[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



 
                  FULL COMMITTEE MARKUP OF H.R. 1873,
                     THE SMALL BUSINESS FAIRNESS IN
                            CONTRACTING ACT

=======================================================================

                      COMMITTEE ON SMALL BUSINESS
                 UNITED STATES HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                             April 24, 2007

                               __________

                          Serial Number 110-16

                               __________

         Printed for the use of the Committee on Small Business


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
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                   HOUSE COMMITTEE ON SMALL BUSINESS

                NYDIA M. VELAZQUEZ, New York, Chairwoman


JUANITA MILLENDER-McDONALD,          STEVE CHABOT, Ohio, Ranking Member
California                           ROSCOE BARTLETT, Maryland
WILLIAM JEFFERSON, Louisiana         SAM GRAVES, Missouri
HEATH SHULER, North Carolina         TODD AKIN, Missouri
CHARLIE GONZALEZ, Texas              BILL SHUSTER, Pennsylvania
RICK LARSEN, Washington              MARILYN MUSGRAVE, Colorado
RAUL GRIJALVA, Arizona               STEVE KING, Iowa
MICHAEL MICHAUD, Maine               JEFF FORTENBERRY, Nebraska
MELISSA BEAN, Illinois               LYNN WESTMORELAND, Georgia
HENRY CUELLAR, Texas                 LOUIE GOHMERT, Texas
DAN LIPINSKI, Illinois               DEAN HELLER, Nevada
GWEN MOORE, Wisconsin                DAVID DAVIS, Tennessee
JASON ALTMIRE, Pennsylvania          MARY FALLIN, Oklahoma
BRUCE BRALEY, Iowa                   VERN BUCHANAN, Florida
YVETTE CLARKE, New York              JIM JORDAN, Ohio
BRAD ELLSWORTH, Indiana
HANK JOHNSON, Georgia
JOE SESTAK, Pennsylvania

                  Michael Day, Majority Staff Director
                  Adam Minehardt, Deputy Staff Director
                       Tim Slattery, Chief Counsel
               Kevin Fitzpatrick, Minority Staff Director

                                 ______

                         STANDING SUBCOMMITTEES

              Subcommittee on Finance and Tax

                   MELISSA BEAN, Illinois, Chairwoman


RAUL GRIJALVA, Arizona               DEAN HELLER, Nevada, Ranking
MICHAEL MICHAUD, Maine               BILL SHUSTER, Pennsylvania
BRAD ELLSWORTH, Indiana              STEVE KING, Iowa
HANK JOHNSON, Georgia                VERN BUCHANAN, Florida
JOE SESTAK, Pennsylvania             JIM JORDAN, Ohio

                                 ______

              Subcommittee on Contracting and Technology

                      BRUCE BRALEY, IOWA, Chairman


WILLIAM JEFFERSON, Louisiana         DAVID DAVIS, Tennessee, Ranking
HENRY CUELLAR, Texas                 ROSCOE BARTLETT, Maryland
GWEN MOORE, Wisconsin                SAM GRAVES, Missouri
YVETTE CLARKE, New York              TODD AKIN, Missouri
JOE SESTAK, Pennsylvania             MARY FALLIN, Oklahoma


                                  (ii)


















              Subcommittee on Regulations, Health Care and Trade

                   CHARLES GONZALEZ, Texas, Chairman


WILLIAM JEFFERSON, Louisiana         LYNN WESTMORELAND, Georgia, 
RICK LARSEN, Washington              Ranking
DAN LIPINSKI, Illinois               BILL SHUSTER, Pennsylvania
MELISSA BEAN, Illinois               STEVE KING, Iowa
GWEN MOORE, Wisconsin                MARILYN MUSGRAVE, Colorado
JASON ALTMIRE, Pennsylvania          MARY FALLIN, Oklahoma
JOE SESTAK, Pennsylvania             VERN BUCHANAN, Florida
                                     JIM JORDAN, Ohio

                                 ______

              Subcommittee on Urban and Rural Entrepreneurship

                 HEATH SHULER, North Carolina, Chairman


RICK LARSEN, Washington              JEFF FORTENBERRY, Nebraska, 
MICHAEL MICHAUD, Maine               Ranking
GWEN MOORE, Wisconsin                ROSCOE BARTLETT, Maryland
YVETTE CLARKE, New York              MARILYN MUSGRAVE, Colorado
BRAD ELLSWORTH, Indiana              DEAN HELLER, Nevada
HANK JOHNSON, Georgia                DAVID DAVIS, Tennessee

