69–006 

115TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 115–243 

PROTECTING BUSINESS OPPORTUNITIES FOR VETERANS 

ACT OF 2017 

JULY 24, 2017.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. ROE of Tennessee, from the Committee on Veterans’ Affairs, 

submitted the following 

R E P O R T 

[To accompany H.R. 2749] 

The Committee on Veterans’ Affairs, to whom was referred the 

bill (H.R. 2749) to amend title 38, United States Code, to improve 

the oversight of contracts awarded by the Secretary of Veterans Affairs to small business concerns owned and controlled by veterans, 

and for other purposes, having considered the same, report favorably thereon without amendment and recommend that the bill do 

pass. 

CONTENTS 

Page 

Purpose and Summary ............................................................................................ 2 

Background and Need for Legislation .................................................................... 2 

Hearings ................................................................................................................... 3 

Subcommittee Consideration .................................................................................. 4 

Committee Consideration ........................................................................................ 4 

Committee Votes ...................................................................................................... 4 

Committee Oversight Findings ............................................................................... 4 

Statement of General Performance Goals and Objectives .................................... 4 

New Budget Authority, Entitlement Authority, and Tax Expenditures ............. 4 

Earmarks and Tax and Tariff Benefits .................................................................. 5 

Committee Cost Estimate ....................................................................................... 5 

Congressional Budget Office Estimate ................................................................... 5 

Federal Mandates Statement ................................................................................. 5 

Advisory Committee Statement .............................................................................. 5 

Constitutional Authority Statement ...................................................................... 5 

Applicability to Legislative Branch ........................................................................ 5 

Statement on Duplication of Federal Programs .................................................... 5 

Disclosure of Directed Rulemaking ........................................................................ 5 

Section-by-Section Analysis of the Legislation ...................................................... 6 

Changes in Existing Law Made by the Bill as Reported ...................................... 6 

2 

PURPOSE AND SUMMARY

H.R. 2749, the ‘‘Protecting Business Opportunities for Veterans 

Act of 2017,’’ was introduced by Representative Jack Bergman of 

Michigan on May 26, 2017. H.R. 2749 would strengthen enforcement of existing restrictions on Veteran- and Service Disabled Veteran-Owned Small Businesses improperly passing through Department of Veterans Affairs (VA) contracts. An ‘‘improper passthrough’’ occurs when a small business obtains a contract but does 

not perform the required percentage of work, instead giving the 

work to another business while collecting profit. The legislation requires Veteran- and Service Disabled Veteran-Owned Small Businesses to certify that they are performing the required percentage 

of work and directs VA to refer violators or suspected violators to 

the VA Office of Inspector General (OIG) for investigation. Finally, 

the legislation references existing administrative and criminal penalties for fraudulent representation and directs the Secretary to 

consider whether they should apply in each case. 

BACKGROUND AND NEED FOR LEGISLATION

The Small Business Act (15 U.S.C. 657s) and Part 19 of the Federal Acquisition Regulation set forth limitations on subcontracting 

for small businesses. A limitation on subcontracting is effectuated 

as a minimum percentage of work that a small business prime contractor must perform itself. The small business may not subcontract out the work, except to another small business of the same 

type, called a ‘‘similarly situated entity.’’ The percentage of work a 

small business is required to perform depends on whether the contract is for supplies, services, or construction. Each contracting officer awarding a particular contract is tasked with detecting violations of these limitations, called improper pass-throughs, on that 

contract. In practice, contracting officers lack tools to detect improper pass-throughs, and they proliferate widely. A contracting officer’s only options to demonstrate an improper pass-through are to 

monitor the contractor’s performance personally or to scrutinize invoices. These methods are time consuming and typically ineffectual, because it is often unclear for which company or companies 

employees work, invoices are vague, and the contracting officer has 

no ability to examine subcontractor invoices or business records. 

