of a bid or proposal for a
Federal grant, contract, subcontract,
cooperative agreement, or cooperative research
and development agreement which in any way
encourages a Federal agency to classify the bid
or proposal, if awarded, as an award to a small
business concern.
(C) Registration on any Federal electronic
database for the purpose of being considered
for award of a Federal grant, contract,
subcontract, cooperative agreement, or
cooperative research agreement, as a small
business concern.
(3) Certification by signature of responsible
official.--
(A) In general.--Each solicitation, bid, or
application for a Federal contract,
subcontract, or grant shall contain a
certification concerning the small business
size and status of a business concern seeking
the Federal contract, subcontract, or grant.
(B) Content of certifications.--A
certification that a business concern qualifies
as a small business concern of the exact size
and status claimed by the business concern for
purposes of bidding on a Federal contract or
subcontract, or applying for a Federal grant,
shall contain the signature of an authorized
official on the same page on which the
certification is contained.
(4) Regulations.--The Administrator shall promulgate
regulations to provide adequate protections to
individuals and business concerns from liability under
this subsection in cases of unintentional errors,
technical malfunctions, and other similar situations.
(x) Annual Certification.--
(1) In general.--Each business certified as a small
business concern under this Act shall annually certify
its small business size and, if appropriate, its small
business status, by means of a confirming entry on the
Online Representations and Certifications Application
database of the Administration, or any successor
thereto.
(2) Regulations.--Not later than 1 year after the
date of enactment of this subsection, the
Administrator, in consultation with the Inspector
General and the Chief Counsel for Advocacy of the
Administration, shall promulgate regulations to ensure
that--
(A) no business concern continues to be
certified as a small business concern on the
Online Representations and Certifications
Application database of the Administration, or
any successor thereto, without fulfilling the
requirements for annual certification under
this subsection; and
(B) the requirements of this subsection are
implemented in a manner presenting the least
possible regulatory burden on small business
concerns.
(y) Policy on Prosecutions of Small Business Size and Status
Fraud.--Not later than 1 year after the date of enactment of
this subsection, the Administrator, in consultation with the
Attorney General, shall issue a Government-wide policy on
prosecution of small business size and status fraud, which
shall direct Federal agencies to appropriately publicize the
policy.
(z) Aquaculture Business Disaster Assistance.--Subject to
section 18(a) and notwithstanding section 18(b)(1), the
Administrator may provide disaster assistance under section
7(b)(2) to aquaculture enterprises that are small businesses.
(aa) Venture Capital Operating Company.--In this Act, the
term ``venture capital operating company'' means an entity
described in clause (i), (v), or (vi) of section 121.103(b)(5)
of title 13, Code of Federal Regulations (or any successor
thereto).
(bb) Hedge Fund.--In this Act, the term ``hedge fund'' has
the meaning given that term in section 13(h)(2) of the Bank
Holding Company Act of 1956 (12 U.S.C. 1851(h)(2)).
(cc) Private Equity Firm.--In this Act, the term ``private
equity firm'' has the meaning given the term ``private equity
fund'' in section 13(h)(2) of the Bank Holding Company Act of
1956 (12 U.S.C. 1851(h)(2)).
(dd) Definitions Pertaining to Subcontracting.--In this Act:
(1) Subcontract.--The term ``subcontract'' means a
legally binding agreement between a contractor that is
already under contract to another party to perform
work, and a third party, hereinafter referred to as the
subcontractor, for the subcontractor to perform a part,
or all, of the work that the contractor has undertaken.
(2) First tier subcontractor.--The term ``first tier
subcontractor'' means a subcontractor who has a
subcontract directly with the prime contractor.
(3) At any tier.--The term ``at any tier'' means any
subcontractor other than a subcontractor who is a first
tier subcontractor.
Sec. 4. (a) In order to carry out the policies of this Act
there is hereby created an agency under the name ``Small
Business Administration'' (herein referred to as the
Administration), which Administration shall be under the
general direction and supervision of the President and shall
not be affiliated with or be within any other agency or
department of the Federal Government. The principal office of
the Administration shall be located in the District of
Columbia. The Administration may establish such branch and
regional offices in other places in the United States as may be
determined by the Administrator of the Administration. As used
in this Act, the term ``United States'' includes the several
States, the Territories and possessions of the United States,
the Commonwealth of Puerto Rico, the Trust territory of the
Pacific Islands, and the District of Columbia.
(b)(1) The management of the Administration shall be vested
in an Administrator who shall be appointed from civilian life
by the President, by and with the advice and consent of the
Senate, and who shall be a person of outstanding qualifications
known to be familiar and sympathetic with small business needs
and problems. The Administrator shall not engage in any other
business, vocation, or employment than that of serving as
Administrator. In carrying out the programs administered by the
Small Business Administration including its lending and
guaranteeing functions, the Administrator shall not
discriminate on the basis of sex or marital status against any
person or small business concern applying for or receiving
assistance from the Small Business Administration, and the
Small Business Administration shall give special consideration
to veterans of the Armed Forces of the United States and their
survivors or dependents. The President also may appoint a
Deputy Administrator, by and with the advice and consent of the
Senate. The Administrator is authorized to appoint Associate
Administrators (including the Associate Administrator specified
in section 201 of the Small Business Investment Act of 1958) to
assist in the execution of the functions vested in the
Administration. One such Associate Administrator shall be the
Associate Administrator for Veterans Business Development, who
shall administer the Office of Veterans Business Development
established under section 32. One of the Associate
Administrators shall be designated at the time of his
appointment as the Associate Administrator for Minority Small
Business and Capital Ownership Development who shall be an
employee in the competitive service or in the Senior Executive
Service and a career appointee and shall be responsible to the
Administrator for the formulation and execution of the policies
and programs under sections 7(j) and 8(a) of this Act which
provide assistance to minority small business concerns. One
such Associate Administrator shall be the Associate
Administrator for International Trade, who shall be the head of
the Office of International Trade established under section 22.
One such Associate Administrator shall be the Chief Hearing
Officer, who shall administer the Office of Hearings and
Appeals established under section 5(i).
(2) the Administrator also shall be responsible for--
(A) establishing and maintaining an external small
business economic data base for the purpose of
providing the Congress and the Administration
information on the economic condition and the expansion
or contraction of the small business sector. To that
end, the Administrator shall publish on a regular basis
national small business economic indices and, to the
extent feasible, regional small business economic
indices, which shall include, but need not be limited
to, data on--
(i) employment layoffs, and new hires;
(ii) number of business establishments and
the types of such establishments such as sole
proprietorships, corporations, and
partnerships;
(iii) number of business formation and
failures;
(iv) sales and new orders;
(v) back orders;
(vi) investment in plant and equipment;
(vii) changes in inventory and rate of
inventory turnover;
(viii) sources and amounts of capital
investment, including debt, equity, and
internally generated funds;
(ix) debt to equity ratios;
(x) exports;
(xi) number and dollar amount of mergers and
acquisitions by size of acquiring and acquired
firm; and
(xii) concentration ratios; and
(B) publishing annually a report giving a comparative
analysis and interpretation of the historical trends of
the small business sector as reflected by the data
acquired pursuant to subparagraph (A) of this
subsection.
(3) Risk management database.--
(A) Establishment.--The Administration shall
establish, within the management system for the
loan programs authorized by subsections (a) and
(b) of section 7 of this Act and title V of the
Small Business Investment Act of 1958, a
management information system that will
generate a database capable of providing timely
and accurate information in order to identify
loan underwriting, collections, recovery, and
liquidation problems.
(B) Information to be maintained.--In
addition to such other information as the
Administration considers appropriate, the
database established under subparagraph (A)
shall, with respect to each loan program
described in subparagraph (A), include
information relating to--
(i) the identity of the institution
making the guaranteed loan or issuing
the debenture;
(ii) the identity of the borrower;
(iii) the total dollar amount of the
loan or debenture;
(iv) the total dollar amount of
government exposure in each loan;
(v) the district of the
Administration in which the borrower
has its principal office;
(vi) the principal line of business
of the borrower, as identified by
Standard Industrial Classification Code
(or any successor to that system);
(vii) the delinquency rate for each
program (including number of instances
and days overdue);
(viii) the number and amount of
repurchases, losses, and recoveries in
each program;
(ix) the number of deferrals or
forbearances in each program (including
days and number of instances);
(x) comparisons on the basis of loan
program, lender, district and region of
the Administration, for all the data
elements maintained; and
(xi) underwriting characteristics of
each loan that has entered into
default, including term, amount and
type of collateral, loan-to-value and
other actual and projected ratios, line
of business, credit history, and type
of loan.
(C) Deadline for operational capability.--The
database established under subparagraph (A)
shall--
(i) be operational not later than
June 30, 1997; and
(ii) capture data beginning on the
first day of the second quarter of
fiscal year 1997 beginning after such
date and thereafter.
(4)(A) The Administrator shall establish a small business
computer security and education program to--
(i) provide small business concerns information
regarding--
(I) utilization and management of computer
technology;
(II) computer crimes committed against small
business concerns; and
(III) security for computers owned or
utilized by small business concerns;
(ii) provide for periodic forums for small business
concerns to improve their knowledge of the matters
described in clause (i); and
(iii) provide training opportunities to educate small
business users on computer security techniques.
(B) The Administrator, after consultation with the Director
of Institute of Computer Sciences and Technology within the
Department of Commerce, shall develop information and materials
to carry out the activities described in subparagraph (A) of
this paragraph.
(c)(1) There are hereby established in the Treasury the
following revolving funds; (A) a disaster loan fund which shall
be available for financing functions performed under section
7(b)(1), 7(b)(2), 7(b)(3), 7(b)(4), 7(d)(2), and 7(m) of this
Act; and (B) a business loan and investment fund which shall be
available for financing functions performed under sections
5(g), 7(a), and 8(a) of this Act, and titles III, IV and V of
the Small Business Investment Act of 1958.
(2) All repayments of loans and debentures, payments of
interest and other receipts arising out of transactions
heretofore or hereafter entered into by the Administration (A)
pursuant to sections 7(b)(1), 7(b)(2), 7(b)(3), 7(b)(4),
7(b)(5), 7(b)(6), (7(b)(7), 7(b)(8), 7(d)(2), and 7(g) of this
Act shall be paid into a disaster loan fund; and (B) pursuant
to sections 5(g), 7(a), 7(h), 7(i), 7(l), 7(m), and 8(a) of
this Act, and titles III, IV and V of the Small Business
Investment Act of 1958, shall be paid into the business loan
and investment fund.
(3) Unexpended balances of appropriations made to the fund
pursuant to this subsection, as in effect immediately prior to
the effective date of this paragraph, shall be allocated,
together with related assets and liabilities, to the funds
established by paragraph (1) in such amounts as the
Administrator shall determine.
(4) The Administration shall submit to the Committees on
Appropriations. Senate Select Committee on Small Business, and
the Committee on Small Business of the House of
Representatives, as soon as possible after the beginning of
each calendar quarter, a full and complete report on the status
of each of the funds established by paragraph (1). Business-
type budgets for each of the funds established by paragraph (1)
shall be prepared, transmitted to the Committees on
Appropriations, the Senate Select Committee on Small Business,
and the Committee on Small Business of the House of
Representatives, and considered, and enacted in the manner
prescribed by law (sections 102, 103, and 104 of the Government
Corporation Control Act (31 U.S.C. 847-849)) for wholly owned
Government corporations.
(5)(A) The Administration is authorized to make and issue
notes to the Secretary of the Treasury for the purpose of
obtaining funds necessary for discharging obligations under the
revolving funds created by section 4(c)(1) of this Act and for
authorized expenditures out of the funds. Such notes shall be
in such form and denominations and have such maturities and be
subject to such terms and conditions as may be prescribed by
the Administration with the approval of the Secretary of the
Treasury. Such notes shall bear interest at a rate fixed by the
Secretary of the Treasury, taking into consideration the
current average market yield of outstanding marketable
obligations of the United States having maturities comparable
to the notes issued by the Administration under this paragraph.
The Secretary of the Treasury is authorized and directed to
purchase any notes of the Administration issued hereunder, and,
for that purpose, the Secretary of the Treasury is authorized
to use as a public debt transaction the proceeds from the sale
of any securities issued under the Second Liberty Bond Act, as
amended, and the purposes for which such securities may be
issued under such Act, as amended, are extended to include the
purchase of notes issued by the Administration. All
redemptions, purchases, and sales by the Secretary of the
Treasury of such notes shall be treated as public debt
transactions of the United States. All borrowing authority
contained herein shall be effective only to such extent or in
such amounts as are provided in advance in appropriation Acts.
(B)(i) Moneys in the funds established in subsection (c)(1)
not needed for current operations may be paid into
miscellaneous receipts of the Treasury.
(ii) Following the close of each fiscal year, the
Administration shall pay into the miscellaneous receipts of the
United States Treasury the actual interest that the
Administration collects during that fiscal year on all
financings made under this Act.
(C) Except on those loan disbursements on which interest is
paid under subsection (B)(ii), the Administration shall pay
into miscellaneous receipts of the Treasury, following the
close of each fiscal year, interest received by the
Administration on financing functions performed under this Act
and titles III and V of the Small business Investment Act of
1958 providing the capital used to perform such functions
originated from appropriated funds. Such payments shall be
treated by the Department of the Treasury as interest income,
not as retirement of indebtedness.
(D) There are authorized to be appropriated, in any fiscal
year, such sums as may be necessary for losses and interest
subsidies incurred by the funds established by subsection
(c)(1), but not previously reimbursed.
(d) There is hereby created the Loan Policy Board of the
Small Business Administration, which shall consist of the
following members, all ex officio: The Administration, as
Chairman, the Secretary of the Treasury, and the Secretary of
Commerce. Either of the said Secretaries may designate an
officer of his Department, who has been appointed by the
President by and with the advice and consent of the Senate, to
act in his stead as a member of the Loan Policy Board with
respect to any matter or matters. The Loan Policy Board shall
establish general policies (particularly with reference to the
public interest involved in the granting and denial of
applications for financial assistance by the Administration and
with reference to the coordination of the functions of the
Administration with other activities and policies of the
Government), which shall govern the granting and denial of
applications for financial assistance by the Administration.
(e) Prohibition on the Provision of Assistance.--
Notwithstanding any other provision of law, the Administration
is prohibited from providing any financial or other assistance
to any business concern or other person engaged in the
production or distribution of any product or service that has
been determined to be obscene by a court of competent
jurisdiction.
(f) Certification of Compliance With Child Support
Obligations.--
(1) In general.--For financial assistance approved
after the promulgation of final regulations to
implement this section, each recipient of financial
assistance under this Act, including a recipient of a
direct loan or a loan guarantee, shall certify that the
recipient is not more than 60 days delinquent under the
terms of any----
(A) administrative order;
(B) court order; or
(C) repayment agreement entered into between
the recipient and the custodial parent or State
agency providing child support enforcement
services,
that requires the recipient to pay child support, as
such term is defined in section 462(b) of the Social
Security Act.
(2) Enforcement.--Not later than 6 months after the
date of enactment of this subsection, the
Administration shall promulgate such regulations as may
be necessary to enforce compliance with the
requirements of this subsection.
(g) [Certification Requirements for] Business Opportunity
Specialists.--
(1) Duties.--The exclusive duties of a Business
Opportunity Specialist employed by the Administrator
and reporting to the senior official appointed by the
Administrator with responsibilities under sections 8,
15, 31, and 36 (or the designee of such official) shall
be to implement sections 7, 8, and 45 and to complete
other duties related to contracting programs under this
Act. Such duties shall include--
(A) with respect to small business concerns
eligible to receive contracts and subcontracts
pursuant to section 8(a)----
(i) providing guidance, counseling,
and referrals for assistance with
technical, management, financial, or
other matters that will improve the
competitive viability of such concerns;
(ii) identifying causes of success or
failure of such concerns;
(iii) providing comprehensive
assessments of such concerns, including
identifying the strengths and
weaknesses of such concerns;
(iv) monitoring and documenting
compliance with the requirements of
sections 7 and 8 and any regulations
implementing those sections;
(v) explaining the requirements of
sections 7, 8, 15, 31, 36 and 45; and
(vi) advising on compliance with
contracting regulations (including the
Federal Acquisition Regulation) after
award of such a contract or
subcontract;
(B) reviewing and monitoring compliance with
mentor-protege agreements under section 45;
(C) representing the interests of the
Administrator and small business concerns in
the award, modification, and administration of
contracts and subcontracts awarded pursuant to
section 8(a); and
(D) reporting fraud or abuse under section 7,
8, 15, 31, 36 or 45 or any regulations
implementing such sections.
(2) Certification requirements.--
[(1)] (A) In general.--Consistent with the
requirements of [paragraph (2)] subparagraph
(B), a Business Opportunity Specialist
described under section 7(j)(10)(D) shall have
a Level I Federal Acquisition Certification in
Contracting (or any successor certification) or
the equivalent Department of Defense
certification, except that a Business
Opportunity Specialist who was serving on or
before January 3, 2013, may continue to serve
as a Business Opportunity Specialist for a
period of 5 years beginning on such date
without such a certification.
[(2)] (B) Delay of certification
requirement.--
[(A)] (i) Timing.--The certification
described in [paragraph (1)]
subparagraph (A) is not required for
any person serving as a Business
Opportunity Specialist until the date
that is one calendar year after the
date such person is appointed as a
Business Opportunity Specialist.
[(B) Application.--The requirements
of subparagraph (A) shall--]
[(i) be included in any
initial job posting for the
position of a Business
Opportunity Specialist; and
[(ii) apply to any person
appointed as a Business
Opportunity Specialist after
January 3, 2013.]
(ii) Application.--The
requirements of clause (i)
shall be included in any
initial job posting for the
position of a Business
Opportunity Specialist and
shall apply to any person
appointed as a Business
Opportunity Specialist after
January 3, 2013.
* * * * * * *
(h) [Certification Requirements for] Commercial Market
Representatives.--
(1) Duties.--The principal duties of a Commercial
Market Representative employed by the Administrator and
reporting to the senior official appointed by the
Administrator with responsibilities under sections 8,
15, 31, and 36 (or the designee of such official) shall
be to advance the policies established in section
8(d)(1) relating to subcontracting. Such duties shall
include----
(A) helping prime contractors to find small
business concerns that are capable of
performing subcontracts;
(B) for contractors awarded contracts
containing the clause described in section
8(d)(3), providing----
(i) counseling on the contractor's
responsibility to maximize
subcontracting opportunities for small
business concerns;
(ii) instruction on methods and tools
to identify potential subcontractors
that are small business concerns; and
(iii) assistance to increase awards
to subcontractors that are small
business concerns through visits,
training, and reviews of past
performance;
(C) providing counseling on how a small
business concern may promote its capacity to
contractors awarded contracts containing the
clause described in section 8(d)(3); and
(D) conducting periodic reviews of
contractors awarded contracts containing the
clause described in section 8(d)(3) to assess
compliance with subcontracting plans required
under section 8(d)(6).
(2) Certification requirements.--
[(1)] (A) In general.--Consistent with the
requirements of paragraph (2), a commercial
market representative referred to in section
15(q)(3) shall have a Level I Federal
Acquisition Certification in Contracting (or
any successor certification) or the equivalent
Department of Defense certification, except
that a commercial market representative who was
serving on or before the date of the enactment
of the National Defense Authorization Act for
Fiscal Year 2016 may continue to serve as a
commercial market representative for a period
of 5 years beginning on such date without such
a certification.
[(2)] (B) Delay of certification
requirement.--
[(A)] (i) Timing.--The certification
described in [paragraph (1)]
subparagraph (A) is not required for
any person serving as a commercial
market representative until the date
that is one calendar year after the
date such person is appointed as a
commercial market representative.
[(B) Application.--The requirements
of subparagraph (A) shall--]
[(i) be included in any
initial job posting for the
position of a commercial market
representative; and
[(ii) apply to any person
appointed as a commercial
market representative after the
date of the enactment of the
National Defense Authorization
Act for Fiscal Year 2016.]
(ii) Application.--The
requirements of clause (i)
shall be included in any
initial job posting for the
position of a commercial market
representative and shall apply
to any person appointed as a
commercial market
representative after November
25, 2015.
* * * * * * *
Sec. 8. (a)(1) It shall be the duty of the Administration and
it is hereby empowered, whenever it determines such action is
necessary or appropriate--
(A) to enter into contracts with the United States
Government and any department, agency, or officer
thereof having procurement powers obligating the
Administration to furnish articles, equipment,
supplies, services, or materials to the Government or
to perform construction work for the Government. In any
case in which the Administration certifies to any
officer of the Government having procurement powers
that the Administration is competent and responsible to
perform any specific Government procurement contract to
be let by any such officer, such officer shall be
authorized in his discretion to let such procurement
contract to the Administration upon such terms and
conditions as may be agreed upon between the
Administration and the procurement officer. Whenever
the Administration and such procurement officer fail to
agree, the matter shall be submitted for determination
to the Secretary or the head of the appropriate
department or agency by the Administrator. Not later
than 5 days from the date the Administration is
notified of a procurement officer's adverse decision,
the Administration may notify the contracting officer
of the intent to appeal such adverse decision, and
within 15 days of such date the Administrator shall
file a written request for a reconsideration of the
adverse decision with the Secretary of the department
or agency head. For the purposes of this subparagraph,
a procurement officer's adverse decision includes a
decision not to make available for award pursuant to
this subsection a particular procurement requirement or
the failure to agree on the terms and conditions of a
contract to be awarded noncompetitively under the
authority of this subsection. Upon receipt of the
notice of intent to appeal, the Secretary of the
department or the agency head shall suspend further
action regarding the procurement until a written
decision on the Administrator's request for
reconsideration has been issued by such Secretary or
agency head, unless such officer makes a written
determination that urgent and compelling circumstances
which significantly affect interests of the United
States will not permit waiting for a reconsideration of
the adverse decision. If the Administrator's request
for reconsideration is denied, the Secretary of the
department or agency head shall specify the reasons why
the selected firm was determined to be incapable to
perform the procurement requirement, and the findings
supporting such determination, which shall be made a
part of the contract file for the requirement. A
contract may not be awarded under this subsection if
the award of the contract would result in a cost to the
awarding agency which exceeds a fair market price;
(B) to arrange for the performance of such
procurement contracts by negotiating or otherwise
letting subcontracts to socially and economically
disadvantaged small business concerns for construction
work, services, or the manufacture, supply, assembly of
such articles, equipment, supplies, materials, or parts
thereof, or servicing or processing in connection
therewith, or such management services as may be
necessary to enable the Administration to perform such
contracts;
(C) to make an award to a small business
concern owned and controlled by socially and
economically disadvantaged individuals which
has completed its period of Program
Participation as prescribed by section
7(j)(15), if----
(i) the contract will be awarded as a
result of an offer (including price)
submitted in response to a published
solicitation relating to a competition
conducted pursuant to subparagraph (D);
and
(ii) the prospective contract awardee
was a Program Participant eligible for
award of the contract on the date
specified for receipt of offers
contained in the contract solicitation;
and
(D)(i) A contract opportunity offered for award
pursuant to this subsection shall be awarded on the
basis of competition restricted to eligible Program
Participants if--
(I) there is a reasonable expectation that at
least two eligible Program Participants will
submit offers and that award can be made at a
fair market price, and
(II) the anticipated award price of the
contract (including options) will exceed
$5,000,000 in the case of a contract
opportunity assigned a standard industrial
classification code for manufacturing and
$3,000,000 (including options) in the case of
all other contract opportunities.
