[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

[[Page H8807]]

     (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

[[Page H8808]]

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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