[House Report 112-726]
[From the U.S. Government Publishing Office]
112th Congress Rept. 112-726
HOUSE OF REPRESENTATIVES
2d Session Part 1
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SMALL BUSINESS PROCUREMENT IMPROVEMENT ACT OF 2012
_______
December 21, 2012.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Graves of Missouri, from the Committee on Small Business, submitted
the following
R E P O R T
[To accompany H.R. 4118]
The Committee on Small Business, to whom was referred the
bill (H.R. 4118) to amend the Small Business Act to provide for
increased small business participation in multiple award
contracts, and for other purposes, having considered the same,
report favorably thereon without amendment and recommend that
the bill do pass.
CONTENTS
Page
I. Purpose of the Bill and Summary.................................1
II. Background and the Need for Legislation.........................2
III. Hearings........................................................4
IV. Committee Consideration.........................................4
V. Committee Votes.................................................4
VI. Section-by-Section Analysis of H.R. 4118........................4
VII. Unfunded Mandates...............................................5
VIII. New Budget Authority, Entitlement Authority, and Tax Expenditure5
IX. Oversight Findings..............................................6
X. Statement of Constitutional Authority...........................6
XI. Congressional Accountability Act................................6
XII. Federal Advisory Committee Statement............................6
XIII. Statement of No Earmarks........................................6
XIV. Performance Goals and Objectives................................6
XV. Changes in Existing Law Made by the Bill, as Reported...........7
I. Purpose and Bill Summary
The purpose of H.R. 4118, the ``Small Business Procurement
Improvement Act of 2012,'' is to amend the Small Business Act
(the Act)\1\ to address a miscellany of important small
business procurements policy matters. First, the legislation
seeks to improve participation by small businesses in multiple
award contracts (MACs) by encouraging outreach and mandating
that the President establish government-wide goals for small
business participation in such contracting vehicles. Second,
the bill raises the small business reserve to $200,000 and
makes it applicable to MACs. Finally, the legislation expands
the Federal Acquisition Regulatory (FAR) Council to include the
Administrator of the Small Business Administration (SBA).
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\1\Originally, title II of the Act of July 30, 1953, c. 282, 67
Stat. 232 was designated as the Small Business Act of 1953. A plethora
of amendments in subsequent Congresses led to a rewrite in 1958. Pub.
L. No. 85-536, Sec. 1, 72m Stat. 384 (1958). The Act is codified at 15
U.S.C. Sec. Sec. 631-657q.
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II. Need for Legislation
The Act iterates Congress's belief in the importance of
small business participation in federal prime contracts and the
resultant subcontracts. Specifically, the Act directs that:
To effectuate the purpose of this Act, small-business
concerns within the meaning of this Act shall receive
any award or contract or any part thereof, and be
awarded any contract for the sale of Government
property, as to which it is determined by the
Administration and the contracting procurement or
disposal agency (1) to be in the interest of
maintaining or mobilizing the Nation's full productive
capacity, (2) to be in the interest of war or national
defense programs, (3) to in the interest of assuring
that a fair proportion of the total purchase and
contracts for property and services for the Government
in each industry category are placed with small-
business concerns, or (4) to be in the interest of
assuring that a fair proportion of the total sales of
Government be made to small-business concerns.\2\
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\2\Id. at Sec. 644(a).
MACs account for a significant portion of federal contract
spending, yet their relationship with the Act remains
ambiguous. For example, the largest of the MACs is the General
Services Administration's (GSA's) Multiple Award Schedules
(MAS) Program, which accounts for approximately 10% of all
federal contract dollars spent each year.\3\ However, the MAS
program does not reserve all awards under $150,000 for small
businesses as required by section (j) of the Act.\4\ Likewise,
traditional contracts over $150,000 should be set aside for
small business if the contracting officer determines that at
least two small businesses will make offers, and an award can
be made at a fair price, and additional set-asides are
permitted for subcategories of small businesses.\5\ Indeed,
task orders under the MAS program were held exempt from all set
asides until the Small Business Jobs Act was enacted in
2010.\6\ This was based on the interpretation that only
contracts, not task orders, could be set aside.\7\ With the
enactment of Section 1331 of the Small Business Jobs Act,
discretionary set-asides rather than the primary evaluation
factor process were permitted. Specifically, Section 1331 of
the law requires regulations that will allow agencies to, at
their discretion:
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\3\GSA, For Vendors--Getting on Schedule, available at http://
www.gsa.gov/portal/category/100635 [hereinafter Getting on Schedule].
\4\15 U.S.C. Sec. 644(i).
