[House Report 110-111]
[From the U.S. Government Publishing Office]
110th Congress Rept. 110-111
HOUSE OF REPRESENTATIVES
1st Session Part 2
======================================================================
SMALL BUSINESS FAIRNESS IN CONTRACTING ACT
_______
May 3, 2007.--Ordered to be printed
_______
Mr. Waxman, from the Committee on Oversight and Government Reform,
submitted the following
R E P O R T
[To accompany H.R. 1873]
The Committee on Oversight and Government Reform, to whom was
referred the bill (H.R. 1873) to reauthorize the programs and
activities of the Small Business Administration relating to
procurement, and for other purposes, having considered the
same, report favorably thereon with an amendment and recommend
that the bill as amended do pass.
CONTENTS
Page
Purpose and Summary.............................................. 6
Background and Need for Legislation.............................. 7
Legislative History.............................................. 7
Section-by-Section............................................... 8
Explanation of Amendments........................................ 12
Committee Consideration.......................................... 12
Rollcall Votes................................................... 12
Application of Law to the Legislative Branch..................... 12
Statement of Oversight Findings and Recommendations of the
Committee...................................................... 13
Statement of General Performance Goals and Objectives............ 13
Constitutional Authority Statement............................... 13
Federal Advisory Committee Act................................... 13
Unfunded Mandates Statement...................................... 13
Earmark Identification........................................... 13
Committee Estimate............................................... 13
Changes in Existing Law Made by the Bill as Reported............. 14
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Small Business
Fairness in Contracting Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Regulations.
TITLE I--CONTRACT BUNDLING
Sec. 101. Definitions of bundling of contract requirements and related
terms.
Sec. 102. Justification.
Sec. 103. Appeals.
Sec. 104. Review.
TITLE II--INCREASING THE NUMBER OF SMALL BUSINESS CONTRACTS AND
SUBCONTRACTS
Sec. 201. Small business goal.
Sec. 202. Annual goal negotiation.
Sec. 203. Usage of small companies in goal achievement.
Sec. 204. Annual plan for each agency explaining how agency will meet
small business goals.
Sec. 205. Making small businesses the first choice.
Sec. 206. Uniform metric for subcontracting achievements.
Sec. 207. Subcontracting database.
Sec. 208. National database.
Sec. 209. Review of subcontracting plans.
Sec. 210. Agency obligation for fulfilling contracting goals.
Sec. 211. Appropriate limits on value of sole source contracts.
TITLE III--PROTECTION OF TAXPAYERS FROM FRAUD
Sec. 301. Small business size protest notification.
Sec. 302. Review of national registry.
Sec. 303. Recertification of compliance with size standards and
registration with Central Contractor Registry.
TITLE IV--AUTHORIZATION OF APPROPRIATIONS
Sec. 401. Authorization of appropriations.
SEC. 2. REGULATIONS.
(a) In General.--Not later than 180 days after the date of the
enactment of this Act--
(1) the Administrator of the Small Business Administration
shall promulgate regulations to implement this Act and the
amendments made by this Act; and
(2) the Federal Acquisition Regulation shall be revised to
implement this Act and the amendments made by this Act.
(b) Notice and Comment.--The regulations required by subsection (a)
shall be promulgated after opportunity for notice and comment as
required by section 553(b) of title 5, United States Code.
TITLE I--CONTRACT BUNDLING
SEC. 101. DEFINITIONS OF BUNDLING OF CONTRACT REQUIREMENTS AND RELATED
TERMS.
Section 3 of the Small Business Act (15 U.S.C. 632) is amended by
amending subsection (o) to read as follows:
``(o) Definitions of Bundling of Contract Requirements and Related
Terms.--For purposes of this Act:
``(1) Bundled contract.--
``(A) In general.--The term `bundled contract' means
a contract or order that is entered into to meet
procurement requirements that are consolidated in a
bundling of contract requirements, without regard to
its designation by the procuring agency or whether a
study of the effects of the solicitation on civilian or
military personnel has been made.
``(B) Exceptions.--The term does not include--
``(i) a contract or order with an aggregate
dollar value below the dollar threshold
specified in paragraph (4); or
``(ii) a contract or order that is entered
into to meet procurement requirements, all of
which are exempted requirements under paragraph
(5).
``(2) Bundling of contract requirements.--
``(A) In general.--The term `bundling of contract
requirements' means the use of any bundling methodology
to satisfy 2 or more procurement requirements for goods
or services, including any construction services,
previously supplied or performed under separate smaller
contracts or orders that is likely to be unsuitable for
award to a small business concern due to--
``(i) the diversity, size, or specialized
nature of the elements of the performance
specified;
``(ii) the aggregate dollar value of the
anticipated award;
``(iii) the geographical dispersion of the
contract or order performance sites; or
``(iv) any combination of the factors
described in clauses (i), (ii), and (iii).
``(B) Inclusion of new features or functions.--A
combination of contract requirements that would meet
the definition of a bundling of contract requirements
but for the addition of a procurement requirement with
at least one new good or service shall be considered to
be a bundling of contract requirements unless the new
features or functions substantially transform the goods
or services previously performed.
``(C) Exceptions.--The term does not include--
``(i) the use of a bundling methodology for
an anticipated award with an aggregate dollar
value below the dollar threshold specified in
paragraph (5); or
``(ii) the use of a bundling methodology to
meet procurement requirements, all of which are
exempted requirements under paragraph (6).
