[Congressional Record Volume 164, Number 158 (Tuesday, September 25, 2018)]
[House]
[Pages H8806-H8808]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
INCENTIVIZING FAIRNESS IN SUBCONTRACTING ACT
Mr. CHABOT. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 6367) to amend the Small Business Act to specify what credit
is given for certain subcontractors and to provide a dispute process
for non-payment to subcontractors, and for other purposes, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 6367
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Incentivizing Fairness in
Subcontracting Act''.
SEC. 2. SMALL BUSINESS LOWER-TIER SUBCONTRACTING.
Section 8(d) of the Small Business Act (15 U.S.C. 637(d))
is amended--
(1) by amending paragraph (16) to read as follows:
``(16) Credit for certain small business concern
subcontractors.--
``(A) In general.--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 Federal agency, the prime contractor may
elect to 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 Federal agencies, or to one
contract with more than one Federal agency, the prime
contractor may only count first tier subcontractors that are
small business concerns.
``(B) Collection and review of data on subcontracting
plans.--The head of each contracting agency shall ensure
that--
``(i) 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
``(ii) the agency periodically reviews data collected and
reported pursuant to subparagraph
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(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.
``(C) Rule of construction.--Nothing in this paragraph
shall permit lower-tier subcontracting goaling requirements
of prime contractors that are eligible to receive lower-tier
subcontracting credit under this paragraph.''; and
(2) by adding at the end the following:
``(18) Dispute process for non-payment to subcontractors.--
``(A) Notice to agency.--With respect to a contract with a
Federal agency, a subcontractor of a prime contractor on such
contract may, if the subcontractor has not received payment
for work performed within 90 days of the completion of such
work, notify the Office of Small and Disadvantaged Business
Utilization (`OSDBU') of the Federal agency and the prime
contractor of such lack of payment, if such notice is
provided to the agency within the 15-day period following the
end of such 90 days.
``(B) Agency determination.--
``(i) In general.--Upon receipt of a notice described under
subparagraph (A), the OSDBU shall verify whether such lack of
payment has occurred and determine whether such lack of
payment is due to an undue restriction placed on the prime
contractor by an action of the Federal agency.
``(ii) Response during determination.--During the period in
which the OSDBU is making the determination under clause (i),
the prime contractor may respond to both the subcontractor
and the OSDBU with relevant verifying documentation to either
prove payment or allowable status of nonpayment.
``(C) Cure period.--If the OSDBU verifies the lack of
payment under subparagraph (B) and determines that such lack
of payment is not due to an action of the Federal agency, the
OSDBU shall notify the prime contractor and provide the prime
contractor with a 15-day period in which the prime contractor
may make the payment owed to the subcontractor.
``(D) Result of nonpayment.--If, after notifying the prime
contractor under subparagraph (C), the OSDBU determines that
the prime contractor has not fully paid the amount owed
within the 15-day cure period described under subparagraph
(C), the OSDBU shall ensure that such failure to pay is
reflected in the Contractor Performance Assessment Reporting
system.''.
SEC. 3. MAINTENANCE OF RECORDS WITH RESPECT TO CREDIT UNDER A
SUBCONTRACTING PLAN.
Section 8(d)(6) of the Small Business Act (15 U.S.C.
637(d)(6)) is amended--
(1) by redesignating subparagraphs (G) and (H) as
subparagraphs (H) and (I), respectively; and
(2) by inserting after subparagraph (F) the following:
``(G) a recitation of the types of records the successful
offeror or bidder will maintain to demonstrate that
procedures have been adopted to substantiate the credit the
successful offeror or bidder will elect to receive under
paragraph (16)(A)(i);''.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Ohio (Mr. Chabot) and the gentlewoman from New York (Ms. Velazquez)
each will control 20 minutes.
The Chair recognizes the gentleman from Ohio.
General Leave
Mr. CHABOT. Mr. Speaker, I ask unanimous consent that all Members may
have 5 legislative days in which to revise and extend their remarks and
include extraneous materials on the bill under consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Ohio?
There was no objection.
Mr. CHABOT. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, before we begin discussion of this legislation, I would
like to thank Mr. Lawson from Florida and Mr. Kelly from Mississippi
for their leadership in addressing an issue that is a cause of great
concern for small subcontractors; namely, prime contractor compliance
with their subcontracting plans.
Large prime contractors have a statutory obligation to develop and
submit a subcontracting plan as part of their bid and proposal package.
In this plan, prime contractors are required to outline their intention
to award a certain percentage of subcontracting dollars to small
businesses.
Unfortunately, it has been a challenge to ensure that prime
contractors are held accountable to these plans. Recently, the
Department of Defense Inspector General's Office issued a report that
found post-award compliance activities, specifically the oversight of
subcontracting plans, is not a high priority for contracting officers.
This finding is not limited to the military and can be generalized to
apply across the Federal Government.
As the number of prime contracts suitable for small business
continues to decline, subcontracting becomes increasingly important for
small contractors trying to gain a foothold in the Federal market.
H.R. 6367, as amended, proposes to strengthen subcontracting measures
by requiring large primes to maintain records proving they are
subcontracting to small businesses, as required by their subcontracting
plans.