\5\48 C.F.R. Sec. 19.502-2(b). For a detailed explanation of all
the small business contracting programs, please see the Committee
memorandum ``Small Business Programs: Misrepresentation and Fraud in
the Certification Process'' (October 21, 2011).
\6\Pub. L. No. 111-240, Sec. 1331, 124 Stat. 2536, 2541 (2010).
\7\The Government Accountability Office (GAO) rejected this
rationale and recognized the validity of set-asides on MAS Program for
some time. See, e.g., Delex Sys. Inc., B-400403. 2008 CPD 181.
However, GSA long argued that such set-asides were not allowed under
the fair opportunity provisions of the Federal Acquisition Streamlining
Act, 41 U.S.C. Sec. 4106, and rejected the GAO decisions.
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(1) set aside part or parts of a multiple award
contract for small business concerns, including the
subcategories of small business concerns identified [15
U.S.C. Sec. 644] (g)(2);
(2) notwithstanding the fair opportunity requirements
under [10 U.S.C. Sec. 2304c(b)], and [41 U.S.C.
Sec. 4106], set aside orders placed against multiple
award contracts for small business concerns, including
the subcategories of small business concerns identified
in [15 U.S.C. Sec. 644] (g)(2); and
(3) reserve 1 or more contract awards for small
business concerns under full and open multiple award
procurements, including the subcategories of small
business concerns identified in [15 U.S.C. Sec. 644]
(g)(2).\8\
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\8\Id.
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While final rules enacting these changes are still pending,
the current statutory provisions fail to create the necessary
opportunities within MACs for small businesses. On the $50
billion in annual MAS Program sales, any protections afforded
to small businesses are simply voluntary, so commercial goods
and services that are suitable for award to small businesses
are being awarded elsewhere. As the Federal government is not
currently meeting the small business contracting goals
established in Section 15(g) of the Act,\9\ additional
legislation is required.
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\9\15 U.S.C. Sec. 644(g).
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Furthermore, under current law small businesses do not have
a voice on the Federal Acquisitions Regulatory (FAR) Council,
whose mission is to ``assist in the direction and coordination
of Government-wide procurement policy and procurement
regulatory activities in the Federal Government.''\10\ This
puts small firms at a distinct disadvantage in government
contracting, as no one is continuously advocating and
monitoring the effects changes to the Federal Acquisition
Regulations will have on small businesses. Given that, this
legislation places the Small Business Administrator on the FAR
Council to ensure that small businesses are represented and
their concerns addressed when proposing or amending regulations
that affect federal procurement.
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\10\41 U.S.C. Sec. 421(a).
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Finally, under the Act the current reserve for small
business contracting is set at $100,000. However, the FAR
Council under section 807 of the Ronald W. Reagan National
Defense Authorization Act for Fiscal Year 2005, is required to
adjusted this threshold for inflation every 5 years. In 2010,
the small business reserve was adjusted for inflation and
increased to $150,000.\11\ Despite this, the Government is
still failing to meet its goal of awarding 23 percent of
contracts to small firms and small firms are not receiving as
many contracting opportunities. Therefore, this legislation
raises the small business reserve to $200,000 in order to
enhance opportunities for small business concerns to receive
federal contracts.
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\11\Federal Acquisition Regulation; Inflation Adjustment of
Acquisition--Related Thresholds, Final Rule, 75 Fed. Reg. 53129 (Aug.
30, 2010) (to be codified at 48 C.F.R. Sec. 19.502-2).
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III. Hearings
The issues raised in H.R. 4118 were examined in multiple
hearings, including in previous Congresses, held by the
Committee and Subcommittees. They were most recently addressed
in the June 7, 2012 hearing entitled, ``Scheduling Success?
Issues and Opportunities for Small Businesses on the GSA
Schedules,'' conducted by the Subcommittee on Contracting and
Workforce.
IV. Committee Consideration
The Committee on Small Business met in open session, with a
quorum being present, on March 7, 2012, and ordered H.R. 4118
reported, to the House by a voice vote at 3:47 pm. During the
markup, no amendments were offered. No recorded votes were
taken in consideration of H.R. 4118.
V. Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the recorded
votes on the motion to report the legislation and amendments
thereto.
VI. Section-by-Section Analysis of H.R. 4118
SECTION-BY-SECTION ANALYSIS OF H.R. 4118 AS AMENDED
Section 1--Short title
This section provides that the bill may be cited as the
``Small Business Procurement Improvement Act of 2012.''