``(3) Bundling methodology.--The term `bundling methodology'
means--
``(A) a solicitation to obtain offers for a single
contract or order, or a multiple award contract or
order; or
``(B) a solicitation of offers for the issuance of a
task or a delivery order under an existing single or
multiple award contract or order.
``(4) Separate smaller contract.--The term `separate smaller
contract', with respect to bundling of contract requirements,
means a contract or order that has been performed by 1 or more
small business concerns or was suitable for award to 1 or more
small business concerns.
``(5) Dollar threshold.--The term `dollar threshold' means--
``(A) $65,000,000, if solely for construction
services; and
``(B) $5,000,000, in all other cases.
``(6) Exempted requirements.--The term `exempted requirement'
means a procurement requirement solely for items that are not
commercial items (as the term `commercial item' is defined in
section 4(12) of the Office of Federal Procurement Policy Act
(41 U.S.C. 403(12)).
``(7) Procurement requirement.--The term `procurement
requirement' means a determination by an agency that a
specified good or service is needed to satisfy the mission of
the agency.''.
SEC. 102. JUSTIFICATION.
Section 15(a) of the Small Business Act (15 U.S.C. 644(a)) is
amended--
(1) by striking ``(2) why delivery schedules'' and inserting
``(2) the names, addresses and size of the incumbent contract
holders; (3) a description of the industries that might be
interested in bidding on the contract requirements; (4) the
number of small businesses listed in the industry categories
that could be excluded from future bidding if the contract is
combined or packaged; (5) why delivery schedules'';
(2) by striking ``(3) why the proposed acquisition'' and
inserting ``(6) why the proposed acquisition'';
(3) by striking ``(4) why construction'' and inserting ``(7)
why construction'';
(4) by striking ``(5) why the agency'' and inserting ``(8)
why the agency'';
(5) by striking ``justified.'' and inserting ``justified. The
statement shall also set forth the proposed procurement
strategy required by subsection (e) and, if applicable, the
specifications required by subsection (e)(3). The statement
shall be made available to the public, including through
dissemination in the Federal contracting opportunities
database, concurrently with the issuance of the
solicitation.''; and
(6) by inserting after ``prime contracting opportunities.''
the following: ``If no notification of the procurement and
accompanying statement is received, but the Administrator
determines that there is cause to believe the contract combines
requirements or a contract (single or multiple award) or task
or delivery order for construction services or includes
unjustified bundling, then the Administrator may request that
such a statement of work goods or services be completed by the
procurement activity and sent to the Procurement Center
Representative and the solicitation process postponed for 10
days to allow the Administrator to review the statement and
make recommendations as described in this section before the
procurement is continued.''.
SEC. 103. APPEALS.
Section 15(a) of the Small Business Act (15 U.S.C. 644(a)) is amended
by inserting before ``Whenever the Administration and the contracting
procurement agency fail to agree,'' the following: ``If a small
business concern would be adversely affected, directly or indirectly,
by the procurement as proposed, and that small business concern or a
trade association on behalf of that small business concern so requests,
the Administrator may, in the Administrator's discretion, take action
to further the interests of that small business concern.''.
SEC. 104. REVIEW.
Section 15(a) of the Small Business Act (15 U.S.C. 644(a)) is amended
by striking the sentence beginning ``Whenever the Administration and
the contracting procurement agency fail to agree,'' and inserting the
following: ``Whenever the Administration and the contracting
procurement agency fail to agree, the Administrator shall submit the
matter to the head of the agency for a determination. The head of the
agency shall provide a written response to the Administrator. A copy of
such response shall also be provided to the Committees on Small
Business of the House of Representatives and Senate, the Committee on
Oversight and Government Reform of the House of Representatives, and
the Committee on Homeland Security and Governmental Affairs of the
Senate.''.
TITLE II--INCREASING THE NUMBER OF SMALL BUSINESS CONTRACTS AND
SUBCONTRACTS
SEC. 201. SMALL BUSINESS GOAL.
(a) Government-Wide Goal.--Section 15(g)(1) of the Small Business Act
(15 U.S.C. 644(g)(1)) is amended by striking ``23 percent'' and
inserting ``25 percent''.
(b) Goals for Small Disadvantaged Businesses and Women-Owned
Businesses.--Section 15(g)(1) of such Act is further amended by
striking ``5 percent'' both places it appears and inserting ``8
percent''.
SEC. 202. ANNUAL GOAL NEGOTIATION.
Section 15(g)(1) of the Small Business Act (15 U.S.C. 644(g)(1)) is
amended by striking ``The President shall annually establish
Government-wide goals for procurement contracts'' and inserting ``The
President shall before the close of each fiscal year establish new
Government-wide procurement goals for the following fiscal year for
procurement contracts''.
SEC. 203. USAGE OF SMALL COMPANIES IN GOAL ACHIEVEMENT.
Section 15(g) of the Small Business Act (15 U.S.C. 644(g)) is amended
by adding at the end the following:
``(4) For purposes of this subsection and subsection (h), a small
business concern shall be counted toward one additional category goal
only, even if that small business concern otherwise qualifies under
more than one category goal. In this paragraph, the term `category
goal' means a goal described in paragraph (2).''.
SEC. 204. ANNUAL PLAN FOR EACH AGENCY EXPLAINING HOW AGENCY WILL MEET
SMALL BUSINESS GOALS.
Section 15(g) of the Small Business Act (15 U.S.C. 644(g)) is amended
by adding at the end the following:
``(5) Before the beginning of each fiscal year, the head of each
Federal agency shall submit to the Administrator of the Small Business
Administration and to Congress a detailed plan explaining how the
agency intends to meet the small business goals under this subsection
that apply to that agency for that fiscal year.''.