The Veterans Benefits, Health Care, and Information Technology 

Act of 2006 (38 U.S.C. 8127) gave Veteran Owned Small Businesses (VOSBs) and Service Disabled Veteran Owned Small Businesses (SDVOSBs) particular preference in VA contracting, called 

the Rule of Two. VA must set aside contracts for competition 

among them, with SDVOSBs having first preference and VOSBs 

having second preference, when it expects that two or more such 

businesses will submit an offer, and the contract can be awarded 

at a fair and reasonable price. The Supreme Court ruled in 

Kingdomware Technologies, Inc. v. United States on June 16, 2016, 

that the Rule of Two applies to all VA contracting. Thus, VOSBs 

and SDVOSBs now receive substantially all VA contracts that are 

set aside for small business, so the issue of compliance with limitations on subcontracting now primarily concerns VOSBs and 

SDVOSBs. Improper pass-throughs are problematic, because they 

create unnecessary layers of profit that wastefully inflate the costs 

3 

of federal contracts. Moreover, improper pass-throughs deny law 

abiding VOSBs and SDVOSBs the opportunity to obtain and perform work, through which they establish agency contacts and grow 

their businesses. 

The legislation is necessary to improve existing detection and enforcement of improper pass-throughs. Companies would be required 

to submit certifications with all quotes or proposals specifying the 

performance requirements they are subject to, indicating compliance, and acknowledging the applicability of criminal penalties for 

fraud or false statements. Such certification may dissuade companies from executing improper pass-throughs and would remove the 

excuse that a company was unaware of the specific limitation on 

subcontracting that applies. Explicitly tasking OIG to assist VA in 

investigating improper pass-throughs will bring a level of expertise 

and resources far above what individual contracting officers can 

muster. 

Finally, the issue of bundling is relevant to the legislation. ‘‘Bundling’’ is defined in Part 2 of the Federal Acquisition Regulation as 

combining two or more purchases, which were previously made 

under separate smaller contracts, into one contract in a way that 

will likely render small businesses unable to perform. The practice 

of bundling is restricted by a variety of statutes and regulations 

concerning procurement. Nonetheless, agencies periodically engage 

in bundling after following regulatory processes to justify the bundling, or by disregarding the restrictions. It is improper for VA or 

any agency to engage in bundling in order to enlarge the size of 

contracts to make limitations on subcontracting more difficult for 

small businesses, including VOSBs and SDVOSBs, to comply with. 

Similarly, it would be improper for VA to engage in bundling in 

this manner in order to apply the penalties set forth in this legislation. The intent of the legislation is to detect and reduce improper 

pass-throughs that exist in the normal course of VA procurement 

activities, not pass-throughs that become improper directly as the 

result of bundling. 

HEARINGS

There were no full Committee hearings held on H.R. 2749. 

On June 29, 2017, the Subcommittee on Oversight and Investigations conducted a legislative hearing on: H.R. 2006, H.R. 2749, 

H.R. 2781, and a draft bill to improve the hiring, training, and efficiency of acquisition personnel and organizations of the Department of Veterans Affairs, and for other purposes (now H.R. 3169). 

The following witnesses testified: 

The Honorable Jack Bergman of Michigan; the Honorable 

Ann McLane Kuster of New Hampshire; the Honorable Mike 

Coffman of Colorado; the Honorable Neal Dunn of Florida; the 

Honorable Jimmy Panetta of California; the Honorable Bruce 

Poliquin of Maine; Mr. Thomas Burgess, Associate Deputy Assistant Secretary, Office of Logistics and Supply Chain Management, Department of Veterans Affairs; Mr. Thomas Leney 

Executive Director, Small and Veteran Business Programs, Office of Small and Disadvantaged Business Utilization, Department of Veterans Affairs; Ms. Kaitlin Gray, Assistant Director, 

National Veterans Employment and Education Division, The 

American Legion; Mr. Patrick Murray, Associate Director, NaVerDate Sep 11 2014 22:50 Jul 27, 2017 Jkt 069006 PO 00000 Frm 00003 Fmt 6659 Sfmt 6602 E:\HR\OC\HR243.XXX HR243
4 

tional Legislative Service, Veterans of Foreign Wars of the 

United States; and Mr. Wayne Simpson, Member, National 

Veterans Small Business Coalition. 

A statement for the record was submitted by: 

The Associated General Contractors of America. 

SUBCOMMITTEE CONSIDERATION

On July 12, 2017, the Subcommittee on Oversight and Investigations met in open markup session, a quorum being present, and ordered H.R. 2749 reported favorably to the full Committee. A motion 

by Representative Ann McLane Kuster of New Hampshire to report 

H.R. 2749 favorably to the House of Representatives was agreed to 

by voice vote. 