Section 2--Increasing small business participation in multiple award
contracts
This section amends section 15(r) of the Small Business Act
to require that federal agencies use small business contracting
procedures such as the small business reserve and set-aside
authorities for MACs. Further, this section requires creation
of an agency outreach program to increase small business
participation in MACs. The program will be overseen by the
Administrator acting in consultation with the Administrator,
Office of Federal Procurement Policy (OFPP) and any agency that
obtains 5 percent of procurement requirements through MACs.
Section 3--Definitions
This section amends section 3 of the Small Business Act to
insert definitions related to MACs. First, it adds each of the
following to the definition of MAC: (1) the MAS Program; (2)
multi-agency contracts and task orders awarded to pursuant to
31 U.S.C. Sec. 1535; and (3) government-wide acquisition
contracts (GWACs) or task orders on GWACs, with GWAC defined by
40 U.S.C. Sec. 11302(e).
Next, it adds two definitions for terms commonly used in
relationship to MACs. The first is blanket purchase agreements
(BPAs), which are given the meaning found in 48 C.F.R.
Sec. Sec. 13.301-1 and 13.301-3. This reference specifics that
BPAs are charge accounts established with qualified sources of
supply to simplify filling anticipated repetitive needs for
supplies or services.
Finally, the section adds a definition of basic ordering
agreement (BOA). BOA is given the meaning currently found in 48
C.F.R. Sec. 16.703. A BOA is a written instrument of
understanding, negotiated between an agency, contracting
activity, or contracting office and a contractor, that contains
(1) terms and clauses applying to future contracts (orders)
between the parties during its term, (2) description, as
specific as practicable, of supplies or services to be
provided, and (3) methods for pricing, issuing, and delivering
future orders under the basic ordering agreement. BOAs are not
contracts.
Section 4--Ensuring small business participation in multiple award
contracts, multi-agency contracts, and government-wide
acquisition contracts
This section amends section 15(g) of the Small Business Act
to require that the President annually set government-wide
goals for the total dollar value of all task orders and
delivery orders placed against MACs, blanket purchases
agreements, and basic ordering agreements awarded under each
contracting program established pursuant to the Small Business
Act.
Section 5--Improvements to the small business reserve
This section amends section 15(j) of the Small Business Act
by increasing the small business reserve to $200,000. This
section specifies that the increase to MACs, including those
issued by the GSA. Further, this section requires the
Administrator of the SBA to work in consultation with the
Administrator of the GSA to enact regulations within 120 days
of this bill's passage to ensure that small businesses have the
correct size standard applied to each task order, that task
orders follow the limitation on subcontracting and non-
manufacturing rule, and that GSA's electronic ordering systems
utilize the correct size information for small businesses
seeking a set aside of a task order.
Section 6--Small business representation on the Federal Acquisition
Regulatory Council
This section amends 41 U.S.C. 1302(b) by placing the SBA
Administrator on the FAR Council. Recognizing that with 4
members, the FAR Council decisions could be deadlocked, section
6 essentially gives the Administrator of OFPP the deciding vote
in situations where there is a tie.
VII. Unfunded Mandates
H.R. 4118 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act, Pub.
L. No. 104-4, and would impose no costs on state, local or
tribal governments.
VIII. New Budget Authority, Entitlement Authority and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House, the Committee provides the following opinion and
estimate with respect to new budget authority, entitlement
authority and tax expenditures. The Committee has not received
an estimate of new budget authority prepared by the Director of
the Congressional Budget Office pursuant to Sec. 402 of the
Congressional Budget Act of 1974. However, the Committee is of
the opinion that the bill will have no cost since it only
requires changes in regulations that can be covered by existing
salaries and expenses.
IX. Oversight Findings
In accordance with clause (2)(b)(1) of rule X of the Rules
of the House, the oversight findings and recommendations of the
Committee on Small Business with respect to the subject matter
contained in H.R. 4118 are incorporated into the descriptive
portions of this report.
X. Statement of Constitutional Authority
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds that the
authority for this legislation in Art. I, Sec. 8, cls. 1, 3,
and 18 and Art. IV, Sec. 3, cl. 2 of the Constitution of the
United States.
XI. Congressional Accountability Act
H.R. 4118 does not relate to the terms and conditions of
employment or access to public services or accommodations
within the meaning of Sec. 102(b)(3) of Pub. L. No. 104-1.
XII. Federal Advisory Committee Act Statement
H.R. 4118 does not establish or authorize the establishment
of any new advisory committees as that term is defined in the
Federal Advisory Committee Act, 5 U.S.C. App. 2.