(ii) The Associate Administrator for Minority Small
Business and Capital Ownership Development, on a
nondelegable basis, is authorized to approve a request
from an agency to award a contract opportunity under
this subsection on the basis of a competition
restricted to eligible Program Participants even if the
anticipated award price is not expected to exceed the
dollar amounts specified in clause (i)(II). Such
approvals shall be granted only on a limited basis.
(2) Notwithstanding subsections (a) and (c) of the first
section of the Act entitled ``An Act requiring contracts for
the construction, alteration, and repair of any public building
or public work of the United States to be accompanied by a
performance bond protecting the United States and by additional
bond for the protection of persons furnishing material and
labor for the construction, alteration, or repair of said
public buildings or public work,'' approved August 24, 1935 (49
Stat. 793), no small business concern shall be required to
provide any amount of any bond as a condition or receiving any
subcontract under this subsection if the Administrator
determines that such amount is inappropriate for such concern
in performing such contract: Provided, That the Administrator
shall exercise the authority granted by the paragraph only if--
(A) the Administration takes such measures as it
deems appropriate for the protection of persons
furnishing materials and labor to a small business
receiving any benefit pursuant to this paragraph;
(B) the Administration assists, insofar as
practicable, a small business receiving the benefits of
this paragraph to develop, within a reasonable period
of time, such financial and other capability as may be
needed to obtain such bonds as the Administration may
subsequently require for the successful completion of
any program conducted under the authority of this
subsection;
(C) the Administration finds that such small business
is unable to obtain the requisite bond or bonds from a
surety and that no surety is willing to issue such bond
or bonds subject to the guarantee provisions of Title
IV of the Small Business Investment Act of 1958; and
(D) that small business is determined to be a start-
up concern and such concern has not been participating
in any program conducted under the authority of this
subsection for a period exceeding one year.
The authority to waive bonds provided in this paragraph (2) may
not be exercised after September 30, 1988.
(3)(A) Any Program Participant selected by the Administration
to perform a contract to be let noncompetitively pursuant to
this subsection shall, when practicable, participate in any
negotiation of the terms and conditions of such contract.
(B)(i) For purposes of paragraph (1) a ``fair market price''
shall be determined by the agency offering the procurement
requirement to the Administration, in accordance with clauses
(ii) and (iii).
(ii) The estimate of a current fair market price for a new
procurement requirement, or a requirement that does not have a
satisfactory procurement history, shall be derived from a price
or cost analysis. Such analysis may take into account
prevailing market conditions, commercial prices for similar
products or services, or data obtained from any other agency.
Such analysis shall consider such cost or pricing data as may
be timely submitted by the Administration.
(iii) The estimate of a current fair market price for a
procurement requirement that has a satisfactory procurement
history shall be based on recent award prices adjusted to
insure comparability. Such adjustments shall take into account
differences in quantities, performance times, plans,
specifications, transportation costs, packaging and packing
costs, labor and materials costs, overhead costs, and any other
additional costs which may be deemed appropriate.
(C) An agency offering a procurement requirement for
potential award pursuant to this subsection shall, upon the
request of the Administration, promptly submit to the
Administration a written statement detailing the method used by
the agency to estimate the current fair market price for such
contract, identifying the information, studies, analyses, and
other data used by such agency. The agency's estimate of the
current fair market price (and any supporting data furnished to
the Administration) shall not be disclosed to any potential
offeror (other than the Administration).
(D) A small business concern selected by the Administration
to perform or negotiate a contract to be let pursuant to this
subsection may request the Administration to protest the
agency's estimate of the fair market price for such contract
pursuant to paragraph (1)(A).
(4)(A) For purposes of this section, the term ``socially and
economically disadvantaged small business concern'' means any
small business concern which meets the requirements of
subparagraph (B) and----
(i) which is at least 51 per centum unconditionally
owned by----
(I) one or more socially and economically
disadvantaged individuals,
(II) an economically disadvantaged Indian
tribe (or a wholly owned business entity of
such tribe), or
(III) an economically disadvantaged Native
Hawaiian organization, or
(ii) in the case of any publicly owned business, at
least 51 per centum of the stock of which is
unconditionally owned by--
(I) one or more socially and economically
disadvantaged individuals,
(II) an economically disadvantaged Indian
tribe (or a wholly owned business entity of
such tribe), or
(III) an economically disadvantaged Native
Hawaiian organization.
(B) A small business concern meets the requirements of this
subparagraph if the management and daily business operations of
such small business concern are controlled by one or more--
(i) socially and economically disadvantaged
individuals described in subparagraph (A)(i)(I) or
subparagraph (A)(ii)(I),
(ii) members of an economically disadvantaged Indian
tribe described in subparagraph (A)(i)(II) or
subparagraph (A)(ii)(II), or
(iii) Native Hawaiian organizations described in
subparagraph (A)(i)(III) or subparagraph (A)(ii)(III).
(C) Each Program Participant shall certify, on an annual
basis, that it meets the requirements of this paragraph
regarding ownership and control.
(5) Socially disadvantaged individuals are those who have
been subjected to racial or ethnic prejudice or cultural bias
because of their identity as a member of a group without regard
to their individual qualities.
(6)(A) Economically disadvantaged individuals are those
socially disadvantaged individuals whose ability to compete in
the free enterprise system has been impaired due to diminished
capital and credit opportunities as compared to others in the
same business area who are not socially disadvantaged. In
determining the degree of diminished credit and capital
opportunities the Administration shall consider, but not be
limited to, the assets and net worth of such socially
disadvantaged individual. In determining the economic
disadvantage of an Indian tribe, the Administration shall
consider, where available, information such as the following:
the per capita income of members of the tribe excluding
judgment awards, the percentage of the local Indian population
below the poverty level, and the tribe's access to capital
markets.
(B) Each Program Participant shall annually submit to the
Administration--
(i) a personal financial statement for each
disadvantaged owner;
(ii) a record of all payments made by the Program
Participant to each of its disadvantaged owners or to
any person or entity affiliated with such owners; and
(iii) such other information as the Administration
may deem necessary to make the determinations required
by this paragraph.
(C)(i) Whenever, on the basis of information provided by a
Program Participant pursuant to subparagraph (B) or otherwise,
the Administration has reason to believe that the standards to
establish economic disadvantage pursuant to subparagraph (A)
have not been met, the Administration shall conduct a review to
determine whether such Program Participant and its
disadvantaged owners continue to be impaired in their ability
to compete in the free enterprise system due to diminished
capital and credit opportunities when compared to other
concerns in the same business area, which are not socially
disadvantaged.
(ii) If the Administration determines, pursuant to such
review, that a Program Participant and its disadvantaged owners
are no longer economically disadvantaged for the purpose of
receiving assistance under this subsection, the Program
Participant shall be graduated pursuant to section 7(j)(10)(G)
subject to the right to a hearing as provided for under
paragraph (9).
(D)(i) Whenever, on the basis of information provided by a
Program Participant pursuant to subparagraph (B) or otherwise,
the Administration has reason to believe that the amount of
funds or other assets withdrawn from a Program Participant for
the personal benefit of its disadvantaged owners or any person
or entity affiliated with such owners may have been unduly
excessive, the Administration shall conduct a review to
determine whether such withdrawal of funds or other assets was
detrimental to the achievement of the targets, objectives, and
goals contained in such Program Participant's business plan.
(ii) If the Administration determines, pursuant to such
review, that funds or other assets have been withdrawn to the
detriment of the Program Participant's business, the
Administration shall----
(I) initiate a proceeding to terminate the Program
Participant pursuant to section 7(j)(10)(F), subject to
the right to a hearing under paragraph (9); or
(II) require an appropriate reinvestment of funds or
other assets and such other steps as the Administration
may deem necessary to ensure the protection of the
concern.
(E) Whenever the Administration computes personal net worth
for any purpose under this paragraph, it shall exclude from
such computation----
(i) the value of investments that disadvantaged
owners have in their concerns, except that such value
shall be taken into account under this paragraph when
comparing such concerns to other concerns in the same
business area that are owned by other than socially
disadvantaged persons;
(ii) the equity that disadvantaged owners have in
their primary personal residences, except that any
portion of such equity that is attributable to unduly
excessive withdrawals from a Program Participant or a
concern applying for program participation shall be
taken into account.
(7)(A) No small business concern shall be deemed eligible for
any assistance pursuant to this subsection unless the
Administration determines that with contract, financial,
technical, and management support the small business concern
will be able to perform contracts which may be awarded to such
concern under paragraph (1)(C) and has reasonable prospects for
success in competing in the private sector.
(B) Limitations established by the Administration in its
regulations and procedures restricting the award of contracts
pursuant to this subsection to a limited number of standard
industrial classification codes in an approved business plan
shall not be applied in a manner that inhibits the logical
business progression by a participating small business concern
into areas of industrial endeavor where such concern has the
potential for success.
(8) All determinations made pursuant to paragraph (5) with
respect to whether a group has been subjected to prejudice or
bias shall be made by the Administrator after consultation with
the Associate Administrator for Minority Small Business and
Capital Ownership Development. All other determinations made
pursuant to paragraphs (4), (5), (6), and (7) shall be made by
the Associate Administrator for Minority Small Business and
Capital Ownership Development under the supervision of, and
responsible to, the Administrator.
(9)(A) Subject to the provisions of subparagraph (E), the
Administration, prior to taking any action described in
subparagraph (B), shall provide the small business concern that
is the subject of such action, an opportunity for a hearing on
the record, in accordance with chapter 5 of title 5, United
States Code.
(B) The actions referred to in subparagraph (A) are----
(i) denial of program admission based upon a negative
determination pursuant to paragraph (4), (5), or (6);
(ii) a termination pursuant to section 7(j)(10)(F);
(iii) a graduation pursuant to section 7(j)(10)(G);
and
(iv) the denial of a request to issue a waiver
pursuant to paragraph (21)(B).
(C) The Administration's proposed action, in any proceeding
conducted under the authority of this paragraph, shall be
sustained unless it is found to be arbitrary, capricious, or
contrary to law.
(D) A decision rendered pursuant to this paragraph shall be
the final decision of the Administration and shall be binding
upon the Administration and those within its employ.
(E) The adjudicator selected to preside over a proceeding
conducted under the authority of this paragraph shall decline
to accept jurisdiction over any matter that----
(i) does not, on its face, allege facts that, if
proven to be true, would warrant reversal or
modification of the Administration's position;
(ii) is untimely filed;
(iii) is not filed in accordance with the rules of
procedure governing such proceedings; or
(iv) has been decided by or is the subject of an
adjudication before a court of competent jurisdiction
over such matters.
(F) Proceedings conducted pursuant to the authority of this
paragraph shall be completed and a decision rendered, insofar
as practicable, within ninety days after a petition for a
hearing is filed with the adjudicating office.
(10) The Administration shall develop and implement an
outreach program to inform and recruit small business concerns
to apply for eligibility for assistance under this subsection.
Such program shall make a sustained and substantial effort to
solicit applications for certification from small business
concerns located in areas of concentrated unemployment or
underemployment or within labor surplus areas and within States
having relatively few Program Participants and from small
disadvantaged business concerns in industry categories that
have not substantially participated in the award of contracts
let under the authority of this subsection.
(11) To the maximum extent practicable, construction
subcontracts awarded by the Administration pursuant to this
subsection shall be awarded within the county or State where
the work is to be performed.
(12)(A) The Administration shall require each concern
eligible to receive subcontracts pursuant to this subsection to
annually prepare and submit to the Administration a capability
statement. Such statement shall briefly describe such concern's
various contract performance capabilities and shall contain the
name and telephone number of the Business Opportunity
Specialist assigned such concern. The Administration shall
separate such statements by those primarily dependent upon
local contract support and those primarily requiring a national
marketing effort. Statements primarily dependent upon local
contract support shall be disseminated to appropriate buying
activities in the marketing area of the concern. The remaining
statements shall be disseminated to the Directors of Small and
Disadvantaged Business Utilization for the appropriate agencies
who shall further distribute such statements to buying
activities with such agencies that may purchase the types of
items or services described on the capability statements.
(B) Contracting activities receiving capability statements
shall, within 60 days after receipt, contact the relevant
Business Opportunity Specialist to indicate the number, type,
and approximate dollar value of contract opportunities that
such activities may be awarding over the succeeding 12-month
period and which may be appropriate to consider for award to
those concerns for which it has received capability statements.
(C) Each executive agency reporting to the Federal
Procurement Data System contract actions with an aggregate
value in excess of $50,000,000 in fiscal year 1988, or in any
succeeding fiscal year, shall prepare a forecast of expected
contract opportunities or classes of contract opportunities for
the next and succeeding fiscal years that small business
concerns, including those owned and controlled by socially and
economically disadvantaged individuals, are capable of
performing. Such forecast shall be periodically revised during
such year. To the extent such information is available, the
agency forecasts shall specify:
(i) The approximate number of individual contract
opportunities (and the number of opportunities within a
class).
(ii) The approximate dollar value, or range of dollar
values, for each contract opportunity or class of
contract opportunities.
(iii) The anticipated time (by fiscal year quarter)
for the issuance of a procurement request.
(iv) The activity responsible for the award and
administration of the contract.
(D) The head of each executive agency subject to the
provisions of subparagraph (C) shall within 10 days of
completion furnish such forecasts to--
(i) the Director of the Office of Small and
Disadvantaged Business Utilization established pursuant
to section 15(k) for such agency; and
(ii) the Administrator.
(E) The information reported pursuant to subparagraph (D) may
be limited to classes of items and services for which there are
substantial annual purchases.
(F) Such forecasts shall be available to small business
concerns.
(13) For purposes of this subsection, the term ``Indian
tribe'' means any Indian tribe, band, nation, or other
organized group or community of Indians, including any Alaska
Native village or regional or village corporation (within the
meaning of the Alaska Native Claims Settlement Act) which--
(A) is recognized as eligible for the special
programs and services provided by the United States to
Indians because of their status as Indians, or
(B) is recognized as such by the State in which such
tribe, band, nation, group, or community resides.
(14) Limitations on subcontracting.--A concern may
not be awarded a contract under this subsection as a
small business concern unless the concern agrees to
satisfy the requirements of section 46.
(15) For purposes of this subsection, the term ``Native
Hawaiian Organization'' means any community service
organization serving Native Hawaiians in the State of Hawaii
which----
(A) is a nonprofit corporation that has filed
articles of incorporation with the director (or the
designee thereof) of the Hawaii Department of Commerce
and Consumer Affairs, or any successor agency,
(B) is controlled by Native Hawaiians, and
(C) whose business activities will principally
benefit such Native Hawaiians.
(16)(A) The Administration shall award sole source contracts
under this section to any small business concern recommended by
the procuring agency offering the contract opportunity if----
(i) the Program Participant is determined to be a
responsible contractor with respect to performance of
such contract opportunity;
(ii) the award of such contract would be consistent
with the Program Participant's business plan; and
(iii) the award of the contract would not result in
the Program Participant exceeding the requirements
established by section 7(j)(10)(I).
(B) To the maximum extent practicable, the Administration
shall promote the equitable geographic distribution of sole
source contracts awarded pursuant to this subsection.
(17)(A) An otherwise responsible business concern that is in
compliance with the requirements of subparagraph (B) shall not
be denied the opportunity to submit and have considered its
offer for any procurement contract, which contract has as its
principal purpose the supply of a product to be let pursuant to
this subsection, subsection (m), section 15(a), section 31, or
section 36, solely because such concern is other than the
actual manufacturer or processor of the product to be supplied
under the contract.
(B) To be in compliance with the requirements referred to in
subparagraph (A), such a business concern shall--
(i) be primarily engaged in the wholesale or retail
trade;
(ii) be a small business concern under the numerical
size standard for the Standard Industrial
Classification Code assigned to the contract
solicitation on which the offer is being made;
(iii) be a regular dealer, as defined pursuant to
section 35(a) of title 41, United States Code
(popularly referred to as the Walsh-Healey Public
Contracts Act), in the product to be offered the
Government or be specifically exempted from such
section by section 7(j)(13)(C); and
(iv) represent that it will supply the product of a
domestic small business manufacturer or processor,
unless a waiver of such requirement is granted--
(I) by the Administrator, after reviewing a
determination by the contracting officer that
no small business manufacturer or processor can
reasonably be expected to offer a product
meeting the specifications (including period
for performance) required of an offeror by the
solicitation; or
(II) by the Administrator for a product (or
class of products), after determining that no
small business manufacturer or processor is
available to participate in the Federal
procurement market.
(C) Limitation.--This paragraph shall not apply to a
contract that has as its principal purpose the
acquisition of services or construction.
(18)(A) No person within the employ of the Administration
shall, during the term of such employment and for a period of
two years after such employment has been terminated, engage in
any activity or transaction specified in subparagraph (B) with
respect to any Program Participant during such person's term of
employment, if such person participated personally (either
directly or indirectly) in decision-making responsibilities
relating to such Program Participant or with respect to the
administration of any assistance provided to Program
Participants generally under this subsection, section 7(j)(10),
or section 7(a)(20).
(B) The activities and transactions prohibited by
subparagraph (A) include----
(i) the buying, selling, or receiving (except by
inheritance) of any legal or beneficial ownership of
stock or any other ownership interest or the right to
acquire any such interest;
(ii) the entering into or execution of any written or
oral agreement (whether or not legally enforceable) to
purchase or otherwise obtain any right or interest
described in clause (i); or
(iii) the receipt of any other benefit or right that
may be an incident of ownership.
(C)(i) The employees designated in clause (ii) shall annually
submit a written certification to the Administration regarding
compliance with the requirements of this paragraph.
(ii) The employees referred to in clause (i) are----
(I) regional administrators;
(II) district directors;
(III) the Associate Administrator for Minority Small
Business and Capital Ownership Development;
(IV) employees whose principal duties relate to the
award of contracts or the provision of other assistance
pursuant to this subsection or section 7(j)(10); and
(V) such other employees as the Administrator may
deem appropriate.
(iii) Any present or former employee of the Administration
who violates this paragraph shall be subject to a civil
penalty, assessed by the Attorney General, that shall not
exceed 300 per centum of the maximum amount of gain such
employee realized or could have realized as a result of
engaging in those activities and transactions prescribed by
subparagraph (B).
(iv) In addition to any other remedy or sanction provided for
under law or regulation, any person who falsely certifies
pursuant to clause (i) shall be subject to a civil penalty
under the Program Fraud Civil Remedies Act of 1986 (31 U.S.C.
3801-3812).
(19)(A) Any employee of the Administration who has authority
to take, direct others to take, recommend, or approve any
action with respect to any program or activity conducted
pursuant to this subsection or section 7(j), shall not, with
respect to any such action, exercise or threaten to exercise
such authority on the basis of the political activity or
affiliation of any party. Employees of the Administration shall
expeditiously report to the Inspector General of the
Administration any such action for which such employee's
participation has been solicitated or directed.
(B) Any employee who willfully and knowingly violates
subparagraph (A) shall be subject to disciplinary action, which
may consist of separation from service, reduction in grade,
suspension, or reprimand.
(C) Subparagraph (A) shall not apply to any action taken as a
penalty or other enforcement of a violation of any law, rule,
or regulation prohibiting or restricting political activity.
(D) The prohibitions of subparagraph (A), and remedial
measures provided for under subparagraphs (B) and (C) with
regard to such prohibitions, shall be in addition to, and not
in lieu of, any other prohibitions, measures or liabilities
that may arise under any other provision of law.
(20)(A) Small business concerns participating in the Program
under section 7(j)(10) and eligible to receive contracts
pursuant to this section shall semiannually report to their
assigned Business Opportunity Specialist the following:
(i) A listing of any agents, representatives,
attorneys, accountants, consultants, and other parties
(other than employees) receiving compensation to assist
in obtaining a Federal contract for such Program
Participant.
(ii) The amount of compensation received by any
person listed under clause (i) during the relevant
reporting period and a description of the activities
performed in return for such compensation.
(B) The Business Opportunity Specialist shall promptly review
and forward such report to the Associate Administrator for
Minority Small Business and Capital Ownership Development. Any
report that raises a suspicion of improper activity shall be
reported immediately to the Inspector General of the
Administration.
(C) The failure to submit a report pursuant to the
requirements of this subsection and applicable regulations
shall be considered ``good cause'' for the initiation of a
termination proceeding pursuant to section 7(j)(10)(F).
(21)(A) Subject to the provisions of subparagraph (B), a
contract (including options) awarded pursuant to this
subsection shall be performed by the concern that initially
received such contract. Notwithstanding the provisions of the
preceding sentence, if the owner or owners upon whom
eligibility was based relinquish ownership or control of such
concern, or enter into any agreement to relinquish such
ownership or control, such contract or option shall be
terminated for the convenience of the Government, except that
no repurchase costs or other damages may be assessed against
such concerns due solely to the provisions of this
subparagraph.
(B) The Administrator may, on a nondelegable basis, waive the
requirements of subparagraph (A) only if one of the following
conditions exist:
(i) When it is necessary for the owners of the
concern to surrender partial control of such concern on
a temporary basis in order to obtain equity financing.
(ii) The head of the contracting agency for which the
contract is being performed certifies that termination
of the contract would severely impair attainment of the
agency's program objectives or missions;
(iii) Ownership and control of the concern that is
performing the contract will pass to another small
business concern that is a program participant, but
only if the acquiring firm would otherwise be eligible
to receive the award directly pursuant to subsection
(a);
(iv) The individuals upon whom eligibility was based
are no longer able to exercise control of the concern
due to incapacity or death; or
(v) When, in order to raise equity capital, it is
necessary for the disadvantaged owners of the concern
to relinquish ownership of a majority of the voting
stock of such concern, but only if----
(I) such concern has exited the Capital
Ownership Development Program;
(II) the disadvantaged owners will maintain
ownership of the largest single outstanding
block of voting stock (including stock held by
affiliated parties); and
(III) the disadvantaged owners will maintain
control of daily business operations.
