59–006 

114TH CONGRESS REPT. 114–704 " ! HOUSE OF REPRESENTATIVES 2d Session Part 1 

DEFENDING AMERICA’S SMALL CONTRACTORS ACT OF 

2016 

JULY 25, 2016.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. CHABOT, from the Committee on Small Business, 

submitted the following 

R E P O R T 

[To accompany H.R. 4341] 

The Committee on Small Business, to whom was referred the bill 

(H.R. 4341) to amend the Small Business Act to improve transparency and clarity for small businesses, to clarify the role of small 

business advocates, to increase opportunities for competition in 

subcontracting, and for other purposes, having considered the 

same, report favorably thereon with an amendment and recommend that the bill as amended do pass. 

CONTENTS 

I. Amendment ................................................................................................. 1 

II. Purpose of the Bill and Summary ............................................................. 15 

III. Background and the Need for Legislation ................................................ 15 

IV. Hearings ....................................................................................................... 47 

V. Committee Consideration ........................................................................... 48 

VI. Committee Votes ......................................................................................... 49 

VII. Section-by-Section Analysis of H.R. 3850 .................................................. 49 

VIII. Congressional Budget Cost Estimate ........................................................ 58 

IX. Unfunded Mandates .................................................................................... 58 

X. New Budget Authority, Entitlement Authority, and Tax Expenditures 58 

XI. Oversight Findings ...................................................................................... 58 

XII. Statement of Constitutional Authority ...................................................... 58 

XIII. Congressional Accountability Act .............................................................. 59 

XIV. Federal Advisory Committee Statement ................................................... 59 

XV. Statement of No Earmarks ........................................................................ 59 

XVI. Performance Goals and Objectives ............................................................ 59 

XVII. Changes in Existing Law Made by the Bill, as Reported ........................ 59 

I. AMENDMENT

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
2 

SECTION 1. SHORT TITLE. 

(a) SHORT TITLE.—This Act may be cited as the ‘‘Defending America’s Small Contractors Act of 2016’’. 

(b) TABLE OF CONTENTS.—The table of contents for this Act is as follows: 

Sec. 1. Short title. 

TITLE I—IMPROVING TRANSPARENCY AND CLARITY FOR SMALL BUSINESSES 

Sec. 101. Plain language rewrite of requirements for small business procurements. 

Sec. 102. Improving reporting on small business goals. 

Sec. 103. Transparency in small business goals. 

Sec. 104. Uniformity in procurement terminology. 

TITLE II—CLARIFYING THE ROLES OF SMALL BUSINESS ADVOCATES 

Sec. 201. Scope of review by procurement center representatives. 

Sec. 202. Responsibilities of Commercial Market Representatives. 

Sec. 203. Duties of the Office of Small and Disadvantaged Business Utilization. 

Sec. 204. Improving contractor compliance. 

Sec. 205. Responsibilities of Business Opportunity Specialists. 

TITLE III—STRENGTHENING OPPORTUNITIES FOR COMPETITION IN SUBCONTRACTING 

Sec. 301. Good faith in subcontracting. 

Sec. 302. Pilot program to provide opportunities for qualified subcontractors to obtain past performance ratings. 

TITLE IV—MENTOR-PROTEGE PROGRAMS 

Sec. 401. Amendments to the Mentor-Protege Program of the Department of Defense. 

Sec. 402. Improving cooperation between the mentor-protege programs of the Small Business Administration 

and the Department of Defense. 

TITLE V—MISCELLANEOUS 

Sec. 501. Improving education on small business regulations. 

Sec. 502. Protecting task order competition. 

Sec. 503. Improvements to size standards for small agricultural producers. 

Sec. 504. Uniformity in service-disabled veteran definitions. 

Sec. 505. GAO review of the Office of Government Contracting and Business Development of the Small Business Administration. 

Sec. 506. Required reports pertaining to capital planning and investment control. 

Sec. 507. GAO review of surety bonds. 

TITLE I—IMPROVING TRANSPARENCY AND 

CLARITY FOR SMALL BUSINESSES 

SEC. 101. PLAIN LANGUAGE REWRITE OF REQUIREMENTS FOR SMALL BUSINESS PROCUREMENTS. 

Section 15(a) of the Small Business Act (15 U.S.C. 644(a)) is amended to read as 

follows: 

‘‘(a) SMALL BUSINESS PROCUREMENTS.— 

‘‘(1) IN GENERAL.—For purposes of this Act, small business concerns shall receive any award or contract if such award or contract is, in the determination 

of the Administrator and the contracting agency, in the interest of— 

‘‘(A) maintaining or mobilizing the full productive capacity of the United 

States; 

‘‘(B) war or national defense programs; or 

‘‘(C) assuring that a fair proportion of the total purchase and contracts 

for goods and services of the Government in each industry category (as described under paragraph (2)) are awarded to small business concerns. 

‘‘(2) INDUSTRY CATEGORY DEFINED.— 

‘‘(A) IN GENERAL.—In this subsection, the term ‘industry category’ means 

a discrete group of similar goods and services, as determined by the Administrator in accordance with the North American Industry Classification System codes used to establish small business size standards, except that the 

Administrator shall limit an industry category to a greater extent than provided under the North American Industry Classification codes if the Administrator receives evidence indicating that further segmentation of the industry category is warranted— 

‘‘(i) due to special capital equipment needs; 

‘‘(ii) due to special labor requirements; 

‘‘(iii) due to special geographic requirements, except as provided in 

subparagraph (B); 

‘‘(iv) due to unique Federal buying patterns or requirements; or 

‘‘(v) to recognize a new industry. 

‘‘(B) EXCEPTION FOR GEOGRAPHIC REQUIREMENTS.—The Administrator 

may not further segment an industry category based on geographic requirements unless— 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
3 

‘‘(i) the Government typically designates the geographic area where 

work for contracts for goods or services is to be performed; 

‘‘(ii) Government purchases comprise the major portion of the entire 

domestic market for such goods or services; and 

‘‘(iii) it is unreasonable to expect competition from business concerns 

located outside of the general geographic area due to the fixed location 

of facilities, high mobilization costs, or similar economic factors. 

‘‘(3) DETERMINATIONS WITH RESPECT TO AWARDS OR CONTRACTS.—Determinations made pursuant to paragraph (1) may be made for individual awards or 

contracts, any part of an award or contract or task order, or for classes of 

awards or contracts or task orders. 

‘‘(4) INCREASING PRIME CONTRACTING OPPORTUNITIES FOR SMALL BUSINESS

CONCERNS.— ‘‘(A) DESCRIPTION OF COVERED PROPOSED PROCUREMENTS.—The requirements of this paragraph shall apply to a proposed procurement that includes in its statement of work goods or services currently being supplied 

or performed by a small business concern and, as determined by the Administrator— 

‘‘(i) is in a quantity or of an estimated dollar value which makes the 

participation of a small business concern as a prime contractor unlikely; 

‘‘(ii) in the case of a proposed procurement for construction, if such 

proposed procurement seeks to bundle or consolidate discrete construction projects; or 

‘‘(iii) is a solicitation that involves an unnecessary or unjustified bundling of contract requirements. 

‘‘(B) NOTICE TO PROCUREMENT CENTER REPRESENTATIVES.—With respect 

to proposed procurements described in subparagraph (A), at least 30 days 

before issuing a solicitation and concurrent with other processing steps required before issuing the solicitation, the contracting agency shall provide 

a copy of the proposed procurement to the procurement center representative of the contracting agency (as described in subsection (l)) along with a 

statement explaining— 

‘‘(i) why the proposed procurement cannot be divided into reasonably 

small lots (not less than economic production runs) to permit offers on 

quantities less than the total requirement; 

‘‘(ii) why delivery schedules cannot be established on a realistic basis 

that will encourage the participation of small business concerns in a 

manner consistent with the actual requirements of the Government; 

‘‘(iii) why the proposed procurement cannot be offered to increase the 

likelihood of the participation of small business concerns; 

‘‘(iv) in the case of a proposed procurement for construction, why the 

proposed procurement cannot be offered as separate discrete projects; 

or 

‘‘(v) why the agency has determined that the bundling of contract requirements is necessary and justified. 

‘‘(C) ALTERNATIVES TO INCREASE PRIME CONTRACTING OPPORTUNITIES FOR

SMALL BUSINESS CONCERNS.—If the procurement center representative believes that the proposed procurement will make the participation of small 

business concerns as prime contractors unlikely, the procurement center 

representative, within 15 days after receiving the statement described in 

subparagraph (B), shall recommend to the contracting agency alternative 

procurement methods for increasing prime contracting opportunities for 

small business concerns. 

‘‘(D) FAILURE TO AGREE ON AN ALTERNATIVE PROCUREMENT METHOD.—If 

the procurement center representative and the contracting agency fail to 

agree on an alternative procurement method, the Administrator shall submit the matter to the head of the appropriate department or agency for a 

determination. 

‘‘(5) CONTRACTS FOR SALE OF GOVERNMENT PROPERTY.—With respect to a contract for the sale of Government property, small business concerns shall receive 

any such contract if, in the determination of the Administrator and the disposal 

agency, the award of such contract is in the interest of assuring that a fair proportion of the total sales of Government property be made to small business 

concerns. 

‘‘(6) SALE OF ELECTRICAL POWER OR OTHER PROPERY.—Nothing in this subsection shall be construed to change any preferences or priorities established by 

law with respect to the sale of electrical power or other property by the Federal 

Government. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
4 

‘‘(7) COSTS EXCEEDING FAIR MARKET PRICE.—A contract may not be awarded 

under this subsection if the cost of the contract to the awarding agency exceeds 

a fair market price.’’. 

SEC. 102. IMPROVING REPORTING ON SMALL BUSINESS GOALS. 

Section 15(h)(2)(E) of the Small Business Act (15 U.S.C. 644(h)(2)(E)) is amended— 

(1) in clause (i)— 

(A) in subclause (III), by striking ‘‘and’’ at the end; and 

(B) by adding at the end the following new subclauses: 

‘‘(V) that were purchased by another entity after the initial contract was awarded and as a result of the purchase, would no longer 

be deemed to be small business concerns for purposes of the initial 

contract; and 

‘‘(VI) that were awarded using a procurement method that restricted competition to 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, small business 

concerns owned and controlled by women, or a subset of any such 

concerns;’’; 

(2) in clause (ii)— 

(A) in subclause (IV), by striking ‘‘and’’ at the end; and 

(B) by adding at the end the following new subclauses: 

‘‘(VI) that were purchased by another entity after the initial contract was awarded and as a result of the purchase, would no longer 

be deemed to be small business concerns owned and controlled by 

service-disabled veterans for purposes of the initial contract; and 

‘‘(VII) that were awarded using a procurement method that restricted competition to qualified HUBZone small business concerns, 

small business concerns owned and controlled by socially and economically disadvantaged individuals, small business concerns 

owned and controlled by women, or a subset of any such concerns;’’; 

(3) in clause (iii)— 

(A) in subclause (V), by striking ‘‘and’’ at the end; and 

(B) by adding at the end the following new subclauses: 

‘‘(VII) that were purchased by another entity after the initial contract was awarded and as a result of the purchase, would no longer 

be deemed to be qualified HUBZone small business concerns for 

purposes of the initial contract; and 

‘‘(VIII) that were awarded using a procurement method that restricted competition to small business concerns owned and controlled by service-disabled veterans, small business concerns owned 

and controlled by socially and economically disadvantaged individuals, small business concerns owned and controlled by women, or 

a subset of any such concerns;’’; 

(4) in clause (iv)— 

(A) in subclause (V), by striking ‘‘and’’ at the end; and 

(B) by adding at the end the following new subclauses: 

‘‘(VII) that were purchased by another entity after the initial contract was awarded and as a result of the purchase, would no longer 

be deemed to be small business concerns owned and controlled by 

socially and economically disadvantaged individuals for purposes of 

the initial contract; and 

‘‘(VIII) that were awarded using a procurement method that restricted competition to small business concerns owned and controlled by service-disabled veterans, qualified HUBZone small business concerns, small business concerns owned and controlled by 

women, or a subset of any such concerns;’’; 

(5) in clause (v)— 

(A) in subclause (IV), by striking ‘‘and’’ at the end; 

(B) in subclause (V), by inserting ‘‘and’’ at the end; and 

(C) by adding at the end the following new subclause: 

‘‘(VI) that were purchased by another entity after the initial contract was awarded and as a result of the purchase, would no longer 

be deemed to be small business concerns owned by an Indian tribe 

other than an Alaska Native Corporation for purposes of the initial 

contract;’’; 

(6) in clause (vi)— 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
5 

(A) in subclause (IV), by striking ‘‘and’’ at the end; and 

(B) by adding at the end the following new subclause: 

‘‘(VI) that were purchased by another entity after the initial contract was awarded and as a result of the purchase, would no longer 

be deemed to be small business concerns owned by a Native Hawaiian Organization for purposes of the initial contract;’’; 

(7) in clause (vii)— 

(A) in subclause (IV), by striking ‘‘and’’ at the end; and 

(B) by adding at the end the following new subclause: 

‘‘(VI) that were purchased by another entity after the initial contract was awarded and as a result of the purchase, would no longer 

be deemed to be small business concerns owned by an Alaska Native Corporation for purposes of the initial contract; and’’; and 

(8) in clause (viii)— 

(A) in subclause (VII), by striking ‘‘and’’ at the end; 

(B) in subclause (VIII), by striking ‘‘and’’ at the end; and 

(C) by adding at the end the following new subclauses: 

‘‘(IX) that were purchased by another entity after the initial contract was awarded and as a result of the purchase, would no longer 

be deemed to be small business concerns owned and controlled by 

women for purposes of the initial contract; and 

‘‘(X) that were awarded using a procurement method that restricted competition to 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, or a subset of 

any such concerns; and’’. 

SEC. 103. TRANSPARENCY IN SMALL BUSINESS GOALS. 

Section 15(g) of the Small Business Act is amended by adding at the end the following new paragraph: 

‘‘(4) DETERMINATIONS OF THE TOTAL VALUE OF CONTRACT AWARDS.—For purposes of the goals established under paragraphs (1) and (2), the total value of 

contract awards for a fiscal year may not be determined in a manner that excludes the value of a contract based on— 

‘‘(A) where the contract is awarded; 

‘‘(B) where the contract is performed; 

‘‘(C) whether the contract is mandated by Federal law to be performed 

by an entity other than a small business concern; 

‘‘(D) whether funding for the contract is made available in an appropriations Act, if the contract is subject to the requirements of chapter 33 of title 

41, United States Code, or chapter 137 of title 10, United States Code, and 

the Federal Acquisition Regulation; or 

‘‘(E) whether the contract is otherwise subject to the Federal Acquisition 

Regulation.’’. 

SEC. 104. UNIFORMITY IN PROCUREMENT TERMINOLOGY. 

(a) IN GENERAL.—Section 15(j)(1) of the Small Business Act (15 U.S.C. 644(j)(1)) 

is amended by striking ‘‘greater than $2,500 but not greater than $100,000’’ and inserting ‘‘greater than the micro-purchase threshold, but not greater than the simplified acquisition threshold’’. 

(b) TECHNICAL AMENDMENT.—Section 3(m) of the Small Business Act (15 U.S.C. 

632(m)) is amended to read as follows: 

‘‘(m) DEFINITIONS PERTAINING TO CONTRACTING.—In this Act: 

‘‘(1) PRIME CONTRACT.—The term ‘prime contract’ has the meaning given such 

term in section 8701(4) of title 41, United States Code. 

‘‘(2) PRIME CONTRACTOR.—The term ‘prime contractor’ has the meaning given 

such term in section 8701(5) of title 41, United States Code. 

‘‘(3) SIMPLIFIED ACQUISITION THRESHOLD.—The term ‘simplified acquisition 

threshold’ has the meaning given such term in section 134 of title 41, United 

States Code. 

‘‘(4) MICRO-PURCHASE THRESHOLD.—The term ‘micro-purchase threshold’ has 

the meaning given such term in section 1902(a) of title 41, United States Code. 

‘‘(5) TOTAL PURCHASE AND CONTRACTS FOR PROPERTY AND SERVICES.—The 

term ‘total purchases and contracts for property and services’ shall mean total 

number and total dollar amount of contracts and orders for property and services.’’. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
6 

TITLE II—CLARIFYING THE ROLES OF SMALL 

BUSINESS ADVOCATES 

SEC. 201. SCOPE OF REVIEW BY PROCUREMENT CENTER REPRESENTATIVES. 

Section 15(l) of the Small Business Act (15 U.S.C. 644(l)) is amended by adding 

at the end the following: 

‘‘(9) SCOPE OF REVIEW.—The Administrator shall not limit the scope of review 

by the Procurement Center Representative for any solicitation of a contract or 

task order without regard to whether the contract or task order or part of the 

contract or task order is set aside for small business concerns, whether 1 or 

more contract or task order awards are reserved for small business concerns 

under a multiple award contract, or whether or not the solicitation would result 

in a bundled or consolidated contract (as defined in subsection (s)) or a bundled 

or consolidated task order.’’. 

SEC. 202. RESPONSIBILITIES OF COMMERCIAL MARKET REPRESENTATIVES. 

Section 4(h) of the Small Business Act (as added by section 865 of the National 

Defense Authorization Act for Fiscal Year 2016 (Public Law 114–92)) is amended— 

(1) in the subsection heading, by striking ‘‘CERTIFICATION REQUIREMENTS

FOR’’; 

(2) in paragraph (2), by redesignating subparagraphs (A) and (B) as clauses 

(i) and (ii), respectively (and conforming the margins accordingly); 

(3) by amending clause (ii) (as so redesignated) to read as follows: 

‘‘(ii) APPLICATION.—The requirements of clause (i) shall be included 

in any initial job posting for the position of a commercial market representative and shall apply to any person appointed as a commercial 

market representative after November 25, 2015.’’; 

(4) in clause (i) (as so redesignated), by striking ‘‘paragraph (1)’’ and inserting 

‘‘subparagraph (A)’’; 

(5) by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B), respectively (and conforming the margins accordingly); 

(6) in subparagraph (A) (as so redesignated), by striking ‘‘paragraph (2)’’ and 

inserting ‘‘subparagraph (B)’’; and 

(7) by inserting before subparagraph (A) (as so redesignated) the following: 

‘‘(1) DUTIES.—The principal duties of a Commercial Market Representative 

employed by the Administrator and reporting to the senior official appointed by 

the Administrator with responsibilities under sections 8, 15, 31, and 36 (or the 

designee of such official) shall be to advance the policies established in section 

8(d)(1) relating to subcontracting. Such duties shall include— 

‘‘(A) helping prime contractors to find small business concerns that are 

capable of performing subcontracts; 

‘‘(B) for contractors awarded contracts containing the clause described in 

section 8(d)(3), providing— 

‘‘(i) counseling on the contractor’s responsibility to maximize subcontracting opportunities for small business concerns; 

‘‘(ii) instruction on methods and tools to identify potential subcontractors that are small business concerns; and 

‘‘(iii) assistance to increase awards to subcontractors that are small 

business concerns through visits, training, and reviews of past performance; 

‘‘(C) providing counseling on how a small business concern may promote 

its capacity to contractors awarded contracts containing the clause described in section 8(d)(3); and 

‘‘(D) conducting periodic reviews of contractors awarded contracts containing the clause described in section 8(d)(3) to assess compliance with 

subcontracting plans required under section 8(d)(6). 

‘‘(2) CERTIFICATION REQUIREMENTS.—’’. 

SEC. 203. DUTIES OF THE OFFICE OF SMALL AND DISADVANTAGED BUSINESS UTILIZATION. 

Section 15(k) of the Small Business Act (15 U.S.C. 644(k)), as amended by section 

870 of the National Defense Authorization Act for Fiscal Year 2016 (Public Law 

114–92), is amended— 

(1) by striking ‘‘section 8, 15 or 44’’ and inserting ‘‘section 8, 15, 31, 36, or 

44’’; 

(2) by striking ‘‘sections 8 and 15’’ each place such term appears and inserting 

‘‘sections 8, 15, 31, 36, and 44’’; 

(3) in paragraph (10), by striking ‘‘section 8(a)’’ and inserting ‘‘section 8, 15, 

31, or 36’’; 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
7 

(4) by redesignating paragraphs (15), (16), and (17) as paragraphs (16), (17), 

and (18), respectively; 

(5) by inserting after paragraph (14) the following new paragraph: 

‘‘(15) shall review purchases made by the agency greater than the micro-purchase threshold, and less than the simplified acquisition threshold to ensure 

that the purchases have been made in compliance with the provisions of this 

Act and have been properly recorded in the Federal Procurement Data System, 

if the method of payment is a purchase card issued by the Department of Defense pursuant to section 2784 of title 10, United States Code, or by the head 

of an executive agency pursuant to section 1909 of title 41, United States 

Code;’’; and 

(6) in paragraph (17) (as so redesignated)— 

(A) in subparagraph (B), by striking ‘‘and’’ at the end; 

(B) in subparagraph (C), by striking the period at the end and inserting 

‘‘; and’’; and 

(C) by adding at the end the following new subparagraph: 

‘‘(D) any failure of the agency to comply with section 8, 15, 31, or 36.’’. 

SEC. 204. IMPROVING CONTRACTOR COMPLIANCE. 

(a) REQUIREMENTS FOR THE OFFICE OF SMALL AND DISADVANTAGED BUSINESS UTI- LIZATION.—Section 15(k) of the Small Business Act (15 U.S.C. 644(k)(8)), as amended by section 203, is further amended— 

(1) by redesignating paragraphs (16), (17), and (18) as paragraphs (17), (18), 

and (19), respectively; and 

(2) by inserting after paragraph (15) the following new paragraph: 

‘‘(16) shall provide assistance to a small business concern awarded a contract 

or subcontract under this Act or under title 10 or title 41, United States Code, 

in finding resources for education and training on compliance with contracting 

regulations (including the Federal Acquisition Regulation) after award of such 

a contract or subcontract.’’. 

(b) REQUIREMENTS UNDER THE MENTOR-PROTEGE PROGRAM OF THE DEPARTMENT

OF DEFENSE.—Section 831(e)(1) of the National Defense Authorization Act for Fiscal 

Year 1991 (Public Law 101–510; 104 Stat. 1607; 10 U.S.C. 2302 note) is amended— 

(1) in subparagraph (B), by striking ‘‘and’’ at the end; 

(2) in subparagraph (C), by striking the period at the end and inserting ‘‘; 

and’’; and 

(3) by inserting at the end the following new subparagraph: 

‘‘(D) the assistance the mentor firm will provide to the protege firm in 

understanding contract regulations of the Federal Government and the Department of Defense (including the Federal Acquisition Regulation and the 

Defense Federal Acquisition Regulation Supplement) after award of a subcontract under this section, if applicable.’’. 

(c) RESOURCES FOR SMALL BUSINESS CONCERNS.—Section 15 of the Small Business Act (15 U.S.C. 644) is amended by adding at the end the following new subsection: 

‘‘(t) POST-AWARD COMPLIANCE RESOURCES.—The Administrator shall provide to 

small business development centers and entities participating in the Procurement 

Technical Assistance Cooperative Agreement Program under chapter 142 of title 10, 

United States Code, and shall make available on the website of the Administration, 

a list of resources for small business concerns seeking education and assistance on 

compliance with contracting regulations (including the Federal Acquisition Regulation) after award of a contract or subcontract.’’. 

(d) REQUIREMENTS FOR PROCUREMENT CENTER REPRESENTATIVES.—Section 

15(l)(2) of the Small Business Act (15 U.S.C. 644(l)(2)) is amended— 

(1) by redesignating subparagraph (I) as subparagraph (J); 

(2) in subparagraph (H), by striking ‘‘and’’ at the end; and 

(3) by inserting after subparagraph (H) the following new subparagraph: 

‘‘(I) assist small business concerns with finding resources for education 

and training on compliance with contracting regulations (including the Federal Acquisition Regulation) after award of a contract or subcontract; and’’. 

(e) REQUIREMENTS UNDER THE MENTOR-PROTEGE PROGRAM OF THE SMALL BUSI- NESS ADMINISTRATION.—Section 45(b)(3) of the Small Business Act (15 U.S.C. 

657r(b)(3)) is amended by adding at the end the following new subparagraph: 

‘‘(K) The extent to which assistance with compliance with the requirements of contracting with the Federal Government after award of a contract 

or subcontract under this section.’’. 

SEC. 205. RESPONSIBILITIES OF BUSINESS OPPORTUNITY SPECIALISTS. 

Section 4(g) of the Small Business Act (as added by section 865 of the National 

Defense Authorization Act for Fiscal Year 2016 (Public Law 114–92)) is amended— 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
8 

(1) in the subsection heading, by striking ‘‘CERTIFICATION REQUIREMENTS

FOR’’; 

(2) in paragraph (2), by redesignating subparagraphs (A) and (B) as clauses 

(i) and (ii), respectively (and conforming the margins accordingly); 

(3) by amending clause (ii) (as so redesignated) to read as follows: 

‘‘(ii) APPLICATION.—The requirements of clause (i) shall be included 

in any initial job posting for the position of a Business Opportunity 

Specialist and shall apply to any person appointed as a Business Opportunity Specialist after January 3, 2013.’’; 

(4) in clause (i) (as so redesignated), by striking ‘‘paragraph (1)’’ and inserting 

‘‘subparagraph (A)’’ 

(5) by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B), respectively (and conforming the margins accordingly); 

(6) in subparagraph (A) (as so redesignated), by striking ‘‘paragraph (2)’’ and 

inserting ‘‘subparagraph (B)’’; and 

(7) by inserting before subparagraph (A) (as so redesignated) the following: 

‘‘(1) DUTIES.—The exclusive duties of a Business Opportunity Specialist employed by the Administrator and reporting to the senior official appointed by the 

Administrator with responsibilities under sections 8, 15, 31, and 36 (or the designee of such official) shall be to implement sections 7, 8, and 45 and to complete other duties related to contracting programs under this Act. Such duties 

shall include— 

‘‘(A) with respect to small business concerns eligible to receive contracts 

and subcontracts pursuant to section 8(a)— 

‘‘(i) providing guidance, counseling, and referrals for assistance with 

technical, management, financial, or other matters that will improve 

the competitive viability of such concerns; 

‘‘(ii) identifying causes of success or failure of such concerns; 

‘‘(iii) providing comprehensive assessments of such concerns, including identifying the strengths and weaknesses of such concerns; 

‘‘(iv) monitoring and documenting compliance with the requirements 

of sections 7 and 8 and any regulations implementing those sections; 

‘‘(v) explaining the requirements of sections 7, 8, 15, 31, 36 and 45; 

and 

‘‘(vi) advising on compliance with contracting regulations (including 

the Federal Acquisition Regulation) after award of such a contract or 

subcontract; 

‘‘(B) reviewing and monitoring compliance with mentor-protege agreements under section 45; 

‘‘(C) representing the interests of the Administrator and small business 

concerns in the award, modification, and administration of contracts and 

subcontracts awarded pursuant to section 8(a); and 

‘‘(D) reporting fraud or abuse under section 7, 8, 15, 31, 36 or 45 or any 

regulations implementing such sections. 

‘‘(2) CERTIFICATION REQUIREMENTS.—’’. 

TITLE III—STRENGTHENING OPPORTUNITIES 

FOR COMPETITION IN SUBCONTRACTING 

SEC. 301. GOOD FAITH IN SUBCONTRACTING. 

(a) TRANSPARENCY IN SUBCONTRACTING GOALS.—Section 8(d)(9) of the Small Business Act (15 U.S.C. 637(d)(9)) is amended— 

(1) by striking ‘‘(9) The failure’’ and inserting the following: 

‘‘(9) MATERIAL BREACH.—The failure’’; 

(2) in subparagraph (A), by striking ‘‘or’’ at the end; 

(3) in subparagraph (B), by inserting ‘‘or’’ at the end; and 

(4) by inserting after subparagraph (B) the following: 

‘‘(C) assurances provided under paragraph (6)(E),’’. 

(b) AUTHORITY OF THE ADMINISTRATOR OF THE SMALL BUSINESS ADMINISTRATION.—Section 8(d)(11) of the Small Business Act (15 U.S.C. 637(d)(11)) is amended— 

(1) by striking ‘‘(11) In the case of’’ and inserting the following: 

‘‘(11) AUTHORITY OF ADMINISTRATOR.—In the case of’’; and 

(2) in subparagraph (B), by striking ‘‘, which shall be advisory in nature,’’. 

(c) REVIEW AND ACCEPTANCE OF SUBCONTRACTING PLANS.—Section 8(d) of the 

Small Business Act (15 U.S.C. 637(d)) is amended by adding at the end the following: 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
9 

‘‘(17) REVIEW AND ACCEPTANCE OF SUBCONTRACTING PLANS.— 

‘‘(A) DEFINITION.—In this paragraph, the term ‘covered small business 

concerns’ means— 

‘‘(i) small business concerns; 

‘‘(ii) qualified HUBZone small business concerns; 

‘‘(iii) small business concerns owned and controlled by veterans; 

‘‘(iv) small business concerns owned and controlled by service-disabled veterans; 

‘‘(v) small business concerns owned and controlled by socially and 

economically disadvantaged individuals, as defined in paragraph (3)(C); 

and 

‘‘(vi) small business concerns owned and controlled by women. 

‘‘(B) DELAYED ACCEPTANCE OF PLAN.—Except as provided in subparagraph (E), if a procurement center representative or commercial market 

representative determines that a subcontracting plan required under paragraph (4) or (5) fails to provide the maximum practicable opportunity for 

covered small business concerns to participate in the performance of the 

contract to which the plan applies, the representative may delay acceptance 

of the plan in accordance with subparagraph (C). 

‘‘(C) PROCESS FOR DELAYED ACCEPTANCE.— 

‘‘(i) IN GENERAL.—Except as provided in clause (ii), a procurement 

center representative or commercial market representative who makes 

a determination under subparagraph (B) with respect to a subcontracting plan may delay acceptance of the plan for a 30-day period by 

providing written notice of the determination to the head of the procuring activity of the contracting agency that includes recommendations for altering the plan to provide the maximum practicable opportunity described in that subparagraph. 

‘‘(ii) EXCEPTION.—In the case of the Department of Defense— 

‘‘(I) a procurement center representative or commercial market 

representative who makes a determination under subparagraph (B) 

with respect to a subcontracting plan may delay acceptance of the 

plan for a 15-day period by providing written notice of the determination to appropriate personnel of the Department of Defense 

that includes recommendations for altering the plan to provide the 

maximum practicable opportunity described in that subparagraph; 

and 

‘‘(II) the authority of a procurement center representative or commercial market representative to delay acceptance of a subcontracting plan as provided in subparagraph (B) does not include the 

authority to delay the award or performance of the contract concerned. 

‘‘(D) DISAGREEMENTS.—If a procurement center representative or commercial market representative delays the acceptance of a subcontracting plan 

under subparagraph (C) and does not reach agreement with the head of the 

procuring activity of the contracting agency to alter the plan to provide the 

maximum practicable opportunity described in subparagraph (B) not later 

than 30 days after the date on which written notice was provided, the disagreement shall be submitted to the head of the contracting agency by the 

Administrator for a final determination. 

‘‘(E) EXCEPTION.—A procurement center representative or commercial 

market representative may not delay the acceptance of a subcontracting 

plan if the head of the contracting agency certifies that the need of the 

agency for the supplies or services is of such an unusual and compelling urgency that the United States would be seriously injured unless the agency 

is permitted to accept the subcontracting plan.’’. 

(d) GOOD FAITH COMPLIANCE.—Not later than 270 days after the date of enactment of this Act, the Administrator of the Small Business Administration shall 

issue regulations providing examples of activities that would be considered a failure 

to make a good faith effort to comply with the requirements imposed on an entity 

(other than a small business concern as defined under section 3 of the Small Business Act (15 U.S.C. 632)) that is awarded a prime contract containing the clauses 

required under paragraph (4) or (5) of section 8(d) of the Small Business Act (15 

U.S.C. 637(d)). 

SEC. 302. PILOT PROGRAM TO PROVIDE OPPORTUNITIES FOR QUALIFIED SUBCONTRACTORS 

TO OBTAIN PAST PERFORMANCE RATINGS. 

Section 8(d) of the Small Business Act (15 U.S.C. 637(d)), as amended by section 

301, is further amended by adding at the end the following new paragraph: 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
10 

‘‘(18) PILOT PROGRAM PROVIDING PAST PERFORMANCE RATINGS FOR OTHER

SMALL BUSINESS SUBCONTRACTORS.— 

‘‘(A) ESTABLISHMENT.—The Administrator shall establish a pilot program 

for a small business concern performing as a first tier subcontractor for a 

covered contract (as defined in paragraph 13(A)) to request a past performance rating in the system used by the Federal Government to monitor or 

record contractor past performance. 

‘‘(B) APPLICATION.—A small business concern described in subparagraph 

(A) shall submit an application to the appropriate official for a past performance rating. Such application shall include written evidence of the past 

performance factors for which the small business concern seeks a rating 

and a suggested rating. 

‘‘(C) DETERMINATION.—The appropriate official shall submit the application from the small business concern to the contracting officer (or a designee of such officer) for the covered contract and to the prime contractor 

for review. The contracting officer (or designee) and the prime contractor 

shall, not later than 30 days after receipt of the application, submit to the 

appropriate official a response regarding the application. 

‘‘(i) AGREEMENT ON RATING.—If the contracting officer (or designee) 

and the prime contractor agree on a past performance rating, or if either the contracting officer (or designee) or the prime contractor fail to 

respond and the responding individual agrees with the rating of the applicant small business concern, the appropriate official shall enter the 

agreed-upon past performance rating in the system described in subparagraph (A). 

‘‘(ii) DISAGREEMENT ON RATING.—If the contracting officer (or designee) and the prime contractor fail to respond within 30 days or if they 

disagree about the rating, or if either the contracting officer (or designee) or the prime contractor fail to respond and the responding individual disagrees with the rating of the applicant small business concern, the contracting officer (or designee) or the prime contractor shall 

submit a notice contesting the application to appropriate official. The 

appropriate official shall follow the requirements of subparagraph (D). 

‘‘(D) PROCEDURE FOR RATING.—Not later than 14 calendar days after receipt of a notice under subparagraph (C)(ii), the appropriate official shall 

submit such notice to the applicant small business concern. Such concern 

may submit comments, rebuttals, or additional information relating to the 

past performance of such concern not later 14 calendar days after receipt 

of such notice. The appropriate official shall enter the into the system described in subparagraph (A) a rating that is neither favorable nor unfavorable along with the initial application from the small business concern, the 

responses of the contracting officer (or designee) and the prime contractor, 

and any additional information provided by the small business concern. 

‘‘(E) USE OF INFORMATION.—A small business subcontractor may use a 

past performance rating given under this paragraph to establish its past 

performance for a prime contract. 

‘‘(F) DURATION.—The pilot program established under this paragraph 

shall terminate 3 years after the date on which the first small business concern receives a past performance rating for performance as a first tier subcontractor. 

‘‘(G) REPORT.—The Comptroller General of the United States shall begin 

an assessment of the pilot program 1 year after the establishment of such 

program. Not later than 6 months after beginning such assessment, the 

Comptroller General shall submit a report to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small 

Business of the House of Representatives, which shall include— 

‘‘(i) the number of small business concerns that have received past 

performance ratings under the pilot program; 

‘‘(ii) the number of applications in which the contracting officer (or 

designee) or the prime contractor contested the application of the small 

business concern; 

‘‘(iii) any suggestions or recommendations the Comptroller General or 

the small business concerns participating in the program have to address disputes between the small business concern, the contracting officer (or designee), and the prime contractor on past performance ratings; 

and 

‘‘(iv) any suggestions or recommendation the Comptroller General has 

to improve the operation of the pilot program. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
11 

‘‘(H) APPROPRIATE OFFICIAL DEFINED.—In this paragraph, the term ‘appropriate official’ means a Commercial Market Representative or other individual designated by the senior official appointed by the Administrator with 

responsibilities under sections 8, 15, 31, and 36.’’. 

TITLE IV—MENTOR-PROTEGE PROGRAMS 

SEC. 401. AMENDMENTS TO THE MENTOR-PROTEGE PROGRAM OF THE DEPARTMENT OF DEFENSE. 