SEC. 205. MAKING SMALL BUSINESSES THE FIRST CHOICE.
Section 15(j) of the Small Business Act (15 U.S.C. 644(j)) is
amended--
(1) in paragraph (1), by striking ``$100,000'' and inserting
``the Simplified Acquisition Threshold''; and
(2) in paragraph (3), by striking ``subsection (a) of section
8'' and inserting ``section 8, 31, or 36''.
SEC. 206. UNIFORM METRIC FOR SUBCONTRACTING ACHIEVEMENTS.
Section 8(d) of the Small Business Act (15 U.S.C. 637(d)) is amended
by adding at the end the following:.
``(12) In carrying out this subsection, the Administrator shall
require each prime contractor to report small business subcontract
usage at all tiers based on the percentage of the total dollar amount
of the contract award.''.
SEC. 207. SUBCONTRACTING DATABASE.
Section 8(d) of the Small Business Act (15 U.S.C. 637(d)) is amended
by adding at the end the following:
``(13) In carrying out this subsection, the Administrator shall
develop and maintain a password-protected database that will enable the
Administration to assist small businesses in marketing to large
corporations that have not achieved their small business goals.''.
SEC. 208. NATIONAL DATABASE.
The Administrator of the Small Business Administration shall ensure
that whenever a small business enters its information in the Central
Contractor Registry, or any successor to that registry, the
Administrator contacts that business within 30 days regarding the
likelihood of Federal contracting opportunities. The Administrator
shall ensure that each small business that so registers is, for each
industry code entered by that small business, provided with the total
dollar value of government contract awards to small businesses for that
industry.
SEC. 209. REVIEW OF SUBCONTRACTING PLANS.
Not later than 120 days after the date of the enactment of this
section, the Administrator of the Small Business Administration shall,
after an opportunity for notice and comment, prescribe regulations to
govern the Administrator's review of subcontracting plans, including
standards for determining good faith effort in compliance with the
subcontracting plans.
SEC. 210. AGENCY OBLIGATION FOR FULFILLING CONTRACTING GOALS.
Section 15(h) of the Small Business Act (15 U.S.C. 644(h)) is amended
by adding at the end the following:
``(4) At the conclusion of each fiscal year, the head of each Federal
agency shall submit to Congress a report specifying the percentage of
contracts awarded by that agency for that fiscal year that were awarded
to small business concerns. If the percentage is less than 25 percent,
the head of the agency shall, in the report, explain why the percentage
is less than 25 percent and what will be done to ensure that the
percentage for the following fiscal year will not be less than 25
percent.''.
SEC. 211. APPROPRIATE LIMITS ON VALUE OF SOLE SOURCE CONTRACTS.
(a) Appropriate Limits.--If a law is not enacted by December 31,
2007, revising the limits referred to in this subsection, the
Administrator for Federal Procurement Policy, in consultation with the
Administrator for Small Business, shall establish appropriate limits on
the value of contracts awarded without the use of competitive
procedures to participants in the program established by section 8(a)
of the Small Business Act (15 USC 637(a)) that are not subject to the
limits on the value of such contracts established by paragraph (1)(D)
of section 8(a) of such Act.
(b) Consultation.--In establishing any limit described in subsection
(a). the Administrator for Federal Procurement Policy shall consult
with representatives of the affected program participants. The
Administrator shall also take into account--
(1) any special circumstances and needs of the affected
program participants; and
(2) the advantages of promoting competition in Federal
contracting.
TITLE III--PROTECTION OF TAXPAYERS FROM FRAUD
SEC. 301. SMALL BUSINESS SIZE PROTEST NOTIFICATION.
(a) In General.--The Administrator of the Small Business
Administration shall work with appropriate Federal agencies to ensure
that whenever a business concern is awarded a contract on the basis
that it qualifies as small and then is determined not to qualify as
small, a notification of those facts (that an award was made on such a
basis, and that such a determination was made) shall be placed adjacent
to that concern's listing in the Central Contractor Registry (or any
successor to that registry).
(b) Comptroller General Certification.--The Administrator shall, in
making any report of small business goal accomplishments, qualify the
accomplishments as ``estimated'', until the Administrator obtains from
the Comptroller General the Comptroller General's certification that
there are no data integrity issues with respect to the national
repository of contract award information known as Federal Procurement
Data System-Next Generation (FPDS-NG), or any successor to that
repository.
(c) Awards to Large Businesses.--For each Federal agency, the
Inspector General of that agency shall, on an annual basis, submit to
Congress a report on the number and dollar value of contract awards
that were coded as awards to small business concerns but in fact were
made to businesses that did not qualify as small business concerns.
SEC. 302. REVIEW OF NATIONAL REGISTRY.
The Administrator of the Small Business Administration shall ensure,
on a biannual basis, that an independent audit is performed of the
Central Contractor Registry, or any successor to that registry, and
that the Dynamic Small Business Search portion of the registry, or any
successor to that portion of the registry, is purged of any businesses
that are not in fact small businesses. If a business that has been so
purged attempts, while not in fact a small business, to re-register,
that business is subject to debarment as a Federal contractor and is
further subject to penalties outlined in section 16 of the Small
Business Act (15 U.S.C. 645).
SEC. 303. RECERTIFICATION OF COMPLIANCE WITH SIZE STANDARDS AND
REGISTRATION WITH CENTRAL CONTRACTOR REGISTRY.
