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[House Report 115-250]
[From the U.S. Government Publishing Office]

115th Congress   }                                     {       Report
                        HOUSE OF REPRESENTATIVES
 1st Session     }                                     {      115-250

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  ENSURING VETERAN ENTERPRISE PARTICIPATION IN STRATEGIC SOURCING ACT

                                _______
                                

 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. 2781]

    The Committee on Veterans' Affairs, to whom was referred 
the bill (H.R. 2781) to direct the Secretary of Veterans 
Affairs to certify the sufficient participation of small 
business concerns owned and controlled by veterans and small 
business concerns owned by veterans with service-connected 
disabilities in contracts under the Federal Strategic Sourcing 
Initiative, and for other purposes, having considered the same, 
report favorably thereon with an amendment and recommend that 
the bill as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     2
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Hearings.........................................................     4
Subcommittee Consideration.......................................     4
Committee Consideration..........................................     4
Committee Votes..................................................     4
Committee Oversight Findings.....................................     5
Statement of General Performance Goals and Objectives............     5
New Budget Authority, Entitlement Authority, and Tax Expenditures     5
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..............................     6
Statement on Duplication of Federal Programs.....................     6
Disclosure of Directed Rulemaking................................     6
Section-by-Section Analysis of the Legislation...................     6
Changes in Existing Law Made by the Bill as Reported.............     7

                               AMENDMENT

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Ensuring Veteran Enterprise 
Participation in Strategic Sourcing Act''.

SEC. 2. SECRETARY OF VETERANS AFFAIRS CERTIFICATION OF SUFFICIENT 
                    PARTICIPATION OF SMALL BUSINESS CONCERNS OWNED AND 
                    CONTROLLED BY VETERANS AND SMALL BUSINESS CONCERNS 
                    OWNED BY VETERANS WITH SERVICE-CONNECTED 
                    DISABILITIES IN CONTRACTS UNDER THE FEDERAL 
                    STRATEGIC SOURCING INITIATIVE.

  (a) Certification Required.--Not later than 180 days after the date 
of the enactment of this Act, the Secretary of Veterans Affairs shall 
submit to the Committees on Veterans' Affairs of the House of 
Representatives and the Senate certification in writing that with 
respect to each contract (except for domestic delivery services) 
awarded under the Federal Strategic Sourcing Initiative (managed by the 
Office of Federal Procurement Policy) a sufficient number of small 
business concerns owned and controlled by veterans and a sufficient 
number of small business concerns owned and controlled by veterans with 
service-connected disabilities are represented within each category.
  (b) Insufficient Representation.--If the Secretary determines that 
the representation by small business concerns owned and controlled by 
veterans or small business concerns owned and controlled by veterans 
with service-connected disabilities within a category of the contracts 
awarded under such Federal Strategic Sourcing Initiative is not a 
sufficient number, the Secretary shall--
          (1) consult with the Administrator of the General Services 
        Administration to increase the number of such concerns awarded 
        contracts under such category; or
          (2) require the Department of Veterans Affairs to stop 
        awarding orders under that category of the Initiative, 
        effective on the date of such determination.
  (c) Definitions.--In this section:
          (1) The terms ``small business concern owned and controlled 
        by veterans'' and ``small business concern owned and controlled 
        by veterans with service-connected disabilities'' have the 
        meaning given such terms in section 8127(k) of title 38, United 
        States Code.
          (2) The term ``category'' means--
                  (A) a type of supply or service for which a suite of 
                contracts has been established under the Federal 
                Strategic Sourcing Initiative; or
                  (B) any further subdivision or grouping within such a 
                suite of contracts.
          (3) The term ``sufficient number'', with respect to a type of 
        business concern, means not fewer than two and enough to 
        maximize the percentage of orders entered into by the Secretary 
        with such business concerns, as determined by the Secretary.

                          PURPOSE AND SUMMARY

    H.R. 2781, the ``Ensuring Veteran Enterprise Participation 
in Strategic Sourcing Act,'' was introduced by Representative 
Neal Dunn of Florida on June 6, 2017. H.R. 2781, as amended, 
would direct the Secretary of the Department of Veterans 
Affairs (VA) to certify whether the number of Veteran- and 
Service Disabled Veteran-Owned Small Businesses represented on 
each category of contract within the Federal Strategic Sourcing 
Initiative is sufficient. If insufficient in any category, VA 
shall consult with the General Services Administration (GSA) to 
increase the number of contracts held by Veteran- and Service 
Disabled Veteran-Owned Small Businesses holding the contracts, 
or stop purchasing in the insufficient category.