Section 831 of the National Defense Authorization Act for Fiscal Year 1991 (Public Law 101–510; 104 Stat. 1607; 10 U.S.C. 2302 note) is amended— 

(1) in subsection (d)— 

(A) by amending paragraph (1) to read as follows: 

‘‘(1) prior to the approval of that agreement, the Administrator of the Small 

Business Administration had made no finding of affiliation between the mentor 

firm and the protege firm;’’; 

(B) by redesignating paragraph (2) as paragraph (3); and 

(C) by inserting after paragraph (1) the following new paragraph: 

‘‘(2)(A) the Administrator of the Small Business Administration does not have 

a current finding of affiliation between the mentor firm and protege firm; or 

‘‘(B) the Secretary, after considering the regulations promulgated by the Administrator of the Small Business Administration regarding affiliation— 

‘‘(i) does not have reason to believe that the mentor firm affiliated with 

the protege firm; or 

‘‘(ii) has received a formal determination of no affiliation between the 

mentor firm and protege firm from the Administrator after having submitted a question of affiliation to the Administrator; and’’; 

(2) in subsection (n), by amending paragraph (9) to read as follows: 

‘‘(9) The term ‘affiliation’, with respect to a relationship between a mentor 

firm and a protege firm, means a relationship described under section 121.103 

of title 13, Code of Federal Regulations (or any successor regulation).’’; and 

(3) in subsection (f)(6)— 

(A) in subparagraph (B), by striking ‘‘or’’ at the end; 

(B) in subparagraph (C), by striking the period at the end and inserting 

‘‘; or’’; and 

(C) by adding at the end the following: 

‘‘(D) women’s business centers described in section 29 of the Small Business Act (15 U.S.C. 656).’’. 

SEC. 402. IMPROVING COOPERATION BETWEEN THE MENTOR-PROTEGE PROGRAMS OF THE 

SMALL BUSINESS ADMINISTRATION AND THE DEPARTMENT OF DEFENSE. 

Section 45(b)(4) of the Small Business Act (15 U.S.C. 657r(b)(4)) is amended by 

striking subparagraph (A) and redesignating subparagraphs (B) and (C) as subparagraphs (A) and (B), respectively. 

TITLE V—MISCELLANEOUS 

SEC. 501. IMPROVING EDUCATION ON SMALL BUSINESS REGULATIONS. 

Section 15 of the Small Business Act (15 U.S.C. 644), as amended by section 

204(c), is further amended by adding at the end the following new subsection: 

‘‘(u) REGULATORY CHANGES AND TRAINING MATERIALS.—Not less than annually, 

the Administrator shall provide to the Defense Acquisition University (established 

under section 1746 of title 10, United States Code), the Federal Acquisition Institute 

(established under section 1201 of title 41, United States Code), the individual responsible for mandatory training and education of the acquisition workforce of each 

agency (described under section 1703(f)(1)(C) of title 41, United States Code), small 

business development centers, and entities participating in the Procurement Technical Assistance Cooperative Agreement Program under chapter 142 of title 10, 

United States Code— 

‘‘(1) a list of all changes made in the prior year to regulations promulgated— 

‘‘(A) by the Administrator that affect Federal acquisition; and 

‘‘(B) by the Federal Acquisition Council that implement changes to this 

Act; and 

‘‘(2) any materials the Administrator has developed to explain, train, or assist 

Federal agencies or departments or small business concerns to comply with the 

regulations specified in paragraph (1).’’. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
12 

SEC. 502. PROTECTING TASK ORDER COMPETITION. 

Section 4106(f) of title 41, United States Code, is amended by striking paragraph 

(3). 

SEC. 503. IMPROVEMENTS TO SIZE STANDARDS FOR SMALL AGRICULTURAL PRODUCERS. 

(a) AMENDMENT TO DEFINITION OF AGRICULTURAL ENTERPRISES.—Paragraph (1) of 

section 18(b) of the Small Business Act (15 U.S.C. 647(b)(1)) is amended by striking 

‘‘businesses’’ and inserting ‘‘small business concerns’’. 

(b) EQUAL TREATMENT OF SMALL FARMS.—Paragraph (1) of section 3(a) of the 

Small Business Act (15 U.S.C. 632(a)(1)) is amended by striking ‘‘operation: Provided,’’ and all that follows through the period at the end and inserting ‘‘operation.’’. 

(c) UPDATED SIZE STANDARDS.— 

(1) IN GENERAL.—Not later than 18 months after the date of enactment of this 

section, the Administrator of the Small Business Administration shall, by rule, 

establish size standards in accordance with section 3 of the Small Business Act 

(15 U.S.C. 632) for agricultural enterprises (as such term is defined in section 

18(b)(1) of such Act). 

(2) REVIEW.—Size standards established under subsection (a) are subject to 

the rolling review procedures established under section 1344(a) of the Small 

Business Jobs Act of 2010 (15 U.S.C. 632 note). 

SEC. 504. UNIFORMITY IN SERVICE-DISABLED VETERAN DEFINITIONS. 

(a) SMALL BUSINESS DEFINITION OF SMALL BUSINESS CONCERN CONSOLIDATED.— 

Section 3(q) of the Small Business Act (15 U.S.C. 632(q)) is amended— 

(1) by amending paragraph (2) to read as follows: 

‘‘(2) SMALL BUSINESS CONCERN OWNED AND CONTROLLED BY SERVICE-DISABLED

VETERANS.—The term ‘small business concern owned and controlled by servicedisabled veterans’ means any of the following: 

‘‘(A) A small business concern— 

‘‘(i) not less than 51 percent of which is owned by one or more service-disabled veterans or, in the case of any publicly owned business, not 

less than 51 percent of the stock (not including any stock owned by an 

ESOP) of which is owned by one or more service-disabled veterans; and 

‘‘(ii) the management and daily business operations of which are controlled by one or more service-disabled veterans or, in the case of a veteran with permanent and severe disability, the spouse or permanent 

caregiver of such veteran. 

‘‘(B) A small business concern— 

‘‘(i) not less than 51 percent of which is owned by one or more service-disabled veterans with a disability that is rated by the Secretary of 

Veterans Affairs as a permanent and total disability who are unable to 

manage the daily business operations of such concern; or 

‘‘(ii) in the case of a publicly owned business, not less than 51 percent 

of the stock (not including any stock owned by an ESOP) of which is 

owned by one or more such veterans. 

‘‘(C)(i) During the time period described in clause (ii), a small business 

concern that was a small business concern described in subparagraph (A) 

or (B) immediately prior to the death of a service-disabled veteran who was 

the owner of the concern, the death of whom causes the concern to be less 

than 51 percent owned by one or more service-disabled veterans, if— 

‘‘(I) the surviving spouse of the deceased veteran acquires such veteran’s ownership interest in such concern; 

‘‘(II) such veteran had a service-connected disability (as defined in 

section 101(16) of title 38, United States Code) rated as 100 percent 

disabling under the laws administered by the Secretary of Veterans Affairs or such veteran died as a result of a service-connected disability; 

and 

‘‘(III) immediately prior to the death of such veteran, and during the 

period described in clause (ii), the small business concern is included 

in the database described in section 8127(f) of title 38, United States 

Code. 

‘‘(ii) The time period described in this clause is the time period beginning 

on the date of the veteran’s death and ending on the earlier of— 

‘‘(I) the date on which the surviving spouse remarries; 

‘‘(II) the date on which the surviving spouse relinquishes an ownership interest in the small business concern; or 

‘‘(III) the date that is 10 years after the date of the death of the veteran.’’; and 

(2) by adding at the end the following new paragraphs: 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
13 

‘‘(6) ESOP.—The term ‘ESOP’ has the meaning given the term ‘employee 

stock ownership plan’ in section 4975(e)(7) of the Internal Revenue Code of 1986 

(26 U.S.C. 4975(e)(7)). 

‘‘(7) SURVIVING SPOUSE.—The term ‘surviving spouse’ has the meaning given 

such term in section 101(3) of title 38, United States Code.’’. 

(b) VETERANS AFFAIRS DEFINITION OF SMALL BUSINESS CONCERN CONSOLI- DATED.— 

(1) IN GENERAL.—Section 8127 of title 38, United States Code, is amended— 

(A) by striking subsection (h) and redesignating subsections (i) through 

(l) as subsections (h) through (k), respectively; and 

(B) in subsection (k), as so redesignated— 

(i) by amending paragraph (2) to read as follows: 

‘‘(2) The term ‘small business concern owned and controlled by veterans’ has 

the meaning given that term under section 3(q)(3) of the Small Business Act 

(15 U.S.C. 632(q)(3)).’’; and 

(ii) by adding at the end the following new paragraph: 

‘‘(3) The term ‘small business concern owned and controlled by veterans with 

service-connected disabilities’ has the meaning given the term ‘small business 

concern owned and controlled by service-disabled veterans’ under section 3(q)(2) 

of the Small Business Act (15 U.S.C. 632(q)(2)).’’. 

(2) CONFORMING AMENDMENTS.—Such section is further amended— 

(A) in subsection (b), by inserting ‘‘or a small business concern owned and 

controlled by veterans with service-connected disabilities’’ after ‘‘a small 

business concern owned and controlled by veterans’’; 

(B) in subsection (c), by inserting ‘‘or a small business concern owned and 

controlled by veterans with service-connected disabilities’’ after ‘‘a small 

business concern owned and controlled by veterans’’; 

(C) in subsection (d) by inserting ‘‘or small business concerns owned and 

controlled by veterans with service-connected disabilities’’ after ‘‘small business concerns owned and controlled by veterans’’ both places it appears; 

and 

(D) in subsection (f)(1), by inserting ‘‘, small business concerns owned and 

controlled by veterans with service-connected disabilities,’’ after ‘‘small business concerns owned and controlled by veterans’’. 

(c) TECHNICAL CORRECTION.—Section 8(d)(3) of the Small Business Act (15 U.S.C. 

637(d)(3)), is amended by adding at the end the following new subparagraph: 

‘‘(H) In this contract, the term ‘small business concern owned and controlled 

by service-disabled veterans’ has the meaning given that term in section 3(q).’’. 

(d) REGULATIONS RELATING TO DATABASE OF THE SECRETARY OF VETERANS AFFAIRS.— 

(1) REQUIREMENT TO USE CERTAIN SMALL BUSINESS ADMINISTRATION REGULATIONS.—Section 8127(f)(4) of title 38, United States Code, is amended by striking ‘‘verified’’ and inserting ‘‘verified, using regulations issued by the Administrator of the Small Business Administration with respect to the status of the 

concern as a small business concern and the ownership and control of such concern,’’. 

(2) PROHIBITION ON SECRETARY OF VETERANS AFFAIRS ISSUING CERTAIN REGULATIONS.—Section 8127(f) of title 38, United States Code, is amended by adding 

at the end the following new paragraph: 

‘‘(7) The Secretary may not issue regulations related to the status of a concern 

as a small business concern and the ownership and control of such small business 

concern.’’. 

(e) DELAYED EFFECTIVE DATE.—The amendments made by subsections (a), (b), (c), 

and (d) shall take effect on the date on which the Administrator of the Small Business Administration and the Secretary of Veterans Affairs jointly issue regulations 

implementing such sections. Such date shall be not later than 18 months after the 

date of enactment of this Act. 

(f) APPEALS OF INCLUSION IN DATABASE.— 

(1) IN GENERAL.—Section 8127(f) of title 38, United States Code, as amended 

by section 504(d)(2), is further amended by adding at the end the following new 

paragraph: 

‘‘(8)(A) If the Secretary does not verify a concern for inclusion in the database 

under this subsection based on 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 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
14 

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; and 

‘‘(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 awarded to the small business concern that submitted an offer 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.’’. 

(2) EFFECTIVE DATE.—Paragraph (8) of subsection (f) of title 38, United States 

Code, as added by paragraph (1), shall apply with respect to a verification decision made by the Secretary of Veterans Affairs on or after the date of the enactment of this Act. 

SEC. 505. GAO REVIEW OF THE OFFICE OF GOVERNMENT CONTRACTING AND BUSINESS DEVELOPMENT OF THE SMALL BUSINESS ADMINISTRATION. 

(a) STUDY.—Not later than 60 days after the date of the enactment of this Act, 

the Comptroller General of the United States shall initiate a review of the Office 

of Government Contracting and Business Development of the Small Business Administration. Such review shall examine— 

(1) the extent to which the personnel of the Small Business Administration 

who carry out procurement and business development programs report to the 

Office of Government Contracting and Business Development; 

(2) whether greater efficiency and consistency in the certification process of 

procurement and business development programs could be achieved by creating 

a single organizational unit of employees to process all certifications required 

by procurement and business development programs; 

(3) whether greater efficiency and efficacy in the performance of procurement 

and business development programs could be achieved by improving the alignment of the field personnel assigned to such programs; 

(4) how the Office of Government Contracting and Business Development 

could improve its staffing of regulatory drafting functions and its coordination 

with the Federal Acquisition Regulatory Council to ensure timely rulemaking 

by the Small Business Administration; and 

(5) any other areas in which the Comptroller General determines that the 

Small Business Administration could improve its performance with respect to 

procurement and business development programs. 

(b) REPORT.—Not later than 1 year after initiating the review required by paragraph (1), the Comptroller General shall submit a report including the results of the 

review, along with any recommendations for improvements or other suggestions 

with respect to procurement and business development programs, to the Committee 

on Small Business of the House of Representatives and the Committee on Small 

Business and Entrepreneurship of the Senate. 

(c) PROCUREMENT AND BUSINESS DEVELOPMENT PROGRAM DEFINED.—In this Act, 

the term ‘‘procurement and business development program’’ means a program related to procurement or business development established under section 7, 8, 15, 31, 

36, 44, 45, or 46 of the Small Business Act (15 U.S.C. 631 et seq.). 

SEC. 506. REQUIRED REPORTS PERTAINING TO CAPITAL PLANNING AND INVESTMENT CONTROL. 

The information described in 11302(c)(3)(B)(ii) of title 40, United States Code, 

shall be submitted to the Senate Committee on Small Business and Entrepreneurship and the Committee on Small Business of the House of Representatives within 

10 days of transmittal to the Director. 

SEC. 507. GAO REVIEW OF SURETY BONDS. 

Not later than 60 days after the date of the enactment of this Act, the Comptroller 

General of the United States shall initiate a review of surety bonds as they apply 

to federal small business procurement contracts. The review shall examine how freVerDate Sep 11 2014 07:19 Jul 27, 2016 Jkt 059006 PO 00000 Frm 00014 Fmt 6659 Sfmt 6621 E:\HR\OC\HR704P1.XXX HR704P1

smartinez on DSK3GLQ082PROD with REPORTS-HSE
15 

1Originally, 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, § 1, 72 Stat. 384 (1958). The Act is codified at 15 U.S.C. 

§§ 631–657s. 2The Act uses the term ‘‘small business concern.’’ However, this report will use the terms 

‘‘small business’’ and ‘‘small business concern’’ interchangeably unless the context requires a 

specific reference to the term ‘‘small business concern.’’ 

quently bonding requirements are waived by federal agencies, an explanation of the 

standard and process for waiving the requirements, an explanation of the review 

process for such waivers, and in cases when bond requirements are waived, how results compare to instances where requirements are not waived, and the process that 

whistleblowers go through when instances of fraud related to surety bonds are reported. 

II. PURPOSE AND BILL SUMMARY

The purpose of H.R. 4341, the ‘‘Defending America’s Small Contractors Act of 2016,’’ is to amend the Small Business Act (the 

Act) 1 and titles 10, 38 and 41 of the United States Code to reduce 

barriers to the participation of small businesses as prime contractors and subcontractors on federal procurements. Small business 2

participation brings necessary competition to the government marketplace, adds innovation, and creates new jobs. Contracting officers, however, generally prefer contractors with whom they have 

experience; typically, this preference hampers the ability of small 

businesses to obtain federal contracts. Thus, the top 100 contractors to the federal government routinely receive 25 percent of the 

total value of contracts spent in a fiscal year, whereas the over 

300,000 small businesses competing for federal contracts struggle 

to eclipse the 20 percent mark. This overreliance on a limited corps 

of contractors is not good for the industrial base, competition, innovation, job creation, or the needs of the federal government. 

H.R. 4341 seeks to promote small business contracting in five 

ways. First, improves transparency by ensuring that terms used 

throughout federal procurement are used consistently in the Act, 

and by improving the process by which small business participation 

in federal procurement are reported. Second, it clarifies the roles 

of the small business advocates at the Small Business Administration (SBA) and in other federal agencies, while improving compliance assistance. Third, it promotes opportunities for small subcontractors, including a pilot program to provide past performance 

experience to first tier subcontractors, which will assist small subcontractors seeking to transition to prime contracting. Fourth, it 

strengthens the mentor-prote ́ge ́ program at the Department of Defense (DOD), and increases coordination between the SBA mentorprote ́ge ́ program and the DOD program. Finally, H.R. 4341 improves the process by which agencies are educated on small business rules, promotes competition on task orders, allows SBA to use 

reasonable size standards for small agricultural producers, reduces 

the confusion between the service-disabled veteran-owned small 

business (SDVOSB) contracting program run by SBA and a similar 

program at the Department of Veterans Affairs (VA), and asks the 

Comptroller General to review operational issues at SBA. 

III. NEED FOR LEGISLATION

The Act finds that awarding prime contracts to small businesses 

serves the nation in three ways. First, small business contracting 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
16 

3Small Business Act, § 15(a), 15 U.S.C. § 644(a). 

4 Id. 

5 Id. 

6 Additionally, it is worth noting that in obtaining its A grade, the federal government did not 

meet half of its numerical goals SBA, ‘‘FY 2013 Procurement Scorecard,’’ available at https:// 

www.sba.gov/sites/default/files/files/FY13_Government-Wide_SB_Procurement_Scorecard_ Public_View_2014-04-28.pdf. 7 Id. 

is in ‘‘the interest of maintaining or mobilizing the Nation’s full 

productive capacity.’’ 3 Second, small business contracting is ‘‘in the 

interest of war or national defense programs.’’ 4 Third, it serves 

‘‘the interest of assuring that a fair proportion of the total purchases and contracts for property and services for the government 

in each industry category are placed with small-business concerns.’’ 5 Ensuring that small businesses can compete for federal 

contracts offers several benefits—business growth, job creation, 

greater competition, lower prices, and innovation. During the 114th 

Congress, the Small Business Committee has held numerous hearings on small businesses in the industrial base. As shown in Chart 

1, the use of small businesses is declining even as the percentage 

of dollars awarded to small businesses increases.6


smartinez on DSK3GLQ082PROD with REPORTS-HSE
17 

CHART 1. SMALL BUSINESS CONTRACTING FY10–FY14 7

FY 

Total Contract 

Dollars (in Billions) Total Small Busi- ness (SB) Dollars Total Number of SB Actions Total DoD Con- tract Dollars Total DoD Small Business Dollars Total Number of DoD SB Actions Average Value of Small Business Contract Action Average Value of DoD Small Busi- ness Contract Action 

11 ............................................................................................................................. $549.6 $103.6 3,346,553 $374.1 $60.4 2,325,622 $30,957.23 $25,971.55 12 ............................................................................................................................. 518.3 100.0 2,584,893 290.1 60.2 1,453,952 38,686.32 41,404.39 13 ............................................................................................................................. 462.3 91.9 1,560,467 308.5 50.0 711,998 58,892.63 70,224.92 14 ............................................................................................................................. 444.7 98.9 1,390,987 284.7 55.6 745,626 71,100.59 74,568.22 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
18 

8 Analysis based upon FPDS, available at https://www.fpds.gov (last accessed January 28, 

2015). Copies of reports are on file with the Committee. 9Data retrieved from the System for Award Management, available at www.sam.gov (last 

accessed January 28, 2015). This number is down by over 100,000 small businesses from 2012, 

when DSBS reported 382,092 active small businesses. 

From FY11 through FY14, the percentage of dollars awarded to 

small businesses increased each year, from just over 18 percent to 

approximately 22.25 percent.8 At the same time, despite a decline 

in overall federal spending, the dollars awarded to small businesses 

remained fairly constant during this period. While this would normally be heralded as a success, a deeper dive into the numbers 

shows that the number of small business contract actions fell by almost 60 percent and the average size of a contract action increased 

230 percent. This reflects that fewer small businesses are winning 

contracts, but those contracts are worth more, which may indicate 

that some small businesses are doing very well but many others 

are losing opportunities to compete. 

Alarmingly, at the Department of Defense (DoD), which is arguably a better reflection of the federal government’s ability to maintain a healthy industrial base capable of supporting defense programs, the results were worse. The percentage of contract dollars 

awarded to small businesses at DoD increased from just over 16 

percent to just over 19 percent, but the actual dollars only fluctuated by about 10 percent. The number of small business contract 

actions at DoD fell by almost 70 percent, and the value of those 

contract actions rose by nearly 290 percent. 

The declining number of contract actions with small businesses 

cannot simply be explained by shrinking budgets or sequestration, 

because during the same period, the number of contract actions 

with large businesses increased by 8 percent. However, the dollar 

value of the average contract action with a small business increased 230 percent, meaning that fewer small companies are getting contracts, but the contracts they get are getting much bigger. 

Furthermore, the number of companies registered to do business 

with the federal government has dropped by over 100,000 from 

2012, so that only 273,072 small businesses are still registered to 

compete for federal contracts.9 This speaks to a greater problem in 

the industrial base—a declining participation rate. 

Therefore, all the provisions in H.R. 4341 support the better opportunities for small contractors and the replenishment of the industrial base. However, the need for specific provisions varies, and 

will be discussed thematically. 

A. TITLE I

1. Sections 101 and 104 

First, H.R. 4341 attempts to make the Act more accessible. Indeed, the provision in the Act that explains why federal small business contracting is importation—section 15(a) of the Act—is itself 

well-nigh unintelligible. It exists as a series of run-on sentences in 

one subsection that cover issues as diverse as how industries 

should be defined, geographic requirements in contracting, the use 

of set-aside contracts, the federal government’s policy on contract 

bundling and consolidation, the process by which bundling is appealed, contracts for the sale of federal property, sales of timber, 

sales of electric power, and the requirement that the government 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
19 

10Pub. L. No. 95–507 (1978). This Act has no common name and is simply An Act of October 

24, 1978. 11OFPP Policy Letter 91–1 (1991). 12See, e.g., Acquisition Regulation: Implementation of Section 3021 of the Energy Policy Act 

of 1992, Notice of Proposed Rulemaking, 59 Fed. Reg. 35,294, 35,295 (July 11, 1994). 13OFPP Policy Letter 99–1 (1999) rescinding OFPP Policy Letter 91–1. 

not pay more than fair market price. As critical as these policies 

are, it is nearly impossible to locate or discuss them in the current 

format. Likewise, the use of procurement terminology in the Act 

that differs from terms with the same meaning in titles 10, 38, and 

41 of the United States Code and SBA’s own regulations creates 

unnecessary confusion for small businesses. Thus, 32 years after 

the rest of the government decided to adopt uniform procurement 

terminology, sections 101 and 104 of H.R. 4341 amend the Act to 

make use the same words adopted by the rest of the federal government. 

2. Sections 102 and 103 

Second, H.R. 4341 addresses the reporting on the use of small 

businesses. Since the enactment of Public Law 95–507,10 the SBA 

has been responsible for negotiating on small business contracting 

and subcontracting goals with federal departments and agencies 

and then reporting on the attainment of these goals. These requirements became stricter in 1988, when President Reagan signed the 

Business Opportunity Development Reform Act of 1988 (BODRA), 

which for the first time established a statutorily mandated government-wide small business goal of ‘‘not less than 20 percent of the 

total value of all prime contract awards for each Fiscal Year.’’ This 

goal was increased to 23 percent by the Small Business Reauthorization Act of 1997 (SBRA). However, there is still little transparency into how the numbers reported by SBA are achieved. Sections 102 and 103 of H.R. 4341 continue the work of the past 38 

years. 

H.R. 4341 does so by requiring that SBA count all dollars awarded federal prime contracts each year, rather than excluding 19 percent of those dollars before it calculates the percentage awarded to 

small businesses. When the concept of goals was introduced 

through the 1978 and 1988 legislation, none of the Congressional 

authors believed that the phrase ‘‘the total value of all prime contract awards for each fiscal year’’ needed further explanation to define the types of contracts to which the goal applied, or that agencies needed encouragement to reach the goals. However, in 1991 

the Office of Federal Procurement Policy (OFPP) began allowing 11

DOE to count subcontracts awarded by its management and operations (M&O) contractors as if they were prime contracts awarded 

by the DOE.12 This allowed DOE to count 18 percent of its prime 

contract dollars as being awarded to small businesses until 1999, 

when OFPP reversed its decision on the M&O contracts,13 and it 

became apparent that DOE had only been awarding 3 percent of 

its prime contract dollars to small businesses. As previously noted, 

over a decade later, DOE only has a goal of 6 percent small business participation, so the goals are clearly not motivating the agency to improve its performance. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
20 

14SBA, GOALING GUIDELINES FOR THE SMALL BUSINESS PREFERENCE PROGRAMS FOR PRIME

AND SUBCONTRACT FEDERAL PROCUREMENT GOALS AND ACHIEVEMENTS, 68 Fed. Reg. 43,566 

(July 23, 2003). 15SBA, FY 2014 SCORECARD SUMMARY (2015) available at https://www.sba.gov/sites/default/files/files/FY14_Scorecard_Summary_by_Prime_Spend_Subk_and_Plan_Progress_ Scores_2015-05-04.pdf. 16FY 13 NDAA, Pub. L. No. 112–239 (2013); FY 14 NDAA, Pub. L. No. 113–66 (2013); FY 

15 NDAA, Pub. L. No. 113–291 (2014); FY 16 NDAA Pub. L. No. 114–92 (2015). 17FY 13 NDAA at §§ 1621, 1691. 18 Id. at § 1622. 19FY 16 NDAA at § 865 (2015). 

After OFPP changed course on the inclusion of M&O subcontracts, SBA in rules published in 2003 14 began allowing agencies to exclude certain types of contracts from consideration before 

the goal achievements were calculated. Under this method, approximately 20 percent of all prime contract dollars are excluded 

from the contracting base before the goals are calculated, thus inflating the performance of all agencies. It is these exclusions that 

have allowed the federal government to meet the 23 percent goal. 

To make the goals themselves more meaningful, the Defending 

America’s Small Contractors Act defines what types of contracts 

must be included in the goaling base. Examining Fiscal Year 2014 

data, this essentially adds nearly $100 billion to the denominator 

and $10 billion to the numerator when calculating small business 

goal achievement. Recalculating using the more appropriate universe of contracts indicates that the federal government achievement is only 22.25 percent, rather than the 24.99 percent reported 

by SBA.15

Likewise, the bill requires that SBA report on how the goals are 

achieved in two meaningful ways. First, it requires that SBA report 

separately on contracts counted as awards to small businesses if 

the company has since lost its small business status. Second, it 

asks the SBA to segregate dollars attributed to any of the socio-economic subgoals if a procurement preference for another program 

was used. Take, for example, a firm that qualifies as a SDVOSB 

and historically underutilized business zone (HUBZone) participant. If that firm wins an award using a SDVOSB set-aside procurement, when SBA reports the award for purposes of the 

HUBZone goaling report, it does not distinguish this award from 

one that used a HUBZone set-aside procurement. This masks important information about the health of the small business programs. 

B. TITLE II

The bill also furthers the goals of the National Defense Authorization Acts (NDAA) of FY 13, 14, 15, and 16, which have attempted to elevate the roles of small business advocates within 

SBA and at other federal agencies.16 The FY 13 NDAA modernized 

the responsibilities of the Offices of Small and Disadvantaged Business Utilization and the Procurement Center Representatives 

(PCR).17 It further implemented minimum training standards for 

the PCRs and the Business Opportunity Specialists (BOS).18 Likewise, the FY 16 NDAA provided minimum requirements for the 

Commercial Market Representatives (CMR).19 Title II of H.R. 4341 

builds on this foundation. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
21 

20 13 C.F.R. § 125.2(b)(i). 21See, e.g., Committee Memorandum, ‘‘Contracting and Industrial Base II: Bundling, Goaling, 

and the Office of Hearings and Appeals’’ 2–18 (2015), available at http://smbiz.house.gov/ 

uploadedfiles/3-17-2015_hearing_memo.pdf. 22 15 U.S.C. §–633(h). 23SBA, SOP 60–03 (2006). 24FY 13 NDAA at § 1653. 25FY 14 NDAA at § 1614. 26FY 15 NDAA at § 821. 27FY 16 NDAA at § 871. 28 15 U.S.C. § 633(g). 29SBA, SOP 80–05–3A (2008). 

1. Section 201 

First, H.R. 4341 addresses a problem with the regulatory functions of PCRs. The PCR is the last best defense of small businesses 

when contracts are being structured in a way that limits small 

business participation. The Committee and its Subcommittee on 

Contracting and Workforce have held numerous hearings exploring 

how contracts that include small business set-asides, partial setasides, or small business reserves may still be harmful to small 

businesses and to principles of competition, specifically in cases of 

strategic sourcing and consolidation. Indeed, a contract may be a 

total small business contract and still be consolidated, meaning 

that many small businesses were unable to compete. 

Therefore, it is problematic that SBA’s regulations provide that 

the PCR will only ‘‘review all acquisitions that are not set-aside or 

reserved for small businesses above or below the Simplified Acquisition Threshold.’’ 20 Thus, none of the consolidated Federal Strategic Sourcing Contracts—which have excluded thousands of small 

competitors—are subject to PCR review.21 Section 201 of H.R. 4341 

terminates this prohibition. 

2. Sections 202 and 205 

Both the CMR and the BOS lack clear, up to date job descriptions. While, as previously mentioned, the 24 CMRs at SBA have 

educational requirements in the Act, there is no other job description of their roles in statute.22 Instead, their responsibilities are 

covered by SBA’s Standard Operating Procedure (SOP) for the Subcontracting Assistance Plan.23 Unfortunately, this job description 

has not been updated to reflect significant legislative changes to 

the subcontracting requirements. For example, the FY 13 NDAA 

changed the requirements for subcontracting plans.24 The FY 14 

NDAA allowed prime contractors to take credit for lower tier subcontracts awarded to small businesses—something the current SOP 

does not reflect.25 The FY 15 NDAA altered subcontracting requirements for some of the largest defense contractors.26 The FY 16 

NDAA made senior agency executives responsible for subcontracting goals.27 None of these changes are reflected in the SOP or 

the job description. Indeed, the SOP does not even recognize the existence of the federal subcontracting reporting system (FSRS) 

which has been in place for nearly ten years. 

Likewise, the BOS has educational requirements imposed by 

statute, and is tangentially referenced in the Act without a job description or a clear statement of responsibilities.28 So, like the 

CMR, the BOS is reduced to an out-of-date SOP to understand the 

full job description.29 However, to understand their role, it is first 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
22 

30 13 C.F.R. § 124.1002. 31 13 C.F.R. § 124. 32 Id. 33 15 U.S.C. § 633(g). 34 13 C.F.R. § 124. 35 Id. at § 124.104. 36 Id. at § 124.506. 37There is a rebuttable presumption that ‘‘Black Americans; Hispanic Americans; Native 

Americans (American Indians, Eskimos, Aleuts, or Native Hawaiians); Asian Pacific Americans 

(persons with origins from Burma, Thailand, Malaysia, Indonesia, Singapore, Brunei, Japan, 

China (including Hong Kong), Taiwan, Laos, Cambodia (Kampuchea), Vietnam, Korea, The Philippines, U.S. Trust Territory of the Pacific Islands (Republic of Palau), Republic of the Marshall 

Islands, Federated States of Micronesia, the Commonwealth of the Northern Mariana Islands, 

Guam, Samoa, Macao, Fiji, Tonga, Kiribati, Tuvalu, or Nauru); Subcontinent Asian Americans 

(persons with origins from India, Pakistan, Bangladesh, Sri Lanka, Bhutan, the Maldives Islands or Nepal)’’ are socially disadvantaged. 13 C.F.R. § 124.103. 38 15 U.S.C. § 637(a). 39 13 C.F.R. § 124.508. 40 Id. at § 124.201, 124.601. 

necessary to understand the SBA’s 8(a) Business Development Program (8(a) program). 

The 8(a) program is a subset of the small and disadvantaged 

business (SDB) program. SDBs are small businesses at least 51 

percent unconditionally owned by one or more socially and economically disadvantaged individuals.30 Social disadvantage is presumed for members of designated groups, or may be established by 

a preponderance of the evidence for any other individual. Economic 

disadvantage is defined as a net worth of less than $750,000, after 

excluding the value of the individual’s ownership interest the small 

business and the value of the individual’s equity in a primary personal residence.31 A firm certifies as an SDB to either the procuring agency or to a third-party certifier, although all 8(a) firms 

are automatically considered SDBs.32 There is a statutory goal of 

awarding five percent of all prime contract and five percent of all 

subcontract dollars to SDBs.33

The 8(a) program is an important subset of the SDB program. 

8(a) firms are small businesses owned and controlled by socially 

and economically disadvantaged individuals who have applied for 

and been accepted into a nine-year business development program 

at SBA.34 While the definition of social disadvantage is the same 

in the 8(a) program as it is in the SDB program, the definition of 

economic disadvantage is much stricter, with a $250,000 cap on assets outside of the business and primary residence, and a requirement that the individual demonstrate a limited access to capital.35

Participation in the 8(a) program provides important contracting 

preferences such as sole-source contracts up to $4 million ($6.5 million for manufacturing contracts) are the preferred contracting 

method, although competitive 8(a) awards are allowed with the 

permission of the SBA.36

In the 8(a) program, SBA is considered the prime contractor, and 

the 8(a) firm is its subcontractor, which requires agencies to negotiate awards with SBA.37 However, since the 1990s, SBA has been 

entering into Memorandums of Understanding (MOUs) with agencies, allowing agencies to bypass SBA and award contracts directly 

to the 8(a) firms.38 The 8(a) certification is processed by SBA, and 

annual reviews are required throughout the nine years of program 

participation to ensure a firm’s continued eligibility.39 Unlike other 

small business programs, the eligibility of an 8(a) participant cannot be challenged by another 8(a) firm or any other party.40 It is 

the BOS who monitors 8(a) firms to ensures their continued eligiVerDate Sep 11 2014 07:19 Jul 27, 2016 Jkt 059006 PO 00000 Frm 00022 Fmt 6659 Sfmt 6602 E:\HR\OC\HR704P1.XXX HR704P1

smartinez on DSK3GLQ082PROD with REPORTS-HSE
23 

41Data from the Federal Procurement Data System (on file with the Committee). 42 Id. 43 Committee Memorandum, ‘‘Manipulation and Fraud in the Reporting of VA Small Business 

Goals’’ (2015), available at http://smbiz.house.gov/uploadedfiles/6-23-2015_hearing_memo.pdf. 44 Id. 45 15 U.S.C. § 644(j). 

bility for the program, negotiate contracts, and otherwise protect 

the firms and the taxpayers. 

Unlike the CMR and the PCR, there is no comprehensive list of 

BOS available from SBA. Instead, a small business concern must 

visit each district office’s website. A visit to these sites reveals that 

while an average of two to three BOS are assigned to each office, 

most of these BOS are also serve as the HUBZone program liaison, 

veteran-owned small business liaison, and woman-owned small 

business liaison. However, the BOS have an incredibly important 

responsibility that should not be diluted: they are able to authorize 

sole source contracts, and last year these contracts exceeded $9 billion.41 The BOS are the government’s defense against waste, fraud 

and abuse in these programs—necessary as federal data shows that 

over $115 million in 8(a) contracts went to companies that are not 

8(a) firms.42

Sections 202 and 205 remedy this issue by providing statutory 

job descriptions for both the CMRs and the BOSs, including lines 

of authority and incorporating changes made to the contracting 

programs in recent legislation. This should standardize the assistance provided to small businesses, make it easier to deter bad actors, and prevent SBA from diverting these individuals to fill other 

roles. 

3. Section 203 

Section 203 of the bill provides updates to the OSDBU program. 

When Public Law 95–507 was first enacted and created the 

OSDBU, there were no programs in the Act to help SDVOSB or 

HUBZone companies. Therefore, section 203 updates the Act to include responsibility for providing assistance to SDVOSBs and 

HUBZones as part of the job description for the OSDBU. 