COMMITTEE CONSIDERATION

On July 19, 2017, the full Committee met in open markup session, a quorum being present, and ordered H.R. 2749 reported favorably to the House of Representatives by voice vote. A motion by 

Representative Tim Walz of Minnesota to report H.R. 2749 favorably to the House of Representatives was agreed to by voice vote. 

COMMITTEE VOTES

In compliance with clause 3(b) of rule XIII of the Rules of the 

House of Representatives, no recorded votes were taken on amendments or in connection with ordering H.R. 2749 reported to the 

House. 

COMMITTEE OVERSIGHT FINDINGS

In compliance with clause 3(c)(1) of rule XIII and clause (2)(b)(1) 

of rule X of the Rules of the House of Representatives, the Committee’s oversight findings and recommendations are reflected in the 

descriptive portions of this report. 

STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

In accordance with clause 3(c)(4) of rule XIII of the Rules of the 

House of Representatives, the Committee’s performance goals and 

objectives are to ensure the Secretary of Veterans Affairs has the 

sufficient mechanisms to identify, investigate, and penalize businesses that improperly utilize contracting set-asides meant for the 

performance of work by Veteran- and Service Disabled VeteranOwned Small Businesses. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

A Congressional Budget Office (CBO) report was not available at 

the time this report was filed. The Committee believes that there 

is no new budget authority, entitlement authority, or tax expenditures. 

5 

EARMARKS AND TAX AND TARIFF BENEFITS

H.R. 2749 does not contain any Congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined in clause 9 of rule 

XXI of the Rules of the House of Representatives. 

COMMITTEE COST ESTIMATE

A CBO report was not available at the time this report was filed. 

The Committee believes that there are no effects on direct spending 

or revenues. 

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

A CBO report was not available at the time this report was filed. 

CBO has preliminarily estimated that there are no effects on direct 

spending or revenues. 

FEDERAL MANDATES STATEMENT

A CBO report was not available at the time this report was filed. 

The Committee believes that there are no Federal mandates. 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act would be created by H.R. 2749. 

CONSTITUTIONAL AUTHORITY STATEMENT

Pursuant to Article I, section 8 of the United States Constitution, 

H.R. 2749 is authorized by Congress’ power to ‘‘provide for the common Defense and general Welfare of the United States.’’ 

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that H.R. 2749 does not relate to the terms 

and conditions of employment or access to public services or accommodations within the meaning of section 102(b)(3) of the Congressional Accountability Act. 

STATEMENT ON DUPLICATION OF FEDERAL PROGRAMS

Pursuant to clause 3(c)(5) of rule XIII of the Rules of the House 

of Representatives, the Committee finds that no provision of H.R. 

2749 establishes or reauthorizes a program of the Federal Government known to be duplicative of another Federal program, a program that was included in any report from the Government Accountability Office to Congress pursuant to section 21 of Public 

Law 111–139, or a program related to a program identified in the 

most recent Catalog of Federal Domestic Assistance. 

DISCLOSURE OF DIRECTED RULEMAKING

Pursuant to section 3(i) of H. Res. 5, 115th Cong. (2017), H.R. 

2749 contains no directed rule making that would require the Secretary to prescribe regulations. 

6 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title 

Section 1 cites the short title of H.R. 2749 to be the ‘‘Protecting 

Business Opportunities for Veterans Act of 2017.’’ 

Section 2. Limitations on subcontracts under contracts with small 

business concerns owned and controlled by veterans 

Section 2(a) would amend section 8127 of title 38, U.S.C., by redesignating subsection (l) as subsection (m) and inserting a new 

subsection (l) entitled, ‘‘Limitations on Subcontracting.’’ 

Section 8127(l)(1) would dictate that the requirements applicable 

to a covered small business concern under section 46 of the Small 

Business Act also apply with respect to a Veteran- or Service Disabled Veteran-Owned Small Business under this Section. The term 

‘‘similarly situated entity’’ used in section 46 of the Small Business 

Act would also include a Veteran- or Service Disabled VeteranOwned Small Business subcontracted by another Veteran- or Service Disabled Veteran-Owned Small Business. 