Section 3(a) of the Small Business Act (15 U.S.C. 632(a)) is amended
by adding at the end the following:
``(5) Recertification.--
``(A) In general.--If a business concern is awarded a
contract because of a standard by which it is determined to be
a small business concern, and the business concern is close to
exceeding that standard at the time the award is made, then the
business concern must, annually after the date of the award,
recertify to the agency awarding the contract whether it meets
that standard.
``(B) `Close to exceeding'.--For purposes of subparagraph
(A), a business concern is close to exceeding--
``(i) a number-of-employees standard if the number of
employees of the business concern is 95 percent or more
of the maximum number of employees allowed under the
standard; and
``(ii) a dollar-volume-of-business standard if the
dollar volume of business is 80 percent or more of the
maximum dollar volume allowed under the standard.
``(6) Registry.--For a business concern to be awarded a contract
because of a standard by which it is determined to be a small business
concern, the business concern must, annually after the end of the
fiscal year used by the business concern, update its listing in the
Central Contractor Registry.''.
TITLE IV--AUTHORIZATION OF APPROPRIATIONS
SEC. 401. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated such sums as may be necessary
to carry out this Act and the amendments made by this Act.
Purpose and Summary
H.R. 1873, the Small Business Fairness in Contracting Act
of 2007, was introduced on April 17, 2007, by Reps. Bruce L.
Braley Steve Chabot, and Nydia M. Velazquez. The bill amends
the Small Business Act to address issues relating to small
business participation in federal procurement. This report
summarizes H.R. 1873, as ordered reported by the Committee on
Oversight and Government Reform.
H.R. 1873 contains provisions concerning contract bundling,
government procurement goals for small business contracts, and
the accuracy of contracting data maintained in federal
databases.
As reported by the Oversight Committee, the bill expands
the definition of contract bundling to ensure that small
businesses have access to work previously available for small
business. The bill improves the current bundling dispute
process by allowing small businesses to request that the Small
Business Administration (SBA) appeal a contract award to the
contracting agency on their behalf and by requiring agencies to
provide written responses to SBA. The bill increases the
government-wide small business contracting goal and raises the
threshold for set-asides of small business contracts to the
Simplified Acquisition Threshold. The bill would provide for
the establishment of appropriate limitations on the award of
contracts without competition to Alaska Native Corporations and
other economically disadvantaged Indian tribes. The bill
requires improvements to federal contracting databases.
Background and Need for Legislation
H.R. 1873 improves small business access to federal
procurement opportunities. Concerns have been raised that some
agencies may be combining work previously awarded to small
businesses and then adding some small new requirement so the
agency can avoid conducting the required contract bundling
analysis. As reported by the Oversight Committee, H.R. 1873
addresses this concern by covering under the definition of a
contract bundling a combination of contract requirements that
would meet the definition of a bundling if it were not for the
addition of a new feature or function that does not
substantially transform the goods or services previously
performed.
Federal contracting law provides a limited privilege for
small minority and economically disadvantaged businesses. These
companies can be awarded contracts worth up to $5 million
without competition. In 1986, Congress made Alaska Native
Corporations and economically disadvantaged Indian tribes
eligible to participate in the program but provided that the $5
million ceiling did not apply to those groups. These firms are
thus eligible to receive noncompetitive federal contracts of
any value. The number and value of noncompetitive federal
contracts awarded to Alaska Native Corporations has increased
in recent years. In 2000, Alaska Native Corporations received
$265 million in federal contracts while in 2005, spending on
these contracts grew to more than $1 billion per year. As
reported by the Oversight Committee, H.R. 1873 puts in place a
mechanism to begin to address this loophole. The bill contains
a ``placeholder'' provision that gives Congress until the end
of the year to revise the statute. If Congress fails to act,
the Office of Management and Budget would set ``appropriate
limits'' after a consultation process.
Concerns have been raised about the validity and usefulness
of the data maintained in federal contractor databases.
According to the Inspector General for the Small Business
Administration, agencies are getting credit toward their small
business procurement goals for contracts which are actually
awarded to large companies. This bill addresses these concerns
by requiring changes to the information that is available in
federal contractor databases and by requiring a biannual audit
of the Central Contractor Registry.
Legislative History
H.R. 1873 was introduced on April 17, 2007, and referred to
the Committee on Small Business. The Committee on Small
Business held a markup to consider the bill on April 24, 2007,
and ordered the bill reported, as amended, on a voice vote.
The bill was sequentially referred to the Committee on
Oversight and Government Reform. The Committee held a markup to
consider H.R. 1873 on May 1, 2007, and ordered the bill to be
reported, as amended, on a voice vote.
Section-by-Section
Section 1. Short title; table of contents
This section provides that the short title of H.R. 1873 is
the ``Small Business Fairness in Contracting Act of 2007.''
This section also contains a table of contents.
Section 2. Regulations
This section requires the SBA Administrator to issue
regulations, after providing the opportunity for notice and
comment, implementing this Act. This section also requires the
Federal Acquisition Regulation to be revised to implement the
Act and the amendments made by the Act.
Title I--Contract Bundling
Section 101. Definitions of bundling of contract requirements and
related terms
This section clarifies the definition of contract bundling
and related terms. The term ``bundled contract'' is amended to
include a contract or an order that is entered into to meet
requirements that are consolidated in a bundling of contract
requirements without regard to its designation by the procuring
agency or whether a study of the effects of the solicitation on
civilian or military personnel has been made. This provision is
intended to cover single award or multiple award ``task and
delivery'' orders under requirements-type contracts and
indefinite delivery indefinite quantity contracts. This
expansion of the current statutory coverage ensures that small
businesses have an appropriate opportunity to share in the
federal business opportunities offered through task and
delivery orders under already existing contracts.