Additionally, this section provide an opportunity to limit waste, 

fraud and abuse. In 2015, the Senior Procurement Executive of the 

VA testified that the agency had intentionally concealed at least $6 

billion, and as much as $12 billion, in purchases each year.43 VA 

accomplished this by illegally using government purchase cards 

without an underlying contract vehicle for purchases above $3,000 

and below $150,000.44 Compounding this injury, small businesses have priority for contracts for less than $150,000 but were excluded 

from even bidding on these purchases.45 The VA OSDBU also 

claimed ignorance of the existence of these purchases. Therefore, 

section 203 allows OSDBUs to access credit card data and hopefully prevent a repeat of this travesty. 

4. Section 204 

Further, the PCRs, BOS, and OSDBUs exert a great deal of effort to help small businesses obtain contracts, but very little effort 

is made to help small businesses understand the compliance requirements that come with that contract. This can lead to the 

small business giving the government the good or service it desires 

in a successful fashion, but failing to successfully fulfill the conVerDate Sep 11 2014 07:19 Jul 27, 2016 Jkt 059006 PO 00000 Frm 00023 Fmt 6659 Sfmt 6602 E:\HR\OC\HR704P1.XXX HR704P1

smartinez on DSK3GLQ082PROD with REPORTS-HSE
24 

46 15 U.S.C. § 637(d). 47 H.R. REP. NO. 95–949, at 5 (1978). 48FY 2014 SCORECARD SUMMARY. 

tract due to a miscomprehension of regulatory peculiarities. There 

are private sector resources available to assist these small companies, including the Defense Industries Initiative and the Procurement Technical Assistance Center program. Therefore, section 204 

of the bill requires that SBA and these advocates help small businesses connect with these resources. 

C. TITLE III

1. Section 301 

Public Law 95–507 also sought to increase subcontracting opportunities for small businesses by requiring that other than small 

businesses receiving prime contracts negotiate subcontracting plans 

with the federal government that would incorporate goals for the 

use of small businesses.46 According to Committee reports, this requirement was added because small businesses were receiving only 

37.5 percent of subcontract dollars.47 Since that time, it has been 

the responsibility of the SBA to establish a government-wide subcontracting goal. However, the current SBA-established goal is 

34.06 percent, which is more than 3 percent less than the actual 

results thirty-eight years ago that spurred the creation of government-wide subcontracting goals.48

As the graph below illustrates, while SBA has steadily decreased 

the subcontracting goals from 36 percent to 34 percent over the last 

five years, subcontracting achievements have fallen from 35 percent to 33 percent. Each time SBA decreases the goals, agencies 

manage to subcontract less with small businesses. This results in 

real losses to small businesses. For example, FY 2013, small businesses received $86.7 billion in subcontracts, which is just about $5 

billion less than they received in prime contracts. If federal agencies had met the then-goal of 36 percent, subcontract would have 

accounted for more dollars to small business than prime contracts. 

The fact that the goal keeps decreasing indicates that less and less 

is being provided to small subcontractors. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
25 

49Graph based on data from FY 2014 Procurement Scorecard, FY 2013 Procurement Scorecard; SBA ‘‘FY 2012 Procurement Scorecard,’’ available at https://www.sba.gov/sites/default/ 

files/files/FY12_Final_Scorecard_Government_Wide_2013-06-20.pdf (last accessed November 16, 

2015); SBA, ‘‘FY 2011 Procurement Scorecard,’’ available at https://www.sba.gov/sites/default/ 

files/files/FY11%20Final%20Scorecard%20Government-Wide_2012-06-29.pdf (last accessed November 16, 2015); SBA, ‘‘FY 2010 Procurement Scorecard,’’ available at https://www.sba.gov/ 

sites/default/files/files/FY10%20SB%20Procurement%20Scorecard_FINAL_ GOVERNMENT%20WIDE.pdf (last accessed November 16, 2015). 50 15 U.S.C. § 637(d). 51FAR § 19.7. 52 15 U.S.C. § 637(d). 53DODIG, SMALL BUSINESS CONTRACTING AT REGIONAL CONTRACTING OFFICE—NATIONAL

CAPITAL REGION NEEDS IMPROVEMENT (DODIG-2015-095), available at http://www.dodig.mil/ 

pubs/documents/DODIG-2015-095.pdf [hereinafter ‘‘NCR Report’’]; DODIG, SMALL BUSINESS

CONTRACTING AT MARINE CORPS SYSTEMS COMMAND NEEDS IMPROVEMENT (DODIG 2016–019), 

available at http://www.dodig.mil/pubs/documents/DODIG-2016-019.pdf [hereinafter ‘‘MCSC 

Report’’]. 

Subcontracting Goals versus Results 49

To figure out why this backsliding is occurring, it is important 

to understand how subcontracting opportunities are established 

and tracked. According to the Act, any procurement exceeding 

$700,000 ($1.5 million for construction) that is awarded to an 

other-than-small business must include a negotiated subcontracting 

plan detailing opportunities for small business participation.50

While PCRs may review these plans, they may not protest a solicitation or award on belief that the goals are inadequate. The prime 

contractor is then required to report its subcontracting, including 

the percentage awarded to each type of small business, either every 

six months or once a year, depending on the type of plan.51 Failure 

to make a good faith effort to comply with the plan can result in 

a prime contractor being assessed liquidated damages.52

However, reviews of the data submitted to the combined federal 

subcontracting reporting system (FSRS) and the electronic subcontracting reporting system (eSRS) demonstrate that approximately 

40 percent of companies required to have with subcontracting plans 

are not reporting the required data. This means that the 32 percent achievement level reported by SBA is overinflated, since it 

does not account for those contractors not reporting any data. 

Recent audits by the DoD Inspector General (DODIG) also found 

discrepancies.53 For example, the DODIG reviewed seven contracts 


smartinez on DSK3GLQ082PROD with REPORTS-HSEInsert graphic 25 HR704.001
26 

54 NCR Report at 10. 55 Id. 56 NCR Report at 10–11. One of the contracts without a subcontracting plan was a follow on 

to a contract that also lacked a subcontracting plan. Id. 57 Id. 58 Id. 59 Id. at 10. 60MCSC Report at 11. 61 Id. 62 Id. at 15. 63 Id. at 16. 

at the National Capital Region (NCR) that under the Act needed 

to have a subcontracting plan.54 Of these, only one contract met 

the statutory and regulatory requirements.55 NCR awarded two 

contracts without any subcontracting plan, and two contracts that 

had a subcontracting plan that failed to include any small business 

subcontracting goals.56 These four contracts were valued at $58.2 

million.57 Additionally, the NCR review found that there were two 

contracts valued at $790 million where the contracting officers had 

met the requirements to incorporate a subcontracting plan and 

goals only to fail to track whether the prime contractors met the 

subcontracting requirements.58 The DODIG concluded that ‘‘small 

businesses may not have received subcontract work that large businesses were required to provide, and NCR officials may have 

missed an opportunity to recoup potential liquidated damages of up 

to $153.5 million which they may have been entitled to.’’ 59

Similarly, in its review of the Marine Corps Systems Command, 

(MCSC), the DODIG’s results were similar. Of the 19 contracts 

worth $1.3 billion reviewed, six were awarded without subcontracting plans and two were awarded without verifying that there 

was an approved subcontracting plan.60 On four contracts, MCSC 

failed to track compliance with the subcontracting plan, and on two 

contracts knew the prime contractor was not meeting its small 

business goals but failed to inquire into why the promised subcontracting opportunities had not materialized.61 In one of these cases, 

the prime contractor had committed to $19 million in subcontracts 

with small businesses, but delivered only $1.3 million—less than 

10 percent of the contractually agreed to amount.62 On the other 

contract, only 25 percent of the promised small business subcontracting dollars materialized.63

To address these issues, section 301 makes three changes to the 

Act. First, it requires that failure to submit a subcontracting report 

may be considered a material breach of the Act. Second, it allows 

PCRs to protest an absent or insufficient subcontracting plan. Finally, it requires that SBA issue regulations that explain what it 

means to fail to make a good faith effort to comply, including the 

fact that failure to file a required report is itself evidence of a lack 

of good faith. 

2. Section 302 

Small subcontractors often complain that any efforts to transition 

to prime contractor status are hampered by the lack of a past performance rating. As such, it may only receive a neutral rating in 

that category, meaning that if all other factors are equal it may 

well lose a contract during proposal evaluations. To address this 

problem without creating a significant bureaucracy, H.R. 4341 creVerDate Sep 11 2014 07:19 Jul 27, 2016 Jkt 059006 PO 00000 Frm 00026 Fmt 6659 Sfmt 6602 E:\HR\OC\HR704P1.XXX HR704P1

smartinez on DSK3GLQ082PROD with REPORTS-HSE
27 

64FY 2016 NDAA at § 861; FY 1991 NDAA, Pub. L. No. 101–510 § 831 (1990). 65 10 U.S.C. § 2302 note; Pub. L. No. 101–510 § 831(a), as amended. 66 H.R. 1481 at § 861(a). 67 It is worth noting that DoD considers organizations employing the severely disabled, tribal 

businesses, historically black colleges and universities and minority institutions of higher learning to be small disadvantaged businesses for purposes of this program. Pub. L. No. 101–510 

§ 831(l). 68 Id. at (c)(2). 69FY 2016 NDAA at § 861(a). 70Pub. L. No. 101–510 § 831(d). 

ates a pilot program for small subcontractors seeking a past performance rating. 

D. TITLE IV

1. Section 401 

The FY 2016 NDAA made significant changes to the DoD mentor-prote ́ge ́ program established by the FY 1991 NDAA.64 While 

most were positive, there were a few unintended consequences. The 

statutory purpose of the DoD program is ‘‘to provide incentives for 

major Department of Defense contractors to furnish disadvantaged 

small business concerns with assistance designed to enhance the 

capabilities of disadvantaged small business concerns to perform as 

subcontractors and suppliers under Department of Defense contracts and other contracts and subcontracts in order to increase the 

participation of such business concerns as subcontractors and suppliers under Department of Defense contracts, other Federal Government contracts, and commercial contracts.’’ 65 The FY 16 NDAA 

altered the purpose to add a requirement that the assistance ‘‘increase the participation of such business concerns as subcontractors and suppliers under Department of Defense contracts, other 

Federal Government contracts, and commercial contracts.’’ 66 This 

change altered the program’s purpose to better reflect the goals of 

the SBA and civilian mentor-prote ́ge ́ programs. 

The DoD program allows small disadvantaged businesses, 

HUBZone business concerns, service-disabled veteran-owned small 

business concerns and women-owned small business concerns to 

participate as prote ́ge ́s.67 These entities may participate as 

prote ́ge ́s at any time.68 The FY 16 NDAA altered eligibility so that 

firms could only participate as prote ́ge ́s for five years after they 

enter their first mentor prote ́ge ́ agreement.69 It also stated that 

prote ́ge ́ firms must be less than half the SBA size standard assigned to the corresponding NAICS code, and that the small business either be a nontraditional defense contractor or be currently 

provide goods or services in the private sector that are critical to 

enhancing the capabilities of the defense supplier base and fulfilling key Department of Defense needs. 

Likewise, while firms with more than $100 million in receipts are 

permitted to act as mentors if the ‘‘mentor firm demonstrates the 

capability to assist in the development of prote ́ge ́ firms,’’ 70 the FY 

16 NDAA also requiree that the mentor not be affiliated with the 

prote ́ge ́, and that the mentor demonstrate that it: (1) is qualified 

to provide assistance in keeping with the purposes of the program; 

(2) is in good financial health and has not been suspended or 

debarred; and (3) ‘‘can impart value to a prote ́ge ́ firm because of 

experience gained as a Department of Defense contractor or 

through knowledge of general business operations and government 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
28 

71FY 2016 NDAA at § 861(a). 72 Id. 73 Id. 74Pub. L. No. 101–510 § 831(f). 75FY 2016 NDAA at § 861(a). 

contracting.’’ 71 The legislation continues to define affiliation using 

the principles delineated by the SBA in regulation. Each of these 

would lead to greater alignment with the SBA program, but does 

raise questions about having DoD determine affiliation. It is to this 

change that H.R. 4341 first addresses itself. 

If DoD is allowed to determine affiliation of small business, and 

thus determine when a business is small or other-than-small, it 

creates the possibility of a conflict. Thus, DoD could find that a 

firm is unaffiliated, and therefore small, while SBA could determine that the firm was affiliated and therefore other-than-small. 

Such a conflict could become untenable, since it would affect which 

contracts are counted towards the governmentwide procurement 

goals, or the eligibility of these companies for other contracts. It 

also creates a workload for DoD’s OSDBU office, when the SBA’s 

Office of Hearings and Appeals (OHA) already has expertise in 

these areas. Therefore, section 401 allows DoD to send cases of possible affiliation to SBA rather than resolving them internally. 

DoD mentor-prote ́ge ́ agreement must detail the assistance to be 

provided to the prote ́ge ́.72 This must include a developmental plan, 

a program participation term, and termination procedures. The FY 

16 NDAA provided greater specificity for the contents of the developmental plan. It required that the plan provide: (1)‘‘factors to assess the prote ́ge ́ firm’s developmental progress;’’ (2) qualitative and 

quantitate benefits’’ to DoD, if any; and (3) ‘‘goals for additional 

awards that the prote ́ge ́ firm can compete for’’ outside of the DoD 

program.73 These measures create higher expectations for program 

performance. 

Finally, to incentivize mentors, DoD offers reimbursements and 

credits. DoD reimburses mentors for progress payment or advance 

payment made to prote ́ge ́s under the program if the prote ́ge ́ is acting as a subcontractors on a DoD contract held by the mentor. Additionally, DoD may reimburse costs associated with six types of eligible assistance provided by the mentor. First, DoD allows the 

prote ́ge ́ to use mentor personnel to aid with, general business management, engineering and technical matters, and other areas detained in the developmental plan.74 The statute explicitly allows 

business development assistance. Second, it allows the prote ́ge ́ to 

receive noncompetitive subcontracts from its mentor. Third, it allows mentors to pay progress payments for the prote ́ge ́. Fourth, it 

allows advance payments. Fifth, it allows loans. Sixth, it allows the 

mentor to purchase up to ten percent of the prote ́ge ́. Until the FY 

2016 NDAA, mentors could be reimbursed for referring the prote ́ge ́

to a small business development center (SBDC), procurement technical assistance center (PTAC), or a historically Black college or 

university or a minority institution of higher education (HBCU/ 

MI).75 While H.R. 4341 leaves the exclusion for reimbursement in 

place for this last category of technical assistance, it does expand 

the sources of technical assistance to include Women’s Business 

Centers (WBC). 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
29 

76 Id. 77OSBP, DoD Mentor-Prote ́ge ́ Program 9 (2015), available at http://www.acq.osd.mil/osbp/ 

docs/DoD%20MPP%20Briefing-v07%20-%2031%20JUL%2015.pdf. 78 Id. at 14. 

2. Section 402 

The FY 16 NDAA added reporting requirements for mentor firms 

and review requirements for the DoD OSDBU.76 First, it required 

that mentors annual report on the assistance provided to prote ́ge ́

firms. Second, it required OSBP to review the reports and program 

participants, and terminate those not furthering the purpose of the 

program. This was done to bring the DoD program and objectives 

further in line with the government wide mentor-prote ́ge ́ program 

managed by SBA. 

Currently, DoD measures success in its program by looking at 

three factors which it tracks for up to two years after completion 

of the mentor-prote ́ge ́ agreement.77 First, it examines whether the 

dollar value of contracts, subcontracts and revenue received by the 

prote ́ge ́ has increased. Second, DoD tracks increases in number and 

dollar value of subcontracts awarded to prote ́ge ́ firms and former 

prote ́ge ́ firms by the mentor firm. Third, it looks for an increase in 

the employment levels of the prote ́ge ́ firm. As of July 31, 2015, 

DoD had published the following performance results for program. 

FY 10–FY 14 DoD Mentor-Prote ́ge ́ Results 78

FY Program Budget Net Revenue Gains Net Employee Gains Net Revenue Gains/ Company 

Net Employee Gains/ 

Company 

14 ........................ $20.1 M $396 M 808 $6.6 M 13.5 

13 ........................ 25.4 M 238 M 743 3.6 M 11.4 

12 ........................ 28.0 M 700 M 660 11.3 M 10.6 

11 ........................ 27.6 M 633 M 1,531 7.6 M 18.4 

10 ........................ 26.3 M 660 M 1,223 6.7 M 12 

While this chart demonstrates growth in each category, it fails 

to control for the involvement of the DoD. Specifically, if DoD is 

paying companies to subcontract with specific small businesses, it 

cannot come as a surprise that those small businesses hire employees and increase their revenues. As the mentor firm was required 

to subcontract with small businesses in any case, would the companies receiving the subcontracts have received similar benefits without a mentor-prote ́ge ́ agreement? Further, since DoD continues to 

reward mentors for subcontracting with prote ́ge ́s after the prote ́ge ́s 

leave the program, tracking two years post program completion 

does not capture whether the benefits are sustainable. 

To further promote better reconciliation of the measures of success and data sharing, H.R. 4341 amends the Act to remove the exemption previously granted to DoD. 

E. TITLE V

1. Section 501 

As previously noted in this document, the FY 2013–FY 2016 

NDAAs contained substantial reforms to the Act. The SBA has 

been less than prompt in implementing these changes. As of April 

14, 2016, the SBA still was missing seven proposed rules, 13 final 

rules, and 17 other actions. Unfortunately, once SBA issues a final 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
30 

79FPDS Data (April 14, 2016). 80Pub. L. No. 110–181, § 843(a)(2)(C). 81 Compare GAO, GAO Bid Protest Annual Report to Congress for Fiscal Year 2015 (2015) 

with GAO, GAO Bid Protest Annual Report to Congress for Fiscal Year 2007 (2007). 82Pub. L. No. 111–383, § 825 (2012). 83FPDS Data (April 14, 2016). 84 15 U.S.C. § 632(a)(1). 85 Id. 86 Id. 87 Id. at § 632(a)(2). The Administrator’s size standards apply to all other federal programs unless that program contains its own definition of small business. Id. at § 632(a)(2)(C). 88There are numerous procurement programs available to small businesses that restrict competition for federal contracts or give small businesses a preference. See COMM. ON SMALL BUS., 

SMALL BUSINESS ACT PROGRAMS FOR SMALL FEDERAL CONTRACTORS (2013), available at http:// 

smallbusiness.house.gov/uploadedfiles/small_business_act_programs_for_small_federal_ contractors.pdf, for a discussion of small business procurement programs. 

rule, the Federal Acquisition Council still needs to itself issue proposed and then final rules. At the current rate, it is taking in excess of seven years to get statutory changes fully implemented. 

As expected, this has led to confusion among small contractors 

and contracting offices who are unsure which rules and provisions 

are in effect. Thus, section 501 requires the SBA to annually report 

to the Federal Acquisition Institute and the Defense Acquisition 

University on any new laws or regulations affecting small business 

contracting. 

2. Section 502 

In FY 2015, the federal government purchased more than $186 

billion in goods and services using task order contracts.79 Since 

2008, offerors have been able to protest task orders above $10 million at the Government Accountability Office.80 This has resulted 

in an increase of less than a thousand additional protests being 

filed per year, but provides important protections for competition.81

The FY 2012 NDAA made this authority permanent for DoD, but 

the authority is set to expire on September 30, 2016 for civilian 

agencies.82 This would leave over $64 billion in procurements without protest authority.83 Section 502 makes the authority permanent for civilian agencies. 

3. Section 503 

The SBA size standards establish the maximum size a business 

can be and still be considered small. Section 3(a)(1) of the Act provides that ‘‘a small business concern . . . shall be deemed to be one 

which is independently owned and operated and which is not dominant in its field of operation.’’ 84 This definition includes ‘‘enterprises that are engaged in the business of production of food and 

fiber, ranching and raising of livestock, agriculture, and all other 

farming and agricultural related industries,’’ although the Act 

never defines the term ‘‘agricultural related industries.’’ 85 However, the Act further states that, ‘‘notwithstanding any other provision of law, an agricultural enterprise shall be deemed to be a 

small business concern if it (including its affiliates) has annual receipts not in excess of $750,000.’’ 86 For all other industries, the Act 

authorizes the Administrator of the SBA to establish small business size standards for the purposes of the Small Business Act and 

any other statute.87

Small business size standards determine whether small businesses may qualify for special treatment in the sale of goods and 

services to the federal government; 88 access to guaranteed loans 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
31 

89SBA, Small Business Size Standards, Final Rule, 49 Fed. Reg. 5024 (Feb. 9, 1984). 90S. REP. NO. 99–20, at 48 (1985). 91 Id. 92S. REP. NO. 99–146, at 530 (1985). 93 Consolidated Omnibus Budget Reconciliation Act of 1985, Pub. L. No. 99–272, Tit. XVIII, 

§ 18016, 100 STAT. 82, 371 (1986). 94 Consolidated Appropriations Act of 2001, Pub. L. No. 106–544, App. I, Tit. VIII, § 806, 114 

STAT. 2763, 2763A–706 (2000). Unfortunately, there is no discussion of the provision in the accompanying report. 95These industry categories are delineated under the North American Industry Classification 

System (NAICS), which is the standard used by federal statistical agencies to classify business 

establishments for the purposes of collecting, analyzing, and publishing statistical data related 

to the United States economy. https://www.census.gov/eos/www/naics/. 96Pub. L. No. 111–240, § 1344, 124 STAT. 2504, 2545–46 (2010). 97SBA White Paper supra note 8, at 38. 

and other types of financial assistance; and obtain technical advice 

through various SBA resource partners. They also may be utilized 

by federal agencies as part of their regulatory analyses during the 

rulemaking process. 

Before 1985, the size standard for agricultural enterprises was 

established by the SBA through the notice and comment rulemaking process. On February 9, 1984, the SBA published a final 

rule establishing the size standard for agricultural producers as 

$100,000.89 However, Congress soon expressed concerns with the 

$100,000 size standard for agricultural enterprises. 

A report issued by the Senate Committee on Small Business in 

early 1985 stated, ‘‘this standard is much lower than that used for 

any other industry, and it excludes virtually all viable family farms 

in many areas of the country.’’ 90 The report additionally stated 

that while Senators Tom Harkin, Max Baucus and Dale Bumpers 

had offered an amendment to raise the size standard to $500,000, 

they later withdrew the amendment in favor of an assurance that 

SBA would immediately revisit the issue.91 Later that year, the 

Senate Committee on Small Business recommended to the Senate 

Committee on the Budget that the amendment be incorporated into 

omnibus budget legislation and noted that the amendment would 

have no budgetary impact.92

The recommended amendment was included in the omnibus legislation that was enacted in 1986. The definition of a small business concern was amended to state, ‘‘[p]rovided, [t]hat notwithstanding any other provision of law, an agricultural enterprise 

shall be deemed to be a small business concern if it (including its 

affiliates) has annual receipts not in excess of $500,000.’’ 93 The 

$500,000 size standard was increased to $750,000 in 2000.94 The 

statutory size standard applies to 46 diverse categories of agricultural enterprises including: cotton farming; orange groves; tree nut 

farming; beef cattle ranching and farming; and shellfish farming.95

The consequences associated with establishing a single size 

standard for agricultural enterprises via statute may not have been 

fully realized or appreciated when the decision was made 30 years 

ago. For example, the authors included no forcing mechanism to require periodic review of the agricultural producer size standard to 

determine whether it was still appropriate. Periodic review of all 

other size standards—at least once every five years—is now required pursuant to the Small Business Jobs Act of 2010.96 The purpose of periodically reviewing size standards is to account for 

changes in industry structure and economic conditions, such as inflation.97 Commodity prices and production inputs can fluctuate 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
32 

98 A detailed explanation of SBA’s size standard methodology may be found in SBA, SBA SIZE

STANDARD METHODOLOGY (2009) [hereinafter SBA White Paper], available at http:// 

www.sba.gov/sites/default/files/size_standards_methodology.pdf. 99 Id. at 10. This mirrors the grant of authorization in the statute. 15 U.S.C. § 632(a)(2)–(3). 100SBA White Paper, supra note 8, at 11. 101 Id. Despite the applicability of these size standards across federal agencies, the SBA does 

not examine the implications of such change on other federal statutes or programs. 102 Id. at 12. 103 Id. at 1. 104FY 2013 NDAA at § 1661. 

dramatically. Moreover, the single standard for 46 different agricultural industry subsectors does not distinguish between the various 

types of agricultural enterprises that may have significantly different economic characteristics. A statutory standard leaves it up 

to future Congresses to review and update the standard, which has 

not been done with any regularity. 

For non-agricultural industries, the SBA size standard methodology can best be described as a granular analysis of specific industry characteristics.98 The agency performs a statistical analysis of 

primary and secondary factors to establish a size standard for a 

specific industry, and that standard is expressed as the number of 

full-time employees at the concern over 12 months, the average annual receipts of the business over three years, or as an alternate 

size standard that looks at the level of production.99

The primary factors assessed by the SBA include an examination 

of four economic characteristics of the industry, such as average 

firm size, startup costs and entry barriers, industry competition, 

and the distribution of firms by size.100 An additional factor is the 

impact of a size standard change on SBA’s federal contract assistance to small businesses.101 The SBA also may assess industry specific considerations, such as technological changes and industry 

growth trends.102

Upon completing its analysis, the SBA then publishes a proposed 

size standard in the Federal Register. Final size standards are selected after input from the public through notice and comment 

rulemaking. In addition, size standards are subject to periodic review and revision every five years,103 again through notice and 

comment rulemaking. 

In 2013, Congress enacted reforms to the Act that codify the factors SBA must consider and address when revising, modifying, or 

establishing size standards. As part of the notice of the proposed 

and final rule, the SBA must include: (1) a detailed description of 

the industry; (2) an analysis of the competitive environment for 

that industry; (3) the approach and sources of all data used to develop the proposed rulemaking; and (4) the anticipated effects of 

the proposed rule on the industry.104 This ensures that the size 

standard setting process is transparent and interested parties have 

adequate information on which to comment. 

In short, the process established by Congress as implemented by 

the SBA for determining size standards creates a logical method for 

establishing small business size standards in order to facilitate the 

accomplishment of federal policy objectives as they relate to small 

business concerns. Unfortunately, the definition of a small business 

agricultural enterprise does not follow the same granular analysis 

as it is set by statute and only would be subject to periodic review 

if Congress acted regularly. As the production of agricultural goods 

has changed and is likely to change, a static definition of small 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
33 

105 ERIK J. O’DONOGHUE, ECONOMIC RESEARCH SERVICE, UNITED STATES DEP’T OF AGRI- CULTURE, EXPLORING ALTERNATIVE FARM DEFINITIONS: IMPLICATIONS FOR AGRICULTURAL STA- TISTICS AND PROGRAM ELIGIBILITY 22–23 (2009), available at http://www.ers.usda.gov/publications/eib-economic-information-bulletin/eib49.aspx. 106 JAMES MACDONALD, ECONOMIC RESEARCH SERVICE, UNITED STATES DEP’T OF AGRI- CULTURE, FAMILY FARMING IN THE UNITED STATES (2014) [HEREINAFTER USDA FAMILY FARMS], available at http://www.ers.usda.gov/amber-waves/2014-march/family-farming-in-the-unitedstates.aspx#.U8K3pk1OW70. However, it should be noted that the relative share of production 

these farms contribute varies depending on commodity group, with family-owned farms accounting for 96 percent of corn, cotton, wheat and soybean production, 75 percent of dairy production, 

and 62 percent of fruits, vegetables and nursery production. Id. 107 Id. 108 Elizabeth Bechdol, Allan Gray, and Brent Gloy, Forces Affecting Crop Production Agriculture, 25 CHOICES 2 (2010), available at http://www.choicesmagazine.org/magazine/pdf/article_152.pdf. In addition to increased competition, there are relatively low barriers to entry into 

agriculture markets. Id. These factors are accounted for in the SBA’s size standard methodology, 

but not in the statutory definition. 109 Id. 110 Id. 111 Id. 112The Future of the Family Farm: The Effect of Proposed DOL Regulations on Small Business 

Producers: Before the Subcomm. on Agriculture, Energy and Trade of the H. Comm. on Small 

Bus., 112th Cong. (2012), available at http://www.gpo.gov/fdsys/pkg/CHRG-112hhrg76459/ 

pdf/CHRG-112hhrg76459.pdf. 113 CAROLYN DIMITRI, ET. AL., ECONOMIC RESEARCH SERVICE, UNITED STATES DEP’T OF AGRICULTURE, THE 20TH CENTURY TRANSFORMATION OF U.S. AGRICULTURE AND FARM POLICY 12 

(2005), available at http://www.ers.usda.gov/publications/eib-economic-information-bulletin/ 

eib3.aspx. 114 USDA Family Farms, supra note 16. 

business agricultural enterprise may not achieve various policy objectives designed to help small businesses. 

Specifically, the modern structure of agricultural operations has 

evolved so that a single dollar size standard is no longer appropriate. The United States agriculture industry continues to be defined by a large number of closely-held, family-owned operations.105

Of the nation’s approximately 2.1 million farms and ranches, approximately 97.6 percent of farms are family-owned.106 These family farms account for 85 percent of domestic agricultural production.107

However, over the past few decades, a number of factors have altered the structure of farms and industry dynamics. New technologies and production methods have increased the productivity of 

the agriculture sector.108 This productivity also has resulted in increased competition 109 among producers which has resulted in 

more output per acre and lower relative prices for agriculture commodities. 

These changes compel agricultural enterprises to achieve larger 

economies of scale in comparison to their predecessors in order to 

maintain a viable agriculture production enterprise.110 Achieving 

these economies of scale often requires the addition of more lands 

or livestock in order to justify investments in new production technologies.111 As the Subcommittee previously examined at a February 2, 2012 hearing,112 many individually family-owned farms 

have consolidated their individual operations into larger, enterprise 

unit family-owned operations in order to achieve economies of 

scale.113 However, on 86.1 percent of farms, families still provide 

the majority of the labor.114

Unfortunately, the influences of these changes may not fully be 

reflected in the current size standard for small agricultural enterprises. If the current definition does not encapsulate these changes 

in the agricultural sector, there could be negative consequences for 

small agricultural enterprises. An incorrect size standard may result in negative effects on federal small business policymaking obVerDate Sep 11 2014 07:19 Jul 27, 2016 Jkt 059006 PO 00000 Frm 00033 Fmt 6659 Sfmt 6602 E:\HR\OC\HR704P1.XXX HR704P1

smartinez on DSK3GLQ082PROD with REPORTS-HSE
34 

115Generally speaking, size standards also are used to determine eligibility for SBA’s loan 

programs, technical assistance programs, and as agencies attempt to assess the effects of regulations on small business concerns under the Regulatory Flexibility Act, 5 U.S.C. §§ 601–12 (RFA). 

However, since agricultural enterprises receive the vast majority of financial and technical assistance from the United States Department of Agriculture (USDA), these are not relevant to 

the memorandum. See, e.g. USDA, Rural Development, Business and Industry Guaranteed 

Loans (2014), available at http://www.rurdev.usda.gov/bcp_gar.html. Likewise, if USDA believes the size standard is incorrect for purposes of the RFA, a process exists to establish an 

alternative size standard. However, USDA has not utilized this process in the past ten years, 

and doing so would likely only create additional work for USDA. See OFFICE OF ADVOCACY, SBA: 

HOW TO COMPLY WITH THE REGULATORY FLEXIBILITY ACT 14 (2012), available at http:// 

www.sba.gov/sites/default/files/rfaguide_0512_0.pdf. To the extent that agencies utilize the 

SBA’s standard, a too low standard may lead agencies to improperly conclude and certify their 

proposed regulations as not affecting a substantial number of small businesses. Letter from the 

Hon. Donald Manzullo and the Hon. Nydia Vela ́zquez to Gary M. Jackson, Assistant Administrator for Size Standards, SBA, Comment Proposed Rule, Proposed Rule: Small Business Size 

Standards: Restructuring Size Standards (July 8, 2004) (on file with the Committee Chief Counsel). The USDA’s 2010 proposed livestock marketing rule is an example of an agency adopting 

the statutory definition of small agricultural enterprise when conducting its threshold analysis 

for a proposed rule. USDA, Implementation of Regulations Required Under Title XI of the Food, 

Conservation and Energy Act of 2008; Conduct in Violation of the Act, 75 Fed. Reg. 35,338, 

35,348 (June 22, 2010). 116 Report generated on November 4, 2015, using the Federal Procurement Data System. 

[Hereinafter FPDS Report]. Report on file with the Committee. 117 Id. Small businesses received $263,647, 420.29 out of $295,699,071.59. 118 Id. Small businesses received $25,265,178.86 out of $92,239,568.96. 119 7 U.S.C. § 1691. 120 15 U.S.C. § 637(d)(4). 121 Id. 122FPDS Report, supra note 35. 

jectives. Primary among these are procurement opportunities, as 

procurement represents the sole scenario when alternative federal 

programs or standards are not available.115

In terms of contracting and procurement opportunities, a more 

accurate definition of small agricultural enterprises would increase 

competition, thereby reducing prices, and strengthen our industrial 

base. In FY 2014, the federal government spent nearly $400 million 

on raw agricultural goods.116 Small businesses received over 89 

percent of the awards in agricultural industries where SBA had established size standards.117 However, in those industries using the $750,000 statutory size standard, small businesses received only 27 

percent of awards.118 If more concerns were easily identifiable as 

small businesses, it could increase the opportunity for competition 

limited to small businesses, or at a minimum for outreach to small 

agricultural producers. While the $92 million in prime contracting opportunities award- ed to industries with a $750,000 size standard is not a large 

amount in terms of federal contract spending, a definitional change 

also could affect subcontracting and grant opportunities. States receive agricultural block grants may choose to prioritize purchases 

from small businesses, using the SBA definition. At a federal level, 

programs such as the Food for Peace Program 119 may create opportunities for small business sales. Most importantly, though, are 

subcontracting opportunities. 

Pursuant to the Act, federal prime contractors, other than small business concerns, receiving prime contracts in excess of $650,000 

must negotiate a subcontracting plan with the government detailing how they will use small businesses as subcontractors.120 This 

requirement also applies to subcontractors other than small businesses who receive subcontracts in excess of $650,000.121 This is 

important because in FY 2014, federal government spent $5.8 billion on food manufacturing. This included nearly $4 billion in contracts requiring subcontracting plans.122 Given that the current adVerDate Sep 11 2014 07:19 Jul 27, 2016 Jkt 059006 PO 00000 Frm 00034 Fmt 6659 Sfmt 6602 E:\HR\OC\HR704P1.XXX HR704P1

smartinez on DSK3GLQ082PROD with REPORTS-HSE
35 

123SBA, Government-Wide Procurement Scorecard (2015), available at https://www.sba.gov/ 

sites/default/files/files/FY14_Government-Wide_SB_Procurement_Scorecard_Public_View_2015- 

04-29.pdf. 124Modernizing Agriculture Producer Size Standards: Before the Subcomm. on Agriculture, 

Energy and Trade of the H. Comm. on Small Bus., 113th Cong. (2014), available at http:// 

www.gpo.gov/fdsys/pkg/CHRG-113hhrg88924/pdf/CHRG-113hhrg88924.pdf. 125 Id. at 5–10. 126 Id. at 4. 127Pub. L. No. 108–183, Title III, § 308, 117 STAT. 2662 (2003) (codified at 15 U.S.C. § 657f). 128Pub. L. No. 109–461, 120 Stat. 3431 (2006) (codified at 38 U.S.C. §§ 8127–8128). The 

VBHCITA also create a set-aside program for Veteran-Owned Small Businesses (VOSBs). While 

there is only a subcontracting goal for VOSBs under the Small Business Act, the certification 

Continued 

ministratively set goal for subcontracting with small businesses is 

34.06 percent of all subcontracted dollars, and food manufacturing 

requires that the contractor obtain raw agricultural products, the 

application of subcontracting rules to these contracts could result 

in billions of dollars of subcontracts being competed among small 

agricultural enterprises.123 Holding all else constant, to the extent 

that an updated size standard increases the number of small agriculture enterprises, more small firms would be able to compete for 

these contracts, which would strengthen the base of small agricultural enterprises. 

In the 113th Congress, the Subcommittee on Agriculture, Energy 

and Trade and held a hearing to examine whether the existing 

statutory size standard for agricultural enterprises meets the needs 

of small agricultural businesses.124 The Subcommittee received testimony from the SBA, a farmer, a cattle rancher, and an agriculture industry representative. The witnesses discussed how the 

input and labor costs of producing crops and livestock has risen 

and that the annual receipts of agricultural operations can vary 

significantly from year to year. Furthermore, the witnesses representing agricultural enterprises recommended that Congress consider eliminating the statutory size standard and allowing the SBA 

to establish size standards through the rulemaking process.125 In 

his testimony, Mr. John Shoraka, the Associate Administrator for 

Government Contracting at the SBA, stated that the agency was 

capable of conducting the analyses to establish size standards for 

agricultural enterprises, and if given the authority, the SBA would 

use the same notice and comment process it currently uses to establish size standards for other industries.126 As a result, section 

503 will abolish the $750,000 size standard in favor of one 

regulatorily established by SBA. 