Section 8127(l)(2) would only allow the Secretary to award a contract under Section 8127 after obtaining a certification from the offeror that it will comply with the requirements described in Section 

8127(l)(1). The certification must specify the exact performance requirements applicable under Section 8127(l)(1) and explicitly acknowledge that the certification is subject to the penalties described in section 1001 of title 18, U.S.C. 

Section 8127(l)(3) would require VA’s Director of Small and Disadvantaged Business Utilization and its Chief Acquisition Officer 

to jointly implement a process using the systems described in section 16(g)(2) of the Small Business Act, and any other relevant systems available, to monitor compliance with this subsection and 

jointly refer any violations or suspected violations to the VA Office 

of Inspector General. This Section would further require any small 

business concern that the Secretary determines, in consultation 

with the Office of Inspector General, did not act in good faith with 

respect to the requirements described in Section 8127(l)(1), to receive any or all of the following: (i) referral to the VA Debarment 

and Suspension Committee; (ii) a fine under section 16(g)(1) of the 

Small Business Act; and (iii) prosecution for violating section 1001 

of title 18, U.S.C. The VA Office of Inspector General would also 

be required by this Section to submit a report to the House and 

Senate Committees on Veterans’ Affairs detailing, for the fiscal 

year during which the report is submitted, (i) the number of referred violations and suspected violations received under this Section; and (ii) the disposition of same, including the number of small 

business concerns suspended or debarred from Federal contracting 

or referred to the Attorney General for prosecution. 

Section 2(b) would make the new subsection (l) created by Section 2(a) of this legislation effective with respect to any contract entered into after the date of enactment of this legislation. 

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 omitVerDate Sep 11 2014 22:50 Jul 27, 2017 Jkt 069006 PO 00000 Frm 00006 Fmt 6659 Sfmt 6602 E:\HR\OC\HR243.XXX HR243
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ted is enclosed in black brackets, new matter is printed in italic, 

existing law in which no change is proposed is shown in roman): 

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, 

and existing law in which no change is proposed is shown in 

roman): 

TITLE 38, UNITED STATES CODE 

* * * * * * * 

PART VI—ACQUISITION AND DISPOSITION OF 

PROPERTY 

* * * * * * * 

CHAPTER 81—ACQUISITION AND OPERATION OF HOSPITAL AND DOMICILIARY FACILITIES; PROCUREMENT 

AND SUPPLY; ENHANCED-USE LEASES OF REAL PROPERTY 

* * * * * * * 

SUBCHAPTER II—PROCUREMENT AND SUPPLY 

* * * * * * * 

§ 8127. Small business concerns owned and controlled by 

veterans: contracting goals and preferences 

(a) CONTRACTING GOALS.—(1) In order to increase contracting opportunities for small business concerns owned and controlled by 

veterans and small business concerns owned and controlled by veterans with service-connected disabilities, the Secretary shall— 

(A) establish a goal for each fiscal year for participation 

in Department contracts (including subcontracts) by small 

business concerns owned and controlled by veterans who 

are not veterans with service-connected disabilities in accordance with paragraph (2); and 

(B) establish a goal for each fiscal year for participation 

in Department contracts (including subcontracts) by small 

business concerns owned and controlled by veterans with 

service-connected disabilities in accordance with paragraph 

(3). 

(2) The goal for a fiscal year for participation under paragraph (1)(A) shall be determined by the Secretary. 

(3) The goal for a fiscal year for participation under paragraph (1)(B) shall be not less than the Government-wide goal 

for that fiscal year for participation by small business concerns 

owned and controlled by veterans with service-connected disabilities under section 15(g)(1) of the Small Business Act (15 

U.S.C. 644(g)(1)). 

8 

(4) The Secretary shall establish a review mechanism to ensure that, in the case of a subcontract of a Department contract that is counted for purposes of meeting a goal established 

pursuant to this section, the subcontract was actually awarded 

to a business concern that may be counted for purposes of 

meeting that goal. 