(C) The Administrator may waive the requirements of
subparagraph (A) if----
(i) in the case of subparagraph (B) (i), (ii)
and (iv), he is requested to do so prior to the
actual relinquishment of ownership or control;
and
(ii) in the case of subparagraph (B)(iii), he
is requested to do so as soon as possible after
the incapacity or death occurs.
(D) Concerns performing contracts awarded pursuant to this
subsection shall be required to notify the Administration
immediately upon entering an agreement (either oral or in
writing) to transfer all or part of its stock or other
ownership interest to any other party.
(E) Notwithstanding any other provision of law, for the
purposes of determining ownership and control of a concern
under this section, any potential ownership interests held by
investment companies licensed under the Small Business
Investment Act of 1958 shall be treated in the same manner as
interests held by the individuals upon whom eligibility is
based.
(b) It shall also be the duty of the Administration and it is
hereby empowered, whenever it determines such action is
necessary----
(1)(A) to provide----
(i) technical, managerial, and informational
aids to small business concerns--
(I) by advising and counseling on
matters in connection with Government
procurement and policies, principles,
and practices of good management;
(II) by cooperating and advising
with----
(aa) voluntary business,
professional, educational, and
other nonprofit organizations,
associations, and institutions
(except that the Administration
shall take such actions as it
determines necessary to ensure
that such cooperation does not
constitute or imply an
endorsement by the
Administration of the
organization or its products or
services, and shall ensure that
it receives appropriate
recognition in all printed
materials); and
(bb) other Federal and State
agencies;
(III) by maintaining a clearinghouse
for information on managing, financing,
and operating small business
enterprises; and
(IV) by disseminating such
information, including through
recognition events, and by other
activities that the Administration
determines to be appropriate; and
(ii) through cooperation with a profit-making
concern (referred to in this paragraph as a
``cosponsor''), training, information, and
education to small business concerns, except
that the Administration shall----
(I) take such actions as it
determines to be appropriate to ensure
that----
(aa) the Administration
receives appropriate
recognition and publicity;
(bb) the cooperation does not
constitute or imply an
endorsement by the
Administration of any product
or service of the cosponsor;
(cc) unnecessary promotion of
the products or services of the
cosponsor is avoided; and
(dd) utilization of any one
cosponsor in a marketing area
is minimized; and
(II) develop an agreement, executed
on behalf of the Administration by an
employee of the Administration in
Washington, the District of Columbia,
that provides, at a minimum, that--
(aa) any printed material to
announce the cosponsorship or
to be distributed at the
cosponsored activity, shall be
approved in advance by the
Administration;
(bb) the terms and conditions
of the cooperation shall be
specified;
(cc) only minimal charges may
be imposed on any small
business concern to cover the
direct costs of providing the
assistance;
(dd) the Administration may
provide to the cosponsorship
mailing labels, but not lists
of names and addresses of small
business concerns compiled by
the Administration;
(ee) all printed materials
containing the names of both
the Administration and the
cosponsor shall include a
prominent disclaimer that the
cooperation does not constitute
or imply an endorsement by the
Administration of any product
or service of the cosponsor;
and
(ff) the Administration shall
ensure that it receives
appropriate recognition in all
cosponsorship printed
materials.
(B) To establish, conduct, and publicize, and to
recruit, select, and train volunteers for (and to enter
into contracts, grants, or cooperative agreements
therefor), volunteer programs, including a Service
Corps of Retired Executives (SCORE) and an Active Corps
of Executive (ACE) for the purposes of section
8(b)(1)(A) of this Act. To facilitate the
implementation of such volunteer programs the
Administration shall maintain at its headquarters and
pay the salaries, benefits, and expenses of a volunteer
and professional staff to manage and oversee the
program. Any such payments made pursuant to this
subparagraph shall be effective only to such extent or
in such amounts as are provided in advance in
appropriation Acts. Notwithstanding any other provision
of law, SCORE may solicit cash and in-kind
contributions from the private sector to be used to
carry out its functions under this Act, and may use
payments made by the Administration pursuant to this
subparagraph for such solicitation and the management
of the contributions received.
(C) To allow any individual or group of persons
participating with it in furtherance of the purposes of
subparagraphs (A) and (B) to use the Administration's
office facilities and related material and services as
the Administration deems appropriate, including
clerical and stenographic service:
(i) such volunteers, while carrying out
activities under section 8(b)(1) of this Act
shall be deemed Federal employees for the
purposes of the Federal tort claims provisions
in title 28, United States Code; and for the
purposes of subchapter I of chapter 81 of title
5, United States Code (relative to compensation
to Federal employees for work injuries) shall
be deemed civil employees of the United States
within the meaning of the term ``employee'' as
defined in section 8101 of title 5, United
States Code, and the provisions of that
subchapter shall apply except that in computing
compensation benefits for disability or death,
the monthly pay of a volunteer shall be deemed
that received under the entrance salary for a
grade GS-11 employee:
(ii) the Administrator is authorized to
reimburse such volunteers for all necessary
out-of-pocket expenses incident to their
provision of services under this Act, or in
connection with attendance at meetings
sponsored by the Administration, or for the
cost of malpractice insurance, as the
Administrator shall determine, in accordance
with regulations which he or she shall
prescribe, and, while they are carrying out
such activities away from their homes or
regular places of business, for travel expenses
(including per diem in lieu of subsistence) as
authorized by section 5703 of title 5, United
States Code, for individuals serving without
pay; and
(iii) such volunteers shall in no way provide
services to a client of such Administration
with a delinquent loan outstanding, except upon
a specific request signed by such client for
assistance in connection with such matter.
(D) Notwithstanding any other provision of law, no
payment for supportive services or reimbursement of
out-of-pocket expenses made to persons serving pursuant
to section 8(b)(1) of this Act shall be subject to any
tax or charge or be treated as wages or compensation
for the purposes of unemployment, disability,
retirement, public assistance, or similar benefit
payments, or minimum wage laws.
(E) In carrying out its functions under subparagraph
(A), to make grants (including contracts and
cooperative agreements) to any public or private
institution of higher education for the establishment
and operation of a small business institute, which
shall be used to provide business counseling and
assistance to small business concerns through the
activities of students enrolled at the institution,
which students shall be entitled to receive educational
credits for their activities.
(F) Notwithstanding any other provision of law and
pursuant to regulations which the Administrator shall
provide, counsel may be employed and counsel fees,
court costs, bail, and other expenses incidental to the
defense of volunteers may be paid in judicial or
Administrative proceedings arising directly out of the
performance of activities pursuant to section 8(b)(1)
of this Act, as amended (15 U.S.C. 637(b)(1)) to which
volunteers have been made parties.
(G) In carrying out its functions under this Act and
to carry out the activities authorized by title IV of
the Women's Business Ownership Act of 1988, the
Administration is authorized to accept, in the name of
the Administration, and employ or dispose of in
furtherance of the purposes of this Act, any money or
property, real, personal, or mixed, tangible, or
intangible, received by gift, devise, bequest, or
otherwise; and, further, to accept gratuitous services
and facilities.
(2) to make a complete inventory of all productive
facilities of small-business concerns or to arrange for
such inventory to be made by any other governmental
agency which has the facilities. In making any such
inventory, the appropriate agencies in the several
States may be requested to furnish an inventory of the
productive facilities of small-business concerns in
each respective State if such an inventory is available
or in prospect;
(3) to coordinate and to ascertain the means by which
the productive capacity of small-business concerns can
be most effectively utilized;
(4) to consult and cooperative with officers of the
Government having procurement or property disposal
powers, in order to utilize the potential productive
capacity of plants operated by small-business concerns;
(5) to obtain information as to methods and practices
which Government prime contractors utilize in letting
subcontracts and to take action to encourage the
letting of subcontracts by prime contractors to small-
business concerns at prices and on conditions and terms
which are fair and equitable;
(6) to determine within any industry the concerns,
firms, persons, corporations, partnerships,
cooperatives, or other business enterprises which are
to be designated ``small-business concerns'' for the
purpose of effectuating the provisions of this Act. To
carry out this purpose the Administrator, when
requested to do so, shall issue in response to each
such request an appropriate certificate certifying an
individual concern as a ``small-business concern'' in
accordance with the criteria expressed in this Act. Any
such certificate shall be subject to revocation when
the concern covered thereby ceases to be a ``small-
business concern.'' Offices of the Government having
procurement or lending powers, or engaging in the
disposal of Federal property or allocating materials or
supplies, or promulgating regulations affecting the
distribution of materials or supplies, shall accept as
conclusive the Administration's determination as to
which enterprises are to be designated ``small-business
concerns'', as authorized and directed under this
paragraph;
(7)(A) to certify to Government procurement officers,
and officers engaged in the sale and disposal of
Federal property, with respect to all elements of
responsibility, including, but not limited to,
capability, competency, capacity, credit, integrity,
perseverance, and tenacity, of any small business
concern or group of such concerns to receive and
perform a specific Government contract. A Government
procurement officer or an officer engaged in the sale
and disposal of Federal property may not, for any
reason specified in the preceding sentence, preclude
any small business concern or group of such concerns
from being awarded such contract without referring the
matter for a final disposition to the Administration.
(B) if a Government procurement officer finds that an
otherwise qualified small business concern may be
ineligible due to the provisions of section 35(a) of
title 41, United States Code (the Walsh-Healey Public
Contracts Act), he shall notify the Administration in
writing of such finding. The Administration shall
review such finding and shall either dismiss it and
certify the small business concern to be an eligible
Government contractor for a specific Government
contract or if it concurs in the finding, forward the
matter to the Secretary of Labor for final disposition,
in which case the Administration may certify the small
business concern only if the Secretary of Labor finds
the small business concern not to be in violation.
(C) in any case in which a small business concern or
group of such concerns has been certified by the
Administration pursuant to (A) or (B) to be a
responsible or eligible Government contractor as to a
specific Government contract, the officers of the
Government having procurement or property disposal
powers are directed to accept such certification as
conclusive, and shall let such Government contract to
such concern or group of concerns without requiring it
to meet any other requirement of responsibility or
eligibility. Notwithstanding the first sentence of this
subparagraph, the Administration may not establish an
exemption from referral or notification or refuse to
accept a referral or notification from a Government
procurement officer made pursuant to subparagraph (A)
or (B) of this paragraph, but nothing in this paragraph
shall require the processing of an application for
certification if the small business concern to which
the referral pertains declines to have the application
processed.
(8) to obtain from any Federal department,
establishment, or agency engaged in procurement or in
the financing of procurement or production such reports
concerning the letting of contracts and subcontracts
and the making of loans to business concerns as it may
deem pertinent in carrying out its functions under this
Act;
(9) to obtain from any Federal department,
establishment, or agency engaged in the disposal of
Federal property such reports concerning the
solicitation of bids, time of sale, or otherwise as it
may deem pertinent in carrying out its functions under
this Act;
(10) to obtain from suppliers of materials
information pertaining to the method of filling orders
and the bases for allocating their supply, whenever it
appears that any small business is unable to obtain
materials from its normal sources;
(11) to make studies and recommendations to the
appropriate Federal agencies to insure that a fair
proportion of the total purchases and contracts for
property and services for the Government be placed with
small-business enterprises, to insure that a fair
proportion of Government contacts for research and
development be placed with small-business concerns, to
insure that a fair proportion of the total sales of
Government property be made to small-business concerns,
and to insure a fair and equitable share of materials,
supplies, and equipment to small-business concerns;
(12) to consult and cooperate with all Government
agencies for the purpose of insuring that small-
business concerns shall receive fair and reasonable
treatment from such agencies;
(13) to establish such advisory boards and committees
as may be necessary to achieve the purposes of this Act
and of the Small Business Investment Act of 1958; to
call meetings of such boards and committees from time
to time; to pay the transportation expenses and a per
diem allowance in accordance with section 5703 of title
5, United States Code, to the members of such boards
and committees for travel and subsistence expenses
incurred at the request of the Administration in
connection with travel to points more than fifty miles
distant from the homes of such members in attending the
meetings of such boards and committees; and to rent
temporarily, within the District of Columbia or
elsewhere, such hotel or other accommodations as are
needed to facilitate the conduct of such meetings;
(14) to provide at the earliest practicable time such
information and assistance as may be appropriate,
including information concerning eligibility for loans
under section 7(b)(3), to local public agencies (as
defined in section 110(h) of the Housing Act of 1949)
and to small-business concerns to be displaced by
federally aided urban renewal projects in order to
assist such small-business concerns in reestablishing
their operations;
(15) to disseminate, without regard to the provisions
of section 3204 of title 39, United States Code, data
and information, in such form as it shall deem
appropriate, to public agencies, private organizations,
and the general public;
(16) to make studies of matters materially affecting
the competitive strength of small business, and of the
effect on small business of Federal laws, programs, and
regulations, and to make recommendations to the
appropriate Federal agency or agencies for the
adjustment of such programs and regulations to the
needs of small business; and
(17) to make grants to, and enter into contracts and
cooperative agreements with, educational institutions,
private businesses, veterans' nonprofit community-based
organizations, and Federal, State, and local
departments and agencies for the establishment and
implementation of outreach programs for disabled
veterans (as defined in section 4211(3) of title 38,
United States Code), veterans, and members of a reserve
component of the Armed Forces.
(c)
(d)(1) It is the policy of the United States that small
business concerns, small business concerns owned and controlled
by veterans, 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, shall have the
maximum practicable opportunity to participate in the
performance of contracts let by any Federal agency, including
contracts and subcontracts for subsystems, assemblies,
components, and related services for major systems. It is
further the policy of the United States that its prime
contractors establish procedures to ensure the timely payment
of amounts due pursuant to the terms of their subcontracts with
small business concerns, small business concerns owned and
controlled by veterans, 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.
(2) The clause stated in paragraph (3) shall be included in
all contracts let by any Federal agency except any contract
which----
(A) does not exceed the simplified acquisition
threshold;
(B) including all subcontracts under such contracts
will be performed entirely outside of any State,
territory, or possession of the United States, the
District of Columbia, or the Commonwealth of Puerto
Rico; or
(C) is for services which are personal in nature.
(3) The clause required by paragraph (2) shall be as follows:
(A) It is the policy of the United States that small
business concerns, small business concerns owned and
controlled by veterans, 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 shall
have the maximum practicable opportunity to participate
in the performance of contracts let by any Federal
agency, including contracts and subcontracts for
subsystems, assemblies, components, and related
services for major systems. It is further the policy of
the United States that its prime contractors establish
procedures to ensure the timely payment of amounts due
pursuant to the terms of their subcontracts with small
business concerns, small business concerns owned and
controlled by veterans, 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) The contractor hereby agrees to carry out this
policy in the awarding of subcontracts to the fullest
extent consistent with the efficient performance of
this contract. The contractor further agrees to
cooperate in any studies or surveys as may be conducted
by the United States Small Business Administration or
the awarding agency of the United States as may be
necessary to determine the extent of the contractor's
compliance with this clause.
(C) As used in this contract, the term ``small
business concern'' shall mean a small business as
defined pursuant to section 3 of the Small Business Act
and relevant regulations promulgated pursuant thereto.
The term ``small business concern owned and controlled
by socially and economically disadvantaged
individuals'' shall mean a small business concern----
(i) which is at least 51 per centum owned by
one or more socially and economically
disadvantaged individuals; or, in the case of
any publicly owned business, at least 51 per
centum of the stock of which is owned by one or
more socially and economically disadvantaged
individuals; and
(ii) whose management and daily business
operations are controlled by one or more of
such individuals.
The contractor shall presume that socially and
economically disadvantaged individuals include Black
Americans, Hispanic Americans, Native Americans, Asian
Pacific Americans, and other minorities, or any other
individual found to be disadvantaged by the
Administration pursuant to section 8(a) of the Small
Business Act.
(D) The term ``small business concern owned and
controlled by women'' shall mean a small business
concern----
(i) which is at least 51 per centum owned by
one or more women; or, in the case of any
publicly owned business, at least 51 per centum
of the stock of which is owned by one or more
women; and
(ii) whose management and daily business
operations are controlled by one or more women.
(E) The term ``small business concern owned and
controlled by veterans'' shall mean a small business
concern----
(i) which is at least 51 per centum owned by
one or more eligible veterans; or, in the case
of any publicly owned business, at least 51 per
centum of the stock of which is owned by one or
more veterans; and
(ii) whose management and daily business
operations are controlled by such veterans. The
contractor shall treat as veterans all
individuals who are veterans within the meaning
of the term under section 3(q) of the Small
Business Act.
(F) Contractors acting in good faith may rely on
written representations by their subcontractors
regarding their status as either a small business
concern, small business concern owned and controlled by
veterans, small business concern owned and controlled
by service-disabled veterans, a small business concern
owned and controlled by socially and economically
disadvantaged individuals, or a small business concern
owned and controlled by women.
(G) In this contract, the term ``qualified HUBZone
small business concern'' has the meaning given that
term in section 3(p) of the Small Business Act.
(H) In this contract, the term ``small business
concern owned and controlled by service-disabled
veterans'' has the meaning given that term in section
3(q).
(4)(A) Each solicitation of an offer for a contract to be let
by a Federal agency which is to be awarded pursuant to the
negotiated method of procurement and which may exceed
$1,000,000, in the case of a contract for the construction of
any public facility, or $500,000, in the case of all other
contracts, shall contain a clause notifying potential offering
companies of the provisions of this subsection relating to
contracts awarded pursuant to the negotiated method of
procurement.
(B) Before the award of any contract to be let, or any
amendment or modification to any contract let, by any Federal
agency which----
(i) is to be awarded, or was let, pursuant to the
negotiated method of procurement,
(ii) is required to include the clause stated in
paragraph (3),
(iii) may exceed $1,000,000 in the case of a contract
for the construction of any public facility, or
$500,000 in the case of all other contracts, and
(iv) which offers subcontracting possibilities,
the apparent successful offeror shall negotiate with the
procurement authority a subcontracting plan which incorporates
the information prescribed in paragraph (6). The subcontracting
plan shall be included in and made a material part of the
contract.
(C) If, within the time limit prescribed in regulations of
the Federal agency concerned, the apparent successful offeror
fails to negotiate the subcontracting plan required by this
paragraph, such offeror shall become ineligible to be awarded
the contract. Prior compliance of the offeror with other such
subcontracting plans shall be considered by the Federal agency
in determining the responsibility of that offeror for the award
of the contract.
(D) No contract shall be awarded to any offeror unless the
procurement authority determines that the plan to be negotiated
by the offeror pursuant to this paragraph provides the maximum
practicable opportunity for small business concerns, qualified
HUBZone small business concerns, small business concerns owned
and controlled by veterans, small business concerns owned and
controlled by service-disabled veterans, 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
the contract.
(E) Notwithstanding any other provisions of law, every
Federal agency, in order to encourage subcontracting
opportunities for small business concerns, small business
concerns owned and controlled by veterans, small business
concerns owned and controlled by service-disabled veterans,
qualified HUBZone small business concerns, and small business
concerns owned and controlled by the socially and economically
disadvantaged individuals as defined in paragraph (3) of this
subsection and for small business concerns owned and controlled
by women, is hereby authorized to provide such incentives as
such Federal agency may deem appropriate in order to encourage
such subcontracting opportunities as may be commensurate with
the efficient and economical performance of the contact:
Provided, That, this subparagraph shall apply only to contracts
let pursuant to the negotiated method of procurement.
(F)(i) Each contract subject to the requirements of this
paragraph or paragraph (5) shall contain a clause for the
payment of liquidated damages upon a finding that a prime
contractor has failed to make a good faith effort to comply
with the requirements imposed on such contractor by this
subsection.
(ii) The contractor shall be afforded an opportunity to
demonstrate a good faith effort regarding compliance prior to
the contracting officer's final decision regarding the
impositon of damages and the amount thereof. The final decision
of a contracting officer regarding the contractor's obligation
to pay such damages, or the amounts thereof, shall be subject
to the Contract Disputes Act of 1978 (41 U.S.C. 601-613).
(iii) Each agency shall ensure that the goals offered by the
apparent successful bidder or offeror are attainable in
relation to--
(I) the subcontracting opportunities available to the
contractor, commensurate with the efficient and
economical performance of the contract;
(II) the pool of eligible subcontractors available to
fulfill the subcontracting opportunities; and
(III) the actual performance of such contractor in
fulfilling the subcontracting goals specified in prior
plans.
(G) The following factors shall be designated by the
Federal agency as significant factors for purposes of
evaluating offers for a bundled contract where the head
of the agency determines that the contract offers a
significant opportunity for subcontracting:
(i) A factor that is based on the rate
provided under the subcontracting plan for
small business participation in the performance
of the contract.
(ii) For the evaluation of past performance
of an offeror, a factor that is based on the
extent to which the offeror attained applicable
goals for small business participation in the
performance of contracts.
(5)(A) Each solicitation of a bid for any contract to be let,
or any amendment or modification to any contract let, by any
Federal agency which--
(i) is to be awarded pursuant to the formal
advertising method of procurement,
(ii) is required to contain the clause stated in
paragraph (3) of this subsection,
(iii) may exceed $1,000,000 in the case of a contract
for the construction of any public facility, or
$500,000, in the case of all other contracts, and
(iv) offers subcontracting possibilities,
shall contain a clause requiring any bidder who is selected to
be awarded a contract to submit to the Federal agency concerned
a subcontracting plan which incorporates the information
prescribed in paragraph (6).
(B) If, within the time limit prescribed in regulations of
the Federal agency concerned, the bidder selected to be awarded
the contract fails to submit the subcontracting plan required
by this paragraph, such bidder shall become ineligible to be
awarded the contract. Prior compliance of the bidder with other
such subcontracting plans shall be considered by the Federal
agency in determining the responsibility of such bidder for the
award of the contract. The subcontracting plan of the bidder
awarded the contract shall be included in and made a material
part of the contract.
