[Senate Report 114-288]
[From the U.S. Government Publishing Office]


                                                      Calendar No. 106
114th Congress    }                                      {      Report
                                 SENATE
 2d Session       }                                      {     114-288

======================================================================
 
                  SMALL BUSINESS FAIRNESS ACT OF 2015

                                _______
                                

                 June 28, 2016.--Ordered to be printed

                                _______
                                

Mr. Vitter, from the Committee on Small Business and Entrepreneurship, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 958]

    The Committee on Small Business and Entrepreneurship, to 
which was referred the bill (S. 958) to amend the Small 
Business Act to provide for team and joint venture offers for 
certain contracts, having considered the same, reports 
favorably thereon with an amendment in the nature of a 
substitute and recommends that the bill, as amended, do pass.

                            I. INTRODUCTION

    The Small Business Fairness Act (S. 958) was introduced by 
Senator Enzi, with original co-sponsorship from Senator Casey, 
on April 15, 2015.
    The Small Business Fairness Act enhances small businesses' 
ability to compete for federal contracting opportunities. It 
does so by changing how agencies consider small business 
teaming and joint ventures in relation to small business 
contracting goals and prior experience of the small business 
within the teaming or joint venture.
    During the markup of the bill, the Vitter amendment to the 
bill was approved unanimously by voice vote. The Vitter 
amendment provides that prior experience shall be taken into 
consideration when assessing a firm's ability to bid as part of 
a team. The bill, as amended, was also approved unanimously by 
voice vote.

              II. HISTORY (PURPOSE & NEED FOR LEGISLATION)

    Teaming and joint venture allowances for small businesses 
are designed to enhance small businesses' ability to compete 
for federal contracting opportunities. The Small Business Act 
encourages small businesses to team and joint venture, and the 
SBA will approve joint ventures to facilitate small businesses 
participating on federal contracts. In the 112th Congress, the 
Committee-passed legislation that was included in the FY 2012 
National Defense Authorization Act to make it easier for small 
businesses to team by changing the limitations on 
subcontracting. However, small businesses that do team and 
joint venture are often unsuccessful at winning contracts when 
the agency will only consider the past performance or financial 
responsibility of the joint venture or the prime contractor, 
not the small business members of the joint venture or the 
parties to the team. As many joint ventures are unpopulated, 
this all but disqualifies the small business from competition.
    Similar or identical legislation was introduced by Senators 
Enzi and Casey in June of 2013 (S. 1190) and May of 2011 (S. 
1110).

                      III. HEARINGS & ROUNDTABLES

    112th Congress
    In the 112th Congress, the Committee held a hearing 
entitled ``Creating Jobs and Growing the Economy: Legislative 
Proposals to Strengthen the Entrepreneurial Ecosystem'' on 
November 29, 2012. Various testimonies recognized the need for 
reforming the way in which government contracts with small 
businesses are implemented and regulated, and discussed a 
number of potential improvements that could be made via 
legislation. However, the vast majority of the changes 
discussed only dealt with the size and scope of contracts, 
rather than how the businesses are considered and selected.

                        IV. DESCRIPTION OF BILL

    The bill permits agencies to count towards their small 
business contracting goals contracts awarded under teaming 
arrangements where a small business works with a prime 
contractor to perform the work under the agreement. This 
legislation requires agencies to give due consideration to the 
capabilities and past performance of the small businesses that 
submit offers as teams or joint ventures. This will allow more 
small businesses to compete for contracts.
    The amendment clarifies that prior experience shall be 
taken into consideration when assessing a firm's ability to bid 
as part of a team.

                           V. COMMITTEE VOTE

    In compliance with rule XXVI (7)(b) of the Standing Rules 
of the Senate, the following vote was recorded on April 23, 
2015.
    A motion to adopt the Small Business Fairness Act of 2015, 
a bill to amend the Small Business Act to provide for team and 
joint venture offers for certain contracts, as amended by the 
Vitter amendment, was approved unanimously by voice vote with 
the following Senators present: Senators Vitter, Risch, 
Fischer, Gardner, Ernst, Ayotte, Enzi, Shaheen, Cantwell, 
Cardin, Heitkamp, Booker, Coons, Hirono, and Peters.

                           VI. COST ESTIMATE

    In compliance with rule XXVI (11)(a)(1) of the Standing 
Rules of the Senate, the Committee estimates the cost of the 
legislation will be equal to the amounts discussed in the 
following letter from the Congressional Budget Office:

                                                      June 9, 2015.
Hon. David Vitter,
Chairman, Committee on Small Business and Entrepreneurship,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 958, the Small 
Business Fairness Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Matthew 
Pickford.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

S. 958--Small Business Fairness Act

    Summary: S. 958 would amend the Small Business Act to allow 
small businesses to join together to submit bids for federal 
contracts. The Small Business Administration (SBA) would have 
one year to issue regulations to implement this authority.
    CBO estimates that implementing S. 958 would increase the 
administrative costs of federal agencies by $25 million over 
the 2016-2020 period, assuming the availability of appropriated 
funds. Enacting S. 958 could affect direct spending by some 
agencies (such as the Tennessee Valley Authority) because they 
are authorized to use receipts from the sale of goods, fees, 
and other collections to cover their operating costs. 
Therefore, pay-as-you-go procedures apply. Because most of 
those agencies can make adjustments to the amounts collected as 
operating costs change, CBO estimates that any net changes in 
direct spending by those agencies would not be significant. 
Enacting the bill would not affect revenues.
    S. 958 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would not affect the budgets of state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 958 is shown in the following table. The 
costs of this legislation would fall within budget functions 
050 (national defense), 800 (general government) and all other 
budget functions that include administrative costs for 
procurement.