Furthermore, this bill establishes an alternative avenue of redress
for small subcontractors, allowing them to engage the appropriate
Federal agency's small business advocate office if they believe payment
is being withheld unfairly by a large prime contractor.
Because of these important measures undertaken to protect small
contractors, I urge my colleagues to support H.R. 6367, as amended. I
also, again, thank my colleagues for their leadership in this measure,
and I reserve the balance of my time.
Ms. VELAZQUEZ. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I rise in support of H.R. 6367, the Incentivizing
Fairness in Subcontracting Act of 2018.
Mr. Speaker, in fiscal year 2017, the Federal Government purchased
goods and services worth over $508 billion through over 22 million
contract actions. Yet, not all this money stayed with the original
prime contractor and, instead, trickles down to subcontractors.
Subcontracts are growing in importance as an avenue for small
businesses to work with the government, so it is important that
barriers to entry are reduced. By improving the tools that exist for
small businesses to become subcontractors, today's measures will draw
in more small businesses that are not regular government contractors.
This is a critical step to expanding the industrial base and
including more small firms. Most importantly, it ensures more small
contractors have just recourse through the Office of Small and
Disadvantaged Business Utilization if payment is not received within 90
days of completion. Timely payment protects small contractors who do
not have the overhead margins to continue operating without being paid.
Mr. Speaker, I urge Members to support this legislation, and I
reserve the balance of my time.
Mr. CHABOT. Mr. Speaker, I have no further speakers on this
particular legislation, and I reserve the balance of my time.
Ms. VELAZQUEZ. Mr. Speaker, I yield 5 minutes to the gentleman from
Florida (Mr. Lawson), the ranking member of the Subcommittee on Health
and Technology and sponsor of the bill.
Mr. LAWSON of Florida. Mr. Speaker, I rise to support my bill, H.R.
6367, the Incentivizing Fairness in Subcontracting Act of 2018.
This bill will clarify what credit is given for certain
subcontractors and to provide a dispute process for nonpayment to
subcontractors. Simply put, this bill will help contractors receive the
credit they need to satisfy Federal requirements.
Small businesses put in a tremendous amount of effort to receive
Federal contracting jobs. There are tons of requirements, paperwork,
and costs that go into applying and being awarded these opportunities.
Unfortunately, even after a Federal contract is awarded, small
businesses still struggle. Whether it is a delay in payment due to the
lack of an administrative dispute process or not being able to count
lower tier subcontractors toward goals, many contractors face obstacles
during the implementation of their contracts, creating the need for
safe harbors to guarantee that they can move forward in the most
effective and efficient manner.
{time} 1730
H.R. 6367 will do just that. This is a bill that provides the clarity
and resources needed to help contractors work at full capacity.
This bill is endorsed by the National Electrical Contractors
Association, an association whose 4,000 members are 85 percent small
businesses. NECA is the voice of about a $160 billion industry
responsible for bringing electrical power, lighting, and communication
to buildings and communities across the United States.
I am proud to work with Ranking Member Velazquez, the chairman, and
the Congressman from Mississippi (Mr. Kelly). This is an important step
in
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guaranteeing that our contractors are treated fairly when carrying out
their contracts.
Mr. CHABOT. Mr. Speaker, I continue to reserve the balance of my
time.
Ms. VELAZQUEZ. Mr. Speaker, I yield myself such time as I may
consume, and I am prepared to close.
Mr. Speaker, I thank the gentleman from Florida (Mr. Lawson) and his
cosponsor, Mr. Kelly, for introducing this important legislation. H.R.
6367 protects our small contractors by updating the subcontracting
goaling regime through increased flexibility and accountability.
Establishing incentives to count low-tier subcontracting awards and a
dispute process for subcontractors to utilize in the event of
nonpayment ensures a healthy Federal procurement marketplace.
Today's legislation spreads the economic power of Federal procurement
to more companies and the communities they are located.
Mr. Speaker, I urge Members to support this bill, and I yield back
the balance of my time.
Mr. CHABOT. Mr. Speaker, I yield myself such time as I may consume to
close.
Mr. Speaker, as we have discussed, there are less prime contracting
opportunities that are available for small businesses nowadays. It is
in the subcontracting arena that is often the best and only way for a
small contractor to engage with the Federal Government, but the lack of
accountability and Federal oversight harms small subcontractors that
rely on these opportunities to survive.
This is a lose-lose situation for both America's small businesses
seeking to do work for the Federal Government and for the government
itself. We want our citizens to get the best bang for their buck, and
the more competition there is, the better it is for all of us. The
greater oversight reforms in this legislation take a big step in
ensuring small firms are protected.
I once again thank the gentleman from Florida (Mr. Lawson) for his
leadership on this measure, and I urge my colleagues to support this
bipartisan, commonsense piece of legislation.
Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore (Mr. Palmer). The question is on the motion
offered by the gentleman from Ohio (Mr. Chabot) that the House suspend
the rules and pass the bill, H.R. 6367, as amended.
The question was taken; and (two-thirds being in the affirmative) the
rules were suspended and the bill, as amended, was passed.
A motion to reconsider was laid on the table.
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