Under the current definition, a contract is considered
bundled if it involves the consolidation of work that has been
previously performed. This section expands the definition of
``bundling of contract requirements'' to cover construction
services and to cover a combination of contract requirements
that would meet the definition of a bundling if it were not for
the addition of a procurement requirement with at least one new
good or service if the new features or functions do not
substantially transform the good or services previously
performed. None of these definitions apply if the anticipated
aggregate dollar value of the award is under $65 million for
construction services or under $5 million for all other
contracts, or if it applies only to non-commercial items.
The bill, as introduced, could have been read to change the
definition of contract bundling to include virtually all
contracts the federal government puts out for bid. This would
require agencies to conduct time-consuming and burdensome
economic analyses for almost all federal contracts. This
section, as amended during Committee consideration, provides a
balanced expansion that improves small business access to
federal contracts while preserving the discretion of agency
contracting officials.
Section 102. Justification
This section requires a contracting agency to provide the
small business representative for the agency with information
on incumbent contract holders, a description of the industries
which might be interested in bidding on the contract
requirements, and the number of small businesses listed in the
industry categories which potentially could be excluded if the
contract is combined or packaged. This section allows the SBA
Administrator to intervene and request a statement of work for
goods or services and to request that the solicitation process
be postponed 10 days to allow the Administrator to review the
statement and make recommendations.
Section 103. Appeals
This section allows a small business or a trade association
acting on behalf of a small business adversely affected by a
proposed procurement to request that SBA take actions to
further the interests of that small business concern.
Section 104. Review
Under current law, when SBA and a procuring agency disagree
on a contract bundling issue, the head of the contracting
agency resolves the dispute. This section improves
accountability by requiring the head of the agency to provide a
written response to the SBA Administrator and to provide copies
of the response to Congress.
This section was amended during Committee consideration to
eliminate the requirement that OMB become involved in disputes
between SBA and other federal agencies over whether a contract
is bundled. The authority to resolve these disputes should
ultimately remain with the individual responsible for ensuring
that the contract is fulfilled and not with political
appointees at OMB. The reporting requirements of this section
will ensure appropriate oversight of the issue.
Title II--Increasing the Number of Small Business Contracts and
Subcontracts
Section 201. Small business goal
This section increases the government-wide small business
procurement goal from 23% to 25%. This section would also raise
the government-wide procurement goal for small disadvantaged
businesses and women-owned businesses from 5% to 8%. This
section was amended during Committee consideration. As
introduced, the bill would have raised the small business
procurement goal to 30%. The federal government barely meets
the current goal of 23% and 25% will be a significant
improvement.
Section 202. Annual goal negotiation
This section requires the President, before the close of
each fiscal year, to establish new government-wide procurement
goals for the following fiscal year. This provision is intended
to ensure that new goals are set each year.
Section 203. Usage of small companies in goal achievement
This section would only permit agencies to count a small
business toward one additional procurement category goal (small
businesses owned by service disabled veterans, socially and
economically disadvantaged individuals, qualified HUB Zone
concerns, and women) even if the small business would otherwise
qualify to be counted under more than one goal.
Section 204. Annual plan for each agency explaining how agency will
meet small business goals
This section requires the head of each agency to submit to
the SBA Administrator and Congress a detailed plan on how the
agency intends to meet its small business procurement goals for
that fiscal year.
Section 205. Making small business the first choice
This section would require that the maximum dollar value
for the small business threshold be raised to that of the
Simplified Acquisition Threshold. The Simplified Acquisition
Threshold is adjusted based on inflation. Tying the maximum
small business threshold to the Simplified Acquisition
Threshold allows both thresholds to be adjusted to inflation at
the same time. H.R. 1873, as introduced, included a provision
that would extend the small business reservation to orders
under existing contracts. This provision was eliminated in the
bill as reported by the Oversight Committee.
Section 206. Uniform metric for subcontracting achievements
This section requires prime contractors to report small
business usage, at all tiers, based on the percentage of the
total dollar amount of the contract award. This provision
establishes a uniform way of measuring subcontracting
performance.
Section 207. Subcontracting database
This section requires the SBA Administrator to develop and
maintain a password protected database to enable agencies to
assist small businesses in marketing to large corporations that
have not achieved their small business goals.
Section 208. National database
This section requires the SBA Administrator to ensure that
whenever a small business enters its information in the Central
Contractor Registry, the Administrator contacts the business
within 30 days regarding the likelihood of federal contracting
opportunities. This section also requires the Administrator to
ensure that each small business is provided with the total
dollar value of government contract awards to small businesses
for each of its relevant industries.
Section 209. Review of subcontracting plans
This section requires the SBA Administrator, within 120
days and after an opportunity for notice and comment, to
prescribe regulations governing the Administrator's review of
subcontracting plans, including standards for determining good
faith effort in compliance with the subcontracting plans.
Section 210. Agency obligation for fulfilling contracting goals
This section requires the head of each federal agency to
submit to Congress a report on the percentage of contracts the
agency awarded to small businesses for that fiscal year. If it
is less than 25%, the head of the agency must explain why and
what the agency will do to ensure that the percentage will not
be less than 25% for the next fiscal year.
