[Congressional Record Volume 165, Number 3 (Tuesday, January 8, 2019)]
[House]
[Pages H271-H273]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              INCENTIVIZING FAIRNESS IN SUBCONTRACTING ACT

  Ms. VELAZQUEZ. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 227) 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.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                                H.R. 227

       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''.

[[Page H272]]

  


     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 total dollar value 
     of any subcontracts 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 receive credit for 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 (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 be construed to allow a Federal agency to establish a 
     goaling requirement for lower-tier subcontractors of a prime 
     contractor that is 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 performance on such contract within 30 days of the 
     completion of such performance, 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 30 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 (or any successor 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 conforming the 
     margins accordingly); 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 gentlewoman from 
New York (Ms. Velazquez) and the gentleman from Ohio (Mr. Chabot) each 
will control 20 minutes.
  The Chair recognizes the gentlewoman from New York.


                             General Leave

  Ms. VELAZQUEZ. 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 material on the measure under consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentlewoman from New York?
  There was no objection.
  Ms. VELAZQUEZ. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise in support of H.R. 227, the Incentivizing 
Fairness in Subcontracting Act.
  In fiscal year 2017, the Federal Government purchased goods and 
services worth over $508 billion through over 22 million contract 
actions. Unfortunately, not all this money remained with the original 
prime contractor and, instead, trickled down to subcontractors.
  Subcontractors 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. Today's bill does just that by helping 
contractors get the credit they need to meet Federal requirements, 
while also creating a dispute process for nonpayment--a recurring 
problem for those working with the Federal Government.
  By improving the tools that exist for small businesses to become 
subcontractors, today's measure 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 30 days of completion. 
Timely payment protects small contractors who do not have the overhead 
margins to continue operating without being paid.
  Today's bill is endorsed by the U.S. Chamber of Commerce, the 
National Small Business Association, and the National Electrical 
Contractors Association.
  Mr. Speaker, I urge Members to support this legislation, and I 
reserve the balance of my time.
  Mr. CHABOT. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in support of H.R. 227, the Incentivizing 
Fairness in Subcontracting Act.
  I, again, would like to thank Chairwoman Velazquez as well as the 
gentleman from Mississippi, Trent Kelly, for their leadership on this 
important bipartisan legislation.
  As this committee has established time and again, small businesses 
play a vital role in the health and strength of the Federal 
marketplace. A vibrant small business community promotes innovation and 
competition, which results in better quality products and services 
provided at a lower cost to the taxpayer. Therefore, it is critically 
important that strong incentives exist to entice new small businesses 
to consider doing business in the Federal space.
  One of the primary methods small businesses use to gain a foothold in 
Federal contracting is through subcontracting. As such, they rely on 
large prime contractors to make these opportunities available and to 
receive payment in a timely manner. This often creates an imbalance of 
power with the large prime contractor having the advantage.
  This bill provides small businesses with more leverage by 
establishing a new measure of accountability on large prime 
contractors. Small subcontractors may seek redress with the Federal 
agency small business advocate to resolve any nonpayment issues 
stemming from the large prime contractor. Unresolved payment issues 
will reflect poorly on the prime contractor's record, which will impact 
the prime contractor's ability to win future contracts.
  This bill establishes an important safeguard to discourage large 
prime contractors from taking advantage of their small subcontractors. 
The result will be a stronger and healthier industrial base, which is 
good for government. It is also, importantly, good for the taxpayer. I 
urge my colleagues to support this commonsense legislation.
  Mr. Speaker, in closing, I want to thank the gentlewoman, again, for 
her leadership on this, as well as Mr. Kelly.
  As we have discussed, this legislation provides an important 
safeguard to discourage large prime contractors from taking advantage 
of their small subcontractors. Given how important

[[Page H273]]