                  BACKGROUND AND NEED FOR LEGISLATION

    The Federal Strategic Sourcing Initiative (FSSI) is a suite 
of contracts awarded by GSA for use by all federal agencies to 
purchase common supplies and services, including building 
maintenance, mobile phone services, janitorial products, office 
supplies, domestic delivery, and maintenance and repair. The 
term ``Federal Strategic Sourcing Initiative'' does not include 
or pertain to any other contracts, awarded by GSA or any other 
agency, for the purpose of strategic sourcing. There are many 
contracts for the purpose of strategic sourcing, referred to 
variously as Federal Supply Schedule contracts, Government-wide 
Acquisition Contracts, Multiple-award Contracts, or other 
terms; the legislation has no bearing on these contracts.
    The FSSI contracts for most of the six types of items 
listed above are awarded to between 10 and 20 companies, 
consisting of large businesses and various types of small 
businesses, including Veteran Owned Small Businesses (VOSBs) 
and Service Disabled Veteran Owned Small Businesses (SDVOSBs). 
The categories of contracts are further subdivided into 
groupings, variously called tracks or contract line items. Each 
grouping consists of fewer contracts. No contractor receives 
any business by merely holding an FSSI contract. An agency must 
decide to place an order against the FSSI contract, and 
agencies typically do this by selecting the appropriate 
contract category or subdivision grouping and requesting 
pricing from each company represented within it. Agencies then 
award an order to the company quoting the lowest price. In some 
subdivision groupings, no VOSBs or SDVOSBs hold contracts, 
meaning no VOSBs or SDVOSBs are eligible to receive any orders. 
Agencies wishing to avoid doing business with VOSBs or SDVOSBs, 
including VA, may deliberately select groupings where they are 
not represented. This is relatively easy to do, because many of 
the same items can be obtained in multiple groupings.
    The Veterans Benefits, Health Care, and Information 
Technology Act of 2006 (38 U.S.C. 8127) gave VOSBs and 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, including in 
particular contracts awarded and administered by other agencies 
but used by VA, such as the FSSI contracts.
    The FSSI contracts have emerged as a loophole to the Rule 
of Two's proper application since Kingdomware. When there are 
no VOSBs or SDVOSBs holding contracts within a particular FSSI 
category or subdivision grouping, some contracting officers 
have searched for VOSBs or SDVOSBs, found none because there 
are none represented, and proceeded to order from another type 
of business. This is contrary to the letter and spirit of the 
Rule of Two. VA's policy in that situation directs the 
contracting officer to disregard the FSSI and either use 
another equivalent, existing contract or create a new contract. 
Contracting officers do not always follow this policy, and when 
they do, disregarding the FSSI contracts and replicating them 
is inefficient. A much better solution is to make VOSB and 
SDVOSB representation adequate in all aspects of the FSSI 
contracts, so they can always be used.

                                HEARINGS

    There were no full Committee hearings held on H.R. 2781.
    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, National 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. 2781 reported favorably to the full 
Committee. A motion by Representative Ann McLane Kuster of New 
Hampshire to report H.R. 2781 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. 2781, as 
amended, reported favorably to the House of Representatives by 
voice vote. During consideration of the bill, the following 
amendment was considered and agreed to by voice vote:
    An amendment to H.R. 2781 offered by Representative Neal 
Dunn of Florida.
    A motion by Representative Tim Walz of Minnesota to report 
H.R. 2781, as amended, 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. 2781, as 
amended, 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 require the Secretary of Veterans 
Affairs to certify adequacy of Veteran- and Service Disabled 
Veteran-Owned Small Business representation on all categories 
of the Federal Strategic Sourcing Initiative contracts, and if 
insufficient, consult with the General Services Administration 
to increase their representation or cease using the 
insufficient categories.

   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.

                  EARMARKS AND TAX AND TARIFF BENEFITS

    H.R. 2781, as amended, 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. 
2781, as amended,

                   CONSTITUTIONAL AUTHORITY STATEMENT

    Pursuant to Article I, section 8 of the United States 
Constitution, H.R. 2781, as amended, 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. 2781, as amended, 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. 2781, as amended, 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. 2781, as amended, contains no directed rule making that 
would require the Secretary to prescribe regulations.

             SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title

    Section 1 cites the short title of H.R. 2781, as amended, 
to be the ``Ensuring Veteran Enterprise Participation in 
Strategic Sourcing Act.''

Section 2. Secretary of Veterans Affairs certification of sufficient 
        participation of small business concerns owned and controlled 
        by veterans and small business concerns owned by veterans with 
        service-connected disabilities in contracts under the Federal 
        Strategic Sourcing Initiative

    Section 2(a) would require the Secretary of Veterans 
Affairs to certify in writing to the Committees on Veterans' 
Affairs of the House and Senate that, with respect to each 
contract awarded under the Federal Strategic Sourcing 
Initiative, a sufficient number of Veteran Owned Small 
Businesses and Service Disabled Veteran Owned Small Businesses 
are represented within each category, excluding Domestic 
Delivery Services.
    Section 2(b) would require the Secretary to consult with 
the Administrator of the General Services Administration to 
increase the number of Veteran Owned Small Businesses and 
Service Disabled Veteran Owned Small Businesses awarded 
contracts under a particular category of the Federal Strategic 
Sourcing Initiative, or require VA to stop awarding orders 
under that category effective on the date of determination, if 
the Secretary determines that category of contracts does not 
have a sufficient number of Veteran Owned Small Businesses and 
Service Disabled Veteran Owned Small Businesses represented.
    Section 2(c) would provide definitions for ``small business 
concern owned and controlled by veterans'', ``small business 
concern owned and controlled by veterans with service-connected 
disabilities'', and ``category'' as they pertain to this 
Section.

         CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    If enacted, this bill would make no changes in existing 
law.

                                  [all]
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