(b) USE OF NONCOMPETITIVE PROCEDURES FOR CERTAIN SMALL

CONTRACTS.—For purposes of meeting the goals under subsection 

(a), and in accordance with this section, in entering into a contract 

with a small business concern owned and controlled by veterans for 

an amount less than the simplified acquisition threshold (as defined in section 134 of title 41), a contracting officer of the Department may use procedures other than competitive procedures. 

(c) SOLE SOURCE CONTRACTS FOR CONTRACTS ABOVE SIMPLIFIED

ACQUISITION THRESHOLD.—For purposes of meeting the goals 

under subsection (a), and in accordance with this section, a contracting officer of the Department may award a contract to a small 

business concern owned and controlled by veterans using procedures other than competitive procedures if— 

(1) such concern is determined to be a responsible source 

with respect to performance of such contract opportunity; 

(2) the anticipated award price of the contract (including options) will exceed the simplified acquisition threshold (as defined in section 134 of title 41) but will not exceed $5,000,000; 

and 

(3) in the estimation of the contracting officer, the contract 

award can be made at a fair and reasonable price that offers 

best value to the United States. 

(d) USE OF RESTRICTED COMPETITION.—Except as provided in 

subsections (b) and (c), for purposes of meeting the goals under 

subsection (a), and in accordance with this section, a contracting officer of the Department shall award contracts on the basis of competition restricted to small business concerns owned and controlled 

by veterans if the contracting officer has a reasonable expectation 

that two or more small business concerns owned and controlled by 

veterans will submit offers and that the award can be made at a 

fair and reasonable price that offers best value to the United 

States. 

(e) ELIGIBILITY OF SMALL BUSINESS CONCERNS.—A small business concern may be awarded a contract under this section only if 

the small business concern and the veteran owner of the small 

business concern are listed in the database of veteran-owned businesses maintained by the Secretary under subsection (f). 

(f) DATABASE OF VETERAN-OWNED BUSINESSES.—(1) Subject to 

paragraphs (2) through (6), the Secretary shall maintain a database of small business concerns owned and controlled by veterans 

and the veteran owners of such business concerns. 

(2)(A) To be eligible for inclusion in the database, such a veteran shall submit to the Secretary such information as the Secretary may require with respect to the small business concern 

or the veteran. Application for inclusion in the database shall 

constitute permission under section 552a of title 5 (commonly 

referred to as the Privacy Act) for the Secretary to access such 

personal information maintained by the Secretary as may be 

9 

necessary to verify the information contained in the application. 

(B) If the Secretary receives an application for inclusion 

in the database from an individual whose status as a veteran cannot be verified because the Secretary does not 

maintain information with respect to the veteran status of 

the individual, the Secretary may not include the small 

business concern owned and controlled by the individual in 

the database maintained by the Secretary until the Secretary receives such information as may be necessary to 

verify that the individual is a veteran. 

(3) Information maintained in the database shall be submitted on a voluntary basis by such veterans. 

(4) No small business concern may be listed in the database 

until the Secretary has verified that— 

(A) the small business concern is owned and controlled 

by veterans; and 

(B) in the case of a small business concern for which the 

person who owns and controls the concern indicates that 

the person is a veteran with a service-connected disability, 

that the person is a veteran with a service-connected disability. 

(5) The Secretary shall make the database available to all 

Federal departments and agencies and shall notify each such 

department and agency of the availability of the database. 

(6) If the Secretary determines that the public dissemination 

of certain types of information maintained in the database is 

inappropriate, the Secretary shall take such steps as are necessary to maintain such types of information in a secure and 

confidential manner. 

(8)(A) If a small business concern is not included in the database because the Secretary does not verify the status of the 

concern as a small business concern or the ownership or control of the concern, the concern may appeal the denial of 

verification to the Office of Hearings and Appeals of the Small 

Business Administration (as established under section 5(i) of 

the Small Business Act). The decision of the Office of Hearings 

and Appeals shall be considered a final agency action. 

(B)(i) If an interested party challenges the inclusion in 

the database of a small business concern owned and controlled by veterans or a small business concern owned and 

controlled by veterans with service-connected disabilities 

based on the status of the concern as a small business concern or the ownership or control of the concern, the challenge shall be heard by the Office of Hearings and Appeals 

of the Small Business Administration as described in subparagraph (A). The decision of the Office of Hearings and 

Appeals shall be considered final agency action. 

