[Congressional Record (Bound Edition), Volume 162 (2016), Part 4]
[House]
[Pages 4544-4546]
[From the U.S. Government Publishing Office, www.gpo.gov]




         SERVICE PROVIDER OPPORTUNITY CLARIFICATION ACT OF 2015

  Mr. CHABOT. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 4284) to require the Administrator of the Small Business 
Administration to issue regulations providing examples of a failure to 
comply in good faith with the requirements of prime contractors with 
respect to subcontracting plans.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 4284

       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 ``Service Provider Opportunity 
     Clarification Act of 2015''.

     SEC. 2. GOOD FAITH COMPLIANCE WITH THE REQUIREMENTS OF PRIME 
                   CONTRACTORS WITH RESPECT TO SUBCONTRACTING 
                   PLANS.

       Not later than 270 days after the date of enactment of this 
     Act, the Administrator of the Small Business Administration 
     shall issue regulations providing examples of activities that 
     would be considered a failure to make a good faith effort to 
     comply with the requirements imposed on an entity (other than 
     a small business concern as defined under section 3 of the 
     Small Business Act (15 U.S.C. 632)) that is awarded a prime 
     contract containing the clauses required under paragraphs (4) 
     or (5) of section 8(d) of the Small Business Act (15 U.S.C. 
     637(d)).

  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 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, the Small Business Act requires that when large 
businesses receive Federal prime contracts, they must negotiate a 
subcontracting plan outlining who they intend to use as small business 
subcontractors. That

[[Page 4545]]

plan becomes part of the contract, and the results are supposed to be 
part of the past performance evaluation for the prime contractor.
  Indeed, failure to make a good faith effort to comply with the 
agreed-upon plan can trigger liquidated damages. Even though this has 
been the law for 38 years, the Small Business Administration has never 
explained what it means to fail to make a good faith effort to comply 
with a subcontracting plan.
  This failure is a double-edged sword. For bad actors, it lets them 
off the hook. For good actors, it leaves ambiguity about what they are 
expected to do. It also forces companies that take their compliance 
obligations seriously to compete against bad actors who never even 
report the results of their plans.
  Failure to report is a real problem. As many as 40 percent of the 
companies with subcontracting plans don't report any results. As a 
result, subcontracting dollars with small businesses are at the lowest 
point in over 40 years.
  My colleague, the gentleman from Florida (Mr. Curbelo), who chairs 
the Subcommittee on Agriculture, Energy and Trade of the Committee on 
Small Business has a commonsense solution for this problem. H.R. 4284 
requires the Small Business Administration to explain what it means to 
fail to make a good faith effort to comply with the plan. It further 
explains that failing to meet the most basic obligation of the contract 
term--reporting back on results--cannot be good faith.
  The beauty of Mr. Curbelo's legislation is that it solves a problem 
without placing any new burdens on compliant contractors while still 
ensuring that the American taxpayer gets the benefits anticipated in 
the contract.
  This legislation was included as part of a larger bill that passed 
the Committee on Small Business in January, and it received bipartisan 
support.
  I urge my colleagues to support and pass H.R. 4284.
  Mr. Speaker, I reserve the balance of my time.
  Ms. VELAZQUEZ. Mr. Speaker, I yield myself such time as I may 
consume.
  I rise in support of H.R. 4284, the Service Provider Opportunity 
Clarification Act of 2015. It has long been the policy of Congress to 
ensure that a fair proportion of Federal contracts, prime contracts or 
subcontracts, be awarded to small businesses. In some areas there has 
been success in advancing this goal. In fiscal year 2015, small prime 
contractors received over $90 billion, amounting to over 25 percent of 
contracting dollars. As a result, the government, again, met its prime 
small business contracting goal.
  However, prime contracting is only one part of the equation. For many 
small businesses, subcontracts are just as vital. These opportunities 
serve as an entry point for firms to the Federal marketplace.
  Subcontracts are a way for firms to increase their capacity and 
prepare to eventually become prime contractors. Subcontracts also help 
entrepreneurs gain valuable insight into what is required when the 
Federal Government is your client.
  Recognizing the importance of subcontracts, the Small Business Act 
requires that prime contractors submit subcontracting plans for 
contracts valued at certain levels and SBA to set goals for 
subcontracting dollars awarded to small businesses.