(6) Each subcontracting plan required under paragraph (4) or
(5) shall include--
(A) percentage goals for the utilization as
subcontractors of small business concerns, small
business concerns owned and controlled by veterans,
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) the name of an individual within the employ of
the offeror or bidder who will administer the
subcontracting program of the offeror or bidder and a
description of the duties of such individual;
(C) a description of the efforts the offeror or
bidder will take to assure that small business
concerns, small business concerns owned and controlled
by veterans, 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 will
have an equitable opportunity to compete for
subcontracts;
(D) assurances that the offeror or bidder will
include the clause required by paragraph (2) of this
subsection in all subcontracts which offer further
subcontracting opportunities, and that the offeror or
bidder will require all subcontractors (except small
business concerns) who receive subcontracts in excess
of $1,000,000 in the case of a contract for the
construction of any public facility, or in excess of
$500,000 in the case of all other contracts, to adopt a
plan similar to the plan required under paragraph (4)
or (5), and assurances at a minimum that the offeror or
bidder, and all subcontractors required to maintain
subcontracting plans pursuant to this paragraph, will--
--
(i) review and approve subcontracting plans
submitted by their subcontractors;
(ii) monitor subcontractor compliance with
their approved subcontracting plans;
(iii) ensure that subcontracting reports are
submitted by their subcontractors when
required;
(iv) acknowledge receipt of their
subcontractors' reports;
(v) compare the performance of their
subcontractors to subcontracting plans and
goals; and
(vi) discuss performance with subcontractors
when necessary to ensure their subcontractors
make a good faith effort to comply with their
subcontracting plans;
(E) assurances that the offeror or bidder will submit
such periodic reports and cooperate in any studies or
surveys as may be required by the Federal agency or the
Administration in order to determine the extent of
compliance by the offeror or bidder with the
subcontracting plan;
(F) a recitation of the types of records the
successful offeror or bidder will maintain to
demonstrate procedures which have been adopted to
comply with the requirements and goals set forth in
this plan, including the establishment of source lists
of small business concerns, small business concerns
owned and controlled by veterans, 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 efforts to identify and award subcontracts
to such small business concerns;
(G) a recitation of the types of records the
successful offeror or bidder will maintain to
demonstrate procedures which have been adopted to
ensure subcontractors at all tiers comply with the
requirements and goals set forth in the plan
established in accordance with subparagraph (D) of this
paragraph, including----
(i) the establishment of source lists of
small business concerns, small business
concerns owned and controlled by veterans,
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
(ii) efforts to identify and award
subcontracts to such small business concerns;
and
(H) a representation that the offeror or bidder
will----
(i) make a good faith effort to acquire
articles, equipment, supplies, services, or
materials, or obtain the performance of
construction work from the small business
concerns used in preparing and submitting to
the contracting agency the bid or proposal, in
the same amount and quality used in preparing
and submitting the bid or proposal; and
(ii) provide to the contracting officer a
written explanation if the offeror or bidder
fails to acquire articles, equipment, supplies,
services, or materials or obtain the
performance of construction work as described
in clause (i).
(7) The head of the contracting agency shall ensure
that----
(A) the agency collects and reports data on
the extent to which contractors of the agency
meet the goals and objectives set forth in
subcontracting plans submitted pursuant to this
subsection; and
(B) the agency periodically reviews data
collected and reported pursuant to subparagraph
(A) for the purpose of ensuring that such
contractors comply in good faith with the
requirements of this subsection and
subcontracting plans submitted by the
contractors pursuant to this subsection.
(8) The provisions of paragraphs (4), (5), and (6) shall not
apply to offerors or bidders who are small business concerns.
[(9) The failure]
(9) Material breach._The failure of any contractor or
subcontractor to comply in good faith with----
(A) the clause contained in paragraph (3) of this
subsection, [or]
(B) any plan required of such contractor pursuant to
the authority of this subsection to be included in its
contract or subcontract, or
(C) assurances provided under paragraph (6)(E),
shall be a material breach of such contract or subcontract and
may be considered in any past performance evaluation of the
contractor.
(10) Nothing contained in this subsection shall be construed
to supersede the requirements of Defense Manpower Policy Number
4A (32A CFR Chap. 1) or any successor policy.
[(11) In the case of]
(11) Authority of administrator._In the case of contracts
within the provisions of paragraphs (4), (5), and (6), the
Administration is authorized to--
(A) assist Federal agencies and businesses in
complying with their responsibilities under the
provisions of this subsection, including the
formulation of subcontracting plans pursuant to
paragraph (4);
(B) review any solicitation for any contract to be
let pursuant to paragraphs (4) and (5) to determine the
maximum practicable opportunity for small business
concerns, small business concerns owned and controlled
by veterans, 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 as subcontractors in the performance of any
contract resulting from any solicitation, and to submit
its findings[, which shall be advisory in nature,] to
the appropriate Federal agency; and
(C) evaluate compliance with subcontracting plans as
a supplement to evaluations performed by the
contracting agency, either on a contract-by-contract
basis or, in the case of contractors having multiple
contracts, on an aggregate basis.
(12) For purposes of determining the attainment of a
subcontract utilization goal under any subcontracting plan
entered into with any executive agency pursuant to this
subsection, a mentor firm providing development assistance to a
protege firm under the pilot Mentor-Protege Program established
pursuant to section 831 of the National Defense Authorization
Act for Fiscal Year 1991 (Public Law 101-510; 10 U.S.C. 2301
note) shall be granted credit for such assistance in accordance
with subsection (g) of such section.
(13) Payment of Subcontractors.--
(A) Definition.--In this paragraph, the term
``covered contract'' means a contract relating to which
a prime contractor is required to develop a
subcontracting plan under paragraph (4) or (5).
(B) Notice.--
(i) In general.--A prime contractor for a
covered contract shall notify in writing the
contracting officer for the covered contract if
the prime contractor pays a reduced price to a
subcontractor for goods and services upon
completion of the responsibilities of the
subcontractor or the payment to a subcontractor
is more than 90 days past due for goods or
services provided for the covered contract for
which the Federal agency has paid the prime
contractor.
(ii) Contents.--A prime contractor shall
include the reason for the reduction in a
payment to or failure to pay a subcontractor in
any notice made under clause (i).
(C) Performance.--A contracting officer for a covered
contract shall consider the unjustified failure by a
prime contractor to make a full or timely payment to a
subcontractor in evaluating the performance of the
prime contractor.
(D) Control of funds.--If the contracting officer for
a covered contract determines that a prime contractor
has a history of unjustified, untimely payments to
contractors, the contracting officer shall record the
identity of the contractor in accordance with the
regulations promulgated under subparagraph (E).
(E) Regulations.--Not later than 1 year after the
date of enactment of this paragraph, the Federal
Acquisition Regulatory Council established under
section 25(a) of the Office of Federal Procurement
Policy Act (41 U.S.C. 421(a)) shall amend the Federal
Acquisition Regulation issued under section 25 of such
Act to--
(i) describe the circumstances under which a
contractor may be determined to have a history
of unjustified, untimely payments to
subcontractors;
(ii) establish a process for contracting
officers to record the identity of a contractor
described in clause (i); and
(iii) require the identity of a contractor
described in clause (i) to be incorporated in,
and made publicly available through, the
Federal Awardee Performance and Integrity
Information System, or any successor thereto.
(14) An offeror for a covered contract that intends
to identify a small business concern as a potential
subcontractor in a bid or proposal for the contract, or
in a plan submitted pursuant to this subsection in
connection with the contract, shall notify the small
business concern prior to making such identification.
(15) The Administrator shall establish a reporting
mechanism that allows a subcontractor or potential
subcontractor to report fraudulent activity or bad
faith by a contractor with respect to a subcontracting
plan submitted pursuant to this subsection.
(16) Credit for Certain Subcontractors.--
(A) For purposes of determining whether or not a
prime contractor has attained the percentage goals
specified in paragraph (6)--
(i) if the subcontracting goals pertain only
to a single contract with the executive agency,
the prime contractor shall receive credit for
small business concerns performing as first
tier subcontractors or subcontractors at any
tier pursuant to the subcontracting plans
required under paragraph (6)(D) in an amount
equal to the dollar value of work awarded to
such small business concerns; and
(ii) if the subcontracting goals pertain to
more than one contract with one or more
executive agencies, or to one contract with
more than one executive agency, the prime
contractor may only count first tier
subcontractors that are small business
concerns.
(B) Nothing in this paragraph shall abrogate the
responsibility of a prime contractor to make a good-
faith effort to achieve the first tier small business
subcontracting goals negotiated under paragraph (6)(A),
or the requirement for subcontractors with further
opportunities for subcontracting to make a good-faith
effort to achieve the goals established under paragraph
(6)(D).
(17) Review and acceptance of subcontracting plans.--
(A) Definition.--In this paragraph, the term
``covered small business concerns'' means----
(i) small business concerns;
(ii) qualified HUBZone small business
concerns;
(iii) small business concerns owned
and controlled by veterans;
(iv) small business concerns owned
and controlled by service-disabled
veterans;
(v) small business concerns owned and
controlled by socially and economically
disadvantaged individuals, as defined
in paragraph (3)(C); and
(vi) small business concerns owned
and controlled by women.
(B) Delayed acceptance of plan.--Except as
provided in subparagraph (E), if a procurement
center representative or commercial market
representative determines that a subcontracting
plan required under paragraph (4) or (5) fails
to provide the maximum practicable opportunity
for covered small business concerns to
participate in the performance of the contract
to which the plan applies, the representative
may delay acceptance of the plan in accordance
with subparagraph (C).
(C) Process for delayed acceptance.--
(i) In general.--Except as provided
in clause (ii), a procurement center
representative or commercial market
representative who makes a
determination under subparagraph (B)
with respect to a subcontracting plan
may delay acceptance of the plan for a
30-day period by providing written
notice of the determination to the head
of the procuring activity of the
contracting agency that includes
recommendations for altering the plan
to provide the maximum practicable
opportunity described in that
subparagraph.
(ii) Exception.--In the case of the
Department of Defense----
(I) a procurement center
representative or commercial
market representative who makes
a determination under
subparagraph (B) with respect
to a subcontracting plan may
delay acceptance of the plan
for a 15-day period by
providing written notice of the
determination to appropriate
personnel of the Department of
Defense that includes
recommendations for altering
the plan to provide the maximum
practicable opportunity
described in that subparagraph;
and
(II) the authority of a
procurement center
representative or commercial
market representative to delay
acceptance of a subcontracting
plan as provided in
subparagraph (B) does not
include the authority to delay
the award or performance of the
contract concerned.
(D) Disagreements.--If a procurement center
representative or commercial market
representative delays the acceptance of a
subcontracting plan under subparagraph (C) and
does not reach agreement with the head of the
procuring activity of the contracting agency to
alter the plan to provide the maximum
practicable opportunity described in
subparagraph (B) not later than 30 days after
the date on which written notice was provided,
the disagreement shall be submitted to the head
of the contracting agency by the Administrator
for a final determination.
(E) Exception.--A procurement center
representative or commercial market
representative may not delay the acceptance of
a subcontracting plan if the head of the
contracting agency certifies that the need of
the agency for the supplies or services is of
such an unusual and compelling urgency that the
United States would be seriously injured unless
the agency is permitted to accept the
subcontracting plan.
(18) Pilot program providing past performance ratings
for other small business subcontractors.--
(A) Establishment.--The Administrator shall
establish a pilot program for a small business
concern performing as a first tier
subcontractor for a covered contract (as
defined in paragraph 13(A)) to request a past
performance rating in the system used by the
Federal Government to monitor or record
contractor past performance.
(B) Application.--A small business concern
described in subparagraph (A) shall submit an
application to the appropriate official for a
past performance rating. Such application shall
include written evidence of the past
performance factors for which the small
business concern seeks a rating and a suggested
rating.
(C) Determination.--The appropriate official
shall submit the application from the small
business concern to the contracting officer (or
a designee of such officer) for the covered
contract and to the prime contractor for
review. The contracting officer (or designee)
and the prime contractor shall, not later than
30 days after receipt of the application,
submit to the appropriate official a response
regarding the application.
(i) Agreement on rating.--If the
contracting officer (or designee) and
the prime contractor agree on a past
performance rating, or if either the
contracting officer (or designee) or
the prime contractor fail to respond
and the responding individual agrees
with the rating of the applicant small
business concern, the appropriate
official shall enter the agreed-upon
past performance rating in the system
described in subparagraph (A).
(ii) Disagreement on rating.--If the
contracting officer (or designee) and
the prime contractor fail to respond
within 30 days or if they disagree
about the rating, or if either the
contracting officer (or designee) or
the prime contractor fail to respond
and the responding individual disagrees
with the rating of the applicant small
business concern, the contracting
officer (or designee) or the prime
contractor shall submit a notice
contesting the application to
appropriate official. The appropriate
official shall follow the requirements
of subparagraph (D).
(D) Procedure for rating.--Not later than 14
calendar days after receipt of a notice under
subparagraph (C)(ii), the appropriate official
shall submit such notice to the applicant small
business concern. Such concern may submit
comments, rebuttals, or additional information
relating to the past performance of such
concern not later 14 calendar days after
receipt of such notice. The appropriate
official shall enter the into the system
described in subparagraph (A) a rating that is
neither favorable nor unfavorable along with
the initial application from the small business
concern, the responses of the contracting
officer (or designee) and the prime contractor,
and any additional information provided by the
small business concern.
(E) Use of information.--A small business
subcontractor may use a past performance rating
given under this paragraph to establish its
past performance for a prime contract.
(F) Duration.--The pilot program established
under this paragraph shall terminate 3 years
after the date on which the first small
business concern receives a past performance
rating for performance as a first tier
subcontractor.
(G) Report.--The Comptroller General of the
United States shall begin an assessment of the
pilot program 1 year after the establishment of
such program. Not later than 6 months after
beginning such assessment, the Comptroller
General shall submit a report to the Committee
on Small Business and Entrepreneurship of the
Senate and the Committee on Small Business of
the House of Representatives, which shall
include--
(i) the number of small business
concerns that have received past
performance ratings under the pilot
program;
(ii) the number of applications in
which the contracting officer (or
designee) or the prime contractor
contested the application of the small
business concern;
(iii) any suggestions or
recommendations the Comptroller General
or the small business concerns
participating in the program have to
address disputes between the small
business concern, the contracting
officer (or designee), and the prime
contractor on past performance ratings;
and
(iv) any suggestions or
recommendation the Comptroller General
has to improve the operation of the
pilot program.
(H) Appropriate official defined.--In this
paragraph, the term ``appropriate official''
means a Commercial Market Representative or
other individual designated by the senior
official appointed by the Administrator with
responsibilities under sections 8, 15, 31, and
36.
(e)(1) Except as provided in subsection (g)----
(A) an executive agency intending to----
(i) solicit bids or proposals for a contract
for property or services for a price expected
to exceed $25,000; or
(ii) place an order, expected to exceed
$25,000, under a basic agreement, basis
ordering agreement, or similar arrangement,
shall publish a notice described in subsection (f);
(B) an executive agency intending to solicit bids or
proposals for a contract for property or services shall
post, for a period of not less than ten days, in a
public place at the contracting office issuing the
solicitation a notice of solicitation described in
subsection (f)--
(i) in the case of an executive agency other
than the Department of Defense, if the contract
is for a price expected to exceed $10,000, but
not to exceed $25,000; and
(ii) in the case of the Department of
Defense, if the contract is for a price
expected to exceed $5,000, but not to exceed
$25,000; and
(C) an executive agency awarding a contract for
property or services for a price exceeding $100,000, or
placing an order referred to in clause (A)(ii)
exceeding $100,000, shall furnish for publication by
the Secretary of Commerce a notice announcing the award
or order if there is likely to be any subcontract under
such contract or order.
(2)(A) A notice of solicitation required to be published
under paragraph (1) may be published--
(i) by electronic means that meet the accessibility
requirements under section 18(a)(7) of the Office of
Federal Procurement Policy Act (41 U.S.C. 416(a)(7));
or
(ii) by the Secretary of Commerce in the Commerce
Business Daily.
(B) The Secretary of Commerce shall promptly publish in the
Commerce Business Daily each notice or announcement received
under this subsection for publication by that means.
(3) Whenever an executive agency is required by paragraph
(1)(A) to publish a notice of solicitation, such executive
agency may not--
(A) issue the solicitation earlier than 15 days after
the date on which the notice is published; or
(B) in the case of a contract or order estimated to
be greater than the simplified acquisition threshold,
establish a deadline for the submission of all bids or
proposals in response to the notice required by
paragraph (1)(A) that--
(i) in the case of an order under a basic
agreement, basic ordering agreement, or similar
arrangement, is earlier than the date 30 days
after the date the notice required by paragraph
(1)(A)(ii) is published;
(ii) in the case of a solicitation for
research and development, is earlier than the
date 45 days after the date the notice required
by paragraph (1)(A)(i) is published; or
(iii) in any other case, is earlier than the
date 30 days after the date the solicitation is
issued.
(f) Each notice of solicitation required by subparagraph (A)
or (B) of subsection (e)(1) shall include----
(1) an accurate description of the property or
services to be contracted for, which description (A)
shall not be unnecessarily restrictive of competition,
and (B) shall include, as appropriate, the agency
nomenclature, National Stock Number or other part
number, and a brief description of the item's form,
fit, or function, physical dimensions, predominant
material of manufacture, or similar information that
will assist a prospective contractor to make an
informed business judgment as to whether a copy of the
solicitation should be requested;
(2) provisions that----
(A) state whether the technical data required
to respond to the solicitation will not be
furnished as part of such solicitation, and
identify the source in the Government, if any,
from which the technical data may be obtained;
and
(B) state whether an offeror, its product, or
service must meet a qualification requirement
in order to be eligible for award, and, if so,
identify the office from which a qualification
requirement may be obtained;
(3) the name, business address, and telephone number
of the contracting officer;
(4) a statement that all responsible sources may
submit a bid, proposal, or quotation (as appropriate)
which shall be considered by the agency;
(5) in the case of a procurement using procedures
other than competitive procedures, a statement of the
reason justifying the use of such procedures and the
identity of the intended source; and
(6) in the case of a contract in an amount estimated
to be greater than $25,000 but not greater than the
simplified acquisition threshold----
(A) a description of the procedures to be
used in awarding the contract; and
(B) a statement specifying the periods for
prospective offerors and the contracting
officer to take the necessary preaward and
award actions.
(g)(1) A notice is not required under subsection (e)(1) if--
(A) the proposed procurement is for an amount not
greater than the simplified acquisition threshold and
is to be conducted by--
(i) using widespread electronic public notice
of the solicitation in a form that allows
convenient and universal user access through a
single, Government-wide point of entry; and
(ii) permitting the public to respond to the
solicitation electronically.
(B) the notice would disclose the executive agency's
needs and the disclosure of such needs would compromise
the national security;
(C) the proposed procurement would result from
acceptance of----
(i) any unsolicited proposal that
demonstrates a unique and innovative research
concept and the publication of any notice of
such unsolicited research proposal would
disclose the originality of thought or
innovativeness of the proposal or would
disclose proprietary information associated
with the proposal; or
(ii) a proposal submitted under section 9 of
this Act;
(D) the procurement is made against an order placed
under a requirements contract;
(E) the procurement is made for perishable
subsistence supplies;
(F) the procurement is for utility services, other
than telecommunication services, and only one source is
available; or
(G) the procurement is for the services of an expert
for use in any litigation or dispute (including
preparation for any foreseeable litigation or dispute)
that involves or could involve the Federal Government
in any trial, hearing, or proceeding before any court,
administrative tribunal, or agency, or in any part of
an alternative dispute resolution process, whether or
not the expert is expected to testify.
(2) The requirements of subsection (a)(1)(A) do not apply to
any procurement under conditions described in paragraph (2),
(3), (4), (5), or (7) of section 303(c) of the Federal Property
and Administrative Services Act of 1949 (41 U.S.C. 253(c)) or
paragraph (2), (3), (4), (5), and (7) of section 2304(c) of
title 10, United States Code.
(3) The requirements of subsection (a)(1)(A) shall not apply
in the case of any procurement for which the head of the
executive agency makes a determination in writing, after
consultation with the Administrator for Federal Procurement
Policy and the Administrator of the Small Business
Administration, that it is not appropriate or reasonable to
publish a notice before issuing a solicitation.
(h)(1) An executive agency may not award a contract using
procedures other than competitive procedures unless----
(A) except as provided in paragraph (2), a written
justification for the use of such procedures has been
approved----
(i) in the case of a contract for an amount
exceeding $100,000 (but equal to or less than
$1,000,000), by the advocate for competition
for the procuring activity (without further
delegation);
(ii) in the case of a contract for an amount
exceeding $1,000,000 (but equal to or less than
$10,000,000), by the head of the procuring
activity or a delegate who, if a member of the
Armed Forces, is a general or flag officer, or,
if a civilian, is serving in a position in
grade GS-16 or above under the General Schedule
(or in a comparable or higher position under
another schedule); or
(iii) in the case of a contract for an amount
exceeding $10,000,000, by the senior
procurement executive of the agency designated
pursuant to section 16(3) of the Office of
Federal Procurement Policy Act (41 U.S.C.
414(3)) (without further delegation); and
(B) all other requirements applicable to the use of
such procedures under title III of the Federal Property
and Administrative Services Act of 1949 (41 U.S.C. 251
et sq.) or chapter 137 of title 10, United States Code,
as appropriate, have been satisfied.
(2) The same exceptions as are provided in section 303(f)(2)
of the Federal Property and Administrative Services Act of 1949
(41 U.S.C. 253(f)(2)) or section 2304(f)(2) of title 10, United
States Code, shall apply with respect to the requirements of
paragraph (1)(A) of this subsection in the same manner as such
exceptions apply to the requirements of section 303(f)(1) of
such Act or section 2304(f)(1) of such title, as appropriate.
(i) An executive agency shall make available to any business
concern, or the authorized representative of such concern, the
complete solicitation package for any on-going procurement
announced pursuant to a notice under subsection (e). An
executive agency may require the payment of a fee, not
exceeding the actual cost of duplication, for a copy of such
package.
(j) For purposes of this section, the term ``executive
agency'' has the meaning provided such term in section 4(1) of
the Office of Federal Procurement Policy Act (41 U.S.C.
403(1)).
(k) Notices of Subcontracting Opportunities.--
(1) In general.--Notices of subcontracting
opportunities may be submitted for publication on the
appropriate Federal Web site (as determined by the
Administrator) by--
(A) a business concern awarded a contract by
an executive agency subject to subsection
(e)(1)(C); and
(B) a business concern that is a
subcontractor or supplier (at any tier) to such
contractor having a subcontracting opportunity
in excess of $10,000.
(2) Content of notice.--The notice of a
subcontracting opportunity shall include----
(A) a description of the business opportunity
that is comparable to the description specified
in paragraphs (1), (2), (3), and (4) of
subsection (f); and
(B) the due date for receipt of offers.
(l) Management Assistance for Small Businesses Affected by
Military Operations.--The Administration shall utilize, as
appropriate, its entrepreneurial development and management
assistance programs, including programs involving State or
private sector partners, to provide business counseling and
training to any small business concern adversely affected by
the deployment of units of the Armed Forces of the United
States in support of a period of military conflict (as defined
in section 7(n)(1)).
(m) Procurement Program for Women-owned Small Business
Concerns.--
(1) Definitions.--In this subsection, the following
definitions apply:
(A) Contracting officer.--The term
``contracting officer'' has the meaning given
such term in section 27(f)(5) of the Office of
Federal Procurement Policy Act (41 U.S.C.
423(f)(5)).
(B) Small business concern owned and
controlled by women.--The term ``small business
concern owned and controlled by women'' has the
meaning given such term in section 3(n), except
that ownership shall be determined without
regard to any community property law.