4. Section 504 

Both the SBA and the VA operate procurement programs for 

SDVOSBs. The SBA program applies to procurements at all agencies other than VA, whereas the VA program applies only to VA 

contracts. While both programs apply nearly identical statutory 

definitions of a SDVOSB, the Committee has received complaints 

that the application of the statutory programs is resulting in disparate decisions. 

The Veterans Benefits Act of 2003 (VBA) amended the Act to create a government wide procurement program for small businesses,127 while the Veterans Benefits, Health Care, and Information Technology Act of 2006 (VBHCITA) created the SDVOSB contracting program at VA.128 The statutory foundations of the two 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
36 

issues described herein are generally applicable to VOSBs except for the lack of a prime contracting certification process at SBA. 129Section 3(q) of the Small Business Act defines ‘‘veteran’’ in accordance with 38 U.S.C. 

§ 101(2) and service-disabled veteran is defined per 38 U.S.C. § 101(16). VBHCITA adds the definition of small business found in Section 3(a) of the Small Business Act to 38 U.S.C. 

§ 8127(k)(1). 130Small Business Act, § 3(q)(2)(A); 38 U.S.C. § 8127(k)(2). c.f., The VBHCITA actually requires that the service disabled veterans ‘‘are unable to manage the daily business operations 

of such concern,’’ but in regulation this has been interpreted to require the management of the 

daily business operations. 38 C.F.R. § 74.1. 131Small Business Act, § 3(q)(2)(B). 132 38 C.F.R. § 74.1. 133 38 U.S.C. § 8127(h). 134Small Business Act, § 36(q)(2)(B). 38 U.S.C. § 8127(f). 135On file with the Committee. 

SDVOSB programs vary in three principal ways. First, the definition of a SDVOSB is slightly different. Second, the scope of the contracts to be awarded differs. Finally, the relationship between the 

SDVOSB program and other small business contracting programs 

is different. 

With a few important exceptions, the VBA and the VBHCITA 

use the same definitions, relying on the VA’s definitions of veteran 

or service-disabled veteran (SDV) to determine whether an individual qualifies for the program, and using the Small Business Act 

definitions of small business.129 This is eminently sensible, as it 

entrusts to each agency that which the agency has the most experience defining. The only difference occurs when the two concepts are 

combined in an attempt to define SDVOSBs. Both statutes agree 

that the term means a small business concern that is at least 51 

percent owned by one or more SDVs or, in the case of any publicly 

owned business, not less than 51 percent of the stock of which is 

owned by one or more SDVs.130 However, there are three critical 

differences. First, the VBA, but not the VBHCITA, explicitly extends benefits to firms that, ‘‘in the case of a veteran with permanent and severe disability, the spouse or permanent caregiver of 

such veteran.’’ 131 The discrepancy regarding permanent caregivers 

is addressed by VA in its regulations, which extends rights to these 

individuals.132 Second, the VBHCITA but not the VBA allows the 

surviving spouse of a veteran to continue participating as a 

SDVOSB for up to ten years if, after the death of a veteran, the 

surviving spouse of such veteran acquires ownership rights.133

Third, the VBA permits self-certification by SDVOSBs, subject to 

protests, while the VBHCITA requires that VA maintain a database of SDVOSBs that are certified as such by the VA.134 While 

these differences may seem minor, the result is that a firm may 

qualify as a SDVOSB at VA but not for a contract at another agency, or vice versa. For these reasons, section 504 reconciles the definitions between the Act and title 38 of the United States Code. 

Reconciling the statutory divergence is the first obstacle, as SBA 

and VA have both received criticism alleging that the regulatory 

differences between the two SDVOSB programs exceed those differences that would be expected given the statutory discrepancies. 

Thus, SBA and VA have undertaken joint review of the regulations 

governing each program and produced a chart that provides a section-by-section comparison of the existing regulations each believes 

are relevant (VA Chart).135 VA has stated that this analysis demonstrates that there are only three differences between the regulations: (1) VA allows surviving spouses to inherit limited benefits; 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
37 

136 Comments of Tom Leney, Executive Director of the Veterans and Small Business Programs 

for VA, to VET-Force (Feb. 12, 2013). 137 Id. 138GAO, VETERAN-OWNED SMALL BUSINESSES: PLANNING AND DATA SYSTEM FOR VA’S 

VERIFICATION PROGRAM NEED IMPROVEMENT 56 (2013) (GAO–13–95) (hereinafter PLANNING AND

DATA). 139 38 C.F.R. § 74; 13 C.F.R. §§ 125.8–125.29; 13 C.F.R. § 124. See Small Business Act Programs at 4–5 for additional information on this program. 140 13 C.F.R. § 124.1. 141Small Business Act, § 15(g); 38 U.S.C. § 8127(c). 142 13 C.F.R. § 121.105(k); 38 C.F.R. § 74.3(f); supra note 7. 143 38 C.F.R. § 74.3(d) 

(2) VA requires change of ownership notification; and (3) VA has 

a program for veteran-owned small businesses (VOSB).136 Furthermore, VA stated that they were aware of only one interpretive difference in the application of the regulations, and that concerned a 

question of whether SDVs control a company with a three-person 

board if one SDV and one non-SDV could align against a second 

SDV.137 Based on this, the conflict would appear minimal at best. 

However, SBA has stated ‘‘while it is true that the wording of the 

regulations pertaining to the VA’s and SBA’s eligibly [sic] requirements is similar, there are some key differences in interpretations.’’ 138

The VA Chart compares three sources of regulations—VA’s 

SDVOSB regulations, SBA’s SDVOSB regulations, and SBA’s 8(a) 

business development (8(a)) program regulations.139 This framing 

of the discussion itself presents two problems. First, looking at the 

regulations regarding the 8(a) program may be informative, but 

should not be controlling since the programs have different statutory purposes. The 8(a) program is a time-limited program intended to assist socially and economically disadvantaged individuals trying to establish successful small businesses, and contracting is used as a tool in the development process.140 In contrast, both SDVOSB programs are contracting programs intended 

to help the federal government meet its statutory goals of awarding 

at least 3 percent of all prime contract and subcontract dollars to 

SDVOSBs.141 When VA patterned its rules off of the 8(a) program 

regulations, it failed to recognize this dichotomy. This has led to 

situations such as that where VA requires SDVOSB living in community property states to have their spouses preemptively relinquish any interest in the firm lest the spouse be considered an 

owner, even though VBHCITA will allow the same spouse to qualify for the program after the SDV’s death—a requirement not found 

in SBA’s SDVOSB program.142 Additionally, like the 8(a) program, 

VA requires that SDVs receive the majority of the pay or profits 

of the firm.143 SBA has not included this requirement in the 

SDVOSB regulations, although distribution of profits would be considered in analyzing control, because pay itself is not always determinative of control. 

Perhaps more egregiously though, the VA Chart excludes the relevant SBA’s regulations that address issues fundamental to whether a SDV owns and controls a firm and whether the firm is itself 

small, which are found at 13 C.F.R. § 121. These regulations provide the underpinnings for the ownership and control provisions 

found in SBA’s SDVOSB and 8(a) programs. For example, it is this 

additional section of regulation that tells firms how stock ownership will be used to determine control of a company, and how board 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
38 

144 13 C.F.R. § 121.103(c). For an in depth discussion of affiliation and control issues, see Committee on Small Business, ‘‘What is a Small Business for Purpose of Federal Contracting?’’ 6– 

16 (2013), available at http://smallbusiness.house.gov/resources/committee-publications.htm. 145Supra note 17. 146 13 C.F.R. §§ 121.103(a)(5); 121.103 (d)–(i). 147Supra note 3. 148 VA, Verification Assistance Brief—Transfer Restrictions, available at http://www.va.gov/ 

osdbu/veteran/transferRestrictionsBrief.asp. 149 38 C.F.R. § 74.4(c)(4). 150 Email from SBA to Committee Staff, ‘‘OHA decisions on Service-Disabled Veteran-Owned 

Status and Size Cases,’’ (Feb. 12, 2013). The cases are: Size Appeal of Chu & Gassman, Inc., 

SBA No. SIZ–5394 (2012); Size Appeal of Chu & Gassman, Inc., SBA No. SIZ–5344 (2012); Size 

Appeal of EarthCare Solutions, Inc., SBA No. SIZ–5183 (2011); Size Appeal of Specialized Veterans, LLC, SBA No. SIZ–5138 (2010); Size Appeal of A1 Procurement, LLC, SBA No. SIZ–5121 

(2010); Size Appeal of J.M. Waller Associates, Inc., SBA No. SIZ–5108 (2010); Size Appeal of 

DooleyMack Government Contracting, LLC, SBA No. SIZ–5086 (2009); Size Appeal of 

DooleyMack Government Contracting, LLC, SBA No. SIZ–5085 (2009); Size Appeal of Blue Cord 

composition affects this calculus 144—the very situation VA admitted caused interpretive differences.145 However, these regulations 

go far beyond that one example—they address when agreements to 

act in the future will be given present effect, how to treat companies with common management, companies with substantially identical business or economic interests, companies spun off from other 

companies, joint ventures, companies that are unduly reliant on an 

ostensible subcontractor, companies with franchise and license 

agreements, or companies where the totality of the circumstances 

indicate that the business is not independently owned and controlled.146 To attempt to determine if a firm is a SDVOSB without 

examining it in light of these regulations belies VBHCITA’s direction to use SBA’s definition of a small business, because these are 

the regulations that define whether a firm is small.147

This has led to bright line rules at VA that do not exist at SBA. 

For example, VA will deny SDVOSB status if ownership in the entity carries with it the requirement that a right of first refusal to 

purchase the SDV’s ownership interest will be offered to another 

owner or third party.148 While SBA does consider agreements regarding transfer of ownership, it looks at each agreement to determine whether its terms mean that the SDV does not unconditionally control the company. Similarly, VA requires that that at least 

one SDV who ‘‘manage[s] the applicant or participant must devote 

full-time to the business during the normal working hours of firms 

in the same or similar line of business.’’ 149 SBA does not require 

this, as long as SDVs can prove actual ownership and control over 

day-to-day decisions. 

Indeed, the regulatory and interpretive differences are being 

borne out by case law. Within SBA, any appeal regarding a firm’s 

size or status is heard by OHA, a body of administrative judges 

that provides final agency action through published decisions. Recently, OHA identified fourteen cases: 

in connection with SDVO set-asides where (1) OHA determined the subject business concern was not small and 

thus was ineligible for the contract at issue, and (2) had 

the [VA regulations] been the sole governing rules, the 

business concern would have been eligible for the contract. 

In each of these 14 cases, the different outcome is owed to 

the operation of SBA’s affiliation rule at 13 C.F.R. 

§ 121.103. The affiliation rule, an integral part of small 

business size analysis, is not a part of the DVA’s SDVO 

status regulations.150


smartinez on DSK3GLQ082PROD with REPORTS-HSE
39 

Construction, Inc., SBA No. SIZ–5077 (2009); Size Appeal of Taylor Consultants, Inc., SBA No. 

SIZ–5049 (2009); Size Appeal of Heritage of America, LLC, SBA No. SIZ–5017 (2008); Size Appeal of Mission Solutions, Inc., SBA No. SIZ-4828 (2006); Size Appeal of B & M Construction, 

Inc., SBA No. SIZ–4805 (2006) Size Appeal of Catapult Technology, Ltd., SBA No. SIZ–4795 

(2006). 151 13 C.F.R. § 125.24–25. 152 13 C.F.R. § 125. 25–27. 153 13 C.F.R. § 134–514. 154SDVOSB numbers are taken from the SBA’s Dynamic Small Business Search tool, available at www.dsbs.sba.gov; for information on fraud, see, e.g. GAO, CASE STUDIES SHOW FRAUD

AND ABUSE ALLOWED INELIGIBLE FIRMS TO OBTAIN MILLIONS OF DOLLARS IN CONTRACTS

(2009)(GAO–10–108) (hereinafter CASE STUDIES). 155www.vip.vetbiz.gov; 38 C.F.R. § 74.15; c.f. http://www.va.gov/osdbu/faqs/verification.asp 

(recertification is required every two years). 156PLANNING AND DATA at 44. 157PLANNING AND DATA at 8. 158 Id. at 14, 44. 159 Id. at 44; supra note 16. VA’s regulations require a decision in 60 days. 38 C.F.R. § 74.11. 

These cases should not be seen as an exhaustive list, since OHA 

does not have the ability to review cases that VA denies, nor does 

OHA see each case that VA approves. However, it does illustrate 

how different applications of regulations by even the most well-intentioned parties can lead to regulatory and interpretive discrepancies. Therefore, section 504 requires that VA and SBA decide 

questions of ownership and control, but not of veteran status, using 

SBA’s regulations. 

Both SBA and VA processes for certifying SDVOSBs are imperfect. SBA relies upon a process of self-certification, but allows contracting officers, SBA, or other interested parties to raise a protest 

to the SBA Director of the Office of Government Contracting 

(DGC).151 The DGC then has 15 days to investigate and issue a decision.152 Appeals of the DGC’s decision are heard by OHA and decided in 15 days, at which time a published decision is made publicly available.153 While this process has the advantage of allowing 

nearly 13,000 SDVOSBs to quickly begin competing for contracts, 

it also leaves open the door for fraud.154

In contrast, VA’s SDVOSB program has 4,102 SDVOSBs currently certified in its database, each of which must be certified 

yearly.155 Additionally, in fiscal year 2012, VA received 4,900 new 

initial applications for both the SDVOSB and VOSB program.156

VA uses over 200 full time equivalents and spends $33 million a 

year running a four step certification process after an application 

is submitted: • VA employees screen it to ensure that it meets the minimum eligibility requirements; • VA contractors conduct an initial evaluation and make a 

preliminary recommendation for approval, denial or additional 

review; • VA contractors and employees review the initial recommendation, and if necessary, conduct site visits; and • VA supervisors make a formal determination and issue a 

letter decision to the applicant.157

This process takes approximately 85 days, and 61 percent of applicants are accepted.158 Those that are rejected may appeal the 

decision through a Request for Consideration, which is conducted 

by the VA’s Office of General Counsel.159 Requests for reconsideration are granted on 48 percent of appeals, but generally take an 

additional 147 days. In contrast with SBA’s process where appeals 

are decided by independent judges ‘‘where the standard of review 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
40 

160PLANNING AND DATA at 56. 161 Id. at 33–34. 162Miles Construction, LLC v. United States, No. 12–597C 13, 25 (Fed. Cl. 2013); see also 

KWV, Inc. v. United States, No. 12–882C (Fed. Cl. 2013). 163 All charts are based on information provided by SBA. 

is whether the determination of eligibility was based on a clear 

error of fact or law or whether the decision was arbitrary, capricious or contrary to law[, VA] has no such appellate procedure.’’ 160

VA’s decisions are not published, and do not represent legal precedent. 

GAO and the federal courts have taken issue with VA’s process. 

GAO recently found that while ‘‘VA has made progress toward reducing its vulnerability to fraud and abuse,’’ the agency’s strategic 

planning and data capabilities necessary to prevent that fraud remain inadequate.161 The Court of Federal Claims (COFC), when 

examining transfer restrictions and appeals under the VA process, 

found that VA’s appeals process does not allow ‘‘basic procedural 

due process’’ and that the examination ‘‘contravened the minimal 

requirements for informal adjudication set forth in Section 555 of 

the [Administrative Procedures Act (APA)].’’ 162 While the GAO 

finding highlighted the lack of long term planning and data systems that allow VA to monitor applications and processes to ensure 

consistence, the COFC holdings go to a more crucial question— 

whether the verification system is able to address the tension between providing due process to SDVs firms and preventing fraudulent contracting. 

To insure that the new regulations are uniformly implemented 

and to protect the due process rights of all potential SDVOSBs, section 504 provides that OHA will hear all appeals dealing with ownership and control. VA will continue to hear appeals dealing with 

an individual’s status as a veteran. 

5. Section 505 

The Office of Government Contracts and Business Development 

(GCBD) at SBA is overseen by an associate administrator appointed by the President, supported by five senior executives and 

a head of operations. It is depicted in the following chart. 

Office of Government Contracts and Business Development 163


smartinez on DSK3GLQ082PROD with REPORTS-HSEInsert offset folio 41 here HR704.002
41 

164 It is worth noting that position responsible for drafting regulations has been vacant since 

2014, despite the high backlog of regulations waiting for SBA action. 165 15 U.S.C. § 632(a). In a few instances, other factors are also considered, such as production 

or assets. For further information, please see the Committee Memorandum, ‘‘What is a Small 

Business for Purposes of Federal Contracting?’’ (2013), available at http://smbiz.house.gov/ 

uploadedfiles/what_is_a_small_business_for_purpose_of_federal_contracting.pdf. 166 Id. at § 644(h)(2). 167 Committee Staff Memorandum, Supporting Success: Empowering Small Business Advocates 1–2 (2015), available at http://smbiz.house.gov/uploadedfiles/12-09- 

2015_hearing_memo.pdf. 168 Id. at 3. 169 15 U.S.C. § 637(b)(7). 170 15 U.S.C. § 644(a). 

The GCBD programs exist within five suboffices: Policy, Planning and Liaison (PPL), Government Contracting (GC), Business 

Development (BD), HUBZone (HZ) and Operations. PPL has three 

primary responsibilities: (1) regulations; (2) goaling; and (3) size 

standards. On the regulatory front, PPL drafts all the amendments 

to the contracting regulations within chapter 13 of the Code of Federal Regulations.164 Additionally, PPL represents SBA on the Civilian Agency Acquisition Council (CAAC). The CAAC and its defense 

counterpart, the Defense Acquisition Regulatory Council (DARC) 

draft all of the regulations promulgated as part of the Federal Acquisition Regulation, which governs almost all federal contracts. 

Additionally, PPL creates specific size standards for each industry that determine which businesses qualify as small businesses. 

The office assigns revenue- or employee-based size standards to 

each of the more than 1,100 North American Industrial Classification System (NAICS) codes, as further discussed in section 502.165

These size standards then govern which firms can compete for restricted contracts. 

Finally, PPL develops and negotiates prime contracting and subcontracting goals with each of the federal agencies. SBA is required 

to report to Congress annually on the goal achievements.166

The GC office oversees the contracting assistance programs and 

most of GCBD’s field operations, including the six area offices. The 

best known function of GC is that its area offices house the Procurement Center Representatives (PCRs) and Commercial Market 

Representatives (CMRs) discussed most recently during the December 9, 2015 Subcommittee on Contracting and Workforce Hearing 

titled, ‘‘Supporting Success: Empowering Small Business Advocates.’’ As explained in that hearing memorandum, the PCRs are 

located at major federal procurement activities and review solicitations to ensure that small businesses have the chance to compete.167 Likewise, the CMRs help small businesses compete for federal subcontracts.168

Additionally, GC oversees the Certificate of Competency Program, Natural Resources Assistance Program, Waivers of the Nonmanufacturer Rule, and the Small Business Size Determination 

Program. The Certificate of Competency Program allows contracting officers unsure of whether a small business has the ability 

to complete a task to refer the contract to SBA for evaluation.169

The Natural Resources Assistance Program aids small businesses 

seeking to purchase timber from the federal government.170 The 

nonmanufacturer rule requires that any contract for goods in which 

competition is limited to small businesses or a subset thereof require that the goods delivered be the product of a domestic small 

business unless SBA has determined that no such businesses are 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
42 

171 15 U.S.C. § 637(a)(17); 15 U.S.C. § 657s(a)(4). 172 13 C.F.R. §§ 121.1001 through 121.1009. 173 17 HUBZone are defined as any area located in a qualified census tract, qualified nonmetropolitan county, within the external boundaries of an Indian reservation or an area subject 

to the Base Realignment and Closure Act (BRAC). 15 U.S.C. § 632(p). Qualified census tracts 

are tracts designated by the Department of Housing and Urban Development (HUD) in which 

either 50 percent or more of the households have an income which is less than 60 percent of 

the area median gross income for such year or which has a poverty rate of at least 25 percent, 

but no more than 20 percent of a metropolitan statistical area may qualify. 26 U.S.C. 

§ 42(d)(5)(B)(ii). Qualified nonmetropolitan counties are those in which median household income 

is at less than 80 percent of the nonmetropolitan State median household income, the unemployment rate at least 140 percent of the average unemployment rate for the United States or for 

the State in which such county is located, whichever is less, or which is located in a difficult 

development area, as designated by HUD. 15 U.S.C. § 632(p). 174 15 U.S.C. § 632(p)(5). 175 48 C.F.R. § 19.1305–1307. 176 Id. 177 Id. 178 13 C.F.R. § 126.300. 179 Id. at § 126.401. 180 Id. 181 Id at § 121.1001. SBA, the contracting officer, or any other interested party may protest 

the apparent successful offeror’s qualified HUBZone SBC status. 13 C.F.R. § 126.801. 182 15 U.S.C. § 644(g)(1). 

available.171 The Small Business Size Determinations Program applies the size standards promulgated by PPL to adjudicate whether 

a firm is small for purposes of a specific contract.172 C also manages four contracting programs: the small business prime contracting program, the small business subcontracting program, the 

Service-Disabled Veteran-Owned Small Business (SDVOSB) Program, and the Women-Owned Small Business (WOSB) Program. 

The BD Office has oversight of the 8(a) business development 

program (8(a) program) and the small disadvantaged business program as described in sections 202 and 205. 

A HUBZone is a geographic area with high poverty or high unemployment, as defined through a complicated statutory framework.173 HUBZone small business concerns are small businesses 

whose principal office is located in a HUBZone, that are at least 

51 percent owned by United States citizens, and which draw at 

least 35 percent of their employees from HUBZones.174 These firms 

can receive set-aside contracts if two or more HUBZone concerns 

are expected to make a fair and reasonable offer.175 Sole-source 

awards are permitted for contracts below $4 million ($6.5 million 

for manufacturing contracts).176 A price evaluation adjustment of 

10 percent is granted when bidding on contracts offered through 

full and open competition.177 To certify as a HUBZone firm, a small 

business must apply on the SBA website, recertify every three 

years, certify through SAM, and qualify at the time of offer and the 

time of award.178 SBA has the authority to conduct program examinations of firms to verify their continued eligibility 179 or to hear 

appeals regarding a firm’s size 180 or eligibility for the program.181

There is a statutory goal of awarding three percent of all prime 

contract dollars and three percent of all subcontract dollars to 

HUBZone firms 182 The HUBZone office at SBA publishes the lists 

and maps of eligible HUBZones, reviews applications, and conducts 

reviews of firms. SBA does not provide details of the organizational 

structure. 

Finally, GCBD’s operations group manages the information technology and develops training to support the GCBD offices. It provides additional administrative support to the Associate Administrator. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
43 

183GAO, SMALL BUSINESS ADMINISTRATION: LEADERSHIP ATTENTION NEEDED TO OVERCOME

MANAGEMENT CHALLENGES (GAO–15–347) (2015), available at http://www.gao.gov/products/ 

GAO-15-347 [hereinafter ‘‘GAO Management Report’’]. 184GAO, IMPROVEMENTS NEEDED TO HELP ENSURE RELIABILITY OF SBA’S PERFORMANCE DATA

ON PROCUREMENT CENTER REPRESENTATIVES 9 (GAO–11–549R) (2011). 185Management Report at 106. 186See Helping Small Businesses Compete: Challenges Within Programs Designed to Assist 

Small Contractors Subcommittee on Contracting and Workforce (2011). 187GAO, SMALL BUSINESS CONTRACTING: UPDATED GUIDANCE AND REPORTING NEEDED FOR

CONSOLIDATED CONTRACTS 8 (GAO–14–36) (2013). 188 Id. at 19. 189Management Report at 106. 190The FY 2015 and FY 2016 NDAAs each included a data quality improvement plan for bundling and consolidation. See Pub. L. No. 113–291 § 822 and Pub. L. No. 114–92 § 862. 

The recent GAO report examining challenges at SBA identified 

a number of open recommendations for GCBD, but it also identified 

broad reaching issues within SBA that are affecting the ability of 

GCBD to perform its mission.183 The following is a brief overview 

of the specific open recommendations, and of the systemic issues. 

In a 2011 report, GAO stated that: 

[t]o help ensure that [Government Contracting Area Report (GCAR)] data are accurate and that SBA reliably can 

use the data to monitor PCR and CMR performance and 

determine whether established goals have been achieved, 

we recommend that SBA’s Director of Government Contracting take the following two steps: 

• provide clear and complete guidance to PCRs and 

CMRs on accurately recording and maintaining the appropriate backup documentation for accomplishments reported in the GCAR monthly report, and 

• require that monthly GCAR data are verified and that 

documentation for PCR and CMR records are periodically 

reviewed for quality and completeness.’’ 184

While additional guidance has been provided, GAO in its Management Report still recommends that ‘‘[t]o help ensure that 

[GCAR] data are accurate and that SBA reliably can use the data 

to monitor [PCR] and [CMR] performance and determine whether 

established goals have been achieved, SBA’s Director of Government Contracting should require that monthly GCAR data are 

verified and that documentation for PCR and CMR records are periodically reviewed for quality and completeness.’’ 185 As discussed 

in a 2011 hearing of this Subcommittee, GCAR data is essential for 

tracking instances of bundling, consolidation, and failure of contracting agencies to follow the Act.186

In a 2013 report, GAO found that agencies did not understand 

the rule regarding bundling and consolidation and were not fully 

complying with the law.187 GAO recommended that SBA submit 

the statutorily required bundling reports to Congress to increase 

accountability and promote compliance.188 While SBA agreed, the 

recommendation had not been complied with at the time of the 

Management Report, prompting GAO to again recommend that 

SBA file the required reports.189 Given the increased attention this 

Subcommittee has focused on bundling and consolidation, most recently at a March 17, 2015 hearing, and requiring in law that 

agencies improve their reporting on bundling and consolidation 190

it would improve the Committee’s oversight if SBA were to provide 

timely reports. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
44 

191GAO, WOMAN-OWNED SMALL BUSINESS PROGRAM: CERTIFIER OVERSIGHT AND ADDITIONAL

ELIGIBILITY CONTROLS ARE NEEDED (GAO–15–54) (2014). 192 Id. at 15. 193Pub. L. No. 113–291 § 825. 194Management Report at 106. 195 Id. 196GAO, SMALL BUSINESS CONTRACTING: OPPORTUNITIES EXIST TO FURTHER IMPROVE

HUBZONE OVERSIGHT (GAO–15–234) (2015). 197Management Report at 106. 

The use of third-party certifiers for WOSB and EDWOSB programs came under scrutiny in a 2014 report that led to two outstanding recommendations.191 Specifically, GAO found that the 

lack of clear guidance and oversight allowed for abuse of the program.192 However, despite language in the FY 2015 NDAA requiring SBA to move to discontinue self-certification,193 SBA has not 

closed two recommendations. Specifically, the Management Report 

echoed the recommendation that ‘‘[t]o improve management and 

oversight of the [WOSB] program, and to help ensure the effective 

oversight of third-party certifiers, the [SBA] should establish and 

implement comprehensive procedures to monitor and assess performance of certifiers in accord with the requirements of the thirdparty certifier agreement and program regulations.’’ 194 Further, 

GAO recommended that ‘‘[t]o improve management and oversight 

of the WOSB program, and to provide reasonable assurance that 

only eligible businesses obtain WOSB set-aside contracts, [SBA] 

should enhance examination of businesses that register to participate in the WOSB program, including actions such as: (1) promptly 

completing the development of procedures to conduct annual eligibility examinations and implementing such procedures; (2) analyzing examination results and individual businesses found to be 

ineligible to better understand the cause of the high rate of ineligibility in annual reviews, and determine what actions are needed to 

address the causes; and (3) implementing ongoing reviews of a 

sample of all businesses that have represented their eligibility to 

participate in the program.’’ 195 If any set-aside program fails to implement the appropriate controls, it opens itself to waste, fraud and 

abuse. Therefore, these recommendations remain critical. 

While the HUBZone program does not rely upon third-party 

verification programs, the outstanding GAO recommendations are 

very similar. Based on a 2015 report that examined lacks of controls and communication in the HUBZone program, GAO made two 

recommendations.196 First, GAO recommended that ‘‘[t]o improve 

SBA’s administration and oversight of the [HUBZone] program and 

reduce the risk that firms that no longer meet program eligibility 

criteria receive HUBZone contracts, [SBA] should conduct an assessment of the recertification process and implement additional 

controls, such as developing criteria and guidance on using a riskbased approach to requesting and verifying firm information, allowing firms to initiate the recertification process, and ensuring that 

sufficient staff will be dedicated to the effort so that a significant 

backlog in recertifications does not recur.’’ 197 Further, GAO recommended that ‘‘SBA should establish a mechanism to better ensure that firms are notified of changes to HUBZone designations 

that may affect their participation in the program, such as ensuring that all certified firms and newly certified firms are signed up 

for the broadcast e-mail system or including more specific information in certification letters about how location in a redesignated 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
45 

198 Id. at 106–107. 199GAO, MENTOR-PROTE ́ GE ́ PROGRAMS HAVE POLICIES THAT AIM TO BENEFIT PARTICIPANTS

BUT DO NOT REQUIRE POSTAGREEMENT TRACKING (GAO–11–548R) (2011). 200 NDAA for Fiscal Year 2013, Pub. L. No. 112–239 § 1641 (2013). 201MENTOR-PROTE ́ GE ́ PROGRAMS HAVE POLICIES THAT AIM TO BENEFIT PARTICIPANTS BUT DO

NOT REQUIRE POSTAGREEMENT TRACKING at 9. 202Management Report at 107. 203Management Report at 20. 204 Id. at 49. 205 Id. at 43 footnote 103. 

area can affect their participation in the program.’’ 198 Given that 

factors such as the residences of employees can change daily, and 

that the HUBZone program was designed to continually shift between locations so that only the most underutilized areas would 

qualify, both recommendations are common sense. 

In September 2011 and again in 2015, the Subcommittee on Contracting and Workforce held hearings examining mentor-prote ́ge ́

programs. This was spurred in part by a 2011 GAO report,199

which has led to legislation reforming the mentor-prote ́ge ́ programs.200 The crux of the report was that, while well-intentioned, 

there was little to no tracking of prote ́ge ́ firms to see if the programs produced lasting benefits.201 Thus, GAO recommended and 

SBA agreed that the program would benefit from post award tracking. However, nearly six years later, the recommendation that ‘‘[t]o 

more fully evaluate the effectiveness of their mentor-prote ́ge ́ programs, . . . the Mentor-Prote ́ge ́ Program Directors of the . . . SBA 

. . . should consider collecting and maintaining protege 

postcompletion information’’ remains open.202 This is particularly 

problematic now that SBA has been given statutory authority over 

all civilian agency mentor-prote ́ge ́ programs. 

In addition to the specific recommendations that were outstanding for GCBD, other agency-wide issues are posing challenges 

to the effectiveness of the GCBD programs and organization. Specifically, human capital, contracting and information technology 

and organizational structure are hampering GCBD. GAO noted in 

its management report that SBA’s Inspector General (OIG) ‘‘has included human capital as one of the most serious management challenges at SBA since fiscal year 2001.’’ 203 Within GCBD, this has 

led to the use of Voluntary Early Retirement Authority and Voluntary Separation Incentive Payments (VERA/VSIP) programs for 

fiscal years 2012 and 2014.204 In a VERA/VSIP action, the agency pays employees up to $25,000 to retire, but then may only replace 

a fraction of the retiring employees to achieve cost savings. GAO 

notes that ‘‘SBA officials stated that each program office was consulted to determine which positions were eligible for VERA/ 

VSIP.’’ 205 However, in GCBD the VERA/VSIP action led to the loss 

of statutorily mandated positions, such as PCRs, and the loss of numerous senior executives. As a consequence, GCBD has been operating without a Deputy, PPL lost its director of Policy and Research, the BD program lost its head of management and technical 

assistance, and numerous PCRs, BOS, and CMRs left. Sixteen 

months later these positions have not been filled. This has led to 

a backlog of regulations: based on the FY13–FY16 NDAAs, SBA 

still needs to produce seven proposed rules, thirteen final rules, 

and take seventeen other actions. Fewer than fifty PCRs are responsible for over $400 billion in contracts each year, and the majority of those PCRs carry other job assignments. GCBD’s ability to 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
46 

206 Id. at 28–29. 207 Id. 208Management Report at 58, citing GAO, MAJOR MANAGEMENT CHALLENGES AND PROGRAM

RISKS: SBA (GAO–03–116) (2003). 209 Id. 210 Id. 211 Id. 212https://www.sba.gov/offices/headquarters/ogc/about-us. 213 Id. 

fulfill its mission is jeopardized, which begs the question of why 

GCBD leadership approved buyouts for crucial positions. 

While information technology (IT) remains a challenge for SBA 

generally, within GCBD it has led to a lack of oversight of the 8(a) 

and HUBZone programs. Specifically, GAO cites a February 2014 

report by the OIG in which SBA failed to follow contracting law 

when purchasing its OneTrack system.206 One Track was intended 

to track participants in the 8(a) and HUBZone programs, as well 

as SBA’s loan programs, to reduce fraud. However, since SBA 

‘‘failed to perform market research or use a modular contracting 

strategy intended to reduce acquisition risks’’ the agency was left 

with a system that still is not deployed and which does not meet 

the needs of GCBD.207

In a 2003 report, GAO criticized SBA’s organizational structure 

as creating complex overlapping relationships among offices that 

contributed to challenges in delivering services to small businesses.208 GAO again specified that the ‘‘working relationships between headquarters and field offices . . . differ from reporting relationships, potentially posing programmatic challenges.’’ 209

A’’[d]istrict officials work[ing] with program offices at SBA’s headquarters to implement the agency’s programs, but [reporting] to regional administrators, who themselves report to the Office of Field 

Operations,’’ GAO cited the BOS ‘‘in the district offices [who] work 

with [GCBD] at SBA headquarters to assist small businesses with 

securing government contracts but report to district office management.’’ 210

GAO also cited as problem that ‘‘some officials have the same duties.’’ 211 While not identified as such by GAO, within GCBD the 

delineation between GC and PPL is tenuous, as illustrated by 

SBA’s own website. PPL does not have a website, but GC does.212

The GC website says that it is responsible for goaling, and that it 

plays a major role in federal regulations on government contracting.213 Indeed, PPL and GC have previously been a single organization as recently as 2015. 

Given this myriad of organizational and operational issues, section 505 requires that the Comptroller General conduct a substantial review of the GCBD and report back with recommendations on 

how to restructure the office to achieve greater efficiencies. 

6. Section 506 

Section 506 requires that reports SBA provides to the Office of 

Management and Budget regarding data security be provided to 

the Committee as well. This will help the Committee perform better oversight of important IT security issues. 

7. Section 507 

Surety bonds protect the government and small businesses alike 

by providing a third party guarantee that the prime contractor will 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
47 

214 40 USC § 3131(b). 

complete construction, commonly called a performance bond, and 

that the prime contractor will pay its suppliers and subcontractors, 

commonly called a payment bond. Under federal law, to bid on 

most federal construction and architectural or engineering projects 

above $150,000, the prime contractor must provide the contracting 

officer with a surety bond, and both the performance and payment 

bonds become binding upon contract award.214 Thus, when bonds 

are issued by a surety, the surety vouches for the creditworthiness 

and capacity of the contractor, protects the government against 

uncompleted projects and liens, and protects subcontractors against 

unscrupulous or over extended prime contractors. However, when 

the requirement to bond is waived, it may expose the federal government, subcontractors and taxpayers to risk. Section 507 requires that the Comptroller General assess whether better outcomes are obtained when surety bonds are required. 

IV. HEARINGS

In the 114th Congress, the Committee held numerous hearings 

that looked at the issues covered by H.R. 4341. 