Section 211. Change in threshold for sole source contracts for certain
entities
This section gives Congress until the end of the year to
adopt legislation addressing sole-source contracting by Alaska
Native Corporations and economically disadvantaged Indian
tribes. If Congress fails to act during this ``placeholder''
period, the section requires the Administrator for Federal
Procurement Policy, in consultation with the SBA Administrator,
to establish appropriate limits on the value of sole-source
contracts awarded to these groups. In setting these limits, the
Administrator must consult with representatives of affected
Alaska Natives and Indian tribes and take into account any
special circumstances and needs of the affected program
participants and the advantages of promoting competition in
federal contracting.
These changes are intended to preserve the integrity of the
contracting privileges afforded to Alaska Native Corporations
and economically disadvantaged Indian tribes by introducing
competition into the program.
Title III--Protection of Taxpayers From Fraud
Section 301. Small business size protest notification
Subsection (a) requires the SBA Administrator to work with
agencies to ensure that whenever a business fails to prevail in
a size protest and the determination is made that the business
is not small, a note is made in the Central Contractor
Registry.
Subsection (b) requires the SBA Administrator, in any
report on small business goal accomplishments, to qualify the
accomplishments as ``estimated'' until the Comptroller General
certifies to the Administrator that there are no data integrity
issues with respect to the Federal Procurement Data System-Next
Generation.
Subsection (c) requires the Inspector General of each
agency to report annually on contracts that were coded as
awards to small businesses but were in fact awarded to
businesses that did not qualify as small.
Section 302. Review of national registry
This section requires the SBA Administrator to ensure, on a
biannual basis, that an independent audit is performed of the
Central Contractor Registry and that the Dynamic Small Business
Search portion of the registry is purged of any businesses that
are not small businesses. This section provides that if a
business that has been purged attempts to re-register, it will
be subject to debarment as a federal contractor and will be
subject to penalties outlined in section 645 of chapter 15 of
the United States Code.
Section 303. Recertification of compliance with size standards and
registration with central contractor registry
This section requires businesses that are, at the time of a
contract award, close to exceeding their size standards, to
annually recertify throughout the duration of the contract.
This provision is intended to ensure that small businesses
that outgrow the small business classification do not continue
to be eligible for small business awards and to ensure that
agencies do not receive credit toward their small business
procurement goals for awarding contracts to such businesses.
This provision does not require a business that outgrows its
small business designation to lose its contract.
Title IV--Authorization of Appropriations
Section 401. Authorization of appropriations
This section authorizes necessary appropriations for
implementation.
Explanation of Amendments
The following amendments were adopted in Committee:
Mr. Waxman and Mr. Davis offered an amendment, passed by
voice vote, in the nature of a substitute. The amendment makes
a number of changes to H.R. 1873. The amendment changes the
definition of contract bundling and eliminates the requirement
that OMB become involved in contract-specific disputes between
SBA and other federal agencies over contract bundling. The
amendment requires the contracting agency to provide a written
opinion to SBA and to Congress regarding such disputes. The
amendment changes the increase in the government-wide small
business procurement goal to 25% from 30% as included in the
bill as it was referred to the Committee. The amendment gives
Congress until the end of the year to address sole-source
contracting by Alaska Native Corporations and economically
disadvantaged Indian tribes. The amendment also eliminated
provisions of the bill, as introduced, which would have
required overseas contracts to be included in determining
achievement of procurement goals and to require agencies to
negotiate individual procurement goals, not lower than the
national goal.
Mr. Clay and Mr. Cummings offered an amendment, passed by
voice vote, to raise the government-wide procurement goal for
small disadvantaged businesses and women-owned businesses from
5% to 8%.
Committee Consideration
On Tuesday, May 1, 2007, the Committee met in open session
and favorably ordered the bill, H.R. 1873, to be reported as
amended, by a voice vote.
Rollcall Votes
No rollcall votes were held.
Application of Law to the Legislative Branch
Section 102(b)(3) of Public Law 104-1 requires a
description of the application of this bill to the legislative
branch where the bill relates to terms and conditions of
employment or access to public services and accommodations.
H.R. 1873 does not relate to the terms and conditions of
employment or access to public services and accommodations
within the meaning of Section 102(b)(3).
Statement of Oversight Findings and Recommendations of the Committee
In compliance with clause 3(c)(l) of rule XIII and clause
(2)(b)(1) of rule X of the Rules of the House of
Representatives, the Committee's oversight findings and
recommendations are reflected in the descriptive portions of
this report, including the need to establish appropriate limits
for certain sole-source contracts and the need for improvements
in the accuracy of contracting data maintained in federal
databases.
Statement of General Performance Goals and Objectives
In accordance with clause 3(c)(a) of rule XIII of the Rules
of the House of Representatives, the Committee's performance
goals and objectives are reflected in the descriptive portions
of this report, including improving the federal procurement
system.
Constitutional Authority Statement
Under clause 3(d)(1) of rule XIII of the Rules of the House
of Representatives, the Committee must include a statement
citing the specific powers granted to Congress to enact the law
proposed by H.R. 1873. Article I, Section 8, Clause 18, of the
Constitution of the United States grants the Congress the power
to enact this law.
Federal Advisory Committee Act
The Committee finds that the legislation does not establish
or authorize the establishment of an advisory committee within
the definition of 5 U.S.C. App., Section 5(b).
Unfunded Mandates Statement
Section 423 of the Congressional Budget and Impoundment
Control Act (as amended by Section 101(a)(2) of the Unfunded
Mandates Reform Act, P.L. 104-4) requires a statement on
whether the provisions of the report include unfunded mandates.