(ii) In this subparagraph, the term ‘‘interested 

party’’ means— 

(I) the Secretary; or 

(II) in the case of a small business concern that 

is awarded a contract, the contracting officer of 

the Department or another small business concern 

that submitted an offer for the contract that was 

10 

awarded to the small business concern that is the 

subject of a challenge made under clause (i). 

(C) For each fiscal year, the Secretary shall reimburse 

the Administrator of the Small Business Administration in 

an amount necessary to cover any cost incurred by the Office of Hearings and Appeals of the Small Business Administration for actions taken by the Office under this paragraph. The Administrator is authorized to accept such reimbursement. The amount of any such reimbursement 

shall be determined jointly by the Secretary and the Administrator and shall be provided from fees collected by 

the Secretary under multiple-award schedule contracts. 

Any disagreement about the amount shall be resolved by 

the Director of the Office of Management and Budget. 

(g) ENFORCEMENT PENALTIES FOR MISREPRESENTATION.—(1) Any 

business concern that is determined by the Secretary to have willfully and intentionally misrepresented the status of that concern as 

a small business concern owned and controlled by veterans or as 

a small business concern owned and controlled by service-disabled 

veterans for purposes of this subsection shall be debarred from contracting with the Department for a period of not less than five 

years. 

(2) In the case of a debarment under paragraph (1), the Secretary shall commence debarment action against the business 

concern by not later than 30 days after determining that the 

concern willfully and intentionally misrepresented the status of 

the concern as described in paragraph (1) and shall complete 

debarment actions against such concern by not later than 90 

days after such determination. 

(3) The debarment of a business concern under paragraph (1) 

includes the debarment of all principals in the business concern for a period of not less than five years. 

(h) TREATMENT OF BUSINESSES AFTER DEATH OF VETERANOWNER.—(1) Subject to paragraph (3), if the death of a veteran 

causes a small business concern to be less than 51 percent owned 

by one or more veterans, the surviving spouse of such veteran who 

acquires ownership rights in such small business concern shall, for 

the period described in paragraph (2), be treated as if the surviving 

spouse were that veteran for the purpose of maintaining the status 

of the small business concern as a small business concern owned 

and controlled by veterans. 

(2) The period referred to in paragraph (1) is the period beginning on the date on which the veteran dies and ending on 

the earliest of the following dates: 

(A) The date on which the surviving spouse remarries. 

(B) The date on which the surviving spouse relinquishes 

an ownership interest in the small business concern. 

(C) The date that is ten years after the date of the veteran’s death. 

(3) Paragraph (1) only applies to a surviving spouse of a veteran with a service-connected disability rated as 100 percent 

disabling or who dies as a result of a service-connected disability. 

11 

(i) PRIORITY FOR CONTRACTING PREFERENCES.—Preferences for 

awarding contracts to small business concerns shall be applied in 

the following order of priority: 

(1) Contracts awarded pursuant to subsection (b), (c), or (d) 

to small business concerns owned and controlled by veterans 

with service-connected disabilities. 

(2) Contracts awarded pursuant to subsection (b), (c), or (d) 

to small business concerns owned and controlled by veterans 

that are not covered by paragraph (1). 

(3) Contracts awarded pursuant to— 

(A) section 8(a) of the Small Business Act (15 U.S.C. 

637(a)); or 

(B) section 31 of such Act (15 U.S.C. 657a). 

(4) Contracts awarded pursuant to any other small business 

contracting preference. 

(j) APPLICABILITY OF REQUIREMENTS TO CONTRACTS.—(1) If after 

December 31, 2008, the Secretary enters into a contract, memorandum of understanding, agreement, or other arrangement with 

any governmental entity to acquire goods or services, the Secretary 

shall include in such contract, memorandum, agreement, or other 

arrangement a requirement that the entity will comply, to the maximum extent feasible, with the provisions of this section in acquiring such goods or services. 

(2) Nothing in this subsection shall be construed to supersede or otherwise affect the authorities provided under the 

Small Business Act (15 U.S.C. 631 et seq.). 