In the 114th Congress, the Committee held thirteen hearings 

that looked at the issues covered by H.R. 4341. On February 12, 

2015, the Full Committee held a hearing titled ‘‘Contracting and 

the Industrial Base’’ that examined surety bond issues. On March 

7, 2015, the Subcommittee on Contracting and Workforce held a 

hearing titled ‘‘Contracting and the Industrial Base II: Bundling, 

Goaling and the Office of Hearings and Appeals’’ that looked at the 

use of subcontracting, and at the role of the PCR. On March 19, 

2015, the Subcommittee on Contracting and Workforce held a hearing on ‘‘Contracting and the Industrial Base III: Reverse Auctions, 

Verification and the SBA’s Role in Rulemaking,’’ that examined the 

SDVOSB verification process, and GCBD organizational issues. On 

June 4, 2015, the Subcommittee on Contracting and Workforce 

held a hearing titled ‘‘Sizing Up Small Businesses: SBA’s Failure 

to Implement Congressional Direction,’’ that looked at size standards and GCBD organizational issues. On June 23, 2015, the Subcommittee on Oversight and Investigations held a joint hearing 

with the Veterans’ Affairs Committee of the House of Representatives (HVAC) Subcommittee on Oversight and Investigations called 

‘‘Manipulation and Fraud in Reporting VA Small Business Goals’’ 

that looked at the role of the OSDBU and the use of purchase 

cards. On October 27, 2015, at a hearing called ‘‘Maximizing Mentoring: How are the SBA and DoD Mentor-Prote ́ge ́ Programs Serving Small Businesses?’’ the Subcommittee on Contracting and 

Workforce examined the DoD and SBA mentor-prote ́ge ́ programs. 

At a hearing called ‘‘An Examination of Continued Changes in VA’s 

Vets First Verification Process,’’ on November 4, 2015, the Subcommittee on Contracting and Workforce and the HVAC Subcommittee on Investigations, Oversight and Regulations examined 

the VA and SBA verification programs for SDVOSB contractors. On 

November 18, 2015, the Subcommittee on Contracting and Workforce held a hearing called ‘‘Continuing Challenges for Small Contractors,’’ that examined subcontracting issues and goaling and 

transparency challenges. The Subcommittee on Agriculture, Energy 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
48 

and Trade held a hearing on size standards for agricultural producers on November 19, 2015 called ‘‘Improving Size Standards for 

Small Farmers and Ranchers.’’ The PCR, OSDBU, CMR, and BOS 

programs were the subject of a hearing of the Subcommittee on 

Contracting and Workforce on December 9, 2015 called ‘‘Supporting 

Success: Empowering Small Business Advocates.’’ On February 3, 

2016, the Subcommittee on Contracting and Workforce held a hearing called ‘‘SBA Management Review: Office of Government Contracts and Business Development’’ that looked at the management 

of GCBD. On February 25, 2016, the Subcommittee on Contracting 

and Workforce looked at compliance with subcontracting plans in 

a hearing called ‘‘Hotline Truths: Issues Raised by Recent Audits 

of Defense Contracting.’’ Finally, on April 5, 2016, the Subcommittee on Contracting and Workforce held a hearing on ‘‘Challenges for Small Defense Contractors’’ that examined compliance 

challenges and other issues. 

V. COMMITTEE CONSIDERATION

The Committee on Small Business met in open session, with a 

quorum being present, on January 13, 2016 and ordered H.R. 4341 

reported, as amended, to the House by a voice vote at 10:36 a.m. 

During the markup, seven amendments were offered. All amendments were adopted. Disposition of the amendments is addressed 

below and is based on the order amendments were filed with the 

Clerk of the Committee and not necessarily in the order that they 

were considered at the markup. 

Amendment Number One filed by Ms. Vela ́zquez (D–NY) added 

section 205 to H.R. 4341 and provide the roles and responsibilities 

of the BOS at SBA. The amendment was adopted by voice vote at 

10:16 a.m. 

Amendment Number Two filed by Ms. Lawrence (D–MI) added 

section 506 to H.R. 4341 and requires that SBA share data on IT 

security with the Committee. The amendment was adopted by voice 

vote at 10:19 a.m. 

Amendment Number Three filed by Mr. Takai (D–HI) allows 

mentors participating in DoD mentor-prote ́ge ́ programs to refer 

prote ́ge ́ firms to Women’s Business Centers for technical assistance. The amendment was adopted by voice vote at 10:22 a.m. 

Amendment Number Four filed by Mr. Chabot (R–OH) made 

technical corrections. The amendment was adopted by voice vote at 

10:35 a.m. 

Amendment Number Five filed by Ms. Hahn (D–CA) clarified 

that a task order is a contract for purposes of section 15 of the Act. 

The amendment was adopted by voice vote at 10:28 a.m. 

Amendment Number Six filed by Ms. Chu (D–CA) clarified that 

SBA may create additional industry groups and new size standards 

to reflect federal buying patterns. The amendment was adopted by 

voice vote at 10:31 a.m. 

Amendment Number Seven filed by Mr. King (R–IA) required 

that GAO conduct a review on the use of surety bonds on small 

business contracts. After the adoption of a perfecting amendment 

by unanimous consent, the amendment was adopted by voice vote 

at 10:33 a.m. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
49 

VI. 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. There were 

no recorded votes on H.R. 4341. 

VII. SECTION-BY-SECTION ANALYSIS OF H.R. 527 

SECTION-BY-SECTION ANALYSIS OF H.R. 4341 AS AMENDED

Section 1. Short title 

This Section designates the bill as the ‘‘Defending America’s 

Small Contractors Act of 2016’’ 

Section 2. Table of contents 

This section provides the table of contents, and divided the bill 

into five titles. 

TITLE I—IMPROVING TRANSPARENCY AND CLARITY FOR SMALL

BUSINESSES

Section 101. Plain language rewrite of requirements for small business procurements 

This section strikes and replaces the current section 15(a). It 

makes no substantive changes to the Act, but merely restructures 

the subsection to aid with comprehension. 

Section 102. Improving reporting on small business goals 

This section amends section 15(h)(2)(E) of the Act in eight paragraphs. 

Paragraph (1) 

Paragraph (1) amends clause (i) of section 15(h)(2)(E) of the Act 

by adding two new subclauses. The new subclause (V) requires that 

when SBA reports on annual prime contract awards to small business, it must also report on awards to small businesses that were 

purchased by another entity after the initial contract was awarded 

and as a result of the purchase, would no longer be deemed to be 

small businesses. The new subclause (VI) requires that when SBA 

reports on annual prime contract awards to small business, it must 

also report on awards to small businesses that were awarded using 

a procurement method other than a small business set-aside or full 

and open competition. 

Paragraph (2) 

Paragraph (2) amends clause (ii) of section 15(h)(2)(E) of the Act 

by adding two new subclauses. The new subclause (VI) requires 

that when SBA reports on annual prime contract awards to 

SDVOSBs, it must also report on awards to SDVOSBs that were 

purchased by another entity after the initial contract was awarded 

and as a result of the purchase, would no longer be deemed to be 

SDVOSBs. The new subclause (VII) requires that when SBA reports on annual prime contract awards to SDVOSBs, it must also 

report on awards to SDVOSBs that were awarded using a procureVerDate Sep 11 2014 07:19 Jul 27, 2016 Jkt 059006 PO 00000 Frm 00049 Fmt 6659 Sfmt 6602 E:\HR\OC\HR704P1.XXX HR704P1

smartinez on DSK3GLQ082PROD with REPORTS-HSE
50 

ment method other than a SDVOSB set-aside or full and open competition. 

Paragraph (3) 

Paragraph (3) amends clause (iii) of section 15(h)(2)(E) of the Act 

by adding two new subclauses. The new subclause (VII) requires 

that when SBA reports on annual prime contract awards to 

HUBZones, it must also report on awards to SDVOSBs that were 

purchased by another entity after the initial contract was awarded 

and as a result of the purchase, would no longer be deemed to be 

HUBZones. The new subclause (VIII) requires that when SBA reports on annual prime contract awards to HUBZones, it must also 

report on awards to SDVOSBs that were awarded using a procurement method other than a HUBZones set-aside or full and open 

competition. 

Paragraph (4) 

Paragraph (4) amends clause (iv) of section 15(h)(2)(E) of the Act 

by adding two new subclauses. The new subclause (VII) requires 

that when SBA reports on annual prime contract awards to SDBs, 

it must also report on awards to SDBs that were purchased by another entity after the initial contract was awarded and as a result 

of the purchase, would no longer be deemed to be SDBs. The new 

subclause (VIII) requires that when SBA reports on annual prime 

contract awards to SDBs, it must also report on awards to SDBs 

that were awarded using a procurement method other than a preference for SDBs or full and open competition. 

Paragraph (5) 

Paragraph (5) amends clause (v) of section 15(h)(2)(E) of the Act 

by adding two new subclauses. The new subclause (VI) requires 

that when SBA reports on annual prime contract awards to Indian 

Tribes other than Alaska Native Corporations (ANC), it must also 

report on awards to Indian Tribes that were purchased by another 

entity after the initial contract was awarded and as a result of the 

purchase, would no longer be deemed to be Indian Tribes. The new 

subclause (VII) requires that when SBA reports on annual prime 

contract awards to Indian Tribes other than ANCs, it must also report on awards to Indian Tribes that were awarded using a procurement method other than a preference for SDBs or full and 

open competition. 

Paragraph (6) 

Paragraph (6) amends clause (vi) of section 15(h)(2)(E) of the Act 

by adding two new subclauses. The new subclause (VI) requires 

that when SBA reports on annual prime contract awards to Native 

Hawaiian Organizations (NHO), it must also report on awards to 

NHOs that were purchased by another entity after the initial contract was awarded and as a result of the purchase, would no longer 

be deemed to be NHOs. The new subclause (VII) requires that 

when SBA reports on annual prime contract awards to NHOs, it 

must also report on awards to Indian Tribes that were awarded 

using a procurement method other than a preference for SDBs or 

full and open competition. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
51 

Paragraph (7) 

Paragraph (7) amends clause (vii) of section 15(h)(2)(E) of the Act 

by adding two new subclauses. The new subclause (VI) requires 

that when SBA reports on annual prime contract awards to ANCs, 

it must also report on awards to ANCs that were purchased by another entity after the initial contract was awarded and as a result 

of the purchase, would no longer be deemed to be ANCs. The new 

subclause (VII) requires that when SBA reports on annual prime 

contract awards to ANCs, it must also report on awards to ANCs 

that were awarded using a procurement method other than a preference for SDBs or full and open competition. 

Paragraph (8) 

Paragraph (8) amends clause (viii) of section 15(h)(2)(E) of the 

Act by adding two new subclauses. The new subclause (IX) requires 

that when SBA reports on annual prime contract awards to 

WOSBs, it must also report on awards to WOSBs that were purchased by another entity after the initial contract was awarded and 

as a result of the purchase, would no longer be deemed to be 

WOSBs. The new subclause (X) requires that when SBA reports on 

annual prime contract awards to WOSBs, it must also report on 

awards to WOSBs that were awarded using a procurement method 

other than a preference for WOSBs or full and open competition. 

Section 103. Transparency in small business goals 

This section amends section 15(g) of the Act by adding a new 

paragraph (4). The new paragraph directs that the Administrator 

of the SBA may not, when calculating whether the federal government met the 23 percent goal for federal prime contracting, exclude 

contracts from the base for any of five reasons. Those reasons are 

based on where the contract as awarded, where it was performed, 

whether another law directs that the contract go to another entity, 

such as Federal Prison Industries, or whether funding for the contract is from fees collected by the agency rather than appropriations if the contract is subject to a bid protest, and finally whether 

the contract is covered by the Federal Acquisition Regulation. This 

will prohibit the current practice of excluding nearly twenty percent of federal contract dollars and artificially inflating the goals. 

Section 104. Uniformity in procurement terminology 

Subsection (a)—In General 

This subsection amends section 15(j)(1) of the Act (15 U.S.C. 

644(j)(1)) to replace the words ‘‘greater than $2,500 but not greater 

than $100,000’’ with the phrase ‘‘greater than the micro-purchase 

threshold, but not greater than the simplified acquisition threshold.’’ Given that the dollar thresholds applicable to this program 

adjust every five years and so no longer reflect the values provided 

in the Act, the implementing regulations have already adopted the 

terms micro-purchase threshold and simplified acquisition threshold. This change keeps the statute and the regulations consistent. 

Subsection (b)—Technical Amendment 

This subsection amends section 3(m) of the Small Business Act 

to ensure that the definitions used for the terms prime contract, 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
52 

prime contractor, simplified acquisition threshold, and micro-purchase threshold are given the same meaning as they are in title 41 

of the United States Code. Further, it clarifies that the term ‘‘total 

purchase and contracts for property and services’’ means ‘‘total 

number and total dollar amount of contracts and orders for property and services.’’ 

TITLE II—CLARIFYING THE ROLES OF SMALL BUSINESS ADVOCATES

Section 201. Scope of review by procurement center representatives 

This section amends section 15(l) of the Act to add a new paragraph (9). The new paragraph directs that the SBA Administrator 

may not prevent PCRs from reviewing contracts and task orders 

that are set aside for small business concerns, partially set aside 

for small business concerns, contain a small business reserve, or 

would result in a bundled or consolidated contract. 

Section 202. Responsibilities of commercial market representatives 

This section amends section 4(h) of the Act. 

Paragraph (1) 

Paragraph (1) retitles the subsection ‘‘Commercial Market Representatives.’’ 

Paragraph (2) 

Paragraph (2) redesignates subparagraphs (A) and (B) as clauses 

(i) and (ii). 

Paragraph (3) 

Paragraph (3) amends the new clause (ii) to state the educational 

requirements must be included in any posting seeking to hire a 

CMR. 

Paragraph (4) 

Paragraph (4) amends the new clause (i) by striking ‘‘paragraph 

(2)’’ and inserting ‘‘paragraph (1).’’ 

Paragraph (5) 

Paragraph (5) redesignates paragraphs (1) and (2) as subparagraphs (A) and (B). 

Paragraph (6) 

Paragraph (6) strikes ‘‘paragraph (2)’’ the new subparagraph (A) 

and inserts ‘‘subparagraph (B).’’ 

Paragraph (7) 

Paragraph (7) by inserts a new paragraph (1). The new paragraph provides that CMR should report to GCBD. It further explains that their responsibilities are to advance the use of small 

business concerns on federal subcontractors, including helping 

prime contractors find qualified subcontractors and assisting prime 

contractors with meeting their responsibilities under their subcontracting plans. Further, the CMR should help small business concerns improve their capacity to perform as subcontractors. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
53 

Section 203. Duties of the Office of Small and Disadvantaged Business Utilization 

This section amends section 15(k) of the Act. 

Paragraph (1) 

Paragraph (1) strikes the references to section 8, 15 or 44 in section 15(k) of the Act and replaces it with section 8, 15, 31, 36, or 

44. This allows the OSDBU to provide assistance to SDVOSBs and 

HUBZones. 

Paragraph (2) 

Paragraph (2) strikes references to section 8 or 15 in section 

15(k) of the Act and replaces it with section 8, 15, 31, 36, or 44. 

This allows the OSDBU to provide assistance to SDVOSBs and 

HUBZones and to provide assistance with bundling and consolidation. 

Paragraph (3) 

Paragraph (3) strikes the reference to section 8 paragraph (10) 

of section 15(k) of the Act and replaces it with section 8, 15, 31, 

36, or 44. This allows the OSDBU to provide assistance to small 

businesses, SDVOSBs and HUBZones and to provide assistance 

with bundling and consolidation. 

Paragraph (4) 

Paragraph (4) redesignates paragraphs (15), (16), and (17) as 

paragraphs (16), (17), and (18). 

Paragraph (5) 

Paragraph (5) inserts as new paragraph (15) that requires the 

OSDBU to review purchases exceeding the micro-purchase threshold but below the simplified acquisition threshold made using purchase cards to ensure that the purchases follow the laws related to 

small businesses and that they have been entered into the Federal 

Procurement Data System. 

Paragraph (6) 

Paragraph (6) amends the new paragraph (17) to requires that 

the OSDBU annually report on any violations of the Act by their 

agency. 

Section 204. Improving contractor compliance 

Subsection (a)—Requirements for the Office of Small and 

Disadvantaged Business Utilization 

Subsection (a) amends section 15(k) of the Act by redesignating 

paragraphs (16), (17), and 7 (18) as paragraphs (17), (18), and (19). 

It then adds a new paragraph (16) that requires that the OSDBU 

should assist small businesses receiving federal contracts or subcontracts in finding resources for education and training on compliance with contracting regulations. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
54 

Subsection (b)—Requirements Under the Mentor-Prote ́ge ́ Program of the Department of Defense 

Subsection (B) amends section 831(e)(1) of the FY 1991 NDAA by 

adding a new subparagraph (D). The new subparagraph requires 

that mentors in approved mentor-prote ́ge ́ agreements shall provide 

compliance assistance to proteges. 

Subsection (c)—Resources for Small Business Concerns 

This subsection amends section 15 of the Act by adding a new 

subsection (t), titled ‘‘Post-Award Compliance Assistance.’’ The new 

subsection requires that SBA provide small business development 

centers and Procurement Technical Assistance Centers a list of resources for small businesses seeking education and assistance with 

complying with federal procurement regulations. Further, SBA is 

required to put the list on its website. 

Subsection (d)—Requirements for Procurement Center 

Represenatives 

This subsection amends section 15(l)(2) of the Act by adding a 

new subparagraph (I) to requires that PCRs assist small business 

concerns with finding resources for education and training on compliance with federal contracting regulations. 

Subsection (e)—Requirements under the the Mentor-Prote ́ge ́

Program of the Department of the Small Business Administration 

This subsection amends section 45(b)(3) of the Act by adding a 

new subparagraph (K) the new subparagraph requires that a mentor prote ́ge ́ agreement should address the extent to which the mentor will provide the prote ́ge ́ with assistance complying with federal 

contracting regulations. 

Section 205. Responsibilities of Business Opportunity Specialists 

This section amends section 4(g) of the Act. 

Paragraph (1) 

This paragraph changes the heading for the subsection to ‘‘Business Opportunity Specialists.’’ 

Paragraph (2) 

This paragraph makes technical amendments. 

Paragraph (3) 

This paragraph amends clause (ii) to require that any job advertisement for BOSs must include the educational requirements. 

Paragraph (4)—Paragraph (6) 

These paragraphs make technical amendments. 

Paragraph (7) 

This paragraph inserts a new paragraph (1) that enumerates the 

duties of the BOS. First, it requires that BOSs report to GCBD, not 

to field operations. Second, it makes it clear that the primary duties of the BOS shall be to implement the 8(a) and mentor-prote ́ge ́

programs. In doing so, the BOS is required to provide eligible firms 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
55 

with counseling, referrals, identifying why firms succeed or fail, 

and assessing the strengths and weaknesses of the firms. Further, 

the BOS should monitor and document the firm’s compliance with 

theprogram, and explain the contracting programs of the Act to 

participant. The BOS may also assist with post-award compliance 

assistance, and shall represent the SBA’s interests in negotiations 

regarding 8(a) contracts. 

TITLE III—STRENGTHENING OPPORTUNITIES FOR COMPETITION IN

SUBCONTRACTING

Section 301. Good faith in subcontracting 

Subsection (a)—Transparency in Subcontracting Goals 

This subsection amends section 8(d)(9) of the Act to provide that 

failure to submit a required subcontracting report may be a material breach of the contract. 

Subsection (b)—Authority of the Administrator of the Small 

Business Administration 

This subsection amends section 8(d)(11) of the Act to state that 

reviews by PCRs and CMRs of subcontracting plans are not advisory in nature. 

Subsection (c)—Review and Acceptance of Subcontracting 

Plans 

This subsection adds a new subsection 8(d)(17) to the Act that 

provides authority for a PCR or CMR to assess whether a proposed 

subcontracting plan provides the maximum practicable opportunity 

for small business concerns to participate. If the PCR or CMR believes that the plan does not provide sufficient opportunities for 

small business participation, the PCR or CMR is permitted to delay 

acceptance of the subcontracting plan for up to 30 days. However, 

if the PCR or CMR fails to reach an agreement with the contracting agency’s personnel on a plan to provide the maximum 

practicable opportunity; this subsection provides that the disagreement shall be decided by the head of the contracting agency. 

Subsection (d)—Good Faith Compliance 

This subsection directs the SBA to issue rules explaining what 

it means to fail to make a good faith effort to comply with a subcontracting plan. It directs that failure to submit a report shall be 

considered failure to make a good faith effort. 

Section 302. Pilot program to provide opportunities for qualified 

subcontractors to obtain past performance ratings 

This section amends section 8(d) of the Act to add a new paragraph (18). The new paragraph establishes a three year pilot program by which small first tier subcontractors may obtain a past 

performance rating. The pilot requires that the subcontractor make 

the application to SBA, and that SBA coordinate the response of 

the contracting agency and the prime contractor. Any dispute between the entities shall result in a neutral past performance rating. The GAO is also directed to review the success of the pilot and 

offer recommendations on how it could be improved. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
56 

TITLE IV—MENTOR-PROTEGE PROGRAMS

Section 401. Amendments to the Mentor-Protege Program of the Department of Defense 

This section amends section 831 of the FY 1991 NDAA. 

Paragraph (1) 

This paragraph amends paragraph (1) of section 831 to require 

that DoD ascertain that any potential prote ́ge ́ not have been found 

affiliated with the proposed mentor. It further adds a new paragraph (2) that requires that if there is any reason to believe that 

there may be affiliation between the potential mentor and prote ́ge ́, that DoD refer the case to SBA’s OHA. 

Paragraph (2) 

This paragraph removes the definition of behaviors that could 

lead to a finding of affiliation and replaces it with a reference to 

the SBA’s affiliation regulations. 

Paragraph (3) 

Paragraph (3) clarifies that mentors may refer prote ́ge ́ firms to 

Women’s Business Centers for technical assistance. 

Section 402. Improving cooperation between the mentor-protege programs of the Small Business Administration and the Department of Defense 

This section amends section 45(b) of the Act to remove the exemption previously provided to DoD. This will require that DoD coordinate its mentor-prote ́ge ́ program with the SBA’s government 

wide program. 

TITLE V—MISCELLANEOUS

Section 501. Improving education on small business regulations 

This section adds a new subsection (u) to section 15 of the Act. 

The new subsection requires that the SBA annually report to the 

Federal Acquisition Institute, Defense Acquisition University, small 

business development centers, Procurement Technical Assistance 

Centers, and the acquisition workforce trading coordinator in each 

agency on regulations promulgated during the prior year that affect 

small business contracting. Further, the SBA must provide any 

training materials it has developed. 

Section 502. Protecting task order competition 

This section makes permanent the authority in section 4106(f) of 

title 41, United States Code, that allows contractors to protest the 

award of task orders above $10 million. Currently, the authority is 

set to expire on September 30, 2016. 

Section 503. Improvements to size standards for small agricultural 

producers 

Subsection (a)—Amendment to definition of agricultural enterprises 

This subsection amends section 18(b) of the Act to uniformly use 

the term ‘‘small business concerns’’ rather than ‘‘small businesses.’’ 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
57 

Subsection (b)—Treatment of small farms 

This subsection amends section 3(a) to remove the statutory cap 

of $750,000 currently applied to small agricultural producers. 

Subsection (c)—Updated size standards 

This subsection directs SBA to issue new size standards for agricultural producers within 18 months. It further clarifies that these 

size standards shall be reviewed and updated every five years. 

Section 504. Uniformity in service-disabled veteran definitions 

Subsection (a)—Small business definition of small business 

concerns consolidated 

This subsection amends the definition of SDVOSB found in section 3(q) of the Act. It changes it to clarify that ownership by an 

employee stock ownership plan shall not automatically disqualify a 

firm from the program. It further adds a provision allowing that 

the surviving spouse of a completely disabled veteran may continue 

the program for ten years or until the surviving spouse remarries, 

or relinquishes ownership. 

Subsection (b)—Veterans Affairs definition of small business 

concern consolidated 

This subsection amends section 8127 of title 38, United States 

Code. It replaces the current definition of SDVOSB and VOSB with 

the definitions found in section 3 of the Act. 

Subsection (c)—Technical correction 

This subsection corrects disparities in how the term SDVOSB is 

used in title 38. 

Subsection (d)—Regulations relating to database of the Secretary of Veterans Affairs 

This subsection requires that VA use the regulations promulgated by SBA to determine whether a firm is owned or controlled 

by veterans or service-disabled veterans. It allows VA to use its 

own regulations to determine whether individuals are veterans or 

service-disabled veterans. 

Subsection (e)—Delayed effective date 

This subsection delays the effect of these changes until the regulations are promulgated. 

Subsection (f)—Appeals of inclusion in the database 

This subsection allows SBA’s OHA to hear appeals of a firm’s eligibility as a SDVOSB or VOSB. It also requires VA to reimburse 

SBA for hearing these appeals. 

Section 505. GAO review of the Office of Government Contracting 

and Business Development of the Small Business Administration 

This section requires that GAO evaluate the operation of the 

GCBD Office at SBA. It further asks GAO to recommend improvements to the operations of this office. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
58 

Section 506. Required reports pertaining to capital planning and investment control 

This section requires that SBA provide the Committees of jurisdiction with copies of reports relating to IT security. 

Section 507. GAO review of surety bonds 

This section requires GAO to evaluate small business contracts 

to assess whether the use of a surety bond increases the success 

of the contract, and whether waivers of surety bonds threaten performance. 

VIII. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

At the time H.R. 4341 was reported to the House, the Congressional Budget Office had not provided a cost estimate. 

IX. UNFUNDED MANDATES

H.R. 4341 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. 

X. 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. While the Committee has not received an estimate of new budget authority contained in the cost estimate prepared by the Director of the Congressional Budget Office pursuant 

to § 402 of the Congressional Budget Act of 1974, the Committee 

does not believe that any additional appropriation will be required 

due to the enactment of H.R. 4341. H.R. 4341 does not direct new 

spending, but instead addresses the opportunity to increase competition for federal contractors. Increased competition may save 

taxpayer funds. 

XI. 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. 4341 are incorporated into the descriptive portions 

of this report. 

XII. 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, § 8, cls. 1, 3, and 18 and Art. IV, § 3, cl.2 of 

the Constitution of the United States. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
59 

XIII. CONGRESSIONAL ACCOUNTABILITY ACT

H.R. 4341 does not relate to the terms and conditions of employment or access to public services or accommodations within the 

meaning of § 102(b)(3) of Pub. L. No. 104–1. 

XIV. FEDERAL ADVISORY COMMITTEE ACT STATEMENT

H.R. 4341 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. 

XV. STATEMENT OF NO EARMARKS

Pursuant to clause 9 of rule XXI, H.R. 4341 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. 

XVI. 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. 4341 includes a number of provisions designed to improve the competitive viability of small businesses as federal 

prime and subcontractors and to improve agency compliance 

with the Small Business Act. 

XVII. 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): 

SMALL BUSINESS ACT 

* * * * * * * 

SEC. 3. DEFINITIONS. 

(a) SMALL BUSINESS CONCERNS.— (1) IN GENERAL.—For the purposes of this Act, a small-business concern, including but not limited to enterprises that are 

engaged in the business of production of food and fiber, ranching and raising of livestock, aquaculture, and all other farming 

and agricultural related industries, shall be deemed to be one 

which is independently owned and operated and which is not 

dominant in its field of øoperation: Provided, That notwithstanding any other provision of law, an agricultural enterprise 

shall be deemed to be a small business concern if it (including 

its affiliates) has annual receipts not in excess of $750,000.¿ 

operation. 

(2) ESTABLISHMENT OF SIZE STANDARDS.— 

(A) IN GENERAL.—In addition to the criteria specified in 

paragraph (1), the Administrator may specify detailed definitions or standards by which a business concern may be 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
60 

determined to be a small business concern for the purposes 

of this Act or any other Act. 

(B) ADDITIONAL CRITERIA.—The standards described in 

paragraph (1) may utilize number of employees, dollar volume of business, net worth, net income, a combination 

thereof, or other appropriate factors. 

(C) REQUIREMENTS.—Unless specifically authorized by 

statute, no Federal department or agency may prescribe a 

size standard for categorizing a business concern as a 

small business concern, unless such proposed size standard— 

(i) is proposed after an opportunity for public notice 

and comment; 

(ii) provides for determining— 

(I) the size of a manufacturing concern as measured by the manufacturing concern’s average employment based upon employment during each of 

the manufacturing concern’s pay periods for the 

preceding 12 months; 

(II) the size of a business concern providing 

services on the basis of the annual average gross 

receipts of the business concern over a period of 

not less than 3 years; 

(III) the size of other business concerns on the 

basis of data over a period of not less than 3 

years; or 

(IV) other appropriate factors; and 

(iii) is approved by the Administrator. 

(3) VARIATION BY INDUSTRY AND CONSIDERATION OF OTHER

FACTORS.—When establishing or approving any size standard 

pursuant to paragraph (2), the Administrator shall ensure that 

the size standard varies from industry to industry to the extent 

necessary to reflect the differing characteristics of the various 

industries and consider other factors deemed to be relevant by 

the Administrator. 

(4) EXCLUSION OF CERTAIN SECURITY EXPENSES FROM CONSIDERATION FOR PURPOSE OF SMALL BUSINESS SIZE STANDARDS.— 

(A) DETERMINATION REQUIRED.—Not later than 30 days 

after the date of enactment of this paragraph, the Administrator shall review the application of size standards established pursuant to paragraph (2) to small business concerns that are performing contracts in qualified areas and 

determine whether it would be fair and appropriate to exclude from consideration in the average annual gross receipts of such small business concerns any payments made 

to such small business concerns by Federal agencies to reimburse such small business concerns for the cost of subcontracts entered for the sole purpose of providing security 

services in a qualified area. 

(B) ACTION REQUIRED.—Not later than 60 days after the 

date of enactment of this paragraph, the Administrator 

shall either— 

(i) initiate an adjustment to the size standards, as 

described in subparagraph (A), if the Administrator 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
61 

determines that such an adjustment would be fair and 

appropriate; or 

(ii) provide a report to the Committee on Small 

Business and Entrepreneurship of the Senate and the 

Committee on Small Business of the House of Representatives explaining in detail the basis for the determination by the Administrator that such an adjustment would not be fair and appropriate. 

(C) QUALIFIED AREAS.—In this paragraph, the term 

‘‘qualified area’’ means— 

(i) Iraq, 

(ii) Afghanistan, and 

(iii) any foreign country which included a combat 

zone, as that term is defined in section 112(c)(2) of the 

Internal Revenue Code of 1986, at the time of performance of the relevant Federal contract or subcontract. 

(5) ALTERNATIVE SIZE STANDARD.— 

(A) IN GENERAL.—The Administrator shall establish an 

alternative size standard for applicants for business loans 

under section 7(a) and applicants for development company loans under title V of the Small Business Investment 

Act of 1958 (15 U.S.C. 695 et seq.), that uses maximum 

tangible net worth and average net income as an alternative to the use of industry standards. 

(B) INTERIM RULE.—Until the date on which the alternative size standard established under subparagraph (A) is 

in effect, an applicant for a business loan under section 

7(a) or an applicant for a development company loan under 

title V of the Small Business Investment Act of 1958 may 

be eligible for such a loan if— 

(i) the maximum tangible net worth of the applicant 

is not more than $15,000,000; and 

(ii) the average net income after Federal income 

taxes (excluding any carry-over losses) of the applicant 

for the 2 full fiscal years before the date of the application is not more than $5,000,000. 

(6) PROPOSED RULEMAKING.—In conducting rulemaking to revise, modify or establish size standards pursuant to this section, the Administrator shall consider, and address, and make 

publicly available as part of the notice of proposed rulemaking 

and notice of final rule each of the following: 

(A) a detailed description of the industry for which the 

new size standard is proposed; 

(B) an analysis of the competitive environment for that 

industry; 

(C) the approach the Administrator used to develop the 

proposed standard including the source of all data used to 

develop the proposed rule making; and 

(D) the anticipated effect of the proposed rulemaking on 

the industry, including the number of concerns not currently considered small that would be considered small 

under the proposed rule making and the number of concerns currently considered small that would be deemed 

other than small under the proposed rulemaking. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
62 

(7) COMMON SIZE STANDARDS.—In carrying out this subsection, the Administrator may establish or approve a single 

size standard for a grouping of 4-digit North American Industry Classification System codes only if the Administrator 

makes publicly available, not later than the date on which 

such size standard is established or approved, a justification 

demonstrating that such size standard is appropriate for each 

individual industry classification included in the grouping. 

(8) NUMBER OF SIZE STANDARDS.—The Administrator shall 

not limit the number of size standards established pursuant to 

paragraph (2), and shall assign the appropriate size standard 

to each North American Industry Classification System Code. 

(9) PETITIONS FOR RECONSIDERATION OF SIZE STANDARDS.— 

(A) IN GENERAL.—A person may file a petition for reconsideration with the Office of Hearings and Appeals (as established under section 5(i)) of a size standard revised, 

modified, or established by the Administrator pursuant to 

this subsection. 

(B) TIME LIMIT.—A person filing a petition for reconsideration described in subparagraph (A) shall file such petition not later than 30 days after the publication in the 

Federal Register of the notice of final rule to revise, modify, or establish size standards described in paragraph (6). 

(C) PROCESS FOR AGENCY REVIEW.—The Office of Hearings and Appeals shall use the same process it uses to decide challenges to the size of a small business concern to 

decide a petition for review pursuant to this paragraph. 

(D) JUDICIAL REVIEW.—The publication of a final rule in 

the Federal Register described in subparagraph (B) shall 

be considered final agency action for purposes of seeking 

judicial review. Filing a petition for reconsideration under 

subparagraph (A) shall not be a condition precedent to judicial review of any such size standard. 

(b) For purposes of this Act, any reference to an agency or department of the United States, and the term ‘‘Federal agency,’’ 

shall have the meaning given the term ‘‘agency’’ by section 551(1) 

of title 5, United States Code, but does not include the United 

States Postal Service or the General Accounting Office. 

(c)(1) For purposes of this Act, a qualified employee trust shall 

be eligible for any loan guarantee under section 7(a) with respect 

to a small business concern on the same basis as if such trust were 

the same legal entity as such concern. 

(2) For purposes of this Act, the term ‘‘qualified employee trust’’ 

means, with respect to a small business concern, a trust— 

(A) which forms part of an employee stock ownership plan 

(as defined in section 4975(e)(7) of the Internal Revenue Code 

of 1954)— 

(i) which is maintained by such concern, and 

(ii) which provides that each participant in the plan is 

entitle to direct the plan as to the manner in which voting 

rights under qualifying employer securities (as defined in 

section 4975(e)(8) of such Code) which are allocated to the 

account of such participant are to be exercised with respect 

to a corporate matter which (by law or charter) must be 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
63 

decided by a majority vote of outstanding common shares 

voted; and 

(B) in the case of any loan guarantee under section 7(a), the 

trustee of which enters into an agreement with the Administrator of which enters into an agreement with the Administrator which is binding on the trust and no such small business concern and which provides that— 

(i) the loan guaranteed under section 7(a) shall be used 

solely for the purchase of qualifying employer securities of 

such concern. 

(ii) all funds acquired by the concern in such purchase 

shall be used by such concern solely for the purposes for 

which such loan was guaranteed, 

(iii) such concern will provide such funds as may be necessary for the timely repayment of such loan, and the 

property of such concern shall be available as security for 

repayment of such loan, and 

(iv) all qualifying employer securities acquired by such 

trust in such purchase shall be allocated to the accounts 

of participants in such plan who are entitled to share in 

such allocation, and each participant has a nonforfeitable 

right, not later than the date such loan is repaid, to all 

such qualifying employer securities which are so allocated 

to the participant’s account. 

(3) Under regulations which may be prescribed by the Administrator, a trust may be treated as a qualified employee trust with 

respect to a small business concern if— 

(A) the trust is maintained by an employee organization 

which represents at least 51 percent of the employee of such 

concern, and 

(B) such concern maintains a plan— 

(i) which is an employee benefit plan which is designed 

to invest primarily in qualifying employer securities (as 

defined in section 4975(e)(8) of the Internal Revenue Code 

of 1954). 