(2) Authority to restrict competition.--In accordance
with this subsection, a contracting officer may
restrict competition for any contract for the
procurement of goods or services by the Federal
Government to small business concerns owned and
controlled by women, if--
(A) each of the concerns is not less than 51
percent owned by one or more women who are
economically disadvantaged (and such ownership
is determined without regard to any community
property law);
(B) the contracting officer has a reasonable
expectation that two or more small business
concerns owned and controlled by women will
submit offers for the contract;
(C) the contract is for the procurement of
goods or services with respect to an industry
identified by the Administrator pursuant to
paragraph (3);
(D) in the estimation of the contracting
officer, the contract award can be made at a
fair and reasonable price; and
(E) each of the concerns is certified by a
Federal agency, a State government, the
Administrator, or a national certifying entity
approved by the Administrator as a small
business concern owned and controlled by women.
(3) Waiver.--With respect to a small business concern
owned and controlled by women, the Administrator may
waive subparagraph (2)(A) if the Administrator
determines that the concern is in an industry in which
small business concerns owned and controlled by women
are substantially underrepresented.
(4) Identification of industries.--The Administrator
shall conduct a study to identify industries in which
small business concerns owned and controlled by women
are underrepresented with respect to Federal
procurement contracting.
(5) Enforcement; penalties.--
(A) Verification of eligibility.--In carrying
out this subsection, the Administrator shall
establish procedures relating to--
(i) the filing, investigation, and
disposition by the Administration of
any challenge to the eligibility of a
small business concern to receive
assistance under this subsection
(including a challenge, filed by an
interested party, relating to the
veracity of a certification made or
information provided to the
Administration by a small business
concern under paragraph (2)(E)); and
(ii) verification by the
Administrator of the accuracy of any
certification made or information
provided to the Administration by a
small business concern under paragraph
(2)(E).
(B) Examinations.--The procedures established
under subparagraph (A) may provide for program
examinations (including random program
examinations) by the Administrator of any small
business concern making a certification or
providing information to the Administrator
under paragraph (2)(E).
(C) Penalties.--In addition to the penalties
described in section 16(d), any small business
concern that is determined by the Administrator
to have misrepresented the status of that
concern as a small business concern owned and
controlled by women for purposes of this
subsection, shall be subject to--
(i) section 1001 of title 18, United
States Code; and
(ii) sections 3729 through 3733 of
title 31, United States Code.
(6) Provision of data.--Upon the request of the
Administrator, the head of any Federal department or
agency shall promptly provide to the Administrator such
information as the Administrator determines to be
necessary to carry out this subsection.
(7) Authority for sole source contracts for
economically disadvantaged small business concerns
owned and controlled by women.--A contracting officer
may award a sole source contract under this subsection
to any small business concern owned and controlled by
women described in paragraph (2)(A) and certified under
paragraph (2)(E) if--
(A) such concern is determined to be a
responsible contractor with respect to
performance of the contract opportunity and the
contracting officer does not have a reasonable
expectation that 2 or more businesses described
in paragraph (2)(A) will submit offers;
(B) the anticipated award price of the
contract (including options) will not exceed--
--
(i) $6,500,000, in the case of a
contract opportunity assigned a
standard industrial classification code
for manufacturing; or
(ii) $4,000,000, in the case of any
other contract opportunity; and
(C) in the estimation of the contracting
officer, the contract award can be made at a
fair and reasonable price.
(8) Authority for sole source contracts for small
business concerns owned and controlled by women in
substantially underrepresented industries.--A
contracting officer may award a sole source contract
under this subsection to any small business concern
owned and controlled by women certified under paragraph
(2)(E) that is in an industry in which small business
concerns owned and controlled by women are
substantially underrepresented (as determined by the
Administrator under paragraph (3)) if----
(A) such concern is determined to be a
responsible contractor with respect to
performance of the contract opportunity and the
contracting officer does not have a reasonable
expectation that 2 or more businesses in an
industry that has received a waiver under
paragraph (3) will submit offers;
(B) the anticipated award price of the
contract (including options) will not exceed--
--
(i) $6,500,000, in the case of a
contract opportunity assigned a
standard industrial classification code
for manufacturing; or
(ii) $4,000,000, in the case of any
other contract opportunity; and
(C) in the estimation of the contracting
officer, the contract award can be made at a
fair and reasonable price.
(n) Business Grants and Cooperative Agreements.--
(1) In general.--In accordance with this subsection,
the Administrator may make grants to and enter into
cooperative agreements with any coalition of private
entities, public entities, or any combination of
private and public entities----
(A) to expand business-to-business
relationships between large and small
businesses; and
(B) to provide businesses, directly or
indirectly, with online information and a
database of companies that are interested in
mentor-protege programs or community-based,
statewide, or local business development
programs.
(2) Matching requirement.--Subject to subparagraph
(B), the Administrator may make a grant to a coalition
under paragraph (1) only if the coalition provides for
activities described in paragraph (1)(A) or (1)(B) an
amount, either in kind or in cash, equal to the grant
amount.
(3) Authorization of appropriations.--There is
authorized to be appropriated to carry out this
subsection $6,600,000, to remain available until
expended, for each of fiscal years 2001 through 2006.
* * * * * * *
Sec. 15. [(a) To effectuate the purposes of this Act, small-
business concerns within the meaning of this Act shall receive
any award or contract or any part thereof, and be awarded any
contract for the sale of Government property, as to which it is
determined by the Administration and the contracting
procurement or disposal agency (1) to be in the interest of
maintaining or mobilizing the Nation's full productive
capacity, (2) to be in the interest of war or national defense
programs, (3) to be in 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, or (4) to be in the
interest of assuring that a fair proportion of the total sales
of Government property be made to small-business concerns; but
nothing contained in this Act shall be construed to change any
preferences or priorities established by law with respect to
the sale of electrical power or other property by the
Government or any agency thereof. These determinations may be
made for individual awards or contracts or for classes of
awards or contracts. If a proposed procurement includes in its
statement of work goods or services currently being performed
by a small business, and if the proposed procurement is in a
quantity or estimated dollar value the magnitude of which
renders small business prime contract participation unlikely,
or if a proposed procurement for construction seeks to package
or consolidate discrete construction projects, or the
solicitation involves an unnecessary or unjustified bundling of
contract requirements, as determined by the Administration, the
Procurement Activity shall provide a copy of the proposed
procurement to the Procurement Activity's Small Business
Procurement Center Representative at least 30 days prior to the
solicitation's issuance along with a statement explaining (1)
why the proposed acquisition cannot be divided into reasonably
small lots (not less than economic production runs) to permit
offers on quantities less than the total requirement, (2) why
delivery schedules cannot be established on a realistic basis
that will encourage small business participation to the extent
consistent with the actual requirements of the Government, (3)
why the proposed acquisition cannot be offered so as to make
small business participation likely, (4) why construction
cannot be procured as separate discrete projects, or (5) why
the agency has determined that the bundled contract (as defined
in section 3(o)) is necessary and justified. The thirty-day
notification process shall occur concurrently with other
processing steps required prior to issuance of the
solicitation. Within 15 days after receipt of the proposed
procurement and accompanying statement, if the Procurement
Center Representative believes that the procurement as proposed
will render small business prime contract participation
unlikely, the Representative shall recommend to the Procurement
Activity alternative procurement methods which would increase
small business prime contracting opportunities. Whenever the
Administration and the contracting procurement agency fail to
agree, the matter shall be submitted for determination to the
Secretary or the head of the appropriate department or agency
by the Administrator. For purposes of clause (3) of the first
sentence of this subsection, an industry category is a discrete
group of similar goods and services. Such groups shall be
determined by the Administration in accordance with the
definition of a ``United States industry'' under the North
American Industry Classification System, as established by the
Office of Management and Budget, except that the Administration
shall limit such an industry category to a greater extent than
provided under such classification codes if the Administration
receives evidence indicating that further segmentation for
purposes of this paragraph is warranted due to special capital
equipment needs or special labor or geographic requirements or
to recognize a new industry. A market for goods or services may
not be segmented under the preceding sentence due to geographic
requirements unless the Government typically designates the
area where work for contracts for such goods or services is to
be performed and Government purchases comprise the major
portion of the entire domestic market for such goods or
services and, due to the fixed location of facilities, high
mobilization costs, or similar economic factors, it is
unreasonable to expect competition from business concerns
located outside of the general areas where such concerns are
located. A contract may not be awarded under this subsection if
the award of the contract would result in a cost to the
awarding agency which exceeds a fair market price.]
(a) Small Business Procurements.--
(1) In general.--For purposes of this Act, small
business concerns shall receive any award or contract
if such award or contract is, in the determination of
the Administrator and the contracting agency, in the
interest of--
(A) maintaining or mobilizing the full
productive capacity of the United States;
(B) war or national defense programs; or
(C) assuring that a fair proportion of the
total purchase and contracts for goods and
services of the Government in each industry
category (as described under paragraph (2)) are
awarded to small business concerns.
(2) Industry category defined.--
(A) In general.--In this subsection, the term
``industry category'' means a discrete group of
similar goods and services, as determined by
the Administrator in accordance with the North
American Industry Classification System codes
used to establish small business size
standards, except that the Administrator shall
limit an industry category to a greater extent
than provided under the North American Industry
Classification codes if the Administrator
receives evidence indicating that further
segmentation of the industry category is
warranted----
(i) due to special capital equipment
needs;
(ii) due to special labor
requirements;
(iii) due to special geographic
requirements, except as provided in
subparagraph (B);
(iv) due to unique Federal buying
patterns or requirements; or
(v) to recognize a new industry.
(B) Exception for geographic requirements.--
The Administrator may not further segment an
industry category based on geographic
requirements unless--
(i) the Government typically
designates the geographic area where
work for contracts for goods or
services is to be performed;
(ii) Government purchases comprise
the major portion of the entire
domestic market for such goods or
services; and
(iii) it is unreasonable to expect
competition from business concerns
located outside of the general
geographic area due to the fixed
location of facilities, high
mobilization costs, or similar economic
factors.
(3) Determinations with respect to awards or
contracts.--Determinations made pursuant to paragraph
(1) may be made for individual awards or contracts, any
part of an award or contract or task order, or for
classes of awards or contracts or task orders.
(4) Increasing prime contracting opportunities for
small business concerns.--
(A) Description of covered proposed
procurements.--The requirements of this
paragraph shall apply to a proposed procurement
that includes in its statement of work goods or
services currently being supplied or performed
by a small business concern and, as determined
by the Administrator----
(i) is in a quantity or of an
estimated dollar value which makes the
participation of a small business
concern as a prime contractor unlikely;
(ii) in the case of a proposed
procurement for construction, if such
proposed procurement seeks to bundle or
consolidate discrete construction
projects; or
(iii) is a solicitation that involves
an unnecessary or unjustified bundling
of contract requirements.
(B) Notice to procurement center
representatives.--With respect to proposed
procurements described in subparagraph (A), at
least 30 days before issuing a solicitation and
concurrent with other processing steps required
before issuing the solicitation, the
contracting agency shall provide a copy of the
proposed procurement to the procurement center
representative of the contracting agency (as
described in subsection (l)) along with a
statement explaining--
(i) why the proposed procurement
cannot be divided into reasonably small
lots (not less than economic production
runs) to permit offers on quantities
less than the total requirement;
(ii) why delivery schedules cannot be
established on a realistic basis that
will encourage the participation of
small business concerns in a manner
consistent with the actual requirements
of the Government;
(iii) why the proposed procurement
cannot be offered to increase the
likelihood of the participation of
small business concerns;
(iv) in the case of a proposed
procurement for construction, why the
proposed procurement cannot be offered
as separate discrete projects; or
(v) why the agency has determined
that the bundling of contract
requirements is necessary and
justified.
(C) Alternatives to increase prime
contracting opportunities for small business
concerns.--If the procurement center
representative believes that the proposed
procurement will make the participation of
small business concerns as prime contractors
unlikely, the procurement center
representative, within 15 days after receiving
the statement described in subparagraph (B),
shall recommend to the contracting agency
alternative procurement methods for increasing
prime contracting opportunities for small
business concerns.
(D) Failure to agree on an alternative
procurement method.--If the procurement center
representative and the contracting agency fail
to agree on an alternative procurement method,
the Administrator shall submit the matter to
the head of the appropriate department or
agency for a determination.
(5) Contracts for sale of government property.--With
respect to a contract for the sale of Government
property, small business concerns shall receive any
such contract if, in the determination of the
Administrator and the disposal agency, the award of
such contract is in the interest of assuring that a
fair proportion of the total sales of Government
property be made to small business concerns.
(6) Sale of electrical power or other propery.--
Nothing in this subsection shall be construed to change
any preferences or priorities established by law with
respect to the sale of electrical power or other
property by the Federal Government.
(7) Costs exceeding fair market price.--A contract
may not be awarded under this subsection if the cost of
the contract to the awarding agency exceeds a fair
market price.
(b) With respect to any work to be performed the amount of
which would exceed the maximum amount of any contract for which
a surety may be guaranteed against loss under section 411 of
the Small Business Investment Act of 1958 (15 U.S.C. 694(b)),
the contracting procurement agency shall, to the extent
practicable, place contracts so as to allow more than one small
business concern to perform such work.
(c)(1) As used in this subsection:
(A) The term ``Committee'' means the Committee for
Purchase from the Blind and Other Severely Handicapped
established under the first section of the Act entitled
``An Act to create a Committee on Purchases of Blind-
made Products, and for other purposes'', approved June
25, 1938 (41 U.S.C. 46).
(B) The term ``public or private organization for the
handicapped'' has the same meaning given such term in
section 3(e).
(C) The term ``handicapped individual'' has the same
meaning given such term in section 3(f).
(2)(A) During fiscal year 1995, public or private
organizations for the handicapped shall be eligible to
participate in programs authorized under this section in an
aggregate amount not to exceed $40,000,000.
(B) None of the amounts authorized for participation by
subparagraph (A) may be placed on the procurement list
maintained by the Committee pursuant to section 2 of the Act
entitled ``An Act to create a Committee on Purchases of Blind-
made Products, and for other purposes'', approved June 25, 1938
(41 U.S.C. 47).
(3) The Administrator shall monitor and evaluate such
participation.
(4)(A) Not later than ten days after the announcement of a
proposed award of a contract by an agency or department to a
public or private organization for the handicapped, a for-
profit small business concern that has experienced or is likely
to experience severe economic injury as the result of the
proposed award may file an appeal of the proposed award with
the Administrator.
(B) If such a concern files an appeal of a proposed award
under subparagraph (A) and the Administrator, after
consultation with the Executive Director of the Committee,
finds that the concern has experienced or is likely to
experience severe economic injury as the result of the proposed
award, not later than thirty days after the filing of the
appeal, the Administration shall require each agency and
department having procurement powers to take such action as may
be appropriate to alleviate economic injury sustained or likely
to be sustained by the concern.
(5) Each agency and department having procurement powers
shall report to the Office of Federal Procurement Policy each
time a contract subject to paragraph (2)(A) is entered into,
and shall include in its report the amount of the next higher
bid submitted by a for-profit small business concern. The
Office of Federal Procurement Policy shall collect data
reported under the preceding sentence through the Federal
procurement data system and shall report to the Administration
which shall notify all such agencies and departments when the
maximum amount of awards authorized under paragraph (2)(A) has
been made during any fiscal year.
(6) For the purpose of this subsection, a contract may be
awarded only if at least 75 per centum of the direct labor
performed on each item being produced under the contract in the
sheltered workshop or performed in providing each type of
service under the contract by the sheltered workshop is
performed by handicapped individuals.
(7) Agencies awarding one or more contracts to such an
organization pursuant to the provisions of this subsection may
use multiyear contracts, if appropriate.
(d) For purposes of this section priority shall be given to
the awarding of contracts and the placement of subcontracts to
small business concerns which shall perform a substantial
proportion of the production on those contracts and
subcontracts within areas of concentrated unemployment or
underemployment or within labor surplus areas. Notwithstanding
any other provison of law, total labor surplus area set-asides
pursuant to Defense Manpower Policy Number 4 (32A C.F.R.
Chapter 1) or any successor policy shall be authorized if the
Secretary or his designee specifically determines that there is
a reasonable expectation that offers will be obtained from a
sufficient number of eligible concerns so that awards will be
made at reasonable prices. As soon as practicable and to the
extent possible, in determining labor surplus areas,
consideration shall be given to those persons who would be
available for employment were suitable employment available.
Until such definition reflects such number, the present
criteria of such policy shall govern.
(e) Procurement Strategies; Contract Bundling.--
(1) In general.--To the maximum extent practicable,
procurement strategies used by a Federal department or
agency having contracting authority shall facilitate
the maximum participation of small business concerns as
prime contractors, subcontractors, and suppliers, and
each such Federal department or agency shall--
(A) provide opportunities for the
participation of small business concerns during
acquisition planning processes and in
acquisition plans; and
(B) invite the participation of the
appropriate Director of Small and Disadvantaged
Business Utilization in acquisition planning
processes and provide that Director access to
acquisition plans.
(2) Market research.--
(A) In general.--Before proceeding with an
acquisition strategy that could lead to a
contract containing consolidated procurement
requirements, the head of an agency shall
conduct market research to determine whether
consolidation of the requirements is necessary
and justified.
(B) Factors.--For purposes of subparagraph
(A), consolidation of the requirements may be
determined as being necessary and justified if,
as compared to the benefits that would be
derived from contracting to meet those
requirements if not consolidated, the Federal
Government would derive from the consolidation
measurably substantial benefits, including any
combination of benefits that, in combination,
are measurably substantial. Benefits described
in the preceding sentence may include the
following:
(i) Cost savings.
(ii) Quality improvements.
(iii) Reduction in acquisition cycle
times.
(iv) Better terms and conditions.
(v) Any other benefits.
(C) Reduction of costs not determinative.--
The reduction of administrative or personnel
costs alone shall not be a justification for
bundling of contract requirements unless the
cost savings are expected to be substantial in
relation to the dollar value of the procurement
requirements to be consolidated.
(3) Strategy specifications.--If the head of a
contracting agency determines that an acquisition plan
for a procurement involves a substantial bundling of
contract requirements, the head of a contracting agency
shall publish a notice on a public website that such
determination has been made not later than 7 days after
making such determination. Any solicitation for a
procurement related to the acquisition plan may not be
published earlier than 7 days after such notice is
published. Along with the publication of the
solicitation, the head of a contracting agency shall
publish a justification for the determination, which
shall include the following information:
(A) The specific benefits anticipated to be
derived from the bundling of contract
requirements and a determination that such
benefits justify the bundling.
(B) An identification of any alternative
contracting approaches that would involve a
lesser degree of bundling of contract
requirements.
(C) An assessment of--
(i) the specific impediments to
participation by small business
concerns as prime contractors that
result from the bundling of contract
requirements; and
(ii) the specific actions designed to
maximize participation of small
business concerns as subcontractors
(including suppliers) at various tiers
under the contract or contracts that
are awarded to meet the requirements.
(4) Contract teaming.--
(A) In general.--In the case of a
solicitation of offers for a bundled or
consolidated contract that is issued by the
head of an agency, a small business concern
that provides for use of a particular team of
subcontractors or a joint venture of small
business concerns may submit an offer for the
performance of the contract.
(B) Evaluation of offers.--The head of the
agency shall evaluate an offer described in
subparagraph (A) in the same manner as other
offers, with due consideration to the
capabilities of all of the proposed
subcontractors or members of the joint venture
as follows:
(i) Teams.--When evaluating an offer
of a small business prime contractor
that includes a proposed team of small
business subcontractors, the head of
the agency shall consider the
capabilities and past performance of
each first tier subcontractor that is
part of the team as the capabilities
and past performance of the small
business prime contractor.
(ii) Joint ventures.--When evaluating
an offer of a joint venture of small
business concerns, if the joint venture
does not demonstrate sufficient
capabilities or past performance to be
considered for award of a contract
opportunity, the head of the agency
shall consider the capabilities and
past performance of each member of the
joint venture as the capabilities and
past performance of the joint venture.
(C) Status as a small business concern.--
Participation of a small business concern in a
team or a joint venture under this paragraph
shall not affect the status of that concern as
a small business concern for any other purpose.
(f) Contracting Preference for Small Business Concerns in a
Major Disaster Area.--
(1) Definition.--In this subsection, the term
``disaster area'' means the area for which the
President has declared a major disaster, during the
period of the declaration.
(2) Contracting preference.--An agency shall provide
a contracting preference for a small business concern
located in a disaster area if the small business
concern will perform the work required under the
contract in the disaster area.
(3) Credit for meeting contracting goals.--If an
agency awards a contract to a small business concern
under the circumstances described in paragraph (2), the
value of the contract shall be doubled for purposes of
determining compliance with the goals for procurement
contracts under subsection (g)(1)(A).
(g)
(1) Governmentwide goals.--
(A) Establishment.--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:
(i) The Governmentwide 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. In meeting this goal, the
Government shall ensure the
participation of small business
concerns from a wide variety of
industries and from a broad spectrum of
small business concerns within each
industry.
(ii) 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 subcontract awards for
each fiscal year.
(iii) 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 subcontract awards for
each fiscal year.
(iv) 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 subcontract
awards for each fiscal year.
(v) 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 subcontract awards for
each fiscal year.
(B) Achievement of governmentwide goals.--
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 Small Business 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 Governmentwide 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. Such goals shall separately address prime contract
awards and subcontract awards for each category of small
business covered.
(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) After establishing goals under this paragraph for a
fiscal year, the head of each Federal agency shall develop a
plan for achieving such goals at both the prime contract and
the subcontract level, which shall apportion responsibilities
among the agency's acquisition executives and officials. In
establishing goals under this paragraph, 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 and subcontracts 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.
(E) The head of each Federal agency, in attempting to
attain expanded participation under 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 goals established
under subparagraph (A).
(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.
(3) First tier subcontracts that are awarded by Management
and Operating contractors sponsored by the Department of Energy
to small business concerns, small businesses 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, shall be considered toward the annually established
agency and Government-wide goals for procurement contracts
awarded.
