House Committee on Small Business 2012 Contracting Legislation

Contract Bundling, Offices of Small and Disadvantaged Business Utilization, and Small Business

Contract Bundling:

Goaling

• Consolidates all language related to contract bundling and consolidation into section 44.

• Permits SBA to appeal unjustified bundling to the appropriate Board of Contract Appeals, and if SBA declines to do so, allow third party groups to bring a GAO protest.

• Expands the definition of bundling to include new construction.

•  Imposes a $2 million review threshold for all agencies and eliminates the review requirement for contracts for major weapons systems.

•  Requires publication of the bundling justification in www.fbo.gov or its successor.

•  Improves review process for reviewing performance of bundled contracts before recompetition.

OSDBU:

•  Establishes that the position of OSDBU Director cannot be combined with another official role, and directors that OSDBU

Directors at CFO Act agencies be members of the SES, and at all other agencies they should be GS-15s in order to make them the equivalent to senior acquisition leaders in the agency.

• Adds training to the list of statutory OSDBU responsibilities, but clarifies that acquisition assistance is each office’s priority, and requires reports on the amount of the OSDBU budget spent on travel.

• Requires that the OSDBU be consulted regarding the decision to insource work performed by a small business.

• Strengthens the statutory OSDBU Council – the Small Business Procurement Advisory Council (SBPAC) – by requiring the SBPAC to monitor member compliance with Section 15(k) of the Act, develop best practices to promote small business utilization, and report annually to the House and Senate Committees on the comment letters filed and the agency disposition, the best practices developed, and the results of compliance reviews.

Goaling:

• Raises the small business prime contract goal from 23% to 25%, defines the goaling base, and establishes the government wide subcontracting goal as 40%.

• Incentivizes agencies to meet the goals by only permitting SES bonus at agencies that meet their goals.

• Increases transparency for small business contracting by requiring that that goaling report provide details into how each

group won contracts, not simply the dollars awarded, and requiring analysis of subcontractor industry distribution.

• Allows prime contractors with contract specific subcontracting plans to take credit for all tiers of small business spending.

Limitation on Subcontracting, Insourcing, and Compliance with Subcontracting Plans

Limitation on Subcontracting:

• Eases compliance issues for primes and subcontractors changing limitation on subcontracting requirements to price rather than cost, and clarifying which rules apply to procurements for goods and services.

• Encourages teaming by allowing firms to count work subcontracted to a firm that meets the socioeconomic requirements of the prime contract towards the minimum performance percentage.

• Improves enforcement by modifying the Federal Subcontracting Reporting System (FSRS), which already tracks all subcontracts above $25,000, to track compliance and notify the contracting officer (CO), the OSDBU, and SBA of potential violations, and clarifying that firms that fail to comply face the penalties in Section 16(d) of the Small Business Act, except that the fine will be the higher of $500,000 or the amount by which the firm failed to meet the requirements of the limitation on subcontracting.

Insourcing:

• Provide small businesses with standing to challenge insourcing decisions.

• Requires that agencies publish insourcing procedures subject to notice and comment rulemaking.

Small Business Subcontracting:

• Allows PCRs or CMRs to protest a subcontracting plan.

• Requires ESRS to notify the CO, SBA and OSDBU of an entity’s failure to submit a required report, and says that failing to

report on a subcontracting plan is evidence of other than good faith compliance, potentially triggering liquidated damages.

• Suggests that SBA improve oversight of subcontracting plans by partnering with the Defense Contract Audit Agency (DCAA) to have them review contractor compliance with subcontracting plans as part of the standard audit process.

Acquisition Planning and Procurement Center Representatives

•  Improves acquisition planning by requiring that small business issues be addressed throughout the process, and provides OSDBUs and PCRs with access to acquisition plans.

•  Reduces the burden on PCRs and improves opportunities for small businesses by requiring that the Federal Acquisition Institute (FAI) and the Defense Acquisition University (DAU) create mandatory small business contracting classes.

•  Focuses the PCRs on providing acquisition oversight and assistance in keeping with the procurement reforms of the last two decades by eliminating the distinction between categories of PCRs, and streamlining the duties of the PCR to focus on the fundamentals (i.e., no longer require PCRs to provide technical data, receive unsolicited proposals, etc.).

•  Provides PCRs with educational opportunities by requiring that they need to be DAWIA or FAC-C level III certified.

•  Removes the restriction on PCRs reviewing commercially available items, as commercial type goods and services now account for a significant portion of federal spending.

•  Clarifies that PCRs are able to intervene in cost-based insourcing cases involving small businesses.

Mentor -Protégé Programs

•  Expands opportunities for small businesses and their mentors by authorizing a SBA mentor-protégé program for small businesses modeled on the 8(a) Mentor-Protégé program.

•  Reduces duplication and paperwork by granting SBA the authority to regulate and approve agency mentor-protégé programs, except for the DoD Mentor-Protégé program, and create reciprocity between the approved programs.

Size Standards

•  Requires that the size standard SBA assigns to each common group size standard be appropriate for each individual NAICS code assigned to the group.

Women’s Procurement Program

•  Restores parity to the small business contracting programs by removing the caps on competitive set-asides awarded to WOSB and EDWOSB.

Small Business Contract Fraud

•  Directs SBA to help businesses identify and explore affiliation issues so that they can make the correct representations as to size through a publicly available website with an interactive affiliation checklist.

•  Creates a safe harbor provision for any small business that receives an advisory opinion from a licensed and barred attorney at an outside law firm may rely on that opinion as evidence of good faith when self-certifying its size or eligibility for any small business contracting program that permits self certification, provided that the opinion (i) includes a detailed analysis of the company structure in relationship to the SBA regulation on size and affiliation; (ii) is less than three years old; (iii) does not predate any material changes; and (iv) does not contradict any firm-specific decisions issued by SBA’s Office of Hearings and Appeals (OHA) or size specialists.

•  Protect contractor speech by prohibiting any contracting officer from collecting, verifying or certifying records related to campaign contributions.

•  Statutorily establishes OHA using Administrative Judges, and requires OHA to refer cases to the Inspector General if a reasonable company would have known that its representations were unreasonable, or if the company knew or should have known that the statements were false.

•  Increases the Civil False Claims Act (CFCA) and Program Fraud Civil Remedies Act (PFCRA) penalties for small business contracting fraud so that the penalties are sufficient to outweigh the government’s cost of prosecution, raises the cap on PFCRA claims so that these may be addressed administratively.

•  Allow the SBA IG to act as the investigating and referring official for PFCRA and try cases at the Civilian Board of Contract Appeals, with any recovery after costs to be split between the SBA IG and the Office of Government Contracts and Business Development (GCBD).

•  Improve suspension and debarment proceedings at SBA by requiring SBA to publish its suspension and debarment standard operating processes, suspension and debarment official, and report to the Committee annually on suspension and debarment proceedings.

•  Make suspension and debarment a viable tool to address small business fraud by making intentional misrepresentation of eligibility for small business contracting programs an independent cause of action for suspension and debarment.