(ii) which provides that each participant in the plan is 

entitled to direct the plan as to the manner in which voting rights under qualifying employer securities which are 

allocated to the account of such participant are to be exercised with respect to a corporate matter which (by law or 

charter) must be decided by a majority vote of the outstanding common shares voted, 

(iii) which provides that each participant who is entitled 

to distribution from the plan has a right, in the case of 

qualifying employer securities which are not readily 

tradable on an established market, to require that the concern repurchase such securities under a fair valuation formula, and 

(iv) which meets such other requirements (similar to requirements applicable to employee ownership plans as defined in section 4975(e)(7) of the Internal Revenue Code of 

1954) as the Administrator may prescribe, and 

(C) in the case of a loan guarantee under section 7(a), such 

organization enters into an agreement with the Administration 

which is described in paragraph (2)(B). 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
64 

(d) For purposes of section 7 of this Act, the term ‘‘qualified Indian tribe’’ means an Indian tribe as defined in section 4(a) of the 

Indian Self-Determination and Education Assistance Act, which 

owns and controls 100 per centum of a small business concern. 

(e) For purposes of section 7 of this Act, the term ‘‘public or private organization for the handicapped’’ means one— 

(1) which is organized under the laws of the United States 

or of any State, operated in the interest of handicapped individuals, the net income of which does not insure in whole or 

in part to the benefit of any shareholder or other individual; 

(2) which complies with any applicable occupational health 

and safety standard prescribed by the Secretary of Labor; and 

(3) which, in the production of commodities and in the provision of services during any fiscal year in which it received financial assistance under this subsection, employs handicapped 

individuals for not less than 75 per centum of the man-hours 

required for the production or provision of the commodities or 

services. 

(f) For purposes of section 7 of this Act, the term ‘‘handicapped 

individual’’ means an individual— 

(1) who has a physical, mental, or emotional impairment, defect, ailment, disease, or disability of a permanent nature 

which in any way limits the selection of any type of employment for which the person would otherwise be qualified or 

qualifiable; or 

(2) who is a service-disabled veteran. 

(g) For purposes of section 7 of this Act, the term ‘‘energy measures’’ includes— 

(1) solar thermal energy equipment which is either of the active type based upon mechanically forced energy transfer or of 

the passive type based on convective, conductive, or radiant energy transfer or some combination equipment; 

(2) photovoltaic cells and related equipment; 

(3) a product or service the primary purpose of which is conservation of energy through devices or techniques which increase the energy through devices or techniques which increase 

the energy efficiency of existing equipment, methods of operation, or systems which use fossil fuels, and which is on the 

Energy Conservation Measures list of the Secretary of Energy 

or which the Administrator determines to be consistent with 

the intent of this subsection; 

(4) equipment the primary purpose of which is production of 

energy from wood, biological waste, grain, or other biomass 

source of energy; 

(5) equipment the primary purpose of which is industrial cogeneration of energy, district heating, or production of energy 

from industrial waste; 

(6) hydroelectric power equipment; 

(7) wind energy conversion equipment; and 

(8) engineering, architectural, consulting, or other professional services which are necessary or appropriate to aid citizens in using any of the measures described in paragraph (1) 

through (7). 

(h) For purposes of this Act, the term ‘‘credit elsewhere’’ means 

the availability of credit from non-Federal sources on reasonable 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
65 

terms and conditions taking into consideration the prevailing rates 

and terms in the community in or near where the concern transacts business, or the homeowner resides, for similar purposes and 

periods of time. 

(i) For purposes of section 7 of this Act, the term ‘‘homeowners’’ 

includes owners and lessees of residential property and also includes personal property. 

(j) For the purposes of this Act, the term ‘‘small agricultural cooperative’’ means an association (corporate or otherwise) acting 

pursuant to the provisions of the Agricultural Marketing Act (12 

U.S.C. 1141j), whose size does not exceed the size standard established by the Administration for other similar agricultural small 

business concerns. In determining such size, the Administration 

shall regard the association as a business concern and shall not include the income or employees of any member shareholder of such 

cooperative. 

(k)(1) For the purposes of this Act, the term ‘‘disaster’’ means a 

sudden event which causes severe damage including, but not limited to, floods, hurricanes, tornadoes, earthquakes, fires, explosions, 

volcanoes, windstorms, landslides or mudslides, tidal waves, commercial fishery failures or fishery resource disasters (as determined 

by the Secretary of Commerce under section 308(b) of the Interjurisdictional Fisheries Act of 1986), ocean conditions resulting in 

the closure of customary fishing waters, riots, civil disorders or 

other catastrophes, except it does not include economic dislocations. 

(2) For purposes of section 7(b)(2), the term ‘‘disaster’’ includes— 

(A) drought; 

(B) below average water levels in the Great Lakes, or on any 

body of water in the United States that supports commerce by 

small business concerns; and 

(C) ice storms and blizzards. 

(l) For purposes of this Act— 

(1) the term ‘‘computer crime’’ means’’— 

(A) any crime committed against a small business concern by means of the use of a computer; and 

(B) any crime involving the illegal use of, or tampering 

with, a computer owned or utilized by a small business 

concern. 

ø(m) For purposes of this Act, the term ‘‘simplified acquisition 

threshold’’ has the meaning given such term in section 4(11) of the 

Office of Federal Procurement Policy Act (41 U.S.C. 403(11)).¿ 

(m) DEFINITIONS PERTAINING TO CONTRACTING.—In this Act: 

(1) PRIME CONTRACT.—The term ‘‘prime contract’’ has the 

meaning given such term in section 8701(4) of title 41, United 

States Code. 

(2) PRIME CONTRACTOR.—The term ‘‘prime contractor’’ has the 

meaning given such term in section 8701(5) of title 41, United 

States Code. 

(3) SIMPLIFIED ACQUISITION THRESHOLD.—The term ‘‘simplified acquisition threshold’’ has the meaning given such term 

in section 134 of title 41, United States Code. 

(4) MICRO-PURCHASE THRESHOLD.—The term ‘‘micro-purchase 

threshold’’ has the meaning given such term in section 1902(a) 

of title 41, United States Code. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
66 

(5) TOTAL PURCHASE AND CONTRACTS FOR PROPERTY AND

SERVICES.—The term ‘‘total purchases and contracts for property and services’’ shall mean total number and total dollar 

amount of contracts and orders for property and services. 

(n) For the purposes of this Act, a small business concern is a 

small business concern owned and controlled by women if— 

(1) at least 51 percent of small business concern is owned by 

one or more women or, in the case of any publicly owned business, at least 51 percent of the stock of which is owned by one 

or more women; and 

(2) the management and daily business operations of the 

business are controlled by one or more women. 

(o) DEFINITIONS OF BUNDLING OF CONTRACT REQUIREMENTS AND

RELATED TERMS.—In this Act: 

(1) BUNDLED CONTRACT.—The term ‘‘bundled contract’’ 

means a contract that is entered into to meet requirements 

that are consolidated in a bundling of contract requirements. 

(2) BUNDLING OF CONTRACT REQUIREMENTS.—The term ‘‘bundling of contract requirements’’ means consolidating 2 or more 

procurement requirements for goods or services previously provided or performed under separate smaller contracts into a solicitation of offers for a single contract that is likely to be unsuitable for award to a small-business concern due to— 

(A) the diversity, size, or specialized nature of the elements of the performance specified; 

(B) the aggregate dollar value of the anticipated award; 

(C) the geographical dispersion of the contract performance sites; or 

(D) any combination of the factors described in subparagraphs (A), (B), and (C). 

(3) SEPARATE SMALLER CONTRACT.—The term ‘‘separate 

smaller contract’’, with respect to a bundling of contract requirements, means a contract that has been performed by 1 or 

more small business concerns or was suitable for award to 1 

or more small business concerns. 

(p) DEFINITIONS RELATING TO HUBZONES.—In this Act: 

(1) HISTORICALLY UNDERUTILIZED BUSINESS ZONE.—The term 

‘‘historically underutilized business zone’’ means any area located within 1 or more— 

(A) qualified census tracts; 

(B) qualified nonmetropolitan counties; 

(C) lands within the external boundaries of an Indian 

reservation; 

(D) redesignated areas; 

(E) base closure areas; or 

(F) qualified disaster areas. 

(2) HUBZONE.—The term ‘‘HUBZone’’ means a historically 

underutilized business zone. 

(3) HUBZONE SMALL BUSINESS CONCERN.—The term 

‘‘HUBZone small business concern’’ means— 

(A) a small business concern that is at least 51 percent 

owned and controlled by United States citizens; 

(B) a small business concern that is— 

(i) an Alaska Native Corporation owned and controlled by Natives (as determined pursuant to section 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
67 

29(e)(1) of the Alaska Native Claims Settlement Act 

(43 U.S.C. 1626(e)(1))); or 

(ii) a direct or indirect subsidiary corporation, joint 

venture, or partnership of an Alaska Native Corporation qualifying pursuant to section 29(e)(1) of the Alaska Native Claims Settlement Act (43 U.S.C. 

1626(e)(1)), if that subsidiary, joint venture, or partnership is owned and controlled by Natives (as determined pursuant to section 29(e)(2)) of the Alaska Native Claims Settlement Act (43 U.S.C. 1626(e)(2))); 

(C) a small business concern— 

(i) that is wholly owned by one or more Indian tribal 

governments, or by a corporation that is wholly owned 

by one or more Indian tribal governments; or 

(ii) that is owned in part by one or more Indian tribal governments, or by a corporation that is wholly 

owned by one or more Indian tribal governments, if all 

other owners are either United States citizens or small 

business concerns; 

(D) a small business concern— 

(i) that is wholly owned by one or more Native Hawaiian Organizations (as defined in section 8(a)(15)), 

or by a corporation that is wholly owned by one or 

more Native Hawaiian Organizations; or 

(ii) that is owned in part by one or more Native Hawaiian Organizations, or by a corporation that is wholly owned by one or more Native Hawaiian Organizations, if all other owners are either United States citizens or small business concerns; 

(E) a small business concern that is— 

(i) wholly owned by a community development corporation that has received financial assistance under 

part 1 of subchapter A of the Community Economic 

Development Act of 1981 (42 U.S.C. 9805 et seq.); or 

(ii) owned in part by one or more community development corporations, if all other owners are either 

United States citizens or small business concerns; or 

(F) a small business concern that is— 

(i) a small agricultural cooperative organized or incorporated in the United States; 

(ii) wholly owned by 1 or more small agricultural cooperatives organized or incorporated in the United 

States; or 

(iii) owned in part by 1 or more small agricultural 

cooperatives organized or incorporated in the United 

States, if all owners are small business concerns or 

United States citizens. 

(4) QUALIFIED AREAS.— 

(A) QUALIFIED CENSUS TRACT.—The term ‘‘qualified census tract’’ has the meaning given that term in section 

42(d)(5)(C)(ii) of the Internal Revenue Code of 1986. 

(B) QUALIFIED NONMETROPOLITAN COUNTY.—The term 

‘‘qualified nonmetropolitan county’’ means any county— 

(i) that was not located in a metropolitan statistical 

area (as defined in section 143(k)(2)(B) of the Internal 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
68 

Revenue Code of 1986) at the time of the most recent 

census taken for purposes of selecting qualified census 

tracts under section 42(d)(5)(C)(ii) of the Internal Revenue Code of 1986; and 

(ii) in which— 

(I) the median household income is less than 80 

percent of the nonmetropolitan State median 

household income, based on the most recent data 

available from the Bureau of the Census of the 

Department of Commerce; 

(II) the unemployment rate is not less than 140 

percent of the average unemployment rate for the 

United States or for the State in which such county is located, whichever is less, based on the most 

recent data available from the Secretary of Labor; 

or 

(III) there is located a difficult development 

area, as designated by the Secretary of Housing 

and Urban Development in accordance with section 42(d)(5)(C)(iii) of the Internal Revenue Code 

of 1986, within Alaska, Hawaii, or any territory or 

possession of the United States outside the 48 

contiguous States. 

(C) REDESIGNATED AREA.—The term ‘‘redesignated area’’ 

means any census tract that ceases to be qualified under 

subparagraph (A) and any nonmetropolitan county that 

ceases to be qualified under subparagraph (B), except that 

a census tract or a nonmetropolitan county may be a ‘‘redesignated area’’ only until the later of— 

(i) the date on which the Census Bureau publicly releases the first results from the 2010 decennial census; 

or 

(ii) 3 years after the date on which the census tract 

or nonmetropolitan county ceased to be so qualified. 

(D) BASE CLOSURE AREA.— (i) IN GENERAL.—Subject to clause (ii), the term 

‘‘base closure area’’ means— 

(I) lands within the external boundaries of a 

military installation that were closed through a 

privatization process under the authority of— 

(aa) the Defense Base Closure and Realignment Act of 1990 (part A of title XXIX of division B of Public Law 101–510; 10 U.S.C. 2687 

note); 

(bb) title II of the Defense Authorization 

Amendments and Base Closure and Realignment Act (Public Law 100–526; 10 U.S.C. 

2687 note); 

(cc) section 2687 of title 10, United States 

Code; or 

(dd) any other provision of law authorizing 

or directing the Secretary of Defense or the 

Secretary of a military department to dispose 

of real property at the military installation for 

purposes relating to base closures of redevelVerDate Sep 11 2014 07:19 Jul 27, 2016 Jkt 059006 PO 00000 Frm 00068 Fmt 6659 Sfmt 6601 E:\HR\OC\HR704P1.XXX HR704P1

smartinez on DSK3GLQ082PROD with REPORTS-HSE
69 

opment, while retaining the authority to enter 

into a leaseback of all or a portion of the property for military use; 

(II) the census tract or nonmetropolitan county 

in which the lands described in subclause (I) are 

wholly contained; 

(III) a census tract or nonmetropolitan county 

the boundaries of which intersect the area described in subclause (I); and 

(IV) a census tract or nonmetropolitan county 

the boundaries of which are contiguous to the area 

described in subclause (II) or subclause (III). 

(ii) LIMITATION.—A base closure area shall be treated as a HUBZone— 

(I) with respect to a census tract or nonmetropolitan county described in clause (i), for a period 

of not less than 8 years, beginning on the date the 

military installation undergoes final closure and 

ending on the date the Administrator makes a 

final determination as to whether or not to implement the applicable designation described in subparagraph (A) or (B) in accordance with the results of the decennial census conducted after the 

area was initially designated as a base closure 

area; and 

(II) if such area was treated as a HUBZone at 

any time after 2010, until such time as the Administrator makes a final determination as to 

whether or not to implement the applicable designation described in subparagraph (A) or (B), 

after the 2020 decennial census. 

(iii) DEFINITIONS.—In this subparagraph: 

(I) CENSUS TRACT.—The term ‘‘census tract’’ 

means a census tract delineated by the United 

States Bureau of the Census in the most recent 

decennial census that is not located in a nonmetropolitan county and does not otherwise qualify as a qualified census tract. 

(II) NONMETROPOLITAN COUNTY.—The term 

‘‘nonmetropolitan county’’ means a county that 

was not located in a metropolitan statistical area 

(as defined in section 143(k)(2)(B) of the Internal 

Revenue Code of 1986) at the time of the most recent census taken for purposes of selecting qualified census tracts and does not otherwise qualify 

as a qualified nonmetropolitan county. 

(E) QUALIFIED DISASTER AREA.— 

(i) IN GENERAL.—Subject to clause (ii), the term 

‘‘qualified disaster area’’ means any census tract or 

nonmetropolitan county located in an area for which 

the President has declared a major disaster under section 401 of the Robert T. Stafford Disaster Relief and 

Emergency Assistance Act (42 U.S.C. 5170) or located 

in an area in which a catastrophic incident has occurred if such census tract or nonmetropolitan county 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
70 

ceased to be qualified under subparagraph (A) or (B), 

as applicable, during the period beginning 5 years before the date on which the President declared the 

major disaster or the catastrophic incident occurred 

and ending 2 years after such date, except that such 

census tract or nonmetropolitan county may be a 

‘‘qualified disaster area’’ only— 

(I) in the case of a major disaster declared by 

the President, during the 5-year period beginning 

on the date on which the President declared the 

major disaster for the area in which the census 

tract or nonmetropolitan county, as applicable, is 

located; and 

(II) in the case of a catastrophic incident, during 

the 10-year period beginning on the date on which 

the catastrophic incident occurred in the area in 

which the census tract or nonmetropolitan county, 

as applicable, is located. 

(ii) LIMITATION.—A qualified disaster area described 

in clause (i) shall be treated as a HUBZone for a period of not less than 8 years, beginning on the date the 

Administrator makes a final determination as to 

whether or not to implement the designations described in subparagraphs (A) and (B) in accordance 

with the results of the decennial census conducted 

after the area was initially designated as a qualified 

disaster area. 

(5) QUALIFIED HUBZONE SMALL BUSINESS CONCERN.— (A) IN GENERAL.—A HUBZone small business concern is 

‘‘qualified’’, if—— 

(i) the small business concern has certified in writing to the Administrator (or the Administrator otherwise determines, based on information submitted to 

the Administrator by the small business concern, or 

based on certification procedures, which shall be established by the Administration by regulation) that— 

(I) it is a HUBZone small business concern— 

(aa) pursuant to subparagraph (A), (B), (C), 

(D), (E), or (F) of paragraph (3), and that its 

principal office is located in a HUBZone and 

not fewer than 35 percent of its employees reside in a HUBZone; 

(bb) pursuant to subparagraph (A), (B), (C), 

(D), (E), or (F) of paragraph (3), that its principal office is located within a base closure 

area and that not fewer than 35 percent of its 

employees reside in such base closure area or 

in another HUBZone; or 

(cc) pursuant to paragraph (3)(C), and not 

fewer than 35 percent of its employees engaged in performing a contract awarded to the 

small business concern on the basis of a preference provided under section 31(b) reside 

within any Indian reservation governed by 

one or more of the tribal government owners, 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
71 

or reside within any HUBZone adjoining any 

such Indian reservation; 

(II) the small business concern will attempt to 

maintain the applicable employment percentage 

under subclause (I) during the performance of any 

contract awarded to the small business concern on 

the basis of a preference provided under section 

31(b); and 

(III) with respect to any subcontract entered 

into by the small business concern pursuant to a 

contract awarded to the small business concern 

under section 31, the small business concern will 

ensure that the requirements of section 46 are 

satisfied; and 

(ii) no certification made or information provided by 

the small business concern under clause (i) has been, 

in accordance with the procedures established under 

section 31(c)(1)— 

(I) successfully challenged by an interested 

party; or 

(II) otherwise determined by the Administrator 

to be materially false. 

(B) LIST OF QUALIFIED SMALL BUSINESS CONCERNS.—The 

Administrator shall establish and maintain a list of qualified HUBZone small business concerns, which list shall, to 

the extent practicable— 

(i) once the Administrator has made the certification 

required by subparagraph (A)(i) regarding a qualified 

HUBZone small business concern and has determined 

that subparagraph (A)(ii) does not apply to that concern, include the name, address, and type of business 

with respect to each such small business concern; 

(ii) be updated by the Administrator not less than 

annually; and 

(iii) be provided upon request to any Federal agency 

or other entity. 

(6) NATIVE AMERICAN SMALL BUSINESS CONCERNS.— (A) ALASKA NATIVE CORPORATION.—The term ‘‘Alaska 

Native Corporation’’ has the same meaning as the term 

‘‘Native Corporation’’ in section 3 of the Alaska Native 

Claims Settlement Act (43 U.S.C. 1602). 

(B) ALASKA NATIVE VILLAGE.—The term ‘‘Alaska Native 

Village’’ has the same meaning as the term ‘‘Native village’’ in section 3 of the Alaska Native Claims Settlement 

Act (43 U.S.C. 1602). 

(C) INDIAN RESERVATION.—The term ‘‘Indian reservation’’— 

(i) has the same meaning as the term ‘‘Indian country’’ in section 1151 of title 18, United States Code, except that such term does not include— 

(I) any lands that are located within a State in 

which a tribe did not exercise governmental jurisdiction on the date of the enactment of this paragraph, unless that tribe is recognized after that 

date of the enactment by either an Act of ConVerDate Sep 11 2014 07:19 Jul 27, 2016 Jkt 059006 PO 00000 Frm 00071 Fmt 6659 Sfmt 6601 E:\HR\OC\HR704P1.XXX HR704P1

smartinez on DSK3GLQ082PROD with REPORTS-HSE
72 

gress or pursuant to regulations of the Secretary 

of the Interior for the administrative recognition 

that an Indian group exists as an Indian tribe 

(part 83 of title 25, Code of Federal Regulations); 

and 

(II) lands taken into trust or acquired by an Indian tribe after the date of the enactment of this 

paragraph if such lands are not located within the 

external boundaries of an Indian reservation or 

former reservation or are not contiguous to the 

lands held in trust or restricted status on that 

date of the enactment; and 

(ii) in the State of Oklahoma, means lands that— 

(I) are within the jurisdictional areas of an 

Oklahoma Indian tribe (as determined by the Secretary of the Interior); and 

(II) are recognized by the Secretary of the Interior as eligible for trust land status under part 

151 of title 25, Code of Federal Regulations (as in 

effect on the date of the enactment of this paragraph). 

(7) AGRICULTURAL COMMODITY.—The term ‘‘agricultural commodity’’ has the same meaning as in section 102 of the Agricultural Trade Act of 1978 (7 U.S.C. 5602). 

(q) DEFINITIONS RELATING TO VETERANS.—In this Act, the following definitions apply: 

(1) SERVICE-DISABLED VETERAN.—The term ‘‘service-disabled 

veteran’’ means a veteran with a disability that is service-connected (as defined in section 101(16) of title 38, United States 

Code). 

ø(2) SMALL BUSINESS CONCERN OWNED AND CONTROLLED BY

SERVICE-DISABLED VETERANS.—The term ‘‘small business concern owned and controlled by service-disabled veterans’’ means 

a small business concern— 

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

or more service-disabled veterans or, in the case of any 

publicly owned business, not less than 51 percent of the 

stock of which is owned by one or more service-disabled 

veterans; and 

ø(B) the management and daily business operations of 

which are controlled by one or more service-disabled veterans or, in the case of a veteran with permanent and severe disability, the spouse or permanent caregiver of such 

veteran.¿ 

(2) SMALL BUSINESS CONCERN OWNED AND CONTROLLED BY

SERVICE-DISABLED VETERANS.—The term ‘‘small business concern owned and controlled by service-disabled veterans’’ means 

any of the following: 

(A) A small business concern— 

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

or more service-disabled veterans or, in the case of any 

publicly owned business, not less than 51 percent of the 

stock (not including any stock owned by an ESOP) of 

which is owned by one or more service-disabled veterans; and 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
73 

(ii) the management and daily business operations of 

which are controlled by one or more service-disabled 

veterans or, in the case of a veteran with permanent 

and severe disability, the spouse or permanent caregiver of such veteran. 

(B) A small business concern— 

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

or more service-disabled veterans with a disability that 

is rated by the Secretary of Veterans Affairs as a permanent and total disability who are unable to manage 

the daily business operations of such concern; or 

(ii) in the case of a publicly owned business, not less 

than 51 percent of the stock (not including any stock 

owned by an ESOP) of which is owned by one or more 

such veterans. 

(C)(i) During the time period described in clause (ii), a 

small business concern that was a small business concern 

described in subparagraph (A) or (B) immediately prior to 

the death of a service-disabled veteran who was the owner 

of the concern, the death of whom causes the concern to be 

less than 51 percent owned by one or more service-disabled 

veterans, if— 

(I) the surviving spouse of the deceased veteran acquires such veteran’s ownership interest in such concern; 

(II) such veteran had a service-connected disability 

(as defined in section 101(16) of title 38, United States 

Code) rated as 100 percent disabling under the laws 

administered by the Secretary of Veterans Affairs or 

such veteran died as a result of a service-connected disability; and 

(III) immediately prior to the death of such veteran, 

and during the period described in clause (ii), the 

small business concern is included in the database described in section 8127(f) of title 38, United States 

Code. 

(ii) The time period described in this clause is the time 

period beginning on the date of the veteran’s death and 

ending on the earlier of— 

(I) the date on which the surviving spouse remarries; 

(II) the date on which the surviving spouse relinquishes an ownership interest in the small business 

concern; or 

(III) the date that is 10 years after the date of the 

death of the veteran. 

(3) SMALL BUSINESS CONCERN OWNED AND CONTROLLED BY

VETERANS.—The term ‘‘small business concern owned and controlled by veterans’’ means a small business concern— 

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

or more veterans or, in the case of any publicly owned 

business, not less than 51 percent of the stock of which is 

owned by one or more veterans; and 

(B) the management and daily business operations of 

which are controlled by one or more veterans. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
74 

(4) VETERAN.—The term ‘‘veteran’’ has the meaning given 

the term in section 101(2) of title 38, United States Code. 

(5) RELIEF FROM TIME LIMITATIONS.— 

(A) IN GENERAL.—Any time limitation on any qualification, certification, or period of participation imposed under 

this Act on any program that is available to small business 

concerns shall be extended for a small business concern 

that— 

(i) is owned and controlled by— 

(I) a veteran who was called or ordered to active 

duty under a provision of law specified in section 

101(a)(13)(B) of title 10, United States Code, on or 

after September 11, 2001; or 

(II) a service-disabled veteran who became such 

a veteran due to an injury or illness incurred or 

aggravated in the active military, naval, or air 

service during a period of active duty pursuant to 

a call or order to active duty under a provision of 

law referred to in subclause (I) on or after September 11, 2001; and 

(ii) was subject to the time limitation during such 

period of active duty. 

(B) DURATION.—Upon submission of proper documentation to the Administrator, the extension of a time limitation under subparagraph (A) shall be equal to the period 

of time that such veteran who owned or controlled such a 

concern was on active duty as described in that subparagraph. 

(C) EXCEPTION FOR PROGRAMS SUBJECT TO FEDERAL

CREDIT REFORM ACT OF 1990.—The provisions of subparagraphs (A) and (B) shall not apply to any programs subject 

to the Federal Credit Reform Act of 1990 (2 U.S.C. 661 et 

seq.). 

(6) ESOP.—The term ‘‘ESOP’’ has the meaning given the 

term ‘‘employee stock ownership plan’’ in section 4975(e)(7) of 

the Internal Revenue Code of 1986 (26 U.S.C. 4975(e)(7)). 

(7) SURVIVING SPOUSE.—The term ‘‘surviving spouse’’ has the 

meaning given such term in section 101(3) of title 38, United 

States Code. 

(r) DEFINITIONS RELATING TO SMALL BUSINESS LENDING COMPANIES.—As used in section 23 of this Act: 

(1) SMALL BUSINESS LENDING COMPANY.—The term ‘‘small 

business lending company’’ means a business concern that is 

authorized by the Administrator to make loans pursuant to 

section 7(a) and whose lending activities are not subject to regulation by any Federal or State regulatory agency. 

(2) NON-FEDERALLY REGULATED SBA LENDER.—The term 

‘‘non-Federally regulated SBA lender’’ means a business concern if— 

(A) such concern is authorized by the Administrator to 

make loans under section 7; 

(B) such concern is subject to regulation by a State; and 

(C) the lending activities of such concern are not regulated by any Federal banking authority. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
75 

(s) MAJOR DISASTER.—In this Act, the term ‘‘major disaster’’ has 

the meaning given that term in section 102 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 

5122). 

(t) SMALL BUSINESS DEVELOPMENT CENTER.—In this Act, the 

term ‘‘small business development center’’ means a small business 

development center described in section 21. 

(u) REGION OF THE ADMINISTRATION.—In this Act, the term ‘‘region of the Administration’’ means the geographic area served by 

a regional office of the Administration established under section 

4(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) 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. 

(w) PRESUMPTION.— 

(1) IN GENERAL.—In every contract, subcontract, cooperative 

agreement, cooperative research and development agreement, 

or grant which is set aside, reserved, or otherwise classified as 

intended for award to small business concerns, there shall be 

a presumption of loss to the United States based on the total 

amount expended on the contract, subcontract, cooperative 

agreement, cooperative research and development agreement, 

or grant whenever it is established that a business concern 

other than a small business concern willfully sought and received the award by misrepresentation. 

(2) DEEMED CERTIFICATIONS.—The following actions shall be 

deemed affirmative, willful, and intentional certifications of 

small business size and status: 

(A) Submission of a bid or proposal for a Federal grant, 

contract, subcontract, cooperative agreement, or cooperative research and development agreement reserved, set 

aside, or otherwise classified as intended for award to 

small business concerns. 

(B) Submission of a bid or proposal for a Federal grant, 

contract, subcontract, cooperative agreement, or cooperative research and development agreement which in any 

way encourages a Federal agency to classify the bid or proposal, if awarded, as an award to a small business concern. 

(C) Registration on any Federal electronic database for 

the purpose of being considered for award of a Federal 

grant, contract, subcontract, cooperative agreement, or cooperative research agreement, as a small business concern. 

(3) CERTIFICATION BY SIGNATURE OF RESPONSIBLE OFFICIAL.— 

(A) IN GENERAL.—Each solicitation, bid, or application 

for a Federal contract, subcontract, or grant shall contain 

a certification concerning the small business size and status of a business concern seeking the Federal contract, 

subcontract, or grant. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
76 

(B) CONTENT OF CERTIFICATIONS.—A certification that a 

business concern qualifies as a small business concern of 

the exact size and status claimed by the business concern 

for purposes of bidding on a Federal contract or subcontract, or applying for a Federal grant, shall contain the 

signature of an authorized official on the same page on 

which the certification is contained. 

(4) REGULATIONS.—The Administrator shall promulgate regulations to provide adequate protections to individuals and 

business concerns from liability under this subsection in cases 

of unintentional errors, technical malfunctions, and other similar situations. 

(x) ANNUAL CERTIFICATION.— 

(1) IN GENERAL.—Each business certified as a small business 

concern under this Act shall annually certify its small business 

size and, if appropriate, its small business status, by means of 

a confirming entry on the Online Representations and Certifications Application database of the Administration, or any successor thereto. 

(2) REGULATIONS.—Not later than 1 year after the date of 

enactment of this subsection, the Administrator, in consultation with the Inspector General and the Chief Counsel for Advocacy of the Administration, shall promulgate regulations to 

ensure that— 

(A) no business concern continues to be certified as a 

small business concern on the Online Representations and 

Certifications Application database of the Administration, 

or any successor thereto, without fulfilling the requirements for annual certification under this subsection; and 

(B) the requirements of this subsection are implemented 

in a manner presenting the least possible regulatory burden on small business concerns. 

(y) POLICY ON PROSECUTIONS OF SMALL BUSINESS SIZE AND STATUS FRAUD.—Not later than 1 year after the date of enactment of 

this subsection, the Administrator, in consultation with the Attorney General, shall issue a Government-wide policy on prosecution 

of small business size and status fraud, which shall direct Federal 

agencies to appropriately publicize the policy. 

(z) AQUACULTURE BUSINESS DISASTER ASSISTANCE.—Subject to 

section 18(a) and notwithstanding section 18(b)(1), the Administrator may provide disaster assistance under section 7(b)(2) to 

aquaculture enterprises that are small businesses. 

(aa) VENTURE CAPITAL OPERATING COMPANY.—In this Act, the 

term ‘‘venture capital operating company’’ means an entity described in clause (i), (v), or (vi) of section 121.103(b)(5) of title 13, 

Code of Federal Regulations (or any successor thereto). 

(bb) HEDGE FUND.—In this Act, the term ‘‘hedge fund’’ has the 

meaning given that term in section 13(h)(2) of the Bank Holding 

Company Act of 1956 (12 U.S.C. 1851(h)(2)). 

(cc) PRIVATE EQUITY FIRM.—In this Act, the term ‘‘private equity 

firm’’ has the meaning given the term ‘‘private equity fund’’ in section 13(h)(2) of the Bank Holding Company Act of 1956 (12 U.S.C. 

1851(h)(2)). 

(dd) DEFINITIONS PERTAINING TO SUBCONTRACTING.—In this Act: 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
77 

(1) SUBCONTRACT.—The term ‘‘subcontract’’ means a legally 

binding agreement between a contractor that is already under 

contract to another party to perform work, and a third party, 

hereinafter referred to as the subcontractor, for the subcontractor to perform a part, or all, of the work that the contractor 

has undertaken. 

(2) FIRST TIER SUBCONTRACTOR.—The term ‘‘first tier subcontractor’’ means a subcontractor who has a subcontract directly 

with the prime contractor. 

(3) AT ANY TIER.—The term ‘‘at any tier’’ means any subcontractor other than a subcontractor who is a first tier subcontractor. 

SEC. 4. (a) In order to carry out the policies of this Act there is 

hereby created an agency under the name ‘‘Small Business Administration’’ (herein referred to as the Administration), which Administration shall be under the general direction and supervision of the 

President and shall not be affiliated with or be within any other 

agency or department of the Federal Government. The principal office of the Administration shall be located in the District of Columbia. The Administration may establish such branch and regional offices in other places in the United States as may be determined by 

the Administrator of the Administration. As used in this Act, the 

term ‘‘United States’’ includes the several States, the Territories 

and possessions of the United States, the Commonwealth of Puerto 

Rico, the Trust territory of the Pacific Islands, and the District of 

Columbia. 

(b)(1) The management of the Administration shall be vested in 

an Administrator who shall be appointed from civilian life by the 

President, by and with the advice and consent of the Senate, and 

who shall be a person of outstanding qualifications known to be familiar and sympathetic with small business needs and problems. 

The Administrator shall not engage in any other business, vocation, or employment than that of serving as Administrator. In carrying out the programs administered by the Small Business Administration including its lending and guaranteeing functions, the 

Administrator shall not discriminate on the basis of sex or marital 

status against any person or small business concern applying for 

or receiving assistance from the Small Business Administration, 

and the Small Business Administration shall give special consideration to veterans of the Armed Forces of the United States and 

their survivors or dependents. The President also may appoint a 

Deputy Administrator, by and with the advice and consent of the 

Senate. The Administrator is authorized to appoint Associate Administrators (including the Associate Administrator specified in 

section 201 of the Small Business Investment Act of 1958) to assist 

in the execution of the functions vested in the Administration. One 

such Associate Administrator shall be the Associate Administrator 

for Veterans Business Development, who shall administer the Office of Veterans Business Development established under section 

32. One of the Associate Administrators shall be designated at the 

time of his appointment as the Associate Administrator for Minority Small Business and Capital Ownership Development who shall 

be an employee in the competitive service or in the Senior Executive Service and a career appointee and shall be responsible to the 

Administrator for the formulation and execution of the policies and 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
78 

programs under sections 7(j) and 8(a) of this Act which provide assistance to minority small business concerns. One such Associate 

Administrator shall be the Associate Administrator for International Trade, who shall be the head of the Office of International 

Trade established under section 22. One such Associate Administrator shall be the Chief Hearing Officer, who shall administer the 

Office of Hearings and Appeals established under section 5(i). 

(2) the Administrator also shall be responsible for— 

(A) establishing and maintaining an external small business 

economic data base for the purpose of providing the Congress 

and the Administration information on the economic condition 

and the expansion or contraction of the small business sector. 

To that end, the Administrator shall publish on a regular basis 

national small business economic indices and, to the extent 

feasible, regional small business economic indices, which shall 

include, but need not be limited to, data on— 

(i) employment layoffs, and new hires; 

(ii) number of business establishments and the types of 

such establishments such as sole proprietorships, corporations, and partnerships; 

(iii) number of business formation and failures; 

(iv) sales and new orders; 

(v) back orders; 

(vi) investment in plant and equipment; 

(vii) changes in inventory and rate of inventory turnover; 

(viii) sources and amounts of capital investment, including debt, equity, and internally generated funds; 

(ix) debt to equity ratios; 

(x) exports; 

(xi) number and dollar amount of mergers and acquisitions by size of acquiring and acquired firm; and 

(xii) concentration ratios; and 

(B) publishing annually a report giving a comparative analysis and interpretation of the historical trends of the small 

business sector as reflected by the data acquired pursuant to 

subparagraph (A) of this subsection. 

(3) RISK MANAGEMENT DATABASE.— 

(A) ESTABLISHMENT.—The Administration shall establish, within the management system for the loan programs 

authorized by subsections (a) and (b) of section 7 of this 

Act and title V of the Small Business Investment Act of 

1958, a management information system that will generate a database capable of providing timely and accurate 

information in order to identify loan underwriting, collections, recovery, and liquidation problems. 