                              {time}  1500

  Yet, throughout the course of this Congress, our committee has heard 
testimony of countless witnesses indicating that not only are prime 
contractors not reporting their subcontracting dollars, but also that 
contracting officers are not holding these firms accountable for their 
subcontracting goals.
  Even more egregious is the fact that some primes have been awarded 
contracts without a subcontracting plan at all. This is simply 
unacceptable.
  The Service Provider Opportunity Clarification Act of 2015, 
introduced by Mr. Curbelo and Ms. Clarke, seeks to rectify this problem 
by making the failure to submit the required subcontracting report a 
material breach, thus providing remedial options to agencies.
  Procurement center representatives will also be allowed to review 
subcontracting plans and place a 30-day hold on the plan if they found 
that it did not adequately provide small businesses subcontracting 
opportunities.
  Additionally, the bill requires that SBA update its regulations to 
give contracting personnel better examples of when prime contractors 
have acted in good faith compliance with the subcontracting plans.
  These provisions will provide necessary oversight to ensure that 
prime contractors are adhering to subcontracting regulations and that 
small businesses are afforded maximum opportunity to participate in the 
Federal marketplace as a subcontractor.
  I, therefore, ask my fellow Members to support this bill.
  I reserve the balance of my time.
  Mr. CHABOT. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Florida (Mr. Curbelo), who is the chairman of the 
Subcommittee on Agriculture, Energy, and Trade.
  Mr. CURBELO of Florida. Mr. Speaker, last year I was proud to 
introduce the Small Entrepreneur Subcontracting Opportunities Act, or 
the SESO Act.
  The bill would hold agency officials accountable for small-business 
subcontracting during their annual performance evaluations.
  Subcontracting is an important entry point for new Federal 
contractors. If we have fewer subcontractors today, we will have fewer 
prime contractors tomorrow.
  In turn, this would mean fewer small suppliers, manufacturers, and 
innovators and higher costs to the Federal Government or the taxpayers. 
We must ensure a healthy industrial base at all levels in our country.
  I would like to thank Small Business Committee Chairman Chabot and 
Armed Services Committee Chairman Thornberry for supporting that 
important language to hold agency managers accountable for meeting 
subcontracting goals included in the Defense Authorization Act that was 
signed into law.
  However, large contractors must also be held accountable for meeting 
subcontracting goals. While the vast majority of contractors honor 
these goals, some do not.
  Currently, the Small Business Act holds bad actors accountable by 
imposing liquidated damages if prime contractors fail to make a good 
faith effort to meet the goals.
  However, SBA regulations only offer examples of what they are 
supposed to do, not what would constitute a violation.
  Consequently, the last time the law was enforced was in 1982. Because 
of this ambiguity, bad actors are able to continue receiving Federal 
contracts.
  My legislation, H.R. 4284, the Service Provider Opportunity 
Clarification Act, or the SPOC Act, simply requires the SBA to issue 
rules explaining what a failure to act in good faith means, ensuring 
transparency and accountability in the subcontracting process.
  I want to thank Congresswoman Yvette Clarke for her leadership 
promoting small-business participation in the procurement process and 
for cosponsoring this bipartisan effort.
  I also thank chairman Steve Chabot for his leadership and Ranking 
Member Nydia Velazquez.
  I thank the chairman for being an original cosponsor of this bill and 
for being a strong advocate for our Nation's emerging entrepreneurs. We 
must ensure that our local businesses have access to Federal contracts 
and subcontracts.
  It is not just about helping the entrepreneurs. It is also about 
helping the workers they employ and keeping our community strong and 
prosperous. We should never forget the vital role that our local 
businesses play in our neighborhoods.
  The reason small business is important, Mr. Speaker, is because small 
businesses have access and know the people who are in most need of jobs 
and opportunities.
  Think of the immigrant family that recently arrived in this country 
and is hungry for opportunities to work or

[[Page 4546]]

the kid who had to drop out of college to help his family.
  It is these small firms, these small entrepreneurs, that have access 
to these needy people and can really help them rise up and give them 
these opportunities to work and prosper.
  So I thank my colleagues for their support.
  I urge passage of H.R. 4284.
  Ms. VELAZQUEZ. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, small firms continue expressing concern that it is 
increasingly difficult to find subcontracting opportunities as primes 
take on more of the work themselves. Agencies and contracting officers 
must do better to ensure that small businesses have access to these 
opportunities.
  The government-wide subcontracting goal has continually been lowered, 
from 36 percent in the 2012 and 2013 fiscal years, to just over 34 
percent in fiscal year 2014. Despite this decrease, the goal is not 
being met, with only 33 percent of subcontracting dollars awarded to 
small firms.
  But even these numbers are deceiving, as the percentage is based only 
on the subcontracting dollars reported. It is estimated that as many as 
40 percent of prime contractors are not submitting subcontracting 
reports.
  The changes in H.R. 4284 will ensure that this no longer occurs and 
that there are real consequences to those companies that try and evade 
their subcontracting obligations.
  I once again urge my colleagues to support this measure.
  I yield back the balance of my time.
  Mr. CHABOT. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, in closing, clarifying an ambiguous provision in law in 
a way that promotes small-business participation without creating any 
new burdens on contractors is a win-win.
  This provision helps contracting officers and large businesses better 
understand the law, aids small businesses looking to be subcontractors, 
and improves the quality of the data we use to make policy decisions.
  This bill deserves the support of the House. I urge my colleagues to 
vote to suspend the rules and pass H.R. 4284.
  I thank the ranking member of the Small Business Committee, Ms. 
Velazquez, for working in a bipartisan manner on this bill, as we 
always try to do in the committee. I think we almost always achieve 
that goal. So I want to thank her for that.
  I want to thank Mr. Curbelo again for his leadership. I thank Ms. 
Clarke as well for working in bipartisan manner on this legislation.
  I yield back the balance of my time.
  The SPEAKER pro tempore. 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. 4284.
  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.

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