XIII. Statement of No Earmarks
Pursuant to clause 9 of rule XXI, H.R. 4121 does not
contain any congressional earmarks, limited tax benefits or
limited tariff benefits as defined in subsections (d), (e) or
(f) of clause 9 of rule XXI of the Rules of the House.
XIV. Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House, the Committee establishes the following performance-
related goals and objectives for this legislation:
H.R. 4118 includes provisions to improve
participation by small businesses in Multiple Award
Contracts by encouraging outreach and mandating that
the President establish government-wide goals for small
business participation in such contracting vehicles;
raise the small business reserve to $200,000 and make
it applicable to multiple award contracts; and expand
the Federal Acquisition Regulatory Council to include
the Administrator of the Small Business Administration.
XV. Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
SMALL BUSINESS ACT
* * * * * * *
Sec. 3. (a) * * *
* * * * * * *
(v) Multiple Award Contract.--In this Act, the term
``multiple award contract'' means--
(1) a multiple award task order contract or delivery
order contract that is entered into under the authority
of sections 303H through 303K of the Federal Property
and Administrative Services Act of 1949 (41 U.S.C. 253h
through 253k); [and]
(2) a contract under the Federal Supply Schedule
program of the General Services Administration;
(3) a multi-agency contract which is a contract, or a
task order or delivery order awarded pursuant to such a
contract, established by one agency for use by
Government agencies to obtain supplies, services, or
both, in accordance with section 1535 of title 31,
United States Code;
(4) a Government-wide acquisition contract which is a
contract, task order contract, or delivery order
contract for information technology established by one
agency for Government-wide use pursuant to section
11302(e) of title 40, United States Code; and
[(2)] (5) any other indefinite delivery, indefinite
quantity contract that is entered into by the head of a
Federal agency with 2 or more sources pursuant to the
same solicitation.
* * * * * * *
(dd) Blanket Purchase Agreement.--In this Act, the term
``blanket purchase agreement'' has the meaning given such term
in sections 13.303-01 and 13.303-2 of title 48, Code of Federal
Regulations (as in effect on October 1, 2011).
(ee) Basic Ordering Agreement.--In this Act, the term ``basic
ordering agreement'' has the meaning given such term in section
16.703 of title 48, Code of Federal Regulations (as in effect
on October 1, 2011).
* * * * * * *
Sec. 15. (a) * * *
* * * * * * *
(g)(1)(A) The President shall annually establish Government-
wide goals for procurement contracts awarded to small business
concerns, small business concerns owned and controlled by
service disabled veterans, qualified HUBZone small business
concerns, small business concerns owned and controlled by
socially and economically disadvantaged individuals, and small
business concerns owned and controlled by women. The
Government-wide goal for participation by small business
concerns shall be established at not less than 23 percent of
the total value of all prime contract awards for each fiscal
year. The Government-wide goal for participation by small
business concerns owned and controlled by service-disabled
veterans shall be established at not less than 3 percent of the
total value of all prime contract and subcontract awards for
each fiscal year. The Governmentwide goal for participation by
qualified HUBZone small business concerns shall be established
at not less than 1 percent of the total value of all prime
contract awards for fiscal year 1999, not less than 1.5 percent
of the total value of all prime contract awards for fiscal year
2000, not less than 2 percent of the total value of all prime
contract awards for fiscal year 2001, not less than 2.5 percent
of the total value of all prime contract awards for fiscal year
2002, and not less than 3 percent of the total value of all
prime contract and subcontract awards for fiscal year 2003 and
each fiscal year thereafter. The Government-wide goal for
participation by small business concerns owned and controlled
by socially and economically disadvantaged individuals shall be
established at not less than 5 percent of the total value of
all prime contract and subcontract awards for each fiscal year.
The Government-wide goal for participation by small business
concerns owned and controlled by women shall be established at
not less than 5 percent of the total value of all prime
contract and subcontract awards for each fiscal year.
Notwithstanding the Government-wide goal, each agency shall
have an annual goal that presents, for that agency, the maximum
practicable opportunity for small business concerns, small
business concerns owned and controlled by service-disabled
veterans, qualified HUBZone small business concerns, small
business concerns owned and controlled by socially and
economically disadvantaged individuals, and small business
concerns owned and controlled by women to participate in the
performance of contracts let by such agency. The Administration
and the Administrator for Federal Procurement Policy shall,
when exercising their authority pursuant to paragraph (2),
insure that the cumulative annual prime contract goals for all
agencies meet or exceed the annual Government-wide prime
contract goal established by the President pursuant to this
paragraph.