(B) INFORMATION TO BE MAINTAINED.—In addition to 

such other information as the Administration considers appropriate, the database established under subparagraph 

(A) shall, with respect to each loan program described in 

subparagraph (A), include information relating to— 

(i) the identity of the institution making the guaranteed loan or issuing the debenture; 

(ii) the identity of the borrower; 

(iii) the total dollar amount of the loan or debenture; 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
79 

(iv) the total dollar amount of government exposure 

in each loan; 

(v) the district of the Administration in which the 

borrower has its principal office; 

(vi) the principal line of business of the borrower, as 

identified by Standard Industrial Classification Code 

(or any successor to that system); 

(vii) the delinquency rate for each program (including number of instances and days overdue); 

(viii) the number and amount of repurchases, losses, 

and recoveries in each program; 

(ix) the number of deferrals or forbearances in each 

program (including days and number of instances); 

(x) comparisons on the basis of loan program, lender, district and region of the Administration, for all 

the data elements maintained; and 

(xi) underwriting characteristics of each loan that 

has entered into default, including term, amount and 

type of collateral, loan-to-value and other actual and 

projected ratios, line of business, credit history, and 

type of loan. 

(C) DEADLINE FOR OPERATIONAL CAPABILITY.—The database established under subparagraph (A) shall— 

(i) be operational not later than June 30, 1997; and 

(ii) capture data beginning on the first day of the 

second quarter of fiscal year 1997 beginning after such 

date and thereafter. 

(4)(A) The Administrator shall establish a small business computer security and education program to— 

(i) provide small business concerns information regarding— 

(I) utilization and management of computer technology; 

(II) computer crimes committed against small business 

concerns; and 

(III) security for computers owned or utilized by small 

business concerns; 

(ii) provide for periodic forums for small business concerns to 

improve their knowledge of the matters described in clause (i); 

and 

(iii) provide training opportunities to educate small business 

users on computer security techniques. 

(B) The Administrator, after consultation with the Director of Institute of Computer Sciences and Technology within the Department of Commerce, shall develop information and materials to 

carry out the activities described in subparagraph (A) of this paragraph. 

(c)(1) There are hereby established in the Treasury the following 

revolving funds; (A) a disaster loan fund which shall be available 

for financing functions performed under section 7(b)(1), 7(b)(2), 

7(b)(3), 7(b)(4), 7(d)(2), and 7(m) of this Act; and (B) a business loan 

and investment fund which shall be available for financing functions performed under sections 5(g), 7(a), and 8(a) of this Act, and 

titles III, IV and V of the Small Business Investment Act of 1958. 

(2) All repayments of loans and debentures, payments of interest 

and other receipts arising out of transactions heretofore or hereafter entered into by the Administration (A) pursuant to sections 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
80 

7(b)(1), 7(b)(2), 7(b)(3), 7(b)(4), 7(b)(5), 7(b)(6), (7(b)(7), 7(b)(8), 

7(d)(2), and 7(g) of this Act shall be paid into a disaster loan fund; 

and (B) pursuant to sections 5(g), 7(a), 7(h), 7(i), 7(l), 7(m), and 8(a) 

of this Act, and titles III, IV and V of the Small Business Investment Act of 1958, shall be paid into the business loan and investment fund. 

(3) Unexpended balances of appropriations made to the fund pursuant to this subsection, as in effect immediately prior to the effective date of this paragraph, shall be allocated, together with related 

assets and liabilities, to the funds established by paragraph (1) in 

such amounts as the Administrator shall determine. 

(4) The Administration shall submit to the Committees on Appropriations. Senate Select Committee on Small Business, and the 

Committee on Small Business of the House of Representatives, as 

soon as possible after the beginning of each calendar quarter, a full 

and complete report on the status of each of the funds established 

by paragraph (1). Business-type budgets for each of the funds established by paragraph (1) shall be prepared, transmitted to the 

Committees on Appropriations, the Senate Select Committee on 

Small Business, and the Committee on Small Business of the 

House of Representatives, and considered, and enacted in the manner prescribed by law (sections 102, 103, and 104 of the Government Corporation Control Act (31 U.S.C. 847–849)) for wholly 

owned Government corporations. 

(5)(A) The Administration is authorized to make and issue notes 

to the Secretary of the Treasury for the purpose of obtaining funds 

necessary for discharging obligations under the revolving funds created by section 4(c)(1) of this Act and for authorized expenditures 

out of the funds. Such notes shall be in such form and denominations and have such maturities and be subject to such terms and 

conditions as may be prescribed by the Administration with the approval of the Secretary of the Treasury. Such notes shall bear interest at a rate fixed by the Secretary of the Treasury, taking into 

consideration the current average market yield of outstanding marketable obligations of the United States having maturities comparable to the notes issued by the Administration under this paragraph. The Secretary of the Treasury is authorized and directed to 

purchase any notes of the Administration issued hereunder, and, 

for that purpose, the Secretary of the Treasury is authorized to use 

as a public debt transaction the proceeds from the sale of any securities issued under the Second Liberty Bond Act, as amended, and 

the purposes for which such securities may be issued under such 

Act, as amended, are extended to include the purchase of notes 

issued by the Administration. All redemptions, purchases, and 

sales by the Secretary of the Treasury of such notes shall be treated as public debt transactions of the United States. All borrowing 

authority contained herein shall be effective only to such extent or 

in such amounts as are provided in advance in appropriation Acts. 

(B)(i) Moneys in the funds established in subsection (c)(1) not 

needed for current operations may be paid into miscellaneous receipts of the Treasury. 

(ii) Following the close of each fiscal year, the Administration 

shall pay into the miscellaneous receipts of the United States 

Treasury the actual interest that the Administration collects during that fiscal year on all financings made under this Act. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
81 

(C) Except on those loan disbursements on which interest is paid 

under subsection (B)(ii), the Administration shall pay into miscellaneous receipts of the Treasury, following the close of each fiscal 

year, interest received by the Administration on financing functions 

performed under this Act and titles III and V of the Small business 

Investment Act of 1958 providing the capital used to perform such 

functions originated from appropriated funds. Such payments shall 

be treated by the Department of the Treasury as interest income, 

not as retirement of indebtedness. 

(D) There are authorized to be appropriated, in any fiscal year, 

such sums as may be necessary for losses and interest subsidies incurred by the funds established by subsection (c)(1), but not previously reimbursed. 

(d) There is hereby created the Loan Policy Board of the Small 

Business Administration, which shall consist of the following members, all ex officio: The Administration, as Chairman, the Secretary 

of the Treasury, and the Secretary of Commerce. Either of the said 

Secretaries may designate an officer of his Department, who has 

been appointed by the President by and with the advice and consent of the Senate, to act in his stead as a member of the Loan Policy Board with respect to any matter or matters. The Loan Policy 

Board shall establish general policies (particularly with reference 

to the public interest involved in the granting and denial of applications for financial assistance by the Administration and with reference to the coordination of the functions of the Administration 

with other activities and policies of the Government), which shall 

govern the granting and denial of applications for financial assistance by the Administration. 

(e) PROHIBITION ON THE PROVISION OF ASSISTANCE.—Notwithstanding any other provision of law, the Administration is prohibited from providing any financial or other assistance to any business concern or other person engaged in the production or distribution of any product or service that has been determined to be obscene by a court of competent jurisdiction. 

(f) CERTIFICATION OF COMPLIANCE WITH CHILD SUPPORT OBLIGA- TIONS.— 

(1) IN GENERAL.—For financial assistance approved after the 

promulgation of final regulations to implement this section, 

each recipient of financial assistance under this Act, including 

a recipient of a direct loan or a loan guarantee, shall certify 

that the recipient is not more than 60 days delinquent under 

the terms of any—— 

(A) administrative order; 

(B) court order; or 

(C) repayment agreement entered into between the recipient and the custodial parent or State agency providing 

child support enforcement services, 

that requires the recipient to pay child support, as such term 

is defined in section 462(b) of the Social Security Act. 

(2) ENFORCEMENT.—Not later than 6 months after the date 

of enactment of this subsection, the Administration shall promulgate such regulations as may be necessary to enforce compliance with the requirements of this subsection. 

(g) øCERTIFICATION REQUIREMENTS FOR¿ BUSINESS OPPORTUNITY

SPECIALISTS.— 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
82 

(1) DUTIES.—The exclusive duties of a Business Opportunity 

Specialist employed by the Administrator and reporting to the 

senior official appointed by the Administrator with responsibilities under sections 8, 15, 31, and 36 (or the designee of such 

official) shall be to implement sections 7, 8, and 45 and to complete other duties related to contracting programs under this 

Act. Such duties shall include— 

(A) with respect to small business concerns eligible to receive contracts and subcontracts pursuant to section 

8(a)—— 

(i) providing guidance, counseling, and referrals for 

assistance with technical, management, financial, or 

other matters that will improve the competitive viability of such concerns; 

(ii) identifying causes of success or failure of such 

concerns; 

(iii) providing comprehensive assessments of such 

concerns, including identifying the strengths and weaknesses of such concerns; 

(iv) monitoring and documenting compliance with 

the requirements of sections 7 and 8 and any regulations implementing those sections; 

(v) explaining the requirements of sections 7, 8, 15, 

31, 36 and 45; and 

(vi) advising on compliance with contracting regulations (including the Federal Acquisition Regulation) 

after award of such a contract or subcontract; 

(B) reviewing and monitoring compliance with mentorprotege agreements under section 45; 

(C) representing the interests of the Administrator and 

small business concerns in the award, modification, and 

administration of contracts and subcontracts awarded pursuant to section 8(a); and 

(D) reporting fraud or abuse under section 7, 8, 15, 31, 

36 or 45 or any regulations implementing such sections. 

(2) CERTIFICATION REQUIREMENTS.— ø(1)¿ (A) IN GENERAL.—Consistent with the requirements of øparagraph (2)¿ subparagraph (B), a Business 

Opportunity Specialist described under section 7(j)(10)(D) 

shall have a Level I Federal Acquisition Certification in 

Contracting (or any successor certification) or the equivalent Department of Defense certification, except that a 

Business Opportunity Specialist who was serving on or before January 3, 2013, may continue to serve as a Business 

Opportunity Specialist for a period of 5 years beginning on 

such date without such a certification. 

ø(2)¿ (B) DELAY OF CERTIFICATION REQUIREMENT.— 

ø(A)¿ (i) TIMING.—The certification described in 

øparagraph (1)¿ subparagraph (A) is not required for 

any person serving as a Business Opportunity Specialist until the date that is one calendar year after 

the date such person is appointed as a Business Opportunity Specialist. 

ø(B) APPLICATION.—The requirements of subparagraph (A) shall—¿ 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
83 

ø(i) be included in any initial job posting for the 

position of a Business Opportunity Specialist; and 

ø(ii) apply to any person appointed as a Business Opportunity Specialist after January 3, 

2013.¿ 

(ii) APPLICATION.—The requirements of clause (i) 

shall be included in any initial job posting for the 

position of a Business Opportunity Specialist and 

shall apply to any person appointed as a Business 

Opportunity Specialist after January 3, 2013. 

* * * * * * * 

(h) øCERTIFICATION REQUIREMENTS FOR¿ COMMERCIAL MARKET

REPRESENTATIVES.— 

(1) DUTIES.—The principal duties of a Commercial Market 

Representative employed by the Administrator and reporting to 

the senior official appointed by the Administrator with responsibilities under sections 8, 15, 31, and 36 (or the designee of 

such official) shall be to advance the policies established in section 8(d)(1) relating to subcontracting. Such duties shall include—— 

(A) helping prime contractors to find small business concerns that are capable of performing subcontracts; 

(B) for contractors awarded contracts containing the 

clause described in section 8(d)(3), providing—— 

(i) counseling on the contractor’s responsibility to 

maximize subcontracting opportunities for small business concerns; 

(ii) instruction on methods and tools to identify potential subcontractors that are small business concerns; 

and 

(iii) assistance to increase awards to subcontractors 

that are small business concerns through visits, training, and reviews of past performance; 

(C) providing counseling on how a small business concern may promote its capacity to contractors awarded contracts containing the clause described in section 8(d)(3); 

and 

(D) conducting periodic reviews of contractors awarded 

contracts containing the clause described in section 8(d)(3) 

to assess compliance with subcontracting plans required 

under section 8(d)(6). 

(2) CERTIFICATION REQUIREMENTS.— ø(1)¿ (A) IN GENERAL.—Consistent with the requirements of paragraph (2), a commercial market representative referred to in section 15(q)(3) shall have a Level I Federal Acquisition Certification in Contracting (or any successor certification) or the equivalent Department of Defense certification, except that a commercial market representative who was serving on or before the date of the 

enactment of the National Defense Authorization Act for 

Fiscal Year 2016 may continue to serve as a commercial 

market representative for a period of 5 years beginning on 

such date without such a certification. 

ø(2)¿ (B) DELAY OF CERTIFICATION REQUIREMENT.— 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
84 

ø(A)¿ (i) TIMING.—The certification described in 

øparagraph (1)¿ subparagraph (A) is not required for 

any person serving as a commercial market representative until the date that is one calendar year after the 

date such person is appointed as a commercial market 

representative. 

ø(B) APPLICATION.—The requirements of subparagraph (A) shall—¿ 

ø(i) be included in any initial job posting for the 

position of a commercial market representative; 

and 

ø(ii) apply to any person appointed as a commercial market representative after the date of 

the enactment of the National Defense Authorization Act for Fiscal Year 2016.¿ 

(ii) APPLICATION.—The requirements of clause (i) 

shall be included in any initial job posting for the 

position of a commercial market representative 

and shall apply to any person appointed as a commercial market representative after November 25, 

2015. 

* * * * * * * 

SEC. 8. (a)(1) It shall be the duty of the Administration and it 

is hereby empowered, whenever it determines such action is necessary or appropriate— 

(A) to enter into contracts with the United States Government and any department, agency, or officer thereof having 

procurement powers obligating the Administration to furnish 

articles, equipment, supplies, services, or materials to the Government or to perform construction work for the Government. 

In any case in which the Administration certifies to any officer 

of the Government having procurement powers that the Administration is competent and responsible to perform any specific Government procurement contract to be let by any such 

officer, such officer shall be authorized in his discretion to let 

such procurement contract to the Administration upon such 

terms and conditions as may be agreed upon between the Administration and the procurement officer. Whenever the Administration and such procurement officer fail to agree, the 

matter shall be submitted for determination to the Secretary 

or the head of the appropriate department or agency by the 

Administrator. Not later than 5 days from the date the Administration is notified of a procurement officer’s adverse decision, 

the Administration may notify the contracting officer of the intent to appeal such adverse decision, and within 15 days of 

such date the Administrator shall file a written request for a 

reconsideration of the adverse decision with the Secretary of 

the department or agency head. For the purposes of this subparagraph, a procurement officer’s adverse decision includes a 

decision not to make available for award pursuant to this subsection a particular procurement requirement or the failure to 

agree on the terms and conditions of a contract to be awarded 

noncompetitively under the authority of this subsection. Upon 

receipt of the notice of intent to appeal, the Secretary of the 

department or the agency head shall suspend further action reVerDate Sep 11 2014 07:19 Jul 27, 2016 Jkt 059006 PO 00000 Frm 00084 Fmt 6659 Sfmt 6601 E:\HR\OC\HR704P1.XXX HR704P1

smartinez on DSK3GLQ082PROD with REPORTS-HSE
85 

garding the procurement until a written decision on the Administrator’s request for reconsideration has been issued by 

such Secretary or agency head, unless such officer makes a 

written determination that urgent and compelling circumstances which significantly affect interests of the United 

States will not permit waiting for a reconsideration of the adverse decision. If the Administrator’s request for reconsideration is denied, the Secretary of the department or agency 

head shall specify the reasons why the selected firm was determined to be incapable to perform the procurement requirement, and the findings supporting such determination, which 

shall be made a part of the contract file for the requirement. 

A contract may not be awarded under this subsection if the 

award of the contract would result in a cost to the awarding 

agency which exceeds a fair market price; 

(B) to arrange for the performance of such procurement contracts by negotiating or otherwise letting subcontracts to socially and economically disadvantaged small business concerns 

for construction work, services, or the manufacture, supply, assembly of such articles, equipment, supplies, materials, or 

parts thereof, or servicing or processing in connection therewith, or such management services as may be necessary to enable the Administration to perform such contracts; 

(C) to make an award to a small business concern owned 

and controlled by socially and economically disadvantaged 

individuals which has completed its period of Program 

Participation as prescribed by section 7(j)(15), if—— 

(i) the contract will be awarded as a result of an 

offer (including price) submitted in response to a published solicitation relating to a competition conducted 

pursuant to subparagraph (D); and 

(ii) the prospective contract awardee was a Program 

Participant eligible for award of the contract on the 

date specified for receipt of offers contained in the contract solicitation; and 

(D)(i) A contract opportunity offered for award pursuant to 

this subsection shall be awarded on the basis of competition restricted to eligible Program Participants if— 

(I) there is a reasonable expectation that at least two eligible Program Participants will submit offers and that 

award can be made at a fair market price, and 

(II) the anticipated award price of the contract (including 

options) will exceed $5,000,000 in the case of a contract opportunity assigned a standard industrial classification code 

for manufacturing and $3,000,000 (including options) in 

the case of all other contract opportunities. 

(ii) The Associate Administrator for Minority Small Business 

and Capital Ownership Development, on a nondelegable basis, 

is authorized to approve a request from an agency to award a 

contract opportunity under this subsection on the basis of a 

competition restricted to eligible Program Participants even if 

the anticipated award price is not expected to exceed the dollar 

amounts specified in clause (i)(II). Such approvals shall be 

granted only on a limited basis. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
86 

(2) Notwithstanding subsections (a) and (c) of the first section of 

the Act entitled ‘‘An Act requiring contracts for the construction, alteration, and repair of any public building or public work of the 

United States to be accompanied by a performance bond protecting 

the United States and by additional bond for the protection of persons furnishing material and labor for the construction, alteration, 

or repair of said public buildings or public work,’’ approved August 

24, 1935 (49 Stat. 793), no small business concern shall be required 

to provide any amount of any bond as a condition or receiving any 

subcontract under this subsection if the Administrator determines 

that such amount is inappropriate for such concern in performing 

such contract: Provided, That the Administrator shall exercise the 

authority granted by the paragraph only if— 

(A) the Administration takes such measures as it deems appropriate for the protection of persons furnishing materials and 

labor to a small business receiving any benefit pursuant to this 

paragraph; 

(B) the Administration assists, insofar as practicable, a small 

business receiving the benefits of this paragraph to develop, 

within a reasonable period of time, such financial and other capability as may be needed to obtain such bonds as the Administration may subsequently require for the successful completion of any program conducted under the authority of this subsection; 

(C) the Administration finds that such small business is unable to obtain the requisite bond or bonds from a surety and 

that no surety is willing to issue such bond or bonds subject 

to the guarantee provisions of Title IV of the Small Business 

Investment Act of 1958; and 

(D) that small business is determined to be a start-up concern and such concern has not been participating in any program conducted under the authority of this subsection for a period exceeding one year. 

The authority to waive bonds provided in this paragraph (2) may 

not be exercised after September 30, 1988. 

(3)(A) Any Program Participant selected by the Administration to 

perform a contract to be let noncompetitively pursuant to this subsection shall, when practicable, participate in any negotiation of 

the terms and conditions of such contract. 

(B)(i) For purposes of paragraph (1) a ‘‘fair market price’’ shall 

be determined by the agency offering the procurement requirement 

to the Administration, in accordance with clauses (ii) and (iii). 

(ii) The estimate of a current fair market price for a new procurement requirement, or a requirement that does not have a satisfactory procurement history, shall be derived from a price or cost 

analysis. Such analysis may take into account prevailing market 

conditions, commercial prices for similar products or services, or 

data obtained from any other agency. Such analysis shall consider 

such cost or pricing data as may be timely submitted by the Administration. 

(iii) The estimate of a current fair market price for a procurement requirement that has a satisfactory procurement history shall 

be based on recent award prices adjusted to insure comparability. 

Such adjustments shall take into account differences in quantities, 

performance times, plans, specifications, transportation costs, packVerDate Sep 11 2014 07:19 Jul 27, 2016 Jkt 059006 PO 00000 Frm 00086 Fmt 6659 Sfmt 6601 E:\HR\OC\HR704P1.XXX HR704P1

smartinez on DSK3GLQ082PROD with REPORTS-HSE
87 

aging and packing costs, labor and materials costs, overhead costs, 

and any other additional costs which may be deemed appropriate. 

(C) An agency offering a procurement requirement for potential 

award pursuant to this subsection shall, upon the request of the 

Administration, promptly submit to the Administration a written 

statement detailing the method used by the agency to estimate the 

current fair market price for such contract, identifying the information, studies, analyses, and other data used by such agency. The 

agency’s estimate of the current fair market price (and any supporting data furnished to the Administration) shall not be disclosed 

to any potential offeror (other than the Administration). 

(D) A small business concern selected by the Administration to 

perform or negotiate a contract to be let pursuant to this subsection may request the Administration to protest the agency’s estimate of the fair market price for such contract pursuant to paragraph (1)(A). 

(4)(A) For purposes of this section, the term ‘‘socially and economically disadvantaged small business concern’’ means any small 

business concern which meets the requirements of subparagraph 

(B) and—— 

(i) which is at least 51 per centum unconditionally owned 

by—— 

(I) one or more socially and economically disadvantaged 

individuals, 

(II) an economically disadvantaged Indian tribe (or a 

wholly owned business entity of such tribe), or 

(III) an economically disadvantaged Native Hawaiian organization, or 

(ii) in the case of any publicly owned business, at least 51 

per centum of the stock of which is unconditionally owned by— 

(I) one or more socially and economically disadvantaged 

individuals, 

(II) an economically disadvantaged Indian tribe (or a 

wholly owned business entity of such tribe), or 

(III) an economically disadvantaged Native Hawaiian organization. 

(B) A small business concern meets the requirements of this subparagraph if the management and daily business operations of 

such small business concern are controlled by one or more— 

(i) socially and economically disadvantaged individuals described in subparagraph (A)(i)(I) or subparagraph (A)(ii)(I), 

(ii) members of an economically disadvantaged Indian tribe 

described in subparagraph (A)(i)(II) or subparagraph (A)(ii)(II), 

or 

(iii) Native Hawaiian organizations described in subparagraph (A)(i)(III) or subparagraph (A)(ii)(III). 

(C) Each Program Participant shall certify, on an annual basis, 

that it meets the requirements of this paragraph regarding ownership and control. 

(5) Socially disadvantaged individuals are those who have been 

subjected to racial or ethnic prejudice or cultural bias because of 

their identity as a member of a group without regard to their individual qualities. 

(6)(A) Economically disadvantaged individuals are those socially 

disadvantaged individuals whose ability to compete in the free enVerDate Sep 11 2014 07:19 Jul 27, 2016 Jkt 059006 PO 00000 Frm 00087 Fmt 6659 Sfmt 6601 E:\HR\OC\HR704P1.XXX HR704P1

smartinez on DSK3GLQ082PROD with REPORTS-HSE
88 

terprise system has been impaired due to diminished capital and 

credit opportunities as compared to others in the same business 

area who are not socially disadvantaged. In determining the degree 

of diminished credit and capital opportunities the Administration 

shall consider, but not be limited to, the assets and net worth of 

such socially disadvantaged individual. In determining the economic disadvantage of an Indian tribe, the Administration shall 

consider, where available, information such as the following: the 

per capita income of members of the tribe excluding judgment 

awards, the percentage of the local Indian population below the 

poverty level, and the tribe’s access to capital markets. 

(B) Each Program Participant shall annually submit to the Administration— 

(i) a personal financial statement for each disadvantaged 

owner; 

(ii) a record of all payments made by the Program Participant to each of its disadvantaged owners or to any person or 

entity affiliated with such owners; and 

(iii) such other information as the Administration may deem 

necessary to make the determinations required by this paragraph. 

(C)(i) Whenever, on the basis of information provided by a Program Participant pursuant to subparagraph (B) or otherwise, the 

Administration has reason to believe that the standards to establish economic disadvantage pursuant to subparagraph (A) have not 

been met, the Administration shall conduct a review to determine 

whether such Program Participant and its disadvantaged owners 

continue to be impaired in their ability to compete in the free enterprise system due to diminished capital and credit opportunities 

when compared to other concerns in the same business area, which 

are not socially disadvantaged. 

(ii) If the Administration determines, pursuant to such review, 

that a Program Participant and its disadvantaged owners are no 

longer economically disadvantaged for the purpose of receiving assistance under this subsection, the Program Participant shall be 

graduated pursuant to section 7(j)(10)(G) subject to the right to a 

hearing as provided for under paragraph (9). 

(D)(i) Whenever, on the basis of information provided by a Program Participant pursuant to subparagraph (B) or otherwise, the 

Administration has reason to believe that the amount of funds or 

other assets withdrawn from a Program Participant for the personal benefit of its disadvantaged owners or any person or entity 

affiliated with such owners may have been unduly excessive, the 

Administration shall conduct a review to determine whether such 

withdrawal of funds or other assets was detrimental to the achievement of the targets, objectives, and goals contained in such Program Participant’s business plan. 

(ii) If the Administration determines, pursuant to such review, 

that funds or other assets have been withdrawn to the detriment 

of the Program Participant’s business, the Administration shall—— 

(I) initiate a proceeding to terminate the Program Participant pursuant to section 7(j)(10)(F), subject to the right to a 

hearing under paragraph (9); or 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
89 

(II) require an appropriate reinvestment of funds or other assets and such other steps as the Administration may deem necessary to ensure the protection of the concern. 

(E) Whenever the Administration computes personal net worth 

for any purpose under this paragraph, it shall exclude from such 

computation—— 

(i) the value of investments that disadvantaged owners have 

in their concerns, except that such value shall be taken into account under this paragraph when comparing such concerns to 

other concerns in the same business area that are owned by 

other than socially disadvantaged persons; 

(ii) the equity that disadvantaged owners have in their primary personal residences, except that any portion of such equity that is attributable to unduly excessive withdrawals from 

a Program Participant or a concern applying for program participation shall be taken into account. 

(7)(A) No small business concern shall be deemed eligible for any 

assistance pursuant to this subsection unless the Administration 

determines that with contract, financial, technical, and management support the small business concern will be able to perform 

contracts which may be awarded to such concern under paragraph 

(1)(C) and has reasonable prospects for success in competing in the 

private sector. 

(B) Limitations established by the Administration in its regulations and procedures restricting the award of contracts pursuant to 

this subsection to a limited number of standard industrial classification codes in an approved business plan shall not be applied in 

a manner that inhibits the logical business progression by a participating small business concern into areas of industrial endeavor 

where such concern has the potential for success. 

(8) All determinations made pursuant to paragraph (5) with respect to whether a group has been subjected to prejudice or bias 

shall be made by the Administrator after consultation with the Associate Administrator for Minority Small Business and Capital 

Ownership Development. All other determinations made pursuant 

to paragraphs (4), (5), (6), and (7) shall be made by the Associate 

Administrator for Minority Small Business and Capital Ownership 

Development under the supervision of, and responsible to, the Administrator. 

(9)(A) Subject to the provisions of subparagraph (E), the Administration, prior to taking any action described in subparagraph (B), 

shall provide the small business concern that is the subject of such 

action, an opportunity for a hearing on the record, in accordance 

with chapter 5 of title 5, United States Code. 

(B) The actions referred to in subparagraph (A) are—— 

(i) denial of program admission based upon a negative determination pursuant to paragraph (4), (5), or (6); 

(ii) a termination pursuant to section 7(j)(10)(F); 

(iii) a graduation pursuant to section 7(j)(10)(G); and 

(iv) the denial of a request to issue a waiver pursuant to 

paragraph (21)(B). 

(C) The Administration’s proposed action, in any proceeding conducted under the authority of this paragraph, shall be sustained 

unless it is found to be arbitrary, capricious, or contrary to law. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
90 

(D) A decision rendered pursuant to this paragraph shall be the 

final decision of the Administration and shall be binding upon the 

Administration and those within its employ. 

(E) The adjudicator selected to preside over a proceeding conducted under the authority of this paragraph shall decline to accept 

jurisdiction over any matter that—— 

(i) does not, on its face, allege facts that, if proven to be true, 

would warrant reversal or modification of the Administration’s 

position; 

(ii) is untimely filed; 

(iii) is not filed in accordance with the rules of procedure 

governing such proceedings; or 

(iv) has been decided by or is the subject of an adjudication 

before a court of competent jurisdiction over such matters. 

(F) Proceedings conducted pursuant to the authority of this paragraph shall be completed and a decision rendered, insofar as practicable, within ninety days after a petition for a hearing is filed 

with the adjudicating office. 

(10) The Administration shall develop and implement an outreach program to inform and recruit small business concerns to 

apply for eligibility for assistance under this subsection. Such program shall make a sustained and substantial effort to solicit applications for certification from small business concerns located in 

areas of concentrated unemployment or underemployment or within labor surplus areas and within States having relatively few Program Participants and from small disadvantaged business concerns 

in industry categories that have not substantially participated in 

the award of contracts let under the authority of this subsection. 

(11) To the maximum extent practicable, construction subcontracts awarded by the Administration pursuant to this subsection shall be awarded within the county or State where the 

work is to be performed. 

(12)(A) The Administration shall require each concern eligible to 

receive subcontracts pursuant to this subsection to annually prepare and submit to the Administration a capability statement. 

Such statement shall briefly describe such concern’s various contract performance capabilities and shall contain the name and telephone number of the Business Opportunity Specialist assigned 

such concern. The Administration shall separate such statements 

by those primarily dependent upon local contract support and those 

primarily requiring a national marketing effort. Statements primarily dependent upon local contract support shall be disseminated 

to appropriate buying activities in the marketing area of the concern. The remaining statements shall be disseminated to the Directors of Small and Disadvantaged Business Utilization for the appropriate agencies who shall further distribute such statements to 

buying activities with such agencies that may purchase the types 

of items or services described on the capability statements. 

(B) Contracting activities receiving capability statements shall, 

within 60 days after receipt, contact the relevant Business Opportunity Specialist to indicate the number, type, and approximate 

dollar value of contract opportunities that such activities may be 

awarding over the succeeding 12-month period and which may be 

appropriate to consider for award to those concerns for which it has 

received capability statements. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
91 

(C) Each executive agency reporting to the Federal Procurement 

Data System contract actions with an aggregate value in excess of 

$50,000,000 in fiscal year 1988, or in any succeeding fiscal year, 

shall prepare a forecast of expected contract opportunities or classes of contract opportunities for the next and succeeding fiscal years 

that small business concerns, including those owned and controlled 

by socially and economically disadvantaged individuals, are capable 

of performing. Such forecast shall be periodically revised during 

such year. To the extent such information is available, the agency 

forecasts shall specify: 

(i) The approximate number of individual contract opportunities (and the number of opportunities within a class). 

(ii) The approximate dollar value, or range of dollar values, 

for each contract opportunity or class of contract opportunities. 

(iii) The anticipated time (by fiscal year quarter) for the 

issuance of a procurement request. 

(iv) The activity responsible for the award and administration of the contract. 

(D) The head of each executive agency subject to the provisions 

of subparagraph (C) shall within 10 days of completion furnish 

such forecasts to— 

(i) the Director of the Office of Small and Disadvantaged 

Business Utilization established pursuant to section 15(k) for 

such agency; and 

(ii) the Administrator. 

(E) The information reported pursuant to subparagraph (D) may 

be limited to classes of items and services for which there are substantial annual purchases. 

(F) Such forecasts shall be available to small business concerns. 

(13) For purposes of this subsection, the term ‘‘Indian tribe’’ 

means any Indian tribe, band, nation, or other organized group or 

community of Indians, including any Alaska Native village or regional or village corporation (within the meaning of the Alaska Native Claims Settlement Act) which— 

(A) is recognized as eligible for the special programs and 

services provided by the United States to Indians because of 

their status as Indians, or 

(B) is recognized as such by the State in which such tribe, 

band, nation, group, or community resides. 

(14) LIMITATIONS ON SUBCONTRACTING.—A concern may not 

be awarded a contract under this subsection as a small business concern unless the concern agrees to satisfy the requirements of section 46. 

(15) For purposes of this subsection, the term ‘‘Native Hawaiian 

Organization’’ means any community service organization serving 

Native Hawaiians in the State of Hawaii which—— 

(A) is a nonprofit corporation that has filed articles of incorporation with the director (or the designee thereof) of the Hawaii Department of Commerce and Consumer Affairs, or any 

successor agency, 

(B) is controlled by Native Hawaiians, and 

(C) whose business activities will principally benefit such 

Native Hawaiians. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
92 

(16)(A) The Administration shall award sole source contracts 

under this section to any small business concern recommended by 

the procuring agency offering the contract opportunity if—— 

(i) the Program Participant is determined to be a responsible 

contractor with respect to performance of such contract opportunity; 

(ii) the award of such contract would be consistent with the 

Program Participant’s business plan; and 

(iii) the award of the contract would not result in the Program Participant exceeding the requirements established by 

section 7(j)(10)(I). 

(B) To the maximum extent practicable, the Administration shall 

promote the equitable geographic distribution of sole source contracts awarded pursuant to this subsection. 

(17)(A) An otherwise responsible business concern that is in compliance with the requirements of subparagraph (B) shall not be denied the opportunity to submit and have considered its offer for 

any procurement contract, which contract has as its principal purpose the supply of a product to be let pursuant to this subsection, 

subsection (m), section 15(a), section 31, or section 36, solely because such concern is other than the actual manufacturer or processor of the product to be supplied under the contract. 

(B) To be in compliance with the requirements referred to in subparagraph (A), such a business concern shall— 

(i) be primarily engaged in the wholesale or retail trade; 

(ii) be a small business concern under the numerical size 

standard for the Standard Industrial Classification Code assigned to the contract solicitation on which the offer is being 

made; 

(iii) be a regular dealer, as defined pursuant to section 35(a) 

of title 41, United States Code (popularly referred to as the 

Walsh-Healey Public Contracts Act), in the product to be offered the Government or be specifically exempted from such 

section by section 7(j)(13)(C); and 

(iv) represent that it will supply the product of a domestic 

small business manufacturer or processor, unless a waiver of 

such requirement is granted— 

(I) by the Administrator, after reviewing a determination 

by the contracting officer that no small business manufacturer or processor can reasonably be expected to offer a 

product meeting the specifications (including period for 

performance) required of an offeror by the solicitation; or 

(II) by the Administrator for a product (or class of products), after determining that no small business manufacturer or processor is available to participate in the Federal 

procurement market. 

(C) LIMITATION.—This paragraph shall not apply to a contract that has as its principal purpose the acquisition of services or construction. 

(18)(A) No person within the employ of the Administration shall, 

during the term of such employment and for a period of two years 

after such employment has been terminated, engage in any activity 

or transaction specified in subparagraph (B) with respect to any 

Program Participant during such person’s term of employment, if 

such person participated personally (either directly or indirectly) in 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
93 

decision-making responsibilities relating to such Program Participant or with respect to the administration of any assistance provided to Program Participants generally under this subsection, section 7(j)(10), or section 7(a)(20). 

(B) The activities and transactions prohibited by subparagraph 

(A) include—— 

(i) the buying, selling, or receiving (except by inheritance) of 

any legal or beneficial ownership of stock or any other ownership interest or the right to acquire any such interest; 

(ii) the entering into or execution of any written or oral 

agreement (whether or not legally enforceable) to purchase or 

otherwise obtain any right or interest described in clause (i); 

or 

(iii) the receipt of any other benefit or right that may be an 

incident of ownership. 

(C)(i) The employees designated in clause (ii) shall annually submit a written certification to the Administration regarding compliance with the requirements of this paragraph. 

(ii) The employees referred to in clause (i) are—— 

(I) regional administrators; 

(II) district directors; 

(III) the Associate Administrator for Minority Small Business and Capital Ownership Development; 

(IV) employees whose principal duties relate to the award of 

contracts or the provision of other assistance pursuant to this 

subsection or section 7(j)(10); and 

(V) such other employees as the Administrator may deem appropriate. 

(iii) Any present or former employee of the Administration who 

violates this paragraph shall be subject to a civil penalty, assessed 

by the Attorney General, that shall not exceed 300 per centum of 

the maximum amount of gain such employee realized or could have 

realized as a result of engaging in those activities and transactions 

prescribed by subparagraph (B). 

(iv) In addition to any other remedy or sanction provided for 

under law or regulation, any person who falsely certifies pursuant 

to clause (i) shall be subject to a civil penalty under the Program 

Fraud Civil Remedies Act of 1986 (31 U.S.C. 3801–3812). 

(19)(A) Any employee of the Administration who has authority to 

take, direct others to take, recommend, or approve any action with 

respect to any program or activity conducted pursuant to this subsection or section 7(j), shall not, with respect to any such action, 

exercise or threaten to exercise such authority on the basis of the 

political activity or affiliation of any party. Employees of the Administration shall expeditiously report to the Inspector General of 

the Administration any such action for which such employee’s participation has been solicitated or directed. 