(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 requirements of
chapter 33 of title 41, United States Code, or
chapter 137 of title 10, United States Code,
and the Federal Acquisition Regulation; or
(E) whether the contract is otherwise 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) with respect to such fiscal year;
(C) any justifications for a failure to
achieve such goals; and
(D) a remediation plan with proposed new
practices to better meet such goals, including
analysis of factors leading to any 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 Web site, 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) for such fiscal year
was achieved;
(D) the reasons for any failure to achieve a
goal established under paragraph (1) or (2) of
subsection (g) for such fiscal year and a
description of actions planned by the
applicable agency to address such failure,
including the Administrator's comments and
recommendations on the proposed remediation
plan; and
(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;
(V) that were purchased by
another entity after the
initial contract was awarded
and as a result of the
purchase, would no longer be
deemed to be small business
concerns for purposes of the
initial contract; and
(VI) that were awarded using
a procurement method that
restricted competition to 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, small business
concerns owned and controlled
by women, or a subset of any
such concerns;
(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;
(VI) that were purchased by
another entity after the
initial contract was awarded
and as a result of the
purchase, would no longer be
deemed to be small business
concerns owned and controlled
by service-disabled veterans
for purposes of the initial
contract; and
(VII) that were awarded using
a procurement method that
restricted competition to
qualified HUBZone small
business concerns, small
business concerns owned and
controlled by socially and
economically disadvantaged
individuals, small business
concerns owned and controlled
by women, or a subset of any
such concerns;
(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;
(VII) that were purchased by
another entity after the
initial contract was awarded
and as a result of the
purchase, would no longer be
deemed to be qualified HUBZone
small business concerns for
purposes of the initial
contract; and
(VIII) that were awarded
using a procurement method that
restricted competition to small
business concerns owned and
controlled by service-disabled
veterans, small business
concerns owned and controlled
by socially and economically
disadvantaged individuals,
small business concerns owned
and controlled by women, or a
subset of any such concerns;
(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;
(VII) that were purchased by
another entity after the
initial contract was awarded
and as a result of the
purchase, would no longer be
deemed to be small business
concerns owned and controlled
by socially and economically
disadvantaged individuals for
purposes of the initial
contract; and
(VIII) that were awarded
using a procurement method that
restricted competition to small
business concerns owned and
controlled by service-disabled
veterans, qualified HUBZone
small business concerns, small
business concerns owned and
controlled by women, or a
subset of any such concerns;
(v) small business concerns owned by
an Indian tribe (as such term is
defined in section 8(a)(13)) other than
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) that were purchased by
another entity after the
initial contract was awarded
and as a result of the
purchase, would no longer be
deemed to be small business
concerns owned by an Indian
tribe other than an Alaska
Native Corporation for purposes
of the initial contract;
(vi) small business concerns owned by
a Native Hawaiian Organization----
(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) that were purchased by
another entity after the
initial contract was awarded
and as a result of the
purchase, would no longer be
deemed to be small business
concerns owned by a Native
Hawaiian Organization for
purposes of the initial
contract;
(vii) 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) that were purchased by
another entity after the
initial contract was awarded
and as a result of the
purchase, would no longer be
deemed to be small business
concerns owned by an Alaska
Native Corporation for purposes
of the initial contract; and
(viii) 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;
(V) through sole source
contracts awarded using the
authority under subsection
8(m)(7);
(VI) through sole source
contracts awarded using the
authority under section
8(m)(8);
(VII) by industry for
contracts described in
subclause (III), (IV), (V), or
(VI); [and]
(VIII) through unrestricted
competition; [and]
(IX) that were purchased by
another entity after the
initial contract was awarded
and as a result of the
purchase, would no longer be
deemed to be small business
concerns owned and controlled
by women for purposes of the
initial contract; and
(X) that were awarded using a
procurement method that
restricted competition to 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, or a subset of any
such concerns; and
(F) for the Federal Government, 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, provided that such information is
publicly available through data systems
developed pursuant to the Federal Funding
Accountability and Transparency Act of 2006
(Public Law 109-282), or otherwise available as
provided in paragraph (3).
(3) Access to data.--
(A) Federal procurement data system.--To
assist in the implementation of this section,
the Administration shall have access to
information collected through the Federal
Procurement Data System, Federal Subcontracting
Reporting System, or any new or successor
system.
(B) Agency procurement data sources.--To
assist in the implementation of this section,
the head of each contracting agency shall
provide, upon request of the Administration,
procurement information collected through
agency data collection sources in existence at
the time of the request. Contracting agencies
shall not be required to establish new data
collection systems to provide such data.
(i) Nothing in this Act or any other provision of law
precludes exclusive small business set-asides for procurements
of architectural and engineering services, research,
development, test and evaluation, and each Federal agency is
authorized to develop such set-asides to further the interests
of small business in those areas.
(j)(1) Each contract for the purchase of goods and services
that has an anticipated value [greater than $2,500 but not
greater than $100,000] greater than the micro-purchase
threshold, but not greater than the simplified acquisition
threshold shall be reserved exclusively for small business
concerns unless the contracting officer is unable to obtain
offers from two or more small business concerns that are
competitive with market prices and are competitive with regard
to the quality and delivery of the goods or services being
purchased.
(2) In carrying out paragraph (1), a contracting officer
shall consider a responsive offer timely received from an
eligible small business offeror.
(3) Nothing in paragraph (1) shall be construed as precluding
an award of a contract with a value not greater than $100,000
under the authority of subsection (a) of section 8 of this Act,
section 2323 of title 10, United States Code, section 712 of
the Business Opportunity Development Reform Act of 1988 (Public
Law 100-656; 15 U.S.C. 644 note), or section 7102 of the
Federal Acquisition Streamlining Act of 1994.
(k) There is hereby established in each Federal agency having
procurement powers an office to be known as the ``Office of
Small and Disadvantaged Business Utilization''. The management
of each such office shall be vested in an officer or employee
of such agency, with experience serving in any combination of
the following roles: program manager, deputy program manager,
or assistant program manager for Federal acquisition program;
chief engineer, systems engineer, assistant engineer, or
product support manager for Federal acquisition program;
Federal contracting officer; small business technical advisor;
contracts administrator for Federal Government contracts;
attorney specializing in Federal procurement law; small
business liaison officer; officer or employee who managed
Federal Government contracts for a small business; or
individual whose primary responsibilities were for the
functions and duties of [section 8, 15 or 44] section 8, 15,
31, 36, or 44 of this Act. Such officer or employee----
(1) shall be known as the ``Director of Small and
Disadvantaged Business Utilization'' for such agency;
(2) shall be appointed by the head of such agency to
a position that is a Senior Executive Service position
(as such term is defined under section 3132(a) of title
5, United States Code), except that, for any agency in
which the positions of Chief Acquisition Officer and
senior procurement executive (as such terms are defined
under section 44(a) of this Act) are not Senior
Executive Service positions, the Director of Small and
Disadvantaged Business Utilization may be appointed to
a position compensated at not less than the minimum
rate of basic pay payable for grade GS-15 of the
General Schedule under section 5332 of such title
(including comparability payments under section 5304 of
such title);
(3) shall be responsible only to (including with
respect to performance appraisals), and report directly
and exclusively to, the head of such agency or to the
deputy of such head, except that the Director for the
Office of the Secretary of Defense shall be responsible
only to (including with respect to performance
appraisals), and report directly and exclusively to,
such Secretary or the Secretary's designee;
(4) shall be responsible for the implementation and
execution of the functions and duties under [sections 8
and 15] sections 8, 15, 31, 36, and 44 of this Act
which relate to such agency;
(5) shall identify proposed solicitations that
involve significant bundling of contract requirements,
and work with the agency acquisition officials and the
Administration to revise the procurement strategies for
such proposed solicitations where appropriate to
increase the probability of participation by small
businesses as prime contractors, or to facilitate small
business participation as subcontractors and suppliers,
if a solicitation for a bundled contract is to be
issued;
(6) shall assist small business concerns to obtain
payments, required late payment interest penalties, or
information regarding payments due to such concerns
from an executive agency or a contractor, in conformity
with chapter 39 of title 31, United States Code, or any
other protection for contractors or subcontractors
(including suppliers) that is included in the Federal
Acquisition Regulation or any individual agency
supplement to such Government-wide regulation;
(7) shall have supervisory authority over personnel
of such agency to the extent that the functions and
duties of such personnel relate to functions and duties
under [sections 8 and 15] sections 8, 15, 31, 36, and
44 of this Act;
(8) shall assign a small business technical adviser
to each office to which the Administration has assigned
a procurement center representative--
(A) who shall be a full-time employee of the
procuring activity and shall be well qualified,
technically trained and familiar with the
supplies or services purchased at the activity;
and
(B) whose principal duty shall be to assist
the Administration procurement center
representative in his duties and functions
relating to [sections 8 and 15] sections 8, 15,
31, 36, and 44 of this Act,
(9) shall cooperate, and consult on a regular basis,
with the Administration with respect to carrying out
the functions and duties described in paragraph (4) of
this subsection;
(10) shall make recommendations to contracting
officers as to whether a particular contract
requirement should be awarded pursuant to subsection
(a), [section 8(a)] section 8, 15, 31, or 36 of this
Act, or section 2323 of title 10, United States Code,
which shall be made with due regard to the requirements
of subsection (m), and the failure of the contracting
officer to accept any such recommendations shall be
documented and included within the appropriate contract
file;
(11) shall review and advise such agency on any
decision to convert an activity performed by a small
business concern to an activity performed by a Federal
employee;
(12) shall provide to the Chief Acquisition Officer
and senior procurement executive of such agency advice
and comments on acquisition strategies, market
research, and justifications related to section 44 of
this Act;
(13) may provide training to small business concerns
and contract specialists, except that such training may
only be provided to the extent that the training does
not interfere with the Director carrying out other
responsibilities under this subsection;
(14) shall receive unsolicited proposals and, when
appropriate, forward such proposals to personnel of the
activity responsible for reviewing such proposals;
(15) shall review purchases made by the agency
greater than the micro-purchase threshold, and less
than the simplified acquisition threshold to ensure
that the purchases have been made in compliance with
the provisions of this Act and have been properly
recorded in the Federal Procurement Data System, if the
method of payment is a purchase card issued by the
Department of Defense pursuant to section 2784 of title
10, United States Code, or by the head of an executive
agency pursuant to section 1909 of title 41, United
States Code;
(16) shall provide assistance to a small business
concern awarded a contract or subcontract under this
Act or under title 10 or title 41, United States Code,
in finding resources for education and training on
compliance with contracting regulations (including the
Federal Acquisition Regulation) after award of such a
contract or subcontract.
[(15)] (17) shall carry out exclusively the duties
enumerated in this Act, and shall, while the Director,
not hold any other title, position, or responsibility,
except as necessary to carry out responsibilities under
this subsection;
[(16)] (18) shall submit, each fiscal year, to the
Committee on Small Business of the House of
Representatives and the Committee on Small Business and
Entrepreneurship of the Senate a report describing--
(A) the training provided by the Director
under paragraph (13) in the most recently
completed fiscal year;
(B) the percentage of the budget of the
Director used for such training in the most
recently completed fiscal year; and
(C) the percentage of the budget of the
Director used for travel in the most recently
completed fiscal year; and
[(17)] (19) shall, when notified by a small business
concern prior to the award of a contract that the small
business concern believes that a solicitation, request
for proposal, or request for quotation unduly restricts
the ability of the small business concern to compete
for the award--
(A) submit the notice of the small business
concern to the contracting officer and, if
necessary, recommend ways in which the
solicitation, request for proposal, or request
for quotation may be altered to increase the
opportunity for competition;
(B) inform the advocate for competition of
such agency (as established under section 1705
of title 41, United States Code, or section
2318 of title 10, United States Code) of such
notice; [and]
(C) ensure that the small business concern is
aware of other resources and processes
available to address unduly restrictive
provisions in a solicitation, request for
proposal, or request for quotation, even if
such resources and processes are provided by
such agency, the Administration, the
Comptroller General, or a procurement technical
assistance program established under chapter
142 of title 10, United States Code[.]; and
(D) any failure of the agency to comply with
section 8, 15, 31, or 36.
This subsection shall not apply to the Administration.
(l) Procurement Center Representatives.--
(1) Assignment and role.--The Administrator shall
assign to each major procurement center a procurement
center representative with such assistance as may be
appropriate.
(2) Activities.--A procurement center representative
is authorized to--
(A) attend any provisioning conference or similar
evaluation session during which determinations are made
as to whether requirements are to be procured through
other than full and open competition and make
recommendations with respect to such requirements to
the members of such conference or session;
(B) review, at any time, barriers to small
business participation in Federal contracting
previously imposed on goods and services
through acquisition method coding or similar
procedures, and recommend to personnel of the
appropriate activity the prompt reevaluation of
such barriers;
(C) review barriers to small business
participation in Federal contracting arising
out of restrictions on the rights of the United
States in technical data, and, when
appropriate, recommend that personnel of the
appropriate activity initiate a review of the
validity of such an asserted restriction;
(D) review any bundled or consolidated
solicitation or contract in accordance with
this Act;
(E) have access to procurement records and
other data of the procurement center
commensurate with the level of such
representative's approved security clearance
classification, with such data provided upon
request in electronic format, when available;
(F) receive unsolicited proposals from small
business concerns and transmit such proposals
to personnel of the activity responsible for
reviewing such proposals, who shall furnish the
procurement center representative with
information regarding the disposition of any
such proposal;
(G) consult with the Director the Office of
Small and Disadvantaged Business Utilization of
that agency and the agency personnel described
in paragraph (7) and (8) of subsection (k) with
regard to agency insourcing decisions covered
by subsection (k)(11);
(H) be an advocate for the maximum
practicable utilization of small business
concerns in Federal contracting, including by
advocating against the consolidation or
bundling of contract requirements when not
justified; [and]
(I) assist small business concerns with
finding resources for education and training on
compliance with contracting regulations
(including the Federal Acquisition Regulation)
after award of a contract or subcontract; and
[(I)] (J) carry out any other responsibility
assigned by the Administrator.
(3) Appeals.--A procurement center representative is
authorized to appeal the failure to act favorably on
any recommendation made pursuant to paragraph (2). Such
appeal shall be filed and processed in the same manner
and subject to the same conditions and limitations as
an appeal filed by the Administrator pursuant to
subsection (a).
(4) The Administration shall assign and co-locate at least
two small business technical advisers to each major procurement
center in addition to such other advisers as may be authorized
from time to time. The sole duties of such advisers shall be to
assist the procurement center representative for the center to
which such advisers are assigned in carrying out the functions
described in paragraph (2) and the representatives referred to
in subsection (k)(6).
(5) Position requirements.--
(A) In general.--A procurement center
representative assigned under this subsection
shall--
(i) be a full-time employee of the
Administration;
(ii) be fully qualified, technically
trained, and familiar with the goods
and services procured by the major
procurement center to which that
representative is assigned; and
(iii) have the certification
described in subparagraph (C).
(B) Compensation.--The Administrator shall
establish personnel positions for procurement
center representatives assigned under this
subsection, which are classified at a grade
level of the General Schedule sufficient to
attract and retain highly qualified personnel.
(C) Certification requirements.--
(i) In general.--Consistent with the
requirements of clause (ii), a
procurement center representative shall
have a Level III Federal Acquisition
Certification in Contracting (or any
successor certification) or the
equivalent Department of Defense
certification, except that any person
serving in such a position on or before
January 3, 2013, may continue to serve
in that position for a period of 5
years without the required
certification.
(ii) Delay of certification
requirements.--
(I) Timing.--The
certification described in
clause (i) is not required for
any person serving as a
procurement center
representative until the date
that is one calendar year after
the date such person is
appointed as a procurement
center representative.
(II) Application.--The
requirements of subclause (I)
shall--
(aa) be included in
any initial job posting
for the position of a
procurement center
representative; and
(bb) apply to any
person appointed as a
procurement center
representative after
January 3, 2013.
(6) Major procurement center defined.--For purposes
of this subsection, the term ``major procurement
center'' means a procurement center that, in the
opinion of the Administrator, purchases substantial
dollar amounts of goods or services, including goods or
services that are commercially available.
(7) Training.--
(A) Authorization.--At such times as the
Administrator deems appropriate. the breakout
procurement center representative shall conduct
familiarization sessions for contracting
officers and other appropriate personnel of the
procurement center to which such representative
is assigned. Such sessions shall acquaint the
participants with the provisions of this
subsection and shall instruct them in methods
designed to further the purposes of such
subsection.
(B) Limitation.--A procurement center
representative may provide training under
subparagraph (A) only to the extent that the
training does not interfere with the
representative carrying out other activities
under this subsection.
(8) Annual briefing and report.--A procurement center
representative shall prepare and personally deliver an
annual briefing and report to the head of the
procurement center to which such representative is
assigned. Such briefing and report shall detail the
past and planned activities of the representative and
shall contain such recommendations for improvement in
the operation of the center as may be appropriate. The
head of such center shall personally receive such
briefing and report and shall, within 60 calendar days
after receipt, respond, in writing, to each
recommendation made by such representative.
(9) Scope of review.--The Administrator shall not
limit the scope of review by the Procurement Center
Representative for any solicitation of a contract or
task order without regard to whether the contract or
task order or part of the contract or task order is set
aside for small business concerns, whether 1 or more
contract or task order awards are reserved for small
business concerns under a multiple award contract, or
whether or not the solicitation would result in a
bundled or consolidated contract (as defined in
subsection (s)) or a bundled or consolidated task
order.
(m)(1) Each agency subject to the requirements of section
2323 of title 10, United States Code, shall, when implementing
such requirements--
(A) establish policies and procedures that insure
that there will be no reduction in the number of dollar
value of contracts awarded pursuant to this section and
section 8(a) in order to achieve any goal or other
program objective; and
(B) assure that such requirements will not alter or
change the procurement process used to implement this
section or section 8(a).
(2) All procurement center representatives (including those
referred to in subsection (k)(6)), in addition to such other
duties as may be assigned by the Administrator, shall--
(A) monitor the performance of the procurement
activities to which they are assigned to ascertain the
degree of compliance with the requirements of paragraph
(1);
(B) report to their immediate supervisors all
instances of noncompliance with such requirements; and
(C) increase, insofar as possible, the number and
dollar value of procurements that may be used for the
programs established under this section, section 8(a),
and section 2323 of title 10, United States Code.
(n) For purposes of this section, the determination of labor
surplus areas shall be made on the basis of the criteria in
effect at the time of the determination, except that any
minimum population criteria shall not exceed twenty-five
thousand. Such determination, as modified by the preceding
sentence, shall be made by the Secretary of Labor.
(o) Limitations on Subcontracting.--A concern may not be
awarded a contract under subsection (a) as a small business
concern unless the concern agrees to satisfy the requirements
of section 46.
(p) Access to Data.--
(1) Bundled contract defined.--In this subsection,
the term ``bundled contract'' has the meaning given
such term in section 3(o)(1).
(2) Database.--
(A) In general.--Not later than 180 days
after the date of the enactment of this
subsection, the Administrator of the Small
Business Administration shall develop and shall
thereafter maintain a database containing data
and information regarding--
(i) each bundled contract awarded by
a Federal agency; and
(ii) each small business concern that
has been displaced as a prime
contractor as a result of the award of
such a contract.
(3) Analysis.--For each bundled contract that is to
be recompeted as a bundled contract, the Administrator
shall determine--
(A) the amount of savings and benefits (in
accordance with subsection (e)) achieved under
the bundling of contract requirements; and
(B) whether such savings and benefits will
continue to be realized if the contract remains
bundled, and whether such savings and benefits
would be greater if the procurement
requirements were divided into separate
solicitations suitable for award to small
business concerns.
(4) Annual report on contract bundling.--
(A) In general.--Not later than 1 year after
the date of the enactment of this paragraph,
and annually in March thereafter, the
Administration shall transmit a report on
contract bundling to the Committees on Small
Business of the House of Representatives and
the Senate.
(B) Contents.--Each report transmitted under
subparagraph (A) shall include--
(i) data on the number, arranged by
industrial classification, of small
business concerns displaced as prime
contractors as a result of the award of
bundled contracts by Federal agencies;
and
(ii) a description of the activities
with respect to previously bundled
contracts of each Federal agency during
the preceding year, including--
(I) data on the number and
total dollar amount of all
contract requirements that were
bundled; and
(II) with respect to each
bundled contract, data or
information on--
(aa) the
justification for the
bundling of contract
requirements;
(bb) the cost savings
realized by bundling
the contract
requirements over the
life of the contract;
(cc) the extent to
which maintaining the
bundled status of
contract requirements
is projected to result
in continued cost
savings;
(dd) the extent to
which the bundling of
contract requirements
complied with the
contracting agency's
small business
subcontracting plan,
including the total
dollar value awarded to
small business concerns
as subcontractors and
the total dollar value
previously awarded to
small business concerns
as prime contractors;
and
(ee) the impact of
the bundling of
contract requirements
on small business
concerns unable to
compete as prime
contractors for the
consolidated
requirements and on the
industries of such
small business
concerns, including a
description of any
changes to the
proportion of any such
industry that is
composed of small
business concerns.
(5) Access to data.--
(A) Federal procurement data system.--To
assist in the implementation of this section,
the Administration shall have access to
information collected through the Federal
Procurement Data System.
(B) Agency procurement data sources.--To
assist in the implementation of this section,
the head of each contracting agency shall
provide, upon request of the Administration,
procurement information collected through
existing agency data collection sources.
(q) Reports Related to Procurement Center Representatives.--
(1) Teaming and joint venture requirements.--
(A) In general.--Each Federal agency shall
include in each solicitation for any multiple
award contract above the substantial bundling
threshold of the Federal agency a provision
soliciting bids from any responsible source,
including responsible small business concerns
and teams or joint ventures of small business
concerns.
(B) Teams.--When evaluating an offer of a
small business prime contractor that includes a
proposed team of small business subcontractors
for any multiple award contract above the
substantial bundling threshold of the Federal
agency, the head of the agency shall consider
the capabilities and past performance of each
first tier subcontractor that is part of the
team as the capabilities and past performance
of the small business prime contractor.
(C) Joint ventures.--When evaluating an offer
of a joint venture of small business concerns
for any multiple award contract above the
substantial bundling threshold of the Federal
agency, if the joint venture does not
demonstrate sufficient capabilities or past
performance to be considered for award of a
contract opportunity, the head of the agency
shall consider the capabilities and past
performance of each member of the joint venture
as the capabilities and past performance of the
joint venture.
(2) Policies on reduction of contract bundling.--
(A) In general.--Not later than 1 year after
the date of enactment of this subsection, the
Federal Acquisition Regulatory Council
established under section 25(a) of the Office
of Federal Procurement Policy Act (41 U.S.C.
4219(a)) shall amend the Federal Acquisition
Regulation issued under section 25 of such Act
to--
(i) establish a Government-wide
policy regarding contract bundling,
including regarding the solicitation of
teaming and joint ventures under
paragraph (1); and
(ii) require that the policy
established under clause (i) be
published on the website of each
Federal agency.
(B) Rationale for contract bundling.--Not
later than 30 days after the date on which the
head of a Federal agency submits data
certifications to the Administrator for Federal
Procurement Policy, the head of the Federal
agency shall publish on the website of the
Federal agency a list and rationale for any
bundled contract for which the Federal agency
solicited bids or that was awarded by the
Federal agency.