                                 ______

              Subcommittee on Investigations and Oversight

                 JASON ALTMIRE, PENNSYLVANIA, Chairman


JUANITA MILLENDER-McDONALD,          LOUIE GOHMERT, Texas, Ranking
California                           LYNN WESTMORELAND, Georgia
CHARLIE GONZALEZ, Texas
RAUL GRIJALVA, Arizona

                                 (iii)




















                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page

Velazquez, Hon. Nydia M..........................................     1
Chabot, Hon. Steve...............................................     2
Braley, Hon. Bruce...............................................     3

                                APPENDIX


Prepared Statements:
Velazquez, Hon. Nydia M..........................................     5
Chabot, Hon. Steve...............................................     7
Braley, Hon. Bruce...............................................     8

                                  (v)














                  FULL COMMITTEE MARKUP OF H.R. 1873,
                    "THE SMALL BUSINESS FAIRNESS IN
                            CONTRACTING ACT"

                              ----------                              


                        TUESDAY, APRIL 24, 2007

                     U.S. House of Representatives,
                               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:00 p.m., in 
Room 2360, Rayburn House Office Building, Hon. Nydia Velazquez 
[Chairwoman of the Committee] presiding.
    Present: Representatives Shuler, Gonzalez, Michaud, 
Cuellar, Braley, Sestak, Chabot, Graves, Davis, Fallin, 
Buchanan and Jordan.

           OPENING STATEMENT OF CHAIRWOMAN VELAZQUEZ

    Chairwoman Velazquez. Good morning. Before we begin, I 
would like to remember our colleague and fellow Committee 
Member Representative Millender-McDonald. So many times we 
forget the great people we work with day in and day out, and 
Juanita Millender-McDonald was one of those people. I would 
like us to recognize her and to honor her by taking a moment of 
silence.
    [A moment of silence was observed.]
    Chairwoman Velazquez. I call this markup to order on H.R. 
1873, ``The Small Business Fairness in Contracting Act''. We 
are here today to consider H.R. 1873, a bill introduced by Mr. 
Braley. The Chairman's amendment in the nature of the 
substitute will serve as the bill to be considered before the 
Committee today as base text for purposes of amendment.
    Chairwoman Velazquez. I am very proud of this bipartisan 
legislation, and I want to recognize both, Committee staff from 
the Democratic and the Republican side. We all work together. 
We have extensive discussions. And many members from both sides 
of the aisle had input into this legislation.
    Last year the Federal Government spent $340 billion on 
goods and services. Our goal is make sure small businesses get 
their fair share of Government contracts.
    In recent years, this Committee has held a number of 
hearings on federal procurement. During this Congress we have 
already held three hearings on the issue and we continue to 
find the same problems over and over again.
    Although the government is spending more, fewer contracts 
are being awarded. Individual contracts are being bundled 
together into mega-contracts. While this may be more convenient 
for the contracting officers, barring small businesses from the 
marketplace reduces competition. This often results in higher 
costs to the taxpayers and decreased value for the government.
    Another problem is that federal agencies are not taking 
small businesses' requirements seriously. Small business 
participation accomplishments reported by agencies is nowhere 
near the maximum extent possible, disappointing levels of small 
businesses participation are often inflated due to misquoted 
data. H.R. 1873 addresses all of these problems.
    The Small Business Fairness in Contracting Act will help to 
ensure that mega-contracts are being identified and subjected 
to review. The bill expands the definition of contract bundling 
and makes the appeals process more accessible by allowing trade 
associations to advocate on behalf of their members. The 
definition will also be expanded to include construction on new 
work.
    In addition, the bill provides for third party review of 
bundling decisions, which will provide a neutral forum for 
resolution. The Manager's Amendment includes a few changes to 
insure the definition is codified so that only contracts that 
are likely to be bundled have to be reviewed. It also provides 
that the legislation would be implemented into the rules the 
contracting officers consult when making awards.
    H.R. 1873 will provide more opportunities for small 
businesses, like raising the small business contracting goal to 
30 percent and expand it to overseas contracts.
    Finally, The Small Business Fairness in Contracting Act 
will ensure that only small business contracts are being 
counted toward small-business achievement. H.R. 1873 aims to 
clean up federal contracting databases so that when agencies 
release the small business accomplishments their numbers are 
accurate.
    Right now, large businesses are identifying themselves as 
small in the central contract registry. Government agencies are 
recording large-business contracts as small business awards in 
the federal procurement data system. When contracts are awarded 
to large businesses and counted toward small business 
achievements, agencies have less incentive to create additional 
small business opportunity.
    I urge you all to consider these barriers that small 
businesses face and offer your support to this important 
legislation. I now yield to Mr. Chabot for his opening 
statement.