small subcontractors are to the Federal procurement process, it is 
critical we ensure that they have an adequate system of redress should 
they have legitimate issues with the prime contractors. Once again, we 
are looking out for the little guy, which is what this committee does, 
and I think we all really appreciate that.
  Mr. Speaker, I urge my colleagues to support this bipartisan 
legislation, and I yield back the balance of my time.
  Ms. VELAZQUEZ. Mr. Speaker, I yield myself the balance of my time.
  Mr. Speaker, I am pleased to introduce this piece of legislation 
which 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 where they are located.
  I want to thank the gentleman from Mississippi (Mr. Kelly) for 
cosponsoring this critical legislation and for all his work on this 
issue while serving on the Small Business Committee, and I would like 
to also take this opportunity to thank the ranking member.
  Mr. Speaker, I urge Members to support this bill, and I yield back 
the balance of my time.
  Ms. JACKSON LEE. Mr. Speaker, I rise in support of H.R. 227, which 
amends the Small Business Act to specify what credit is given for 
certain subcontractors and to provide a dispute process for non-payment 
to subcontractors.
  Mr. Speaker, it is of the utmost importance that we pass this 
legislation to ensure subcontractors receive the credit and payment for 
performance that they have earned.
  Between 2010 and 2016, Texas' population grew at the second-greatest 
rate in the country, accompanied by increased demand for residential, 
retail and commercial space.
  With this increased demand came an increase in small businesses and 
the need for subcontractors across the state.
  This fact alone explains why H.R. 227 is so important not only to 
small businesses throughout the country but specifically the small 
businesses and subcontractors in Texas that deserve compensation for 
their performance in a timely manner.
  The Houston Chapter of the American Subcontractors Association (ASA-
HC) is a collective voice for a diverse membership that was created in 
order to ensure quality, safety and ethics in construction trades.
  ASA-HC advocates for legislative reform and provides educational 
opportunities for the subcontracting community.
  Since ASA-HC's founding in 1966, more than 2,500 member companies 
throughout the United States, and more than 160 members in Houston 
benefit from the advocacy ASA offers to its members.
  These hard-working Americans deserve nothing less than our maximal 
support for this bill.
  Not only do these Americans deserve our support for H.R. 227, they 
deserve our maximum efforts to end the government shutdown.
  Thousands of subcontractors whose pay comes from federal contracts 
have little hope of recouping the pay they lost when the government is 
not operating.
  Julie Burr, a single mom from Kansas City, struggles to support her 
family during this shutdown.
  She has been out of work and cannot receive pay for the two weeks 
prior to the shutdown because there is no one to process her time 
sheet.
  She has taken extra shifts in her side job as a seasonal employee at 
Barnes and Noble, but it only makes up 25 percent of what her normal 
pay would be and she has had to ask for an extension on her rent 
payment, which was due on the first of the month.
  Ethan James, a 21 year old minimum-wage contractor can only 
realistically miss three to four days of work before his standard of 
living is compromised.
  He now risks missing his rent payment because he is not receiving the 
checks he depends on to sustain himself.
  These hardworking Americans deserve more, we cannot afford to drag 
our feet on such an important issue.
  I urge my colleagues to join me in voting for H.R. 227 and standing 
true to our nation's commitment to supporting and protecting small 
businesses and subcontractors.
  I include in the Record a new article entitled ``During Shutdown, 
Janitors, Security Guards and other Federal Contractors receive no back 
pay.''

                    [From ABC News, January 2, 2019]

     During Shutdown, Janitors, Security Guards, and Other Federal 
                    Contractors Receive No Back Pay

                 (By Stephanie Ebbs and Anne Flaherty)

       While hundreds of thousands of federal workers will have to 
     wait for back pay after the government shutdown ends, 
     thousands more whose pay comes from federal contracts have 
     little hope of recouping the pay they lose when the 
     government isn't operating. Some contractors are turning to 
     other means to make up for the lost income, like taking extra 
     shifts at a second job.
       Julie Burr, an administrative assistant for the Department 
     of Transportation in Kansas City, said she doesn't expect any 
     compensation for the time she's been out of work during the 
     shutdown and that she can't even get paid for the two weeks 
     before it started because there's no one to process her time 
     sheet.
       ``I'm just trying to take one day at a time honestly,'' 
     Burr said in a phone interview. ``I keep turning on the news 
     and think maybe today's the day something will happen.''
       She said she's taken extra shifts in her side job as a 
     seasonal employee at Barnes and Noble but it only makes up 25 
     percent of what her normal pay would be and she's had to ask 
     for an extension on her rent payment, which was due on the 
     first of the month.
       Burr even set up a GoFundMe page to try and help with some 
     of the expenses and is concerned that even if she can set up 
     a payment plan it could hurt her credit score.
       ``I'm a single mom . . . we aren't a two income family or 
     anything. It's just me, and I'm kind of trying to make things 
     meet and if it comes to the point of selling items in the 
     house I'll do that,'' she said.
       During previous government shutdowns, Congress has passed 
     resolutions approving back pay for most federal workers. But 
     contract workers like custodians and security officers, whose 
     hourly wages are funded by private companies, don't get paid 
     unless they work.
       According to 32BJ SEIU, that means sudden unemployment with 
     no end in sight for the 370 Smithsonian security officers in 
     Washington D.C. protecting the popular museums--which house 
     everything from Judy Garland's ruby red slippers from ``The 
     Wizard of Oz'' to Charles Lindbergh's Spirit of St. Louis 
     airplane--as well as the 50 security officers who work for 
     Smithsonian museums in New York.
       32BJ SEIU is a large property service workers' union that 
     estimates some 2,000 of its members are facing potential 
     paycheck disruptions as a result of the shutdown, including 
     some 70 custodians at the Agriculture Department alone.
       Most of those workers aren't eligible for back pay because 
     they are paid by private companies with government contracts 
     instead of being government employees.
       It's a particularly ironic twist for federal workers caught 
     in the showdown between President Donald Trump and 
     congressional Democrats over funding for a border wall.
       The union said that almost of all of its members are 
     African-American or Latino and many don't support Trump's 
     efforts to build a border wall.
       ``A true focus on America would mean support for the 
     hardworking men and women who keep our government safe, clean 
     and running every day while supporting their own families and 
     communities across the country,'' said Jaime Contreras, a 
     32BJ SEIU vice president, in a statement.
       ``I wish everybody would just sit down and come to a 
     compromise,'' she said.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentlewoman from New York (Ms. Velazquez) that the House suspend the 
rules and pass the bill, H.R. 227.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill was passed.
  A motion to reconsider was laid on the table.

                          ____________________