(k) ANNUAL REPORTS.—Not later than December 31 each year, 

the Secretary shall submit to Congress a report on small business 

contracting during the fiscal year ending in such year. Each report 

shall include, for the fiscal year covered by such report, the following: 

(1) The percentage of the total amount of all contracts 

awarded by the Department during that fiscal year that were 

awarded to small business concerns owned and controlled by 

veterans. 

(2) The percentage of the total amount of all such contracts 

awarded to small business concerns owned and controlled by 

veterans with service-connected disabilities. 

(3) The percentage of the total amount of all contracts 

awarded by each Administration of the Department during 

that fiscal year that were awarded to small business concerns 

owned and controlled by veterans. 

(4) The percentage of the total amount of all contracts 

awarded by each such Administration during that fiscal year 

that were awarded to small business concerns owned and controlled by veterans with service-connected disabilities. 

(l) LIMITATIONS ON SUBCONTRACTING.—(1)(A) The requirements 

applicable to a covered small business concern under section 46 of 

the Small Business Act (15 U.S.C. 657s) shall apply with respect to 

a small business concern owned and controlled by veterans that is 

awarded a contract under this section. 

(B) For purposes of applying the requirements of section 46 of the 

Small Business Act (15 U.S.C. 657s) pursuant to subparagraph (A), 

the term ‘‘similarly situated entity’’ used in such section 46 includes 

12 

a subcontractor for a small business concern owned and controlled 

by veterans described in such subparagraph (A). 

(2) The Secretary may award a contract under this section only 

after the Secretary obtains from the offeror a certification that the 

offeror will comply with the requirements described in paragraph 

(1)(A) if awarded the contract. Such certification shall— 

(A) specify the exact performance requirements applicable 

under such paragraph; and 

(B) explicitly acknowledge that the certification is subject to 

section 1001 of title 18. 

(3)(A) The Director of Small and Disadvantaged Business Utilization for the Department, established pursuant to section 15(k) of the 

Small Business Act (15 U.S.C. 644(k)), and the Chief Acquisition 

Officer of the Department, established pursuant to section 1702 of 

title 41, shall jointly implement a process using the systems described in section 16(g)(2) of the Small Business Act (15 U.S.C. 

645(g)(2)), and any other relevant systems available, to monitor 

compliance with this subsection. 

(B) The Director of Small and Disadvantaged Business Utilization and the Chief Acquisition Officer shall jointly refer any violations or suspected violations of this subsection to the Inspector General of the Department. 

(C) If the Secretary determines, in consultation with the Inspector 

General of the Department, that a small business concern that is 

awarded a contract under this section did not act in good faith with 

respect to the requirements described in paragraph (1)(A), the small 

business concern shall be subject to any or all of the following consequences— 

(i) referral to the Debarment and Suspension Committee of 

the Department; 

(ii) a fine under section 16(g)(1) of the Small Business Act (15 

U.S.C. 645(g)(1)); and 

(iii) prosecution for violating section 1001 of title 18. 

(D) Not later than November 30 of each year, the Inspector General shall submit to the Committees on Veterans’ Affairs of the Senate and House of Representatives a report for the fiscal year preceding the fiscal year during which the report is submitted that includes, for the fiscal year covered by the report— 

(i) the number of referred violations and suspected violations 

received under subparagraph (B); and 

(ii) the disposition of such referred violations, including the 

number of small business concerns suspended or debarred from 

Federal contracting or referred to the Attorney General for prosecution. 

ø(l)¿ (m) DEFINITIONS.—In this section: 

(1) The term ‘‘small business concern’’ has the meaning given 

that term under section 3 of the Small Business Act (15 U.S.C. 

632). 

(2) The term ‘‘small business concern owned and controlled 

by veterans’’ means a small business concern— 

(A)(i) not less than 51 percent of which is owned by one 

or more veterans or, in the case of a publicly owned business, not less than 51 percent of the stock of which is 

owned by one or more veterans; and 

13 

(ii) the management and daily business operations 

of which are controlled by one or more veterans; or 

(B) not less than 51 percent of which is owned by one 

or more veterans with service-connected disabilities that 

are permanent and total who are unable to manage the 

daily business operations of such concern or, in the case of 

a publicly owned business, not less than 51 percent of the 

stock of which is owned by one or more such veterans. 

* * * * * * * 

Æ