(3) Reporting.--Not later than 90 days after the date
of enactment of this subsection, and every 3 years
thereafter, the Administrator shall submit to the
Committee on Small Business and Entrepreneurship of the
Senate and the Committee on Small Business of the House
of Representatives a report regarding procurement
center representatives and commercial market
representatives, which shall--
(A) identify each area for which the
Administration has assigned a procurement
center representative or a commercial market
representative;
(B) explain why the Administration selected
the areas identified under subparagraph (A);
and
(C) describe the activities performed by
procurement center representatives and
commercial market representatives.
(r) Multiple Award Contracts.--Not later than 1 year after
the date of enactment of this subsection, the Administrator for
Federal Procurement Policy and the Administrator, in
consultation with the Administrator of General Services, shall,
by regulation, establish guidance under which Federal agencies
may, at their discretion--
(1) set aside part or parts of a multiple award
contract for small business concerns, including the
subcategories of small business concerns identified in
subsection (g)(2);
(2) notwithstanding the fair opportunity requirements
under section 2304c(b) of title 10, United States Code,
and section 303J(b) of the Federal Property and
Administrative Services Act of 1949 (41 U.S.C.
253j(b)), set aside orders placed against multiple
award contracts for small business concerns, including
the subcategories of small business concerns identified
in subsection (g)(2); and
(3) reserve 1 or more contract awards for small
business concerns under full and open multiple award
procurements, including the subcategories of small
business concerns identified in subsection (g)(2).
(s) Data Quality Improvement Plan.--
(1) In general.--Not later than October 1, 2015, the
Administrator of the Small Business Administration, in
consultation with the Small Business Procurement
Advisory Council, the Administrator for Federal
Procurement Policy, and the Administrator of General
Services, shall develop a plan to improve the quality
of data reported on bundled or consolidated contracts
in the Federal procurement data system (described in
section 1122(a)(4)(A) of title 41, United States Code).
(2) Plan requirements.--The plan shall--
(A) describe the roles and responsibilities
of the Administrator of the Small Business
Administration, each Director of Small and
Disadvantaged Business Utilization, the
Administrator for Federal Procurement Policy,
the Administrator of General Services, senior
procurement executives, and Chief Acquisition
Officers in--
(i) improving the quality of data
reported on bundled or consolidated
contracts in the Federal procurement
data system; and
(ii) contributing to the annual
report required by subsection (p)(4);
(B) recommend changes to policies and
procedures, including training procedures of
relevant personnel, to properly identify and
mitigate the effects of bundled or consolidated
contracts;
(C) recommend requirements for periodic and
statistically valid data verification and
validation; and
(D) recommend clear data verification
responsibilities.
(3) Plan submission.--The Administrator of the Small
Business Administration shall submit the plan to the
Committee on Small Business of the House of
Representatives and the Committee on Small Business and
Entrepreneurship of the Senate not later than December
1, 2016.
(4) Implementation.--Not later than October 1, 2016,
the Administrator of the Small Business Administration
shall implement the plan described in this subsection.
(5) Certification.--The Administrator shall annually
provide to the Committee on Small Business of the House
of Representatives and the Committee on Small Business
and Entrepreneurship of the Senate a certification of
the accuracy and completeness of data reported on
bundled and consolidated contracts.
(6) Definitions.--In this subsection, the following
definitions apply:
(A) Chief acquisition officer; senior
procurement executive.--The terms ``Chief
Acquisition Officer'' and ``senior procurement
executive'' have the meanings given such terms
in section 44(a) of this Act.
(B) Bundled or consolidated contract.--The
term ``bundled or consolidated contract'' means
a bundled contract (as defined in section 3(o))
or a contract resulting from the consolidation
of contracting requirements (as defined in
section 44(a)(2)).
(t) Post-Award Compliance Resources.--The Administrator shall
provide to small business development centers and entities
participating in the Procurement Technical Assistance
Cooperative Agreement Program under chapter 142 of title 10,
United States Code, and shall make available on the website of
the Administration, a list of resources for small business
concerns seeking education and assistance on compliance with
contracting regulations (including the Federal Acquisition
Regulation) after award of a contract or subcontract.
(u) Regulatory Changes and Training Materials.--Not less than
annually, the Administrator shall provide to the Defense
Acquisition University (established under section 1746 of title
10, United States Code), the Federal Acquisition Institute
(established under section 1201 of title 41, United States
Code), the individual responsible for mandatory training and
education of the acquisition workforce of each agency
(described under section 1703(f)(1)(C) of title 41, United
States Code), small business development centers, and entities
participating in the Procurement Technical Assistance
Cooperative Agreement Program under chapter 142 of title 10,
United States Code--
(1) a list of all changes made in the prior year to
regulations promulgated--
(A) by the Administrator that affect Federal
acquisition; and
(B) by the Federal Acquisition Council that
implement changes to this Act; and
(2) any materials the Administrator has developed to
explain, train, or assist Federal agencies or
departments or small business concerns to comply with
the regulations specified in paragraph (1).
* * * * * * *
Sec. 18. (a) The Administration shall not duplicate the work
or activity of any other department or agency of the Federal
Government,, and nothing contained in this Act shall be
construed to authorize any such duplication unless such work or
activity is expressly provided for in this Act. If loan
applications are being refused or loans denied by such other
department or agency responsible for such work or activity due
to administrative withholding from obligation or withholding
from apportionment, or due to administratively declared
moratorium, then, for purposes of this section, no duplication
shall be deemed to have occurred.
(b) As used in this Act--
(1) ``agricultural enterprises'' means those
[businesses] small business concerns engaged in the
production of food and fiber, ranching, and raising of
livestock, aquaculture, and all other farming and
agricultural related industries; and
(2) ``credit elsewhere'' means the availability of
sufficient credit from non-Federal sources at
reasonable rates and terms, taking into consideration
prevailing private rates and terms in the community in
or near where the concern transacts business for
similar purposes and periods of time.
* * * * * * *
SEC. 45. MENTOR-PROTEGE PROGRAMS.
(a) Administration Program.--
(1) Authority.--The Administrator is authorized to
establish a mentor-protege program for all small
business concerns.
(2) Model for program.--The mentor-protege program
established under paragraph (1) shall be identical to
the mentor-protege program of the Administration for
small business concerns that participate in the program
under section 8(a) (as in effect on the date of
enactment of this section), except that the
Administrator may modify the program to the extent
necessary given the types of small business concerns
included as proteges.
(b) Programs of Other Agencies.--
(1) Approval required.--Except as provided in
paragraph (4), a Federal department or agency may not
carry out a mentor-protege program for small business
concerns unless--
(A) the head of the department or agency
submits a plan to the Administrator for the
program; and
(B) the Administrator approves such plan.
(2) Basis for approval.--The Administrator shall
approve or disapprove a plan submitted under paragraph
(1) based on whether the program proposed--
(A) will assist proteges to compete for
Federal prime contracts and subcontracts; and
(B) complies with the regulations issued
under paragraph (3).
(3) Regulations.--Not later than 270 days after the
date of enactment of this section, the Administrator
shall issue, subject to notice and comment, regulations
with respect to mentor-protege programs, which shall
ensure that such programs improve the ability of
proteges to compete for Federal prime contracts and
subcontracts and which shall address, at a minimum, the
following:
(A) Eligibility criteria for program
participants, including any restrictions on the
number of mentor-protege relationships
permitted for each participant.
(B) The types of developmental assistance to
be provided by mentors, including how the
assistance provided shall improve the
competitive viability of the proteges.
(C) Whether any developmental assistance
provided by a mentor may affect the status of a
program participant as a small business concern
due to affiliation.
(D) The length of mentor-protege
relationships.
(E) The effect of mentor-protege
relationships on contracting.
(F) Benefits that may accrue to a mentor as a
result of program participation.
(G) Reporting requirements during program
participation.
(H) Postparticipation reporting requirements.
(I) The need for a mentor-protege pair, if
accepted to participate as a pair in a mentor-
protege program of any Federal department or
agency, to be accepted to participate as a pair
in all Federal mentor-protege programs.
(J) Actions to be taken to ensure benefits
for proteges and to protect a protege against
actions by a mentor that--
(i) may adversely affect the
protege's status as a small business
concern; or
(ii) provide disproportionate
economic benefits to the mentor
relative to those provided the protege.
(K) The extent to which assistance with
compliance with the requirements of contracting
with the Federal Government after award of a
contract or subcontract under this section.
(4) Limitation on applicability.--Paragraph (1) does
not apply to the following:
[(A) Any mentor-protege program of the
Department of Defense.]
[(B)] (A) Any mentoring assistance provided
under a Small Business Innovation Research
Program or a Small Business Technology Transfer
Program.
[(C)] (B) Until the date that is 1 year after
the date on which the Administrator issues
regulations under paragraph (3), any Federal
department or agency operating a mentor-protege
program in effect on the date of enactment of
this section.
(c) Reporting.--
(1) In general.--Not later than 2 years after the
date of enactment of this section, and annually
thereafter, the Administrator shall submit to the
Committee on Small Business of the House of
Representatives and the Committee on Small Business and
Entrepreneurship of the Senate a report that--
(A) identifies each Federal mentor-protege
program;
(B) specifies the number of participants in
each such program, including the number of
participants that are--
(i) small business concerns;
(ii) small business concerns owned
and controlled by service-disabled
veterans;
(iii) qualified HUBZone small
business concerns;
(iv) small business concerns owned
and controlled by socially and
economically disadvantaged individuals;
or
(v) small business concerns owned and
controlled by women;
(C) describes the type of assistance provided
to proteges under each such program;
(D) describes the benefits provided to
mentors under each such program; and
(E) describes the progress of proteges under
each such program with respect to competing for
Federal prime contracts and subcontracts.
(2) Provision of information.--The head of each
Federal department or agency carrying out a mentor-
protege program shall provide to the Administrator, on
an annual basis, the information necessary for the
Administrator to submit a report required under
paragraph (1).
(d) Definitions.--In this section, the following definitions
apply:
(1) Mentor.--The term ``mentor'' means a for-profit
business concern, of any size, that--
(A) has the ability to assist and commits to
assisting a protege to compete for Federal
prime contracts and subcontracts; and
(B) satisfies any other requirements imposed
by the Administrator.
(2) Mentor-protege program.--The term ``mentor-
protege program'' means a program that pairs a mentor
with a protege for the purpose of assisting the protege
to compete for Federal prime contracts and
subcontracts.
(3) Protege.--The term ``protege'' means a small
business concern that--
(A) is eligible to enter into Federal prime
contracts and subcontracts; and
(B) satisfies any other requirements imposed
by the Administrator.
(e) Current Mentor Protege Agreements.--Mentors and proteges
with approved agreement in a program operating pursuant to
subsection (b)(4)(C) shall be permitted to continue their
relationship according to the terms specified in their
agreement until the expiration date specified in the agreement.
(f) Submission of Agency Plans.--Agencies operating mentor
protege programs pursuant to subsection (b)(4)(C) shall submit
the plans specified in subsection (b)(1)(A) to the
Administrator within 6 months of the promulgation of rules
required by subsection (b)(3). The Administrator shall provide
initial comments on each plan within 60 days of receipt, and
final approval or denial of each plan within 180 days after
receipt.
* * * * * * *
----------
NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 1991
* * * * * * *
DIVISION A--DEPARTMENT OF DEFENSE AUTHORIZATIONS
* * * * * * *
TITLE VIII--ACQUISITION POLICY, ACQUISITION MANAGEMENT, AND RELATED
MATTERS
* * * * * * *
Part D--Miscellaneous
* * * * * * *
SEC. 831. MENTOR-PROTEGE PILOT PROGRAM.
(a) Establishment of Pilot Program.--The Secretary of Defense
shall establish a pilot program to be known as the ``Mentor-
Protege Program''.
(b) Purpose.--The purpose of the program is to provide
incentives for major Department of Defense contractors to
furnish disadvantaged small business concerns with assistance
designed to--
(1) enhance the capabilities of disadvantaged small
business concerns to perform as subcontractors and
suppliers under Department of Defense contracts and
other contracts and subcontracts; and
(2) increase the participation of such business
concerns as subcontractors and suppliers under
Department of Defense contracts, other Federal
Government contracts, and commercial contracts.
(c) Program Participants.--(1) A business concern meeting the
eligibility requirements set out in subsection (d) may enter
into agreements under subsection (e) and furnish assistance to
disadvantaged small business concerns upon making application
to the Secretary of Defense and being approved for
participation in the pilot program by the Secretary. A business
concern participating in the pilot program pursuant to such an
approval shall be known, for the purposes of the program, as a
``mentor firm''.
(2) A disadvantaged small business concern eligible
for the award of Federal contracts may obtain
assistance from a mentor firm upon entering into an
agreement with the mentor firm as provided in
subsection (e). A disadvantaged small business concern
may not be a party to more than one agreement
concurrently, and the authority to enter into
agreements under subsection (e) shall only be available
to such concern during the 5-year period beginning on
the date such concern enters into the first such
agreement. A disadvantaged small business concern
receiving such assistance shall be known, for the
purposes of the program, as a ``protege firm''.
(3) In entering into an agreement pursuant to
subsection (e), a mentor firm may rely in good faith on
a written representation of a business concern that
such business concern is a disadvantaged small business
concern. The Small Business Administration shall
determine the status of such business concern as a
disadvantaged small business concern in the event of a
protest regarding the status of such business concern.
If at any time the business concern is determined by
the Small Business Administration not to be a
disadvantaged small business concern, assistance
furnished such business concern by the mentor firm
after the date of the determination may not be
considered assistance furnished under the program.
(d) Mentor Firm Eligibility.--Subject to subsection (c)(1), a
mentor firm eligible for award of Federal contracts may enter
into an agreement with one or more protege firms under
subsection (e) and provide assistance under the program
pursuant to that agreement if--
[(1) the mentor firm is not affiliated with the
protege firm prior to the approval of that agreement;
and]
(1) prior to the approval of that agreement, the
Administrator of the Small Business Administration had
made no finding of affiliation between the mentor firm
and the protege firm;
(2)(A) the Administrator of the Small Business
Administration does not have a current finding of
affiliation between the mentor firm and protege firm;
or
(B) the Secretary, after considering the regulations
promulgated by the Administrator of the Small Business
Administration regarding affiliation--
(i) does not have reason to believe that the
mentor firm affiliated with the protege firm;
or
(ii) has received a formal determination of
no affiliation between the mentor firm and
protege firm from the Administrator after
having submitted a question of affiliation to
the Administrator; and
[(2)] (3) the mentor firm demonstrates that it--
(A) is qualified to provide assistance that
will contribute to the purpose of the program;
(B) is of good financial health and character
and does not appear on a Federal list of
debarred or suspended contractors; and
(C) can impart value to a protege firm
because of experience gained as a Department of
Defense contractor or through knowledge of
general business operations and government
contracting, as demonstrated by evidence that--
(i) during the fiscal year preceding
the fiscal year in which the mentor
firm enters into the agreement, the
total amount of the Department of
Defense contracts awarded such mentor
firm and the subcontracts awarded such
mentor firm under Department of Defense
contracts was equal to or greater than
$100,000,000; or
(ii) the mentor firm demonstrates the
capability to assist in the development
of protege firms, and is approved by
the Secretary of Defense pursuant to
criteria specified in the regulations
prescribed pursuant to subsection (k).
(e) Mentor-Protege Agreement.--Before providing assistance to
a protege firm under the program, a mentor firm shall enter
into a mentor-protege agreement with the protege firm regarding
the assistance to be provided by the mentor firm. The agreement
shall include the following:
(1) A developmental program for the protege firm, in
such detail as may be reasonable, including--
(A) factors to assess the protege firm's
developmental progress under the program;
(B) a description of the quantitative and
qualitative benefits to the Department of
Defense from the agreement, if applicable;
[and]
(C) goals for additional awards that protege
firm can compete for outside the Mentor-Protege
Program[.]; and
(D) the assistance the mentor firm will
provide to the protege firm in understanding
contract regulations of the Federal Government
and the Department of Defense (including the
Federal Acquisition Regulation and the Defense
Federal Acquisition Regulation Supplement)
after award of a subcontract under this
section, if applicable.
(2) A program participation term for any period of
not more than three years, except that the term may be
a period of up to five years if the Secretary of
Defense determines in writing that unusual
circumstances justify a program participation term in
excess of three years.
(3) Procedures for the protege firm to terminate the
agreement voluntarily and for the mentor firm to
terminate the agreement for cause.
(f) Forms of Assistance.--A mentor firm may provide a protege
firm the following:
(1) Assistance, by using mentor firm personnel, in--
(A) general business management, including
organizational management, financial
management, and personnel management,
marketing, and overall business planning;
(B) engineering and technical matters such as
production, inventory control, and quality
assurance; and
(C) any other assistance designed to develop
the capabilities of the protege firm under the
developmental program referred to in subsection
(e).
(2) Award of subcontracts on a noncompetitive basis
to the protege firm under the Department of Defense or
other contracts.
(3) Payment of progress payments for performance of
the protege firm under such a subcontract in amounts as
provided for in the subcontract, but in no event may
any such progress payment exceed 100 percent of the
costs incurred by the protege firm for the performance.
(4) Advance payments under such subcontracts.
(5) Loans.
(6) Assistance obtained by the mentor firm for the
protege firm from one or more of the following--
(A) small business development centers
established pursuant to section 21 of the Small
Business Act (15 U.S.C. 648);
(B) entities providing procurement technical
assistance pursuant to chapter 142 of title 10,
United States Code; [or]
(C) a historically Black college or
university or a minority institution of higher
education[.]; or
(D) women's business centers described in
section 29 of the Small Business Act (15 U.S.C.
656).
(g) Incentives for Mentor Firms.--(1) The Secretary of
Defense may provide to a mentor firm reimbursement for the
total amount of any progress payment or advance payment made
under the program by the mentor firm to a protege firm in
connection with a Department of Defense contract awarded the
mentor firm.
(2)(A) The Secretary of Defense may provide to a
mentor firm reimbursement for the costs of the
assistance furnished to a protege firm pursuant to
paragraphs (1) and (6) of subsection (f) (except as
provided in subparagraph (D)) as provided for in a line
item in a Department of Defense contract under which
the mentor firm is furnishing products or services to
the Department, subject to a maximum amount of
reimbursement specified in such contract, except that
this sentence does not apply in a case in which the
Secretary of Defense determines in writing that unusual
circumstances justify reimbursement using a separate
contract.
(B) The determinations made in annual performance reviews of
a mentor firm's mentor-protege agreement shall be a major
factor in the determinations of amounts of reimbursement, if
any, that the mentor firm is eligible to receive in the
remaining years of the program participation term under the
agreement.
(C) The total amount reimbursed under this paragraph to a
mentor firm for costs of assistance furnished in a fiscal year
to a protege firm may not exceed $1,000,000, except in a case
in which the Secretary of Defense determines in writing that
unusual circumstances justify a reimbursement of a higher
amount.
(D) The Secretary may not reimburse any fee assessed by the
mentor firm for services provided to the protege firm pursuant
to subsection (f)(6) or for business development expenses
incurred by the mentor firm under a contract awarded to the
mentor firm while participating in a joint venture with the
protege firm.
(3)(A) Costs incurred by a mentor firm in providing
assistance to a protege firm that are not reimbursed
pursuant to paragraph (2) shall be recognized as credit
in lieu of subcontract awards for purposes of
determining whether the mentor firm attains a
subcontracting participation goal applicable to such
mentor firm under a Department of Defense contract,
under a contract with another executive agency, or
under a divisional or company-wide subcontracting plan
negotiated with the Department of Defense or another
executive agency.
(B) The amount of the credit given a mentor firm for any such
unreimbursed costs shall be equal to--
(i) four times the total amount of such costs
attributable to assistance provided by entities
described in subsection (f)(6);
(ii) three times the total amount of such costs
attributable to assistance furnished by the mentor
firm's employees; and
(iii) two times the total amount of any other such
costs.
(C) Under regulations prescribed pursuant to subsection (k),
the Secretary of Defense shall adjust the amount of credit
given a mentor firm pursuant to subparagraphs (A) and (B) if
the Secretary determines that the firm's performance regarding
the award of subcontracts to disadvantaged small business
concerns has declined without justifiable cause.
(4) A mentor firm shall receive credit toward the
attainment of a subcontracting participation goal
applicable to such mentor firm for each subcontract for
a product or service awarded under such contract by a
mentor firm to a business concern that, except for its
size, would be a small business concern owned and
controlled by socially and economically disadvantaged
individuals, but only if--
(A) the size of such business concern is not more
than two times the maximum size specified by the
Administrator of the Small Business Administration for
purposes of determining whether a business concern
furnishing such product or service is a small business
concern; and
(B) the business concern formerly had a mentor-
protege agreement with such mentor firm that was not
terminated for cause.
(h) Relationship to Small Business Act.--(1) For purposes of
the Small Business Act (15 U.S.C. 631 et seq.), no
determination of affiliation or control (either direct or
indirect) may be found between a protege firm and its mentor
firm on the basis that the mentor firm has agreed to furnish
(or has furnished) to its protege firm pursuant to a mentor-
protege agreement any form of developmental assistance
described in subsection (f).
(2) Notwithstanding section 8 of the Small Business
Act (15 U.S.C. 637), the Small Business Administration
may not determine a disadvantaged small business
concern to be ineligible to receive any assistance
authorized under the Small Business Act on the basis
that such business concern has participated in the
Mentor-Protege Program or has received assistance
pursuant to any developmental assistance agreement
authorized under such program.
(3) The Small Business Administration may not require
a firm that is entering into, or has entered into, an
agreement under subsection (e) as a protege firm to
submit the agreement, or any other document required by
the Secretary of Defense in the administration of the
Mentor-Protege Program, to the Small Business
Administration for review, approval, or any other
purpose.
(i) Participation in Mentor-Protege Program not To Be a
Condition for Award of a Contract or Subcontract.--A mentor
firm may not require a business concern to enter into an
agreement with the mentor firm pursuant to subsection (e) as a
condition for being awarded a contract by the mentor firm,
including a subcontract under a contract awarded to the mentor
firm.
(j) Expiration of Authority.--(1) No mentor-protege agreement
may be entered into under subsection (e) after September 30,
2018.
(2) No reimbursement may be paid, and no credit
toward the attainment of a subcontracting goal may be
granted, under subsection (g) for any cost incurred
after September 30, 2021.