                OPENING STATEMENT OF MR. CHABOT

    Mr. Chabot. Thank you, Madam Chair. And I want to thank 
you, Madam, for holding this markup today and for pushing for 
this important legislation.
    H.R. 1873, The Small Business Fairness in Contracting Act 
in my view is a good bill that should be reported out of this 
Committee favorably. This is important legislation, and it 
would expand small-business opportunities in the federal 
marketplace and take necessary steps to help ensure that 
federal agencies meet their small business procurement 
requirements.
    Specifically, H.R. 1873 would expand the definition of 
contract bundling. Contract bundling remains a problem, and 
this bill would require additional information from agencies to 
justify bundling. The bill would also enhance the review 
process agencies must undergo when issuing a bundling decision.
    This bill would also increase the government-wide small-
business goal from 23 percent--lower than the government-wide 
goal. It will also require the SBA to establish standards for 
reviewing subcontracting plans. And finally the bill will 
strengthen the review and reporting process to better identify 
who is a small business and who is not.
    The Small Business Fairness in Contracting Act makes 
important changes to help small businesses in the federal 
procurement process, and I urge its adoption.
    Once again, I thank the chairwoman for her continued 
leadership on this issue and yield back the balance of my time.
    Chairwoman Velazquez. I now yield to Mr. Braley for his 
statement on this legislation.

                OPENING STATEMENT OF MR. BRALEY

    Mr. Braley. Thank you, Madam Chairwoman, for holding this 
markup and thank you for those remarks, Ranking Member Chabot. 
I really appreciate your support. I also want to echo your 
condolences to the family, friends and colleagues of 
Congresswoman Millender-McDonald. She will be sorely missed in 
this Congress.
    Last week, the Small Business Committee held a hearing on 
expanding the small business's access to federal contracts. I 
was pleased we were able to have a meaningful discussion, 
hearing from small-business owners and representatives that 
want a fair opportunity to compete for and to win federal 
contracts.
    Over the past five years, government agencies have greatly 
increased contract bundling, often combining work small 
businesses could perform into giant packages that exceed small 
firms' ability to compete for the work. During the same time, 
total government contracting has increased by 60 percent while 
small-business contracts have decreased by 55 percent.
    Last Friday President Bush proclaimed this week as National 
Small Business Week. That is why it's so appropriate that today 
we'll be marking up H.R. 1873, The Small Business Fairness in 
Contracting Act, sending a message to small businesses that 
this Committee is serious about leveling the playing field for 
them by improving their opportunities to compete for federal 
contracts.
    Small businesses are the number one job creators in this 
country, and we need to ensure that this engine not only 
remains healthy but has the support it needs to grow. It's 
essential to help remove the barriers blocking small businesses 
from entering the nearly $400 billion per year federal 
marketplace.
    As I mentioned in the hearing last week, Iowa ranks near 
the bottom in terms of government contracting dollars awarded 
to small businesses, yet these small businesses play such an 
important role in all of our districts that allowing them a 
fair opportunity to bid on federal contracts will bring 
economic vitality to our respective towns and cities.
    I'm particularly pleased that this bill has received such 
strong bipartisan support from members of the Small Business 
Committee. And I thank you, Madam Chairwoman, and all of my 
colleagues who join me in standing up for the interests of 
small businesses.
    Chairwoman Velazquez. Thank you, and it was important work 
that you did on this legislation.
    Are there any other members who wish to be recognized on 
this bill?
    [No response.]
    Chairwoman Velazquez. The bill shall now be considered open 
for amendment at any time. Does any member seek recognition for 
the purpose of offering an amendment?
    Seeing no amendments, the question is on reporting H.R. 
1873 with amendment. All those in favor say aye.
    [Chorus of ayes.]
    Chairman Velazquez. Those opposed, say no.
    [No response.]
    Chairman Velazquez. The ayes have it. The bill is adopted 
and reported. I ask unanimous consent that the clerk be 
authorized to correct section numbers, punctuation and cross 
references and to make all the necessary technical and 
conforming corrections. Without objection, so ordered.
    That concludes the markup, and we are now adjourned. Thank 
you.
    [Whereupon, at 2:20 p.m., the Committee was adjourned.]



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