In compliance with this law, and in the absence of an estimate
from the Congressional Budget Office, the committee states that
the bill deals only with the functions and operations of the
federal government and, as such, contains no unfunded mandates.
Earmark Identification
H.R. 1873 does not include any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9(d), 9(e), or 9(f) of rule XXI.
Committee Estimate
At the time of the filing of this report on H.R. 1873, the
cost estimate of the Congressional Budget Office was not
available. In compliance with clause 3(d)(2) of rule XIII of
the Rules of the House of Representatives, and based on the
best information available at this time the Committee on
Oversight and Government Reform provides the following
estimate. The Committee on Small Business, in its report on
H.R. 1873, estimated that should the bill be enacted, it would
cost $2.5 million in fiscal year 2008 and $2 million each year
thereafter. Most of the costs fall within budget function 370
and other budget functions that procure goods and services. If
the bill is enacted prior to fiscal year 2008 and necessary
amounts are appropriated near the start of each fiscal year
thereafter, the five year cost of the bill reported by the
Committee on Small Business from 2008 to 2012 would be $10.5
million. The bill as reported by the Committee on Oversight and
Government Reform may reduce those cost due to differences in
bundling and goaling requirements.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
SMALL BUSINESS ACT
* * * * * * *
Sec. 3. (a)(1) * * *
* * * * * * *
(5) Recertification.--
(A) In general.--If a business concern is awarded a
contract because of a standard by which it is
determined to be a small business concern, and the
business concern is close to exceeding that standard at
the time the award is made, then the business concern
must, annually after the date of the award, recertify
to the agency awarding the contract whether it meets
that standard.
(B) ``Close to exceeding''.--For purposes of
subparagraph (A), a business concern is close to
exceeding--
(i) a number-of-employees standard if the
number of employees of the business concern is
95 percent or more of the maximum number of
employees allowed under the standard; and
(ii) a dollar-volume-of-business standard if
the dollar volume of business is 80 percent or
more of the maximum dollar volume allowed under
the standard.
(6) Registry.--For a business concern to be awarded a
contract because of a standard by which it is determined to be
a small business concern, the business concern must, annually
after the end of the fiscal year used by the business concern,
update its listing in the Central Contractor Registry.
* * * * * * *
[(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.]
(o) Definitions of Bundling of Contract Requirements and
Related Terms.--For purposes of this Act:
(1) Bundled contract.--
(A) In general.--The term ``bundled
contract'' means a contract or order that is
entered into to meet procurement requirements
that are consolidated in a bundling of contract
requirements, without regard to its designation
by the procuring agency or whether a study of
the effects of the solicitation on civilian or
military personnel has been made.
(B) Exceptions.--The term does not include--
(i) a contract or order with an
aggregate dollar value below the dollar
threshold specified in paragraph (4);
or
(ii) a contract or order that is
entered into to meet procurement
requirements, all of which are exempted
requirements under paragraph (5).
(2) Bundling of contract requirements.--
(A) In general.--The term ``bundling of
contract requirements'' means the use of any
bundling methodology to satisfy 2 or more
procurement requirements for goods or services,
including any construction services, previously
supplied or performed under separate smaller
contracts or orders that is likely to be
unsuitable for award to a small business
concern due to--
(i) the diversity, size, or
specialized nature of the elements of
the performance specified;
(ii) the aggregate dollar value of
the anticipated award;
(iii) the geographical dispersion of
the contract or order performance
sites; or
(iv) any combination of the factors
described in clauses (i), (ii), and
(iii).
(B) Inclusion of new features or functions.--
A combination of contract requirements that
would meet the definition of a bundling of
contract requirements but for the addition of a
procurement requirement with at least one new
good or service shall be considered to be a
bundling of contract requirements unless the
new features or functions substantially
transform the goods or services previously
performed.
(C) Exceptions.--The term does not include--
(i) the use of a bundling methodology
for an anticipated award with an
aggregate dollar value below the dollar
threshold specified in paragraph (5);
or
(ii) the use of a bundling
methodology to meet procurement
requirements, all of which are exempted
requirements under paragraph (6).
(3) Bundling methodology.--The term ``bundling
methodology'' means--
(A) a solicitation to obtain offers for a
single contract or order, or a multiple award
contract or order; or
(B) a solicitation of offers for the issuance
of a task or a delivery order under an existing
single or multiple award contract or order.
(4) Separate smaller contract.--The term ``separate
smaller contract'', with respect to bundling of
contract requirements, means a contract or order that
has been performed by 1 or more small business concerns
or was suitable for award to 1 or more small business
concerns.
(5) Dollar threshold.--The term ``dollar threshold''
means--
(A) $65,000,000, if solely for construction
services; and
(B) $5,000,000, in all other cases.
(6) Exempted requirements.--The term ``exempted
requirement'' means a procurement requirement solely
for items that are not commercial items (as the term
``commercial item'' is defined in section 4(12) of the
Office of Federal Procurement Policy Act (41 U.S.C.
403(12)).
(7) Procurement requirement.--The term ``procurement
requirement'' means a determination by an agency that a
specified good or service is needed to satisfy the
mission of the agency.
* * * * * * *
Sec. 8.(a) * * *
* * * * * * *
(d)(1) * * *
* * * * * * *
(12) In carrying out this subsection, the Administrator shall
require each prime contractor to report small business
subcontract usage at all tiers based on the percentage of the
total dollar amount of the contract award.