(k) Regulations.--The Secretary of Defense shall prescribe
regulations to carry out the pilot Mentor-Protege Program. Such
regulations shall include the requirements set forth in section
8(d) of the Small Business Act (15 U.S.C. 637(d)) and shall
prescribe procedures by which mentor firms may terminate
participation in the program. The Secretary shall publish the
proposed regulations not later than the date 180 days after the
date of the enactment of this Act. The Secretary shall
promulgate the final regulations not later than the date 270
days after the date of the enactment of this Act. The
Department of Defense policy regarding the pilot Mentor-Protege
Program shall be published and maintained as an appendix to the
Department of Defense Supplement to the Federal Acquisition
Regulation.
(l) Report by Mentor Firms.--To comply with section 8(d)(7)
of the Small Business Act (15 U.S.C. 637(d)(7)), each mentor
firm shall submit a report to the Secretary not less than once
each fiscal year that includes, for the preceding fiscal year--
(1) all technical or management assistance provided
by mentor firm personnel for the purposes described in
subsection (f)(1);
(2) any new awards of subcontracts on a competitive
or noncompetitive basis to the protege firm under
Department of Defense contracts or other contracts,
including the value of such subcontracts;
(3) any extensions, increases in the scope of work,
or additional payments not previously reported for
prior awards of subcontracts on a competitive or
noncompetitive basis to the protege firm under
Department of Defense contracts or other contracts,
including the value of such subcontracts;
(4) the amount of any payment of progress payments or
advance payments made to the protege firm for
performance under any subcontract made under the
Mentor-Protege Program;
(5) any loans made by mentor firm to the protege
firm;
(6) all Federal contracts awarded to the mentor firm
and the protege firm as a joint venture, designating
whether the award was a restricted competition or a
full and open competition;
(7) any assistance obtained by the mentor firm for
the protege firm from one or more--
(A) small business development centers
established pursuant to section 21 of the Small
Business Act (15 U.S.C. 648);
(B) entities providing procurement technical
assistance pursuant to chapter 142 of title 10,
United States Code; or
(C) historically Black colleges or
universities or minority institutions of higher
education;
(8) whether there have been any changes to the terms
of the mentor-protege agreement; and
(9) a narrative describing the success assistance
provided under subsection (f) has had in addressing the
developmental needs of the protege firm, the impact on
Department of Defense contracts, and addressing any
problems encountered.
(m) Review of Report by the Office of Small Business
Programs.--The Office of Small Business Programs of the
Department of Defense shall review the report required by
subsection (l) and, if the Office finds that the mentor-protege
agreement is not furthering the purpose of the Mentor-Protege
Program, decide not to approve any continuation of the
agreement.
(n) Definitions.--In this section:
(1) The term ``small business concern'' has the
meaning given such term under section 3 of the Small
Business Act (15 U.S.C. 632).
(2) The term ``disadvantaged small business concern''
means a firm that has less than half the size standard
corresponding to its primary North American Industry
Classification System code, is not owned or managed by
individuals or entities that directly or indirectly
have stock options or convertible securities in the
mentor firm, and is--
(A) a small business concern owned and
controlled by socially and economically
disadvantaged individuals;
(B) a business entity owned and controlled by
an Indian tribe as defined by section 8(a)(13)
of the Small Business Act (15 U.S.C.
637(a)(13));
(C) a business entity owned and controlled by
a Native Hawaiian Organization as defined by
section 8(a)(15) of the Small Business Act (15
U.S.C. 637(a)(15));
(D) a qualified organization employing
severely disabled individuals;
(E) a small business concern owned and
controlled by women, as defined in section
8(d)(3)(D) of the Small Business Act (15 U.S.C.
637(d)(3)(D));
(F) a small business concern owned and
controlled by service-disabled veterans (as
defined in section 8(d)(3) of the Small
Business Act); and
(G) a qualified HUBZone small business
concern (as defined in section 3(p) of the
Small Business Act (15 U.S.C. 632(p)); or
(H) a small business concern that--
(i) is a nontraditional defense
contractor, as such term is defined in
section 2302 of title 10, United States
Code; or
(ii) currently provides goods or
services in the private sector that are
critical to enhancing the capabilities
of the defense supplier base and
fulfilling key Department of Defense
needs.
(3) The term ``small business concern owned and
controlled by socially and economically disadvantaged
individuals'' has the meaning given such term in
section 8(d)(3)(C) of the Small Business Act (15 U.S.C.
637(d)(3)(C)).
(4) The term ``historically Black college and
university'' means any of the historically Black
colleges and universities referred to in section 2323
of title 10, United States Code.
(5) The term ``minority institution of higher
education'' means an institution of higher education
with a student body that reflects the composition
specified in section 312(b)(3), (4), and (5) of the
Higher Education Act of 1965 (20 U.S.C. 1058(b)(3),
(4), and (5)).
(6) The term ``subcontracting participation goal'',
with respect to a Department of Defense contract, means
a goal for the extent of the participation by
disadvantaged small business concerns in the
subcontracts awarded under such contract, as
established pursuant to section 2323 of title 10,
United States Code, and section 8(d) of the Small
Business Act (15 U.S.C. 637(d)).
(7) The term ``qualified organization employing the
severely disabled'' means a business entity operated on
a for-profit or nonprofit basis that--
(A) uses rehabilitative engineering to
provide employment opportunities for severely
disabled individuals and integrates severely
disabled individuals into its workforce;
(B) employs severely disabled individuals at
a rate that averages not less than 20 percent
of its total workforce;
(C) employs each severely disabled individual
in its workforce generally on the basis of 40
hours per week; and
(D) pays not less than the minimum wage
prescribed pursuant to section 6 of the Fair
Labor Standards Act (29 U.S.C. 206) to those
employees who are severely disabled
individuals.
(8) The term ``severely disabled individual'' means
an individual who is blind (as defined in section 8501
of title 41, United States Code) or a severely disabled
individual (as defined in such section).
[(9) The term ``affiliated'', with respect to the
relationship between a mentor firm and a protege firm,
means--
[(A) the mentor firm shares, directly or
indirectly, with the protege firm ownership or
management of the protege firm;
[(B) the mentor firm has an agreement, at the
time the mentor firm enters into a mentor-
protege agreement under subsection (e), to
merge with the protege firm;
[(C) the owners and managers of the mentor
firm are the parent, child, spouse, sibling,
aunt, uncle, niece, nephew, grandparent,
grandchild, or first cousin of an owner or
manager of the protege firm;
[(D) the mentor firm has, during the 2-year
period before entering into a mentor-protege
agreement, employed any officer, director,
principal stock holder, managing member, or key
employee of the protege firm;
[(E) the mentor firm has engaged in a joint
venture with the protege firm during the 2-year
period before entering into a mentor-protege
agreement, unless such joint venture was
approved by the Small Business Administration
prior to making any offer on a contract;
[(F) the mentor firm is, directly or
indirectly, the primary party providing
contracts to the protege firm, as measured by
the dollar value of the contracts; and
[(G) the Small Business Administration has
made a determination of affiliation or control
under subsection (h).]
(9) The term ``affiliation'', with respect to a
relationship between a mentor firm and a protege firm,
means a relationship described under section 121.103 of
title 13, Code of Federal Regulations (or any successor
regulation).
* * * * * * *
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TITLE 41, UNITED STATES CODE
SUBTITLE I--FEDERAL PROCUREMENT POLICY
* * * * * * *
CHAPTER 41--TASK AND DELIVERY ORDER CONTRACTS
* * * * * * *
Sec. 4106. Orders
(a) Application.--This section applies to task and delivery
order contracts entered into under sections 4103 and 4105 of
this title.
(b) Actions Not Required for Issuance of Orders.--The
following actions are not required for issuance of a task or
delivery order under a task or delivery order contract:
(1) A separate notice for the order under section
1708 of this title or section 8(e) of the Small
Business Act (15 U.S.C. 637(e)).
(2) Except as provided in subsection (c), a
competition (or a waiver of competition approved in
accordance with section 3304(e) of this title) that is
separate from that used for entering into the contract.
(c) Multiple Award Contracts.--When multiple contracts are
awarded under section 4103(d)(1)(B) or 4105(f) of this title,
all contractors awarded the contracts shall be provided a fair
opportunity to be considered, pursuant to procedures set forth
in the contracts, for each task or delivery order in excess of
$2,500 that is to be issued under any of the contracts,
unless--
(1) the executive agency's need for the services or
property ordered is of such unusual urgency that
providing the opportunity to all of those contractors
would result in unacceptable delays in fulfilling that
need;
(2) only one of those contractors is capable of
providing the services or property required at the
level of quality required because the services or
property ordered are unique or highly specialized;
(3) the task or delivery order should be issued on a
sole-source basis in the interest of economy and
efficiency because it is a logical follow-on to a task
or delivery order already issued on a competitive
basis; or
(4) it is necessary to place the order with a
particular contractor to satisfy a minimum guarantee.
(d) Enhanced Competition for Orders in Excess of
$5,000,000.--In the case of a task or delivery order in excess
of $5,000,000, the requirement to provide all contractors a
fair opportunity to be considered under subsection (c) is not
met unless all such contractors are provided, at a minimum--
(1) a notice of the task or delivery order that
includes a clear statement of the executive agency's
requirements;
(2) a reasonable period of time to provide a proposal
in response to the notice;
(3) disclosure of the significant factors and
subfactors, including cost or price, that the executive
agency expects to consider in evaluating such
proposals, and their relative importance;
(4) in the case of an award that is to be made on a
best value basis, a written statement documenting--
(A) the basis for the award; and
(B) the relative importance of quality and
price or cost factors; and
(5) an opportunity for a post-award debriefing
consistent with the requirements of section 3704 of
this title.
(e) Statement of Work.--A task or delivery order shall
include a statement of work that clearly specifies all tasks to
be performed or property to be delivered under the order.
(f) Protests.--
(1) Protest not authorized.--A protest is not
authorized in connection with the issuance or proposed
issuance of a task or delivery order except for--
(A) a protest on the ground that the order
increases the scope, period, or maximum value
of the contract under which the order is
issued; or
(B) a protest of an order valued in excess of
$10,000,000.
(2) Jurisdiction over protests.--Notwithstanding
section 3556 of title 31, the Comptroller General shall
have exclusive jurisdiction of a protest authorized
under paragraph (1)(B).
[(3) Effective period.--Paragraph (1)(B) and
paragraph (2) of this subsection shall not be in effect
after September 30, 2016.]
(g) Task and Delivery Order Ombudsman.--
(1) Appointment or designation and
responsibilities.--The head of each executive agency
who awards multiple task or delivery order contracts
under section 4103(d)(1)(B) or 4105(f) of this title
shall appoint or designate a task and delivery order
ombudsman who shall be responsible for reviewing
complaints from the contractors on those contracts and
ensuring that all of the contractors are afforded a
fair opportunity to be considered for task or delivery
orders when required under subsection (c).
(2) Who is eligible.--The task and delivery order
ombudsman shall be a senior agency official who is
independent of the contracting officer for the
contracts and may be the executive agency's advocate
for competition.
* * * * * * *
----------
TITLE 38, UNITED STATES CODE
* * * * * * *
PART VI--ACQUISITION AND DISPOSITION OF PROPERTY
* * * * * * *
CHAPTER 81--ACQUISITION AND OPERATION OF HOSPITAL AND DOMICILIARY
FACILITIES; PROCUREMENT AND SUPPLY; ENHANCED-USE LEASES OF REAL
PROPERTY
* * * * * * *
SUBCHAPTER II--PROCUREMENT AND SUPPLY
* * * * * * *
Sec. 8127. Small business concerns owned and controlled by veterans:
contracting goals and preferences
(a) Contracting Goals.--(1) In order to increase contracting
opportunities for small business concerns owned and controlled
by veterans and small business concerns owned and controlled by
veterans with service-connected disabilities, the Secretary
shall--
(A) establish a goal for each fiscal year for
participation in Department contracts (including
subcontracts) by small business concerns owned and
controlled by veterans who are not veterans with
service-connected disabilities in accordance with
paragraph (2); and
(B) establish a goal for each fiscal year for
participation in Department contracts (including
subcontracts) by small business concerns owned and
controlled by veterans with service-connected
disabilities in accordance with paragraph (3).
(2) The goal for a fiscal year for participation under
paragraph (1)(A) shall be determined by the Secretary.
(3) The goal for a fiscal year for participation under
paragraph (1)(B) shall be not less than the Government-wide
goal for that fiscal year for participation by small business
concerns owned and controlled by veterans with service-
connected disabilities under section 15(g)(1) of the Small
Business Act (15 U.S.C. 644(g)(1)).
(4) The Secretary shall establish a review mechanism to
ensure that, in the case of a subcontract of a Department
contract that is counted for purposes of meeting a goal
established pursuant to this section, the subcontract was
actually awarded to a business concern that may be counted for
purposes of meeting that goal.
(b) Use of Noncompetitive Procedures for Certain Small
Contracts.--For purposes of meeting the goals under subsection
(a), and in accordance with this section, in entering into a
contract with a small business concern owned and controlled by
veterans or a small business concern owned and controlled by
veterans with service-connected disabilities for an amount less
than the simplified acquisition threshold (as defined in
section 134 of title 41), a contracting officer of the
Department may use procedures other than competitive
procedures.
(c) Sole Source Contracts for Contracts Above Simplified
Acquisition Threshold.--For purposes of meeting the goals under
subsection (a), and in accordance with this section, a
contracting officer of the Department may award a contract to a
small business concern owned and controlled by veterans or a
small business concern owned and controlled by veterans with
service-connected disabilities using procedures other than
competitive procedures if--
(1) such concern is determined to be a responsible
source with respect to performance of such contract
opportunity;
(2) the anticipated award price of the contract
(including options) will exceed the simplified
acquisition threshold (as defined in section 134 of
title 41) but will not exceed $5,000,000; and
(3) in the estimation of the contracting officer, the
contract award can be made at a fair and reasonable
price that offers best value to the United States.
(d) Use of Restricted Competition.--Except as provided in
subsections (b) and (c), for purposes of meeting the goals
under subsection (a), and in accordance with this section, a
contracting officer of the Department shall award contracts on
the basis of competition restricted to small business concerns
owned and controlled by veterans or small business concerns
owned and controlled by veterans with service-connected
disabilities if the contracting officer has a reasonable
expectation that two or more small business concerns owned and
controlled by veterans or small business concerns owned and
controlled by veterans with service-connected disabilities will
submit offers and that the award can be made at a fair and
reasonable price that offers best value to the United States.
(e) Eligibility of Small Business Concerns.--A small business
concern may be awarded a contract under this section only if
the small business concern and the veteran owner of the small
business concern are listed in the database of veteran-owned
businesses maintained by the Secretary under subsection (f).
(f) Database of Veteran-Owned Businesses.--(1) Subject to
paragraphs (2) through (6), the Secretary shall maintain a
database of small business concerns owned and controlled by
veterans, small business concerns owned and controlled by
veterans with service-connected disabilities, and the veteran
owners of such business concerns.
(2)(A) To be eligible for inclusion in the database, such a
veteran shall submit to the Secretary such information as the
Secretary may require with respect to the small business
concern or the veteran. Application for inclusion in the
database shall constitute permission under section 552a of
title 5 (commonly referred to as the Privacy Act) for the
Secretary to access such personal information maintained by the
Secretary as may be necessary to verify the information
contained in the application.
(B) If the Secretary receives an application for inclusion in
the database from an individual whose status as a veteran
cannot be verified because the Secretary does not maintain
information with respect to the veteran status of the
individual, the Secretary may not include the small business
concern owned and controlled by the individual in the database
maintained by the Secretary until the Secretary receives such
information as may be necessary to verify that the individual
is a veteran.
(3) Information maintained in the database shall be submitted
on a voluntary basis by such veterans.
(4) No small business concern may be listed in the database
until the Secretary has [verified] verified, using regulations
issued by the Administrator of the Small Business
Administration with respect to the status of the concern as a
small business concern and the ownership and control of such
concern, that--
(A) the small business concern is owned and
controlled by veterans; and
(B) in the case of a small business concern for which
the person who owns and controls the concern indicates
that the person is a veteran with a service-connected
disability, that the person is a veteran with a
service-connected disability.
(5) The Secretary shall make the database available to all
Federal departments and agencies and shall notify each such
department and agency of the availability of the database.
(6) If the Secretary determines that the public dissemination
of certain types of information maintained in the database is
inappropriate, the Secretary shall take such steps as are
necessary to maintain such types of information in a secure and
confidential manner.
(7) The Secretary may not issue regulations related to the
status of a concern as a small business concern and the
ownership and control of such small business concern.
(8)(A) If the Secretary does not verify a concern for
inclusion in the database under this subsection based on the
status of the concern as a small business concern or the
ownership or control of the concern, the concern may appeal the
denial of verification to the Office of Hearings and Appeals of
the Small Business Administration (as established under section
5(i) of the Small Business Act). The decision of the Office of
Hearings and Appeals shall be considered a final agency action.
(B)(i) If an interested party challenges the inclusion in the
database of a small business concern owned and controlled by
veterans or a small business concern owned and controlled by
veterans with service-connected disabilities based on the
status of the concern as a small business concern or the
ownership or control of the concern, the challenge shall be
heard by the Office of Hearings and Appeals of the Small
Business Administration as described in subparagraph (A). The
decision of the Office of Hearings and Appeals shall be
considered final agency action.
(ii) In this subparagraph, the term ``interested party''
means--
(I) the Secretary; and
(II) in the case of a small business concern that is
awarded a contract, the contracting officer of the
Department or another small business concern that
submitted an offer for the contract that was awarded to
the small business concern that submitted an offer
under clause (i).
(C) For each fiscal year, the Secretary shall reimburse the
Administrator of the Small Business Administration in an amount
necessary to cover any cost incurred by the Office of Hearings
and Appeals of the Small Business Administration for actions
taken by the Office under this paragraph. The Administrator is
authorized to accept such reimbursement. The amount of any such
reimbursement shall be determined jointly by the Secretary and
the Administrator and shall be provided from fees collected by
the Secretary under multiple-award schedule contracts. Any
disagreement about the amount shall be resolved by the Director
of the Office of Management and Budget.
(g) Enforcement Penalties for Misrepresentation.--(1) Any
business concern that is determined by the Secretary to have
willfully and intentionally misrepresented the status of that
concern as a small business concern owned and controlled by
veterans or as a small business concern owned and controlled by
service-disabled veterans for purposes of this subsection shall
be debarred from contracting with the Department for a period
of not less than five years.
(2) In the case of a debarment under paragraph (1), the
Secretary shall commence debarment action against the business
concern by not later than 30 days after determining that the
concern willfully and intentionally misrepresented the status
of the concern as described in paragraph (1) and shall complete
debarment actions against such concern by not later than 90
days after such determination.
(3) The debarment of a business concern under paragraph (1)
includes the debarment of all principals in the business
concern for a period of not less than five years.
[(h) Treatment of Businesses After Death of Veteran-Owner.--
(1) Subject to paragraph (3), if the death of a veteran causes
a small business concern to be less than 51 percent owned by
one or more veterans, the surviving spouse of such veteran who
acquires ownership rights in such small business concern shall,
for the period described in paragraph (2), be treated as if the
surviving spouse were that veteran for the purpose of
maintaining the status of the small business concern as a small
business concern owned and controlled by veterans.
[(2) The period referred to in paragraph (1) is the period
beginning on the date on which the veteran dies and ending on
the earliest of the following dates:
[(A) The date on which the surviving spouse
remarries.
[(B) The date on which the surviving spouse
relinquishes an ownership interest in the small
business concern.
[(C) The date that is ten years after the date of the
veteran's death.
[(3) Paragraph (1) only applies to a surviving spouse of a
veteran with a service-connected disability rated as 100
percent disabling or who dies as a result of a service-
connected disability.]
[(i)] (h) Priority for Contracting Preferences.--Preferences
for awarding contracts to small business concerns shall be
applied in the following order of priority:
(1) Contracts awarded pursuant to subsection (b),
(c), or (d) to small business concerns owned and
controlled by veterans with service-connected
disabilities.
(2) Contracts awarded pursuant to subsection (b),
(c), or (d) to small business concerns owned and
controlled by veterans that are not covered by
paragraph (1).
(3) Contracts awarded pursuant to--
(A) section 8(a) of the Small Business Act
(15 U.S.C. 637(a)); or
(B) section 31 of such Act (15 U.S.C. 657a).
(4) Contracts awarded pursuant to any other small
business contracting preference.
[(j)] (i) Applicability of Requirements to Contracts.--(1) If
after December 31, 2008, the Secretary enters into a contract,
memorandum of understanding, agreement, or other arrangement
with any governmental entity to acquire goods or services, the
Secretary shall include in such contract, memorandum,
agreement, or other arrangement a requirement that the entity
will comply, to the maximum extent feasible, with the
provisions of this section in acquiring such goods or services.
(2) Nothing in this subsection shall be construed to
supersede or otherwise affect the authorities provided under
the Small Business Act (15 U.S.C. 631 et seq.).
[(k)] (j) Annual Reports.--Not later than December 31 each
year, the Secretary shall submit to Congress a report on small
business contracting during the fiscal year ending in such
year. Each report shall include, for the fiscal year covered by
such report, the following:
(1) The percentage of the total amount of all
contracts awarded by the Department during that fiscal
year that were awarded to small business concerns owned
and controlled by veterans.
(2) The percentage of the total amount of all such
contracts awarded to small business concerns owned and
controlled by veterans with service-connected
disabilities.
(3) The percentage of the total amount of all
contracts awarded by each Administration of the
Department during that fiscal year that were awarded to
small business concerns owned and controlled by
veterans.
(4) The percentage of the total amount of all
contracts awarded by each such Administration during
that fiscal year that were awarded to small business
concerns owned and controlled by veterans with service-
connected disabilities.
[(l)] (k) Definitions.--In this section:
(1) The term ``small business concern'' has the
meaning given that term under section 3 of the Small
Business Act (15 U.S.C. 632).
[(2) The term ``small business concern owned and
controlled by veterans'' means a small business
concern--
[(A)(i) not less than 51 percent of which is
owned by one or more veterans or, in the case
of a publicly owned business, not less than 51
percent of the stock of which is owned by one
or more veterans; and
[(ii) the management and daily business
operations of which are controlled by one or
more veterans; or
[(B) not less than 51 percent of which is
owned by one or more veterans with service-
connected disabilities that are permanent and
total who are unable to manage the daily
business operations of such concern or, in the
case of a publicly owned business, not less
than 51 percent of the stock of which is owned
by one or more such veterans.]
(2) The term ``small business concern owned and
controlled by veterans'' has the meaning given that
term under section 3(q)(3) of the Small Business Act
(15 U.S.C. 632(q)(3)).
(3) The term ``small business concern owned and
controlled by veterans with service-connected
disabilities'' has the meaning given the term ``small
business concern owned and controlled by service-
disabled veterans'' under section 3(q)(2) of the Small
Business Act (15 U.S.C. 632(q)(2)).
* * * * * * *
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