(B) Any employee who willfully and knowingly violates subparagraph (A) shall be subject to disciplinary action, which may consist 

of separation from service, reduction in grade, suspension, or reprimand. 

(C) Subparagraph (A) shall not apply to any action taken as a 

penalty or other enforcement of a violation of any law, rule, or regulation prohibiting or restricting political activity. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
94 

(D) The prohibitions of subparagraph (A), and remedial measures 

provided for under subparagraphs (B) and (C) with regard to such 

prohibitions, shall be in addition to, and not in lieu of, any other 

prohibitions, measures or liabilities that may arise under any other 

provision of law. 

(20)(A) Small business concerns participating in the Program 

under section 7(j)(10) and eligible to receive contracts pursuant to 

this section shall semiannually report to their assigned Business 

Opportunity Specialist the following: 

(i) A listing of any agents, representatives, attorneys, accountants, consultants, and other parties (other than employees) receiving compensation to assist in obtaining a Federal 

contract for such Program Participant. 

(ii) The amount of compensation received by any person listed under clause (i) during the relevant reporting period and a 

description of the activities performed in return for such compensation. 

(B) The Business Opportunity Specialist shall promptly review 

and forward such report to the Associate Administrator for Minority Small Business and Capital Ownership Development. Any report that raises a suspicion of improper activity shall be reported 

immediately to the Inspector General of the Administration. 

(C) The failure to submit a report pursuant to the requirements 

of this subsection and applicable regulations shall be considered 

‘‘good cause’’ for the initiation of a termination proceeding pursuant 

to section 7(j)(10)(F). 

(21)(A) Subject to the provisions of subparagraph (B), a contract 

(including options) awarded pursuant to this subsection shall be 

performed by the concern that initially received such contract. Notwithstanding the provisions of the preceding sentence, if the owner 

or owners upon whom eligibility was based relinquish ownership or 

control of such concern, or enter into any agreement to relinquish 

such ownership or control, such contract or option shall be terminated for the convenience of the Government, except that no repurchase costs or other damages may be assessed against such concerns due solely to the provisions of this subparagraph. 

(B) The Administrator may, on a nondelegable basis, waive the 

requirements of subparagraph (A) only if one of the following conditions exist: 

(i) When it is necessary for the owners of the concern to surrender partial control of such concern on a temporary basis in 

order to obtain equity financing. 

(ii) The head of the contracting agency for which the contract 

is being performed certifies that termination of the contract 

would severely impair attainment of the agency’s program objectives or missions; 

(iii) Ownership and control of the concern that is performing 

the contract will pass to another small business concern that 

is a program participant, but only if the acquiring firm would 

otherwise be eligible to receive the award directly pursuant to 

subsection (a); 

(iv) The individuals upon whom eligibility was based are no 

longer able to exercise control of the concern due to incapacity 

or death; or 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
95 

(v) When, in order to raise equity capital, it is necessary for 

the disadvantaged owners of the concern to relinquish ownership of a majority of the voting stock of such concern, but only 

if—— 

(I) such concern has exited the Capital Ownership Development Program; 

(II) the disadvantaged owners will maintain ownership 

of the largest single outstanding block of voting stock (including stock held by affiliated parties); and 

(III) the disadvantaged owners will maintain control of 

daily business operations. 

(C) The Administrator may waive the requirements of subparagraph (A) if—— 

(i) in the case of subparagraph (B) (i), (ii) and (iv), he is 

requested to do so prior to the actual relinquishment of 

ownership or control; and 

(ii) in the case of subparagraph (B)(iii), he is requested 

to do so as soon as possible after the incapacity or death 

occurs. 

(D) Concerns performing contracts awarded pursuant to this subsection shall be required to notify the Administration immediately 

upon entering an agreement (either oral or in writing) to transfer 

all or part of its stock or other ownership interest to any other 

party. 

(E) Notwithstanding any other provision of law, for the purposes 

of determining ownership and control of a concern under this section, any potential ownership interests held by investment companies licensed under the Small Business Investment Act of 1958 

shall be treated in the same manner as interests held by the individuals upon whom eligibility is based. 

(b) It shall also be the duty of the Administration and it is hereby empowered, whenever it determines such action is necessary—— 

(1)(A) to provide—— 

(i) technical, managerial, and informational aids to small 

business concerns— 

(I) by advising and counseling on matters in connection with Government procurement and policies, principles, and practices of good management; 

(II) by cooperating and advising with—— 

(aa) voluntary business, professional, educational, and other nonprofit organizations, associations, and institutions (except that the Administration shall take such actions as it determines 

necessary to ensure that such cooperation does not 

constitute or imply an endorsement by the Administration of the organization or its products or 

services, and shall ensure that it receives appropriate recognition in all printed materials); and 

(bb) other Federal and State agencies; 

(III) by maintaining a clearinghouse for information 

on managing, financing, and operating small business 

enterprises; and 

(IV) by disseminating such information, including 

through recognition events, and by other activities 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
96 

that the Administration determines to be appropriate; 

and 

(ii) through cooperation with a profit-making concern 

(referred to in this paragraph as a ‘‘cosponsor’’), training, 

information, and education to small business concerns, except that the Administration shall—— 

(I) take such actions as it determines to be appropriate to ensure that—— 

(aa) the Administration receives appropriate 

recognition and publicity; 

(bb) the cooperation does not constitute or imply 

an endorsement by the Administration of any 

product or service of the cosponsor; 

(cc) unnecessary promotion of the products or 

services of the cosponsor is avoided; and 

(dd) utilization of any one cosponsor in a marketing area is minimized; and 

(II) develop an agreement, executed on behalf of the 

Administration by an employee of the Administration 

in Washington, the District of Columbia, that provides, at a minimum, that— 

(aa) any printed material to announce the cosponsorship or to be distributed at the cosponsored activity, shall be approved in advance by the 

Administration; 

(bb) the terms and conditions of the cooperation 

shall be specified; 

(cc) only minimal charges may be imposed on 

any small business concern to cover the direct 

costs of providing the assistance; 

(dd) the Administration may provide to the cosponsorship mailing labels, but not lists of names 

and addresses of small business concerns compiled 

by the Administration; 

(ee) all printed materials containing the names 

of both the Administration and the cosponsor shall 

include a prominent disclaimer that the cooperation does not constitute or imply an endorsement 

by the Administration of any product or service of 

the cosponsor; and 

(ff) the Administration shall ensure that it receives appropriate recognition in all cosponsorship 

printed materials. 

(B) To establish, conduct, and publicize, and to recruit, select, and train volunteers for (and to enter into contracts, 

grants, or cooperative agreements therefor), volunteer programs, including a Service Corps of Retired Executives 

(SCORE) and an Active Corps of Executive (ACE) for the purposes of section 8(b)(1)(A) of this Act. To facilitate the implementation of such volunteer programs the Administration shall 

maintain at its headquarters and pay the salaries, benefits, 

and expenses of a volunteer and professional staff to manage 

and oversee the program. Any such payments made pursuant 

to this subparagraph shall be effective only to such extent or 

in such amounts as are provided in advance in appropriation 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
97 

Acts. Notwithstanding any other provision of law, SCORE may 

solicit cash and in-kind contributions from the private sector to 

be used to carry out its functions under this Act, and may use 

payments made by the Administration pursuant to this subparagraph for such solicitation and the management of the 

contributions received. 

(C) To allow any individual or group of persons participating 

with it in furtherance of the purposes of subparagraphs (A) 

and (B) to use the Administration’s office facilities and related 

material and services as the Administration deems appropriate, including clerical and stenographic service: 

(i) such volunteers, while carrying out activities under 

section 8(b)(1) of this Act shall be deemed Federal employees for the purposes of the Federal tort claims provisions 

in title 28, United States Code; and for the purposes of 

subchapter I of chapter 81 of title 5, United States Code 

(relative to compensation to Federal employees for work 

injuries) shall be deemed civil employees of the United 

States within the meaning of the term ‘‘employee’’ as defined in section 8101 of title 5, United States Code, and 

the provisions of that subchapter shall apply except that 

in computing compensation benefits for disability or death, 

the monthly pay of a volunteer shall be deemed that received under the entrance salary for a grade GS–11 employee: 

(ii) the Administrator is authorized to reimburse such 

volunteers for all necessary out-of-pocket expenses incident 

to their provision of services under this Act, or in connection with attendance at meetings sponsored by the Administration, or for the cost of malpractice insurance, as the 

Administrator shall determine, in accordance with regulations which he or she shall prescribe, and, while they are 

carrying out such activities away from their homes or regular places of business, for travel expenses (including per 

diem in lieu of subsistence) as authorized by section 5703 

of title 5, United States Code, for individuals serving without pay; and 

(iii) such volunteers shall in no way provide services to 

a client of such Administration with a delinquent loan outstanding, except upon a specific request signed by such client for assistance in connection with such matter. 

(D) Notwithstanding any other provision of law, no payment 

for supportive services or reimbursement of out-of-pocket expenses made to persons serving pursuant to section 8(b)(1) of 

this Act shall be subject to any tax or charge or be treated as 

wages or compensation for the purposes of unemployment, disability, retirement, public assistance, or similar benefit payments, or minimum wage laws. 

(E) In carrying out its functions under subparagraph (A), to 

make grants (including contracts and cooperative agreements) 

to any public or private institution of higher education for the 

establishment and operation of a small business institute, 

which shall be used to provide business counseling and assistance to small business concerns through the activities of stuVerDate Sep 11 2014 07:19 Jul 27, 2016 Jkt 059006 PO 00000 Frm 00097 Fmt 6659 Sfmt 6601 E:\HR\OC\HR704P1.XXX HR704P1

smartinez on DSK3GLQ082PROD with REPORTS-HSE
98 

dents enrolled at the institution, which students shall be entitled to receive educational credits for their activities. 

(F) Notwithstanding any other provision of law and pursuant 

to regulations which the Administrator shall provide, counsel 

may be employed and counsel fees, court costs, bail, and other 

expenses incidental to the defense of volunteers may be paid 

in judicial or Administrative proceedings arising directly out of 

the performance of activities pursuant to section 8(b)(1) of this 

Act, as amended (15 U.S.C. 637(b)(1)) to which volunteers have 

been made parties. 

(G) In carrying out its functions under this Act and to carry 

out the activities authorized by title IV of the Women’s Business Ownership Act of 1988, the Administration is authorized 

to accept, in the name of the Administration, and employ or 

dispose of in furtherance of the purposes of this Act, any 

money or property, real, personal, or mixed, tangible, or intangible, received by gift, devise, bequest, or otherwise; and, further, to accept gratuitous services and facilities. 

(2) to make a complete inventory of all productive facilities 

of small-business concerns or to arrange for such inventory to 

be made by any other governmental agency which has the facilities. In making any such inventory, the appropriate agencies in the several States may be requested to furnish an inventory of the productive facilities of small-business concerns 

in each respective State if such an inventory is available or in 

prospect; 

(3) to coordinate and to ascertain the means by which the 

productive capacity of small-business concerns can be most effectively utilized; 

(4) to consult and cooperative with officers of the Government having procurement or property disposal powers, in order 

to utilize the potential productive capacity of plants operated 

by small-business concerns; 

(5) to obtain information as to methods and practices which 

Government prime contractors utilize in letting subcontracts 

and to take action to encourage the letting of subcontracts by 

prime contractors to small-business concerns at prices and on 

conditions and terms which are fair and equitable; 

(6) to determine within any industry the concerns, firms, 

persons, corporations, partnerships, cooperatives, or other business enterprises which are to be designated ‘‘small-business 

concerns’’ for the purpose of effectuating the provisions of this 

Act. To carry out this purpose the Administrator, when requested to do so, shall issue in response to each such request 

an appropriate certificate certifying an individual concern as a 

‘‘small-business concern’’ in accordance with the criteria expressed in this Act. Any such certificate shall be subject to revocation when the concern covered thereby ceases to be a 

‘‘small-business concern.’’ Offices of the Government having 

procurement or lending powers, or engaging in the disposal of 

Federal property or allocating materials or supplies, or promulgating regulations affecting the distribution of materials or 

supplies, shall accept as conclusive the Administration’s determination as to which enterprises are to be designated ‘‘smallVerDate Sep 11 2014 07:19 Jul 27, 2016 Jkt 059006 PO 00000 Frm 00098 Fmt 6659 Sfmt 6601 E:\HR\OC\HR704P1.XXX HR704P1

smartinez on DSK3GLQ082PROD with REPORTS-HSE
99 

business concerns’’, as authorized and directed under this paragraph; 

(7)(A) to certify to Government procurement officers, and officers engaged in the sale and disposal of Federal property, 

with respect to all elements of responsibility, including, but not 

limited to, capability, competency, capacity, credit, integrity, 

perseverance, and tenacity, of any small business concern or 

group of such concerns to receive and perform a specific Government contract. A Government procurement officer or an officer engaged in the sale and disposal of Federal property may 

not, for any reason specified in the preceding sentence, preclude any small business concern or group of such concerns 

from being awarded such contract without referring the matter 

for a final disposition to the Administration. 

(B) if a Government procurement officer finds that an otherwise qualified small business concern may be ineligible due to 

the provisions of section 35(a) of title 41, United States Code 

(the Walsh-Healey Public Contracts Act), he shall notify the 

Administration in writing of such finding. The Administration 

shall review such finding and shall either dismiss it and certify 

the small business concern to be an eligible Government contractor for a specific Government contract or if it concurs in the 

finding, forward the matter to the Secretary of Labor for final 

disposition, in which case the Administration may certify the 

small business concern only if the Secretary of Labor finds the 

small business concern not to be in violation. 

(C) in any case in which a small business concern or group 

of such concerns has been certified by the Administration pursuant to (A) or (B) to be a responsible or eligible Government 

contractor as to a specific Government contract, the officers of 

the Government having procurement or property disposal powers are directed to accept such certification as conclusive, and 

shall let such Government contract to such concern or group of 

concerns without requiring it to meet any other requirement of 

responsibility or eligibility. Notwithstanding the first sentence 

of this subparagraph, the Administration may not establish an 

exemption from referral or notification or refuse to accept a referral or notification from a Government procurement officer 

made pursuant to subparagraph (A) or (B) of this paragraph, 

but nothing in this paragraph shall require the processing of 

an application for certification if the small business concern to 

which the referral pertains declines to have the application 

processed. 

(8) to obtain from any Federal department, establishment, or 

agency engaged in procurement or in the financing of procurement or production such reports concerning the letting of contracts and subcontracts and the making of loans to business 

concerns as it may deem pertinent in carrying out its functions 

under this Act; 

(9) to obtain from any Federal department, establishment, or 

agency engaged in the disposal of Federal property such reports concerning the solicitation of bids, time of sale, or otherwise as it may deem pertinent in carrying out its functions 

under this Act; 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
100 

(10) to obtain from suppliers of materials information pertaining to the method of filling orders and the bases for allocating their supply, whenever it appears that any small business is unable to obtain materials from its normal sources; 

(11) to make studies and recommendations to the appropriate Federal agencies to insure that a fair proportion of the 

total purchases and contracts for property and services for the 

Government be placed with small-business enterprises, to insure that a fair proportion of Government contacts for research 

and development be placed with small-business concerns, to insure that a fair proportion of the total sales of Government 

property be made to small-business concerns, and to insure a 

fair and equitable share of materials, supplies, and equipment 

to small-business concerns; 

(12) to consult and cooperate with all Government agencies 

for the purpose of insuring that small-business concerns shall 

receive fair and reasonable treatment from such agencies; 

(13) to establish such advisory boards and committees as 

may be necessary to achieve the purposes of this Act and of the 

Small Business Investment Act of 1958; to call meetings of 

such boards and committees from time to time; to pay the 

transportation expenses and a per diem allowance in accordance with section 5703 of title 5, United States Code, to the 

members of such boards and committees for travel and subsistence expenses incurred at the request of the Administration in 

connection with travel to points more than fifty miles distant 

from the homes of such members in attending the meetings of 

such boards and committees; and to rent temporarily, within 

the District of Columbia or elsewhere, such hotel or other accommodations as are needed to facilitate the conduct of such 

meetings; 

(14) to provide at the earliest practicable time such information and assistance as may be appropriate, including information concerning eligibility for loans under section 7(b)(3), to 

local public agencies (as defined in section 110(h) of the Housing Act of 1949) and to small-business concerns to be displaced 

by federally aided urban renewal projects in order to assist 

such small-business concerns in reestablishing their operations; 

(15) to disseminate, without regard to the provisions of section 3204 of title 39, United States Code, data and information, 

in such form as it shall deem appropriate, to public agencies, 

private organizations, and the general public; 

(16) to make studies of matters materially affecting the competitive strength of small business, and of the effect on small 

business of Federal laws, programs, and regulations, and to 

make recommendations to the appropriate Federal agency or 

agencies for the adjustment of such programs and regulations 

to the needs of small business; and 

(17) to make grants to, and enter into contracts and cooperative agreements with, educational institutions, private businesses, veterans’ nonprofit community-based organizations, 

and Federal, State, and local departments and agencies for the 

establishment and implementation of outreach programs for 

disabled veterans (as defined in section 4211(3) of title 38, 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
101 

United States Code), veterans, and members of a reserve component of the Armed Forces. 

(c) 

(d)(1) It is the policy of the United States that small business 

concerns, small business concerns owned and controlled by veterans, 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, shall have the maximum practicable opportunity to participate in the performance of contracts 

let by any Federal agency, including contracts and subcontracts for 

subsystems, assemblies, components, and related services for major 

systems. It is further the policy of the United States that its prime 

contractors establish procedures to ensure the timely payment of 

amounts due pursuant to the terms of their subcontracts with 

small business concerns, small business concerns owned and controlled by veterans, 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. 

(2) The clause stated in paragraph (3) shall be included in all 

contracts let by any Federal agency except any contract which—— 

(A) does not exceed the simplified acquisition threshold; 

(B) including all subcontracts under such contracts will be 

performed entirely outside of any State, territory, or possession 

of the United States, the District of Columbia, or the Commonwealth of Puerto Rico; or 

(C) is for services which are personal in nature. 

(3) The clause required by paragraph (2) shall be as follows: 

(A) It is the policy of the United States that small business 

concerns, small business concerns owned and controlled by veterans, 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 shall have the 

maximum practicable opportunity to participate in the performance of contracts let by any Federal agency, including contracts and subcontracts for subsystems, assemblies, components, and related services for major systems. It is further the 

policy of the United States that its prime contractors establish 

procedures to ensure the timely payment of amounts due pursuant to the terms of their subcontracts with small business 

concerns, small business concerns owned and controlled by veterans, 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. 

(B) The contractor hereby agrees to carry out this policy in 

the awarding of subcontracts to the fullest extent consistent 

with the efficient performance of this contract. The contractor 

further agrees to cooperate in any studies or surveys as may 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
102 

be conducted by the United States Small Business Administration or the awarding agency of the United States as may be 

necessary to determine the extent of the contractor’s compliance with this clause. 

(C) As used in this contract, the term ‘‘small business concern’’ shall mean a small business as defined pursuant to section 3 of the Small Business Act and relevant regulations promulgated pursuant thereto. The term ‘‘small business concern 

owned and controlled by socially and economically disadvantaged individuals’’ shall mean a small business concern—— 

(i) which is at least 51 per centum owned by one or more 

socially and economically disadvantaged individuals; or, in 

the case of any publicly owned business, at least 51 per 

centum of the stock of which is owned by one or more socially and economically disadvantaged individuals; and 

(ii) whose management and daily business operations 

are controlled by one or more of such individuals. 

The contractor shall presume that socially and economically 

disadvantaged individuals include Black Americans, Hispanic 

Americans, Native Americans, Asian Pacific Americans, and 

other minorities, or any other individual found to be disadvantaged by the Administration pursuant to section 8(a) of the 

Small Business Act. 

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

by women’’ shall mean a small business concern—— 

(i) which is at least 51 per centum owned by one or more 

women; or, in the case of any publicly owned business, at 

least 51 per centum of the stock of which is owned by one 

or more women; and 

(ii) whose management and daily business operations 

are controlled by one or more women. 

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

by veterans’’ shall mean a small business concern—— 

(i) which is at least 51 per centum owned by one or more 

eligible veterans; or, in the case of any publicly owned 

business, at least 51 per centum of the stock of which is 

owned by one or more veterans; and 

(ii) whose management and daily business operations 

are controlled by such veterans. The contractor shall treat 

as veterans all individuals who are veterans within the 

meaning of the term under section 3(q) of the Small Business Act. 

(F) Contractors acting in good faith may rely on written representations by their subcontractors regarding their status as 

either a small business concern, small business concern owned 

and controlled by veterans, small business concern owned and 

controlled by service-disabled veterans, a small business concern owned and controlled by socially and economically disadvantaged individuals, or a small business concern owned and 

controlled by women. 

(G) In this contract, the term ‘‘qualified HUBZone small 

business concern’’ has the meaning given that term in section 

3(p) of the Small Business Act. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
103 

(H) In this contract, the term ‘‘small business concern owned 

and controlled by service-disabled veterans’’ has the meaning 

given that term in section 3(q). 

(4)(A) Each solicitation of an offer for a contract to be let by a 

Federal agency which is to be awarded pursuant to the negotiated 

method of procurement and which may exceed $1,000,000, in the 

case of a contract for the construction of any public facility, or 

$500,000, in the case of all other contracts, shall contain a clause 

notifying potential offering companies of the provisions of this subsection relating to contracts awarded pursuant to the negotiated 

method of procurement. 

(B) Before the award of any contract to be let, or any amendment 

or modification to any contract let, by any Federal agency 

which—— 

(i) is to be awarded, or was let, pursuant to the negotiated 

method of procurement, 

(ii) is required to include the clause stated in paragraph (3), 

(iii) may exceed $1,000,000 in the case of a contract for the 

construction of any public facility, or $500,000 in the case of 

all other contracts, and 

(iv) which offers subcontracting possibilities, 

the apparent successful offeror shall negotiate with the procurement authority a subcontracting plan which incorporates the information prescribed in paragraph (6). The subcontracting plan shall 

be included in and made a material part of the contract. 

(C) If, within the time limit prescribed in regulations of the Federal agency concerned, the apparent successful offeror fails to negotiate the subcontracting plan required by this paragraph, such offeror shall become ineligible to be awarded the contract. Prior compliance of the offeror with other such subcontracting plans shall be 

considered by the Federal agency in determining the responsibility 

of that offeror for the award of the contract. 

(D) No contract shall be awarded to any offeror unless the procurement authority determines that the plan to be negotiated by 

the offeror pursuant to this paragraph provides the maximum practicable opportunity for small business concerns, qualified HUBZone 

small business concerns, small business concerns owned and controlled by veterans, small business concerns owned and controlled 

by service-disabled veterans, 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 the contract. 

(E) Notwithstanding any other provisions of law, every Federal 

agency, in order to encourage subcontracting opportunities for 

small business concerns, small business concerns owned and controlled by veterans, small business concerns owned and controlled 

by service-disabled veterans, qualified HUBZone small business 

concerns, and small business concerns owned and controlled by the 

socially and economically disadvantaged individuals as defined in 

paragraph (3) of this subsection and for small business concerns 

owned and controlled by women, is hereby authorized to provide 

such incentives as such Federal agency may deem appropriate in 

order to encourage such subcontracting opportunities as may be 

commensurate with the efficient and economical performance of the 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
104 

contact: Provided, That, this subparagraph shall apply only to contracts let pursuant to the negotiated method of procurement. 

(F)(i) Each contract subject to the requirements of this paragraph 

or paragraph (5) shall contain a clause for the payment of liquidated damages upon a finding that a prime contractor has failed 

to make a good faith effort to comply with the requirements imposed on such contractor by this subsection. 

(ii) The contractor shall be afforded an opportunity to demonstrate a good faith effort regarding compliance prior to the contracting officer’s final decision regarding the impositon of damages 

and the amount thereof. The final decision of a contracting officer 

regarding the contractor’s obligation to pay such damages, or the 

amounts thereof, shall be subject to the Contract Disputes Act of 

1978 (41 U.S.C. 601–613). 

(iii) Each agency shall ensure that the goals offered by the apparent successful bidder or offeror are attainable in relation to— 

(I) the subcontracting opportunities available to the contractor, commensurate with the efficient and economical performance of the contract; 

(II) the pool of eligible subcontractors available to fulfill the 

subcontracting opportunities; and 

(III) the actual performance of such contractor in fulfilling 

the subcontracting goals specified in prior plans. 

(G) The following factors shall be designated by the Federal 

agency as significant factors for purposes of evaluating offers 

for a bundled contract where the head of the agency determines that the contract offers a significant opportunity for subcontracting: 

(i) A factor that is based on the rate provided under the 

subcontracting plan for small business participation in the 

performance of the contract. 

(ii) For the evaluation of past performance of an offeror, 

a factor that is based on the extent to which the offeror attained applicable goals for small business participation in 

the performance of contracts. 

(5)(A) Each solicitation of a bid for any contract to be let, or any 

amendment or modification to any contract let, by any Federal 

agency which— 

(i) is to be awarded pursuant to the formal advertising method of procurement, 

(ii) is required to contain the clause stated in paragraph (3) 

of this subsection, 

(iii) may exceed $1,000,000 in the case of a contract for the 

construction of any public facility, or $500,000, in the case of 

all other contracts, and 

(iv) offers subcontracting possibilities, 

shall contain a clause requiring any bidder who is selected to be 

awarded a contract to submit to the Federal agency concerned a 

subcontracting plan which incorporates the information prescribed 

in paragraph (6). 

(B) If, within the time limit prescribed in regulations of the Federal agency concerned, the bidder selected to be awarded the contract fails to submit the subcontracting plan required by this paragraph, such bidder shall become ineligible to be awarded the contract. Prior compliance of the bidder with other such subconVerDate Sep 11 2014 07:19 Jul 27, 2016 Jkt 059006 PO 00000 Frm 00104 Fmt 6659 Sfmt 6601 E:\HR\OC\HR704P1.XXX HR704P1

smartinez on DSK3GLQ082PROD with REPORTS-HSE
105 

tracting plans shall be considered by the Federal agency in determining the responsibility of such bidder for the award of the contract. The subcontracting plan of the bidder awarded the contract 

shall be included in and made a material part of the contract. 

(6) Each subcontracting plan required under paragraph (4) or (5) 

shall include— 

(A) percentage goals for the utilization as subcontractors of 

small business concerns, small business concerns owned and 

controlled by veterans, 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; 

(B) the name of an individual within the employ of the offeror or bidder who will administer the subcontracting program of 

the offeror or bidder and a description of the duties of such individual; 

(C) a description of the efforts the offeror or bidder will take 

to assure that small business concerns, small business concerns owned and controlled by veterans, 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 will have an equitable opportunity to 

compete for subcontracts; 

(D) assurances that the offeror or bidder will include the 

clause required by paragraph (2) of this subsection in all subcontracts which offer further subcontracting opportunities, and 

that the offeror or bidder will require all subcontractors (except 

small business concerns) who receive subcontracts in excess of 

$1,000,000 in the case of a contract for the construction of any 

public facility, or in excess of $500,000 in the case of all other 

contracts, to adopt a plan similar to the plan required under 

paragraph (4) or (5), and assurances at a minimum that the offeror or bidder, and all subcontractors required to maintain 

subcontracting plans pursuant to this paragraph, will—— 

(i) review and approve subcontracting plans submitted 

by their subcontractors; 

(ii) monitor subcontractor compliance with their approved subcontracting plans; 

(iii) ensure that subcontracting reports are submitted by 

their subcontractors when required; 

(iv) acknowledge receipt of their subcontractors’ reports; 

(v) compare the performance of their subcontractors to 

subcontracting plans and goals; and 

(vi) discuss performance with subcontractors when necessary to ensure their subcontractors make a good faith effort to comply with their subcontracting plans; 

(E) assurances that the offeror or bidder will submit such 

periodic reports and cooperate in any studies or surveys as 

may be required by the Federal agency or the Administration 

in order to determine the extent of compliance by the offeror 

or bidder with the subcontracting plan; 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
106 

(F) a recitation of the types of records the successful offeror 

or bidder will maintain to demonstrate procedures which have 

been adopted to comply with the requirements and goals set 

forth in this plan, including the establishment of source lists 

of small business concerns, small business concerns owned and 

controlled by veterans, 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; 

and efforts to identify and award subcontracts to such small 

business concerns; 

(G) a recitation of the types of records the successful offeror 

or bidder will maintain to demonstrate procedures which have 

been adopted to ensure subcontractors at all tiers comply with 

the requirements and goals set forth in the plan established in 

accordance with subparagraph (D) of this paragraph, including—— 

(i) the establishment of source lists of small business 

concerns, small business concerns owned and controlled by 

veterans, 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; and 

(ii) efforts to identify and award subcontracts to such 

small business concerns; and 

(H) a representation that the offeror or bidder will—— 

(i) make a good faith effort to acquire articles, equipment, supplies, services, or materials, or obtain the performance of construction work from the small business 

concerns used in preparing and submitting to the contracting agency the bid or proposal, in the same amount 

and quality used in preparing and submitting the bid or 

proposal; and 

(ii) provide to the contracting officer a written explanation if the offeror or bidder fails to acquire articles, 

equipment, supplies, services, or materials or obtain the 

performance of construction work as described in clause (i). 

(7) The head of the contracting agency shall ensure that—— 

(A) the agency collects and reports data on the extent to 

which contractors of the agency meet the goals and objectives set forth in subcontracting plans submitted pursuant 

to this subsection; and 

(B) the agency periodically reviews data collected and reported pursuant to subparagraph (A) for the purpose of ensuring that such contractors comply in good faith with the 

requirements of this subsection and subcontracting plans 

submitted by the contractors pursuant to this subsection. 

(8) The provisions of paragraphs (4), (5), and (6) shall not apply 

to offerors or bidders who are small business concerns. 

ø(9) The failure¿ 

(9) MATERIAL BREACH.—The failure of any contractor or subcontractor to comply in good faith with—— 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
107 

(A) the clause contained in paragraph (3) of this subsection, 

øor¿ 

(B) any plan required of such contractor pursuant to the authority of this subsection to be included in its contract or subcontract, or 

(C) assurances provided under paragraph (6)(E), 

shall be a material breach of such contract or subcontract and may 

be considered in any past performance evaluation of the contractor. 

(10) Nothing contained in this subsection shall be construed to 

supersede the requirements of Defense Manpower Policy Number 

4A (32A CFR Chap. 1) or any successor policy. 

ø(11) In the case of¿ 

(11) AUTHORITY OF ADMINISTRATOR.—In the case of contracts 

within the provisions of paragraphs (4), (5), and (6), the Administration is authorized to— 

(A) assist Federal agencies and businesses in complying with 

their responsibilities under the provisions of this subsection, 

including the formulation of subcontracting plans pursuant to 

paragraph (4); 

(B) review any solicitation for any contract to be let pursuant 

to paragraphs (4) and (5) to determine the maximum practicable opportunity for small business concerns, small business 

concerns owned and controlled by veterans, 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 as subcontractors in 

the performance of any contract resulting from any solicitation, 

and to submit its findingsø, which shall be advisory in nature,¿ 

to the appropriate Federal agency; and 

(C) evaluate compliance with subcontracting plans as a supplement to evaluations performed by the contracting agency, 

either on a contract-by-contract basis or, in the case of contractors having multiple contracts, on an aggregate basis. 

(12) For purposes of determining the attainment of a subcontract 

utilization goal under any subcontracting plan entered into with 

any executive agency pursuant to this subsection, a mentor firm 

providing development assistance to a protege firm under the pilot 

Mentor-Protege Program established pursuant to section 831 of the 

National Defense Authorization Act for Fiscal Year 1991 (Public 

Law 101–510; 10 U.S.C. 2301 note) shall be granted credit for such 

assistance in accordance with subsection (g) of such section. 

(13) PAYMENT OF SUBCONTRACTORS.— 

(A) DEFINITION.—In this paragraph, the term ‘‘covered contract’’ means a contract relating to which a prime contractor is 

required to develop a subcontracting plan under paragraph (4) 

or (5). 

(B) NOTICE.— (i) IN GENERAL.—A prime contractor for a covered contract shall notify in writing the contracting officer for the 

covered contract if the prime contractor pays a reduced 

price to a subcontractor for goods and services upon completion of the responsibilities of the subcontractor or the 

payment to a subcontractor is more than 90 days past due 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
108 

for goods or services provided for the covered contract for 

which the Federal agency has paid the prime contractor. 

(ii) CONTENTS.—A prime contractor shall include the 

reason for the reduction in a payment to or failure to pay 

a subcontractor in any notice made under clause (i). 

(C) PERFORMANCE.—A contracting officer for a covered contract shall consider the unjustified failure by a prime contractor to make a full or timely payment to a subcontractor in 

evaluating the performance of the prime contractor. 

(D) CONTROL OF FUNDS.—If the contracting officer for a covered contract determines that a prime contractor has a history 

of unjustified, untimely payments to contractors, the contracting officer shall record the identity of the contractor in accordance with the regulations promulgated under subparagraph (E). 

(E) REGULATIONS.—Not later than 1 year after the date of 

enactment of this paragraph, the Federal Acquisition Regulatory Council established under section 25(a) of the Office of 

Federal Procurement Policy Act (41 U.S.C. 421(a)) shall amend 

the Federal Acquisition Regulation issued under section 25 of 

such Act to— 

(i) describe the circumstances under which a contractor 

may be determined to have a history of unjustified, untimely payments to subcontractors; 

(ii) establish a process for contracting officers to record 

the identity of a contractor described in clause (i); and 

(iii) require the identity of a contractor described in 

clause (i) to be incorporated in, and made publicly available through, the Federal Awardee Performance and Integrity Information System, or any successor thereto. 

(14) An offeror for a covered contract that intends to identify 

a small business concern as a potential subcontractor in a bid 

or proposal for the contract, or in a plan submitted pursuant 

to this subsection in connection with the contract, shall notify 

the small business concern prior to making such identification. 

(15) The Administrator shall establish a reporting mechanism that allows a subcontractor or potential subcontractor to 

report fraudulent activity or bad faith by a contractor with respect to a subcontracting plan submitted pursuant to this subsection. 

(16) CREDIT FOR CERTAIN SUBCONTRACTORS.— 

(A) For purposes of determining whether or not a prime contractor has attained the percentage goals specified in paragraph (6)— 

(i) if the subcontracting goals pertain only to a single 

contract with the executive agency, the prime contractor 

shall receive credit for small business concerns performing 

as first tier subcontractors or subcontractors at any tier 

pursuant to the subcontracting plans required under paragraph (6)(D) in an amount equal to the dollar value of 

work awarded to such small business concerns; and 

(ii) if the subcontracting goals pertain to more than one 

contract with one or more executive agencies, or to one 

contract with more than one executive agency, the prime 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
109 

contractor may only count first tier subcontractors that are 

small business concerns. 

(B) Nothing in this paragraph shall abrogate the responsibility of a prime contractor to make a good-faith effort to 

achieve the first tier small business subcontracting goals negotiated under paragraph (6)(A), or the requirement for subcontractors with further opportunities for subcontracting to 

make a good-faith effort to achieve the goals established under 

paragraph (6)(D). 

(17) REVIEW AND ACCEPTANCE OF SUBCONTRACTING PLANS.— (A) DEFINITION.—In this paragraph, the term ‘‘covered 

small business concerns’’ means—— 

(i) small business concerns; 

(ii) qualified HUBZone small business concerns; 

(iii) small business concerns owned and controlled by 

veterans; 

(iv) small business concerns owned and controlled by 

service-disabled veterans; 

(v) small business concerns owned and controlled by 

socially and economically disadvantaged individuals, 

as defined in paragraph (3)(C); and 

(vi) small business concerns owned and controlled by 

women. 

(B) DELAYED ACCEPTANCE OF PLAN.—Except as provided 

in subparagraph (E), if a procurement center representative 

or commercial market representative determines that a subcontracting plan required under paragraph (4) or (5) fails 

to provide the maximum practicable opportunity for covered 

small business concerns to participate in the performance of 

the contract to which the plan applies, the representative 

may delay acceptance of the plan in accordance with subparagraph (C). 

(C) PROCESS FOR DELAYED ACCEPTANCE.— (i) IN GENERAL.—Except as provided in clause (ii), a 

procurement center representative or commercial market representative who makes a determination under 

subparagraph (B) with respect to a