(13) In carrying out this subsection, the Administrator shall
develop and maintain a password-protected database that will
enable the Administration to assist small businesses in
marketing to large corporations that have not achieved their
small business goals.
* * * * * * *
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] (2) the names, addresses and size of the
incumbent contract holders; (3) a description of the industries
that might be interested in bidding on the contract
requirements; (4) the number of small businesses listed in the
industry categories that could be excluded from future bidding
if the contract is combined or packaged; (5) 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] (6) why the proposed acquisition cannot
be offered so as to make small business participation likely,
[(4) why construction] (7) why construction cannot be procured
as separate discrete projects, or [(5) why the agency] (8) why
the agency has determined that the bundled contract (as defined
in section 3(o)) is necessary and [justified.] justified. The
statement shall also set forth the proposed procurement
strategy required by subsection (e) and, if applicable, the
specifications required by subsection (e)(3). The statement
shall be made available to the public, including through
dissemination in the Federal contracting opportunities
database, concurrently with the issuance of the solicitation.
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.] If no notification of the procurement
and accompanying statement is received, but the Administrator
determines that there is cause to believe the contract combines
requirements or a contract (single or multiple award) or task
or delivery order for construction services or includes
unjustified bundling, then the Administrator may request that
such a statement of work goods or services be completed by the
procurement activity and sent to the Procurement Center
Representative and the solicitation process postponed for 10
days to allow the Administrator to review the statement and
make recommendations as described in this section before the
procurement is continued. If a small business concern would be
adversely affected, directly or indirectly, by the procurement
as proposed, and that small business concern or a trade
association on behalf of that small business concern so
requests, the Administrator may, in the Administrator's
discretion, take action to further the interests of that small
business concern. Whenever the Administration and the
contracting procurement agency fail to agree, the Administrator
shall submit the matter to the head of the agency for a
determination. The head of the agency shall provide a written
response to the Administrator. A copy of such response shall
also be provided to the Committees on Small Business of the
House of Representatives and Senate, the Committee on Oversight
and Government Reform of the House of Representatives, and the
Committee on Homeland Security and Governmental Affairs of the
Senate. 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.
* * * * * * *
(g)(1) [The President shall annually establish Government-
wide goals for procurement contracts] The President shall
before the close of each fiscal year establish new Government-
wide procurement goals for the following fiscal year for
procurement contracts awarded to small business concerns, small
business concerns owned and controlled by service disabled
veterans, qualified HUBZone small business concerns, small
business concerns owned and controlled by socially and
economically disadvantaged individuals, and small business
concerns owned and controlled by women. The Government-wide
goal for participation by small business concerns shall be
established at not less than [23 percent] 25 percent of the
total value of all prime contract awards for each fiscal year.
The Government-wide goal for participation by small business
concerns owned and controlled by service-disabled veterans
shall be established at not less than 3 percent of the total
value of all prime contract and subcontract awards for each
fiscal year. The Governmentwide goal for participation by
qualified HUBZone small business concerns shall be established
at not less than 1 percent of the total value of all prime
contract awards for fiscal year 1999, not less than 1.5 percent
of the total value of all prime contract awards for fiscal year
2000, not less than 2 percent of the total value of all prime
contract awards for fiscal year 2001, not less than 2.5 percent
of the total value of all prime contract awards for fiscal year
2002, and not less than 3 percent of the total value of all
prime contract awards for fiscal year 2003 and each fiscal year
thereafter. The Government-wide goal for participation by small
business concerns owned and controlled by socially and
economically disadvantaged individuals shall be established at
not less than [5 percent] 8 percent of the total value of all
prime contract and subcontract awards for each fiscal year. The
Government-wide goal for participation by small business
concerns owned and controlled by women shall be established at
not less than [5 percent] 8 percent of the total value of all
prime contract and subcontract awards for each fiscal year.
Notwithstanding the Government-wide goal, each agency shall
have an annual goal that presents, for that agency, the maximum
practicable opportunity for small business concerns, small
business concerns owned and controlled by service-disabled
veterans, qualified HUBZone small business concerns, small
business concerns owned and controlled by socially and
economically disadvantaged individuals, and small business
concerns owned and controlled by women to participate in the
performance of contracts let by such agency. The Administration
and the Administrator of the Office of Federal Procurement
Policy shall, when exercising their authority pursuant to
paragraph (2), insure that the cumulative annual prime contract
goals for all agencies meet or exceed the annual Government-
wide prime contract goal established by the President pursuant
to this paragraph.
* * * * * * *
(4) For purposes of this subsection and subsection (h), a
small business concern shall be counted toward one additional
category goal only, even if that small business concern
otherwise qualifies under more than one category goal. In this
paragraph, the term ``category goal'' means a goal described in
paragraph (2).
(5) Before the beginning of each fiscal year, the head of
each Federal agency shall submit to the Administrator of the
Small Business Administration and to Congress a detailed plan
explaining how the agency intends to meet the small business
goals under this subsection that apply to that agency for that
fiscal year.
(h)(1) * * *
* * * * * * *
(4) At the conclusion of each fiscal year, the head of each
Federal agency shall submit to Congress a report specifying the
percentage of contracts awarded by that agency for that fiscal
year that were awarded to small business concerns. If the
percentage is less than 25 percent, the head of the agency
shall, in the report, explain why the percentage is less than
25 percent and what will be done to ensure that the percentage
for the following fiscal year will not be less than 25 percent.
* * * * * * *
(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] 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.
* * * * * * *
(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] section 8,
31, or 36 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.
* * * * * * *