----------------------------------------------------------------------------------------------------------------
                                                               By fiscal year, in millions of dollars--
                                                    ------------------------------------------------------------
                                                       2016      2017      2018      2019      2020    2016-2020
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION
 
Estimated Authorization Level......................        10         6         3         3         3         25
Estimated Outlays..................................        10         6         3         3         3         25
----------------------------------------------------------------------------------------------------------------

    Basis of estimate: For this estimate, CBO assumes that S. 
958 will be enacted in late 2015 and that spending will follow 
historical patterns for similar activities.
    S. 958 would amend the Small Business Act to allow small 
businesses to join together to submit bids for bundled, 
consolidated, and multiple-award federal contracts. When 
evaluating procurement bids, the legislation would require 
agencies to consider the capabilities, prior experience, and 
past performance of the joint team of small businesses 
collectively. A small business participating in such a joint 
bid would still be considered a small business.
    Using information from the Office of Personnel Management, 
CBO estimates that more than 36,000 federal employees are 
responsible for administering the procurement of goods and 
services for the government at a cost of more than $3 billion 
annually. Based on information from SBA and the General 
Services Administration (GSA) about the costs of prior 
modifications to federal procurement laws, CBO estimates that 
implementing S. 958 would cost $25 million over the 2016-2020 
period. Most of those amounts would be used to train 
procurement staff on new rules for evaluating procurement bids 
from teams of small businesses. Federal agencies also would 
need to modify their computer systems used in the procurement 
process to accommodate the small business teams. In subsequent 
years federal procurement offices would need to issue new 
certifications to confirm that teams of small businesses 
qualify as small businesses under procurement laws. Under S. 
958, CBO expects that agencies would continue to procure goods 
and services at the lowest price available; therefore, we 
estimate that implementing S. 958 would not significantly 
increase the cost of goods and services procured by the federal 
government.
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. Enacting S. 958 could affect direct spending by some 
agencies (such as the Tennessee Valley Authority) because they 
are authorized to use receipts from the sale of goods, fees, 
and other collections to cover their operating costs. 
Therefore, pay-as-you-go procedures apply. Because most of 
those agencies can adjust the amounts collected as operating 
costs change, CBO estimates that any net changes in direct 
spending by those agencies would not be significant. Enacting 
the bill would not affect revenues.
    Intergovernmental and private-sector impact: S. 958 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would not affect the budgets of state, 
local, or tribal governments.
    Estimate prepared by: Federal costs: Matthew Pickford; 
Impact on state, local, and tribal governments: Logan Smith; 
Impact on the private sector: Melissa Merrell.
    Estimate approved by: Theresa Gullo, Assistant Director for 
Budget Analysis.

                  VII. EVALUATION OF REGULATORY IMPACT

    In compliance with rule XXVI (11)(b) of the Standing Rules 
of the Senate, it is the opinion of the Committee that no 
significant additional regulatory impact will be incurred in 
carrying out the provisions of this legislation. There will be 
no additional impact on the personal privacy of companies or 
individuals who utilize the services provided.

                   VIII. SECTION-BY-SECTION ANALYSIS

Section 1. Title

    This section provides the title, the ``Small Business 
Fairness Act of 2015''.

Section 2. Joint venturing and teaming

    Section 2(a)--Amends Section 15(e)(4) of the Small Business 
Act, which allows small businesses to bid as a joint venture or 
team on a bundled or consolidated contract. While the Small 
Business Act already allows small business teams and joint 
ventures to bid on consolidated or bundled contracts, it does 
not address how agencies should evaluate these proposals.
    New paragraph (4)(A)--Reaffirms that small businesses may 
joint venture and team for these contracts, as currently 
provided in paragraph (4).
    New paragraph (4)(B)--Requires agencies to consider the 
capability of all members of a small business joint venture or 
team. Specifically, clause (i) requires that agencies consider 
the capabilities of first tier subcontractors when a small 
business prime contractor teams with other small businesses. 
Clause (ii) requires that when two or more small businesses 
form a joint venture to bid on a bundled or consolidated 
contract, the agency must consider the capabilities, prior 
experience, and past performance of the members of the joint 
venture. This is particularly important, since most small 
business joint ventures are not populated.
    New paragraph (4)(C)--Reaffirms that when small businesses 
joint venture or team to compete for bundled and consolidated 
contracts, the Small Business Administration (SBA) cannot find 
that they are no longer small as a result of that joint venture 
or team.
    Section 2(b)--Amends Section 15(q)(1) of the Small Business 
Act, which allows small businesses to bid as a joint venture or 
team on multiple award contracts. While the Small Business Act 
already allows small business teams and joint ventures to bid 
on multiple award contracts, it does not address how agencies 
should evaluate these proposals.
    Paragraph (1)--Changes the title of subsection (q)(1) to 
better reflect its purpose.
    Paragraph (2)--Renumbers the subsection and adds:
    The new paragraph (B) requires that agencies consider the 
capabilities of first tier subcontractors when a small business 
prime contractor teams with other small businesses.
    New paragraph (C) requires that when two or more small 
businesses form a joint venture to bid on a bundled or 
consolidated contract, the agency must consider the 
capabilities, prior experience, and past performance of the 
members of the joint venture.
    New paragraph (D) requires that if competition for the 
contract was limited to small businesses, women-owned small 
businesses, HUBZones, or service-disabled veteran-owned small 
businesses, the composition of the team or joint venture must 
be reassessed each year to make sure the team or joint venture 
qualifies for the contact, unless the contract was awarded 
under an approved mentor-protege program.
    Section 2(c)--Requires that SBA complete any necessary 
rulemakings to implement this change within one year.

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