(B) The President shall annually establish Government-wide
goals for the total dollar value of all task orders and
delivery orders placed against multiple award contracts,
blanket purchase agreements, and basic ordering agreements
awarded to small business concerns, small business concerns
owned and controlled by service disabled veterans, qualified
HUB-Zone small business concerns, small business concerns owned
and controlled by socially and economically disadvantaged
individuals, and small business concerns owned and controlled
by women.
* * * * * * *
(j)(1) Each contract for the purchase of goods and services
that has an anticipated value greater than $2,500 but not
greater than [$100,000] $200,000 shall be reserved exclusively
for small business concerns unless the contracting officer is
unable to obtain offers from two or more small business
concerns that are competitive with market prices and are
competitive with regard to the quality and delivery of the
goods or services being purchased.
* * * * * * *
(3) Nothing in paragraph (1) shall be construed as precluding
an award of a contract with a value not greater than [$100,000]
$200,000 under the authority of subsection (a) of section 8 of
this Act, section 2323 of title 10, United States Code, section
712 of the Business Opportunity Development Reform Act of 1988
(Public Law 100-656; 15 U.S.C. 644 note), or section 7102 of
the Federal Acquisition Streamlining Act of 1994.
(4) Multiple award contract applicability.--
(A) This subsection applies to all task or
delivery orders placed against multiple award
contracts, including any contract under the
Federal Supply Schedule program of the General
Services Administration.
(B) The Administrator, in consultation with
the Administrator of General Services
Administration, shall within 120 days of the
date of enactment of this Act, issue
regulations regarding--
(i) how the Administrator of the
General Services Administration will
ensure that the correct size standard
is applied to each task order;
(ii) how the Administrator of the
General Services Administration will
ensure that the non-manufacturer rule
and limitation on subcontracting
provisions are implemented at the task
order level; and
(iii) how the Administrator of the
General Services Administration will
ensure that its electronic ordering
systems display the correct size
information for small business concerns
seeking the set aside of a task order.
* * * * * * *
(r) Multiple Award Contracts.--Not later than 1 year after
the date of enactment of this subsection, the Administrator for
Federal Procurement Policy and the Administrator, in
consultation with the Administrator of General Services, shall,
by regulation, establish guidance under which Federal agencies
[may, at their discretion] shall, to the maximum extent
practicable, include small business concerns in multiple award
contracts, as defined in section 3(v) of this Act, including--
(1) [set] setting aside part or parts of a multiple
award contract for small business concerns, including
the subcategories of small business concerns identified
in subsection (g)(2);
(2) notwithstanding the fair opportunity requirements
under section 2304c(b) of title 10, United States Code,
and section 303J(b) of the Federal Property and
Administrative Services Act of 1949 (41 U.S.C.
253j(b)), [set] setting aside orders placed against
multiple award contracts for small business concerns,
including the subcategories of small business concerns
identified in subsection (g)(2); [and]
(3) [reserve] reserving 1 or more contract awards for
small business concerns under full and open multiple
award procurements, including the subcategories of
small business concerns identified in subsection
(g)(2)[.]; and
(4) making full use of the set-aside programs
established in sections 8(a), 8(m), 31, and 36 of this
Act and any other program under this Act that provides
for set-asides of contracts for small businesses.
(s) Agency Outreach Program.--The Administrator, in
consultation with the Administrator of the Office of Federal
Procurement Policy and any agency that obtains 5 percent of
procurement requirements through a multiple award contract,
shall carry out a program to increase the participation of
small business concerns in multiple award contracts, as defined
in section 3(v) of this Act. Such program shall--
(1) increase awareness among small business concerns
regarding multiple award contracts;
(2) provide small business concerns with education
and training on Federal agency procedures for the bid
and award of multiple award contracting procedures;
(3) assist small business concerns with becoming
listed on multiple award contracts, including the
Federal Supply Schedules of the General Services
Administration; and
(4) develop measures to track small business
participation in multiple award contracts, including
awards pursuant to those contracts.
* * * * * * *
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SECTION 1302 OF TITLE 41, UNITED STATES CODE
Sec. 1302. Establishment and membership
(a) * * *
(b) Membership.--
(1) Makeup of council.--The Council consists of--
(A) the Administrator;
* * * * * * *
(C) the Administrator of National Aeronautics
and Space; [and]
(D) the Administrator of General Services[.];
and
(E) the Administrator of the Small Business
Administration.
* * * * * * *
(c) Deciding Vote.--In the case of an equal vote among
council membership, the Administrator of the Office of Federal
Procurement Policy will have the deciding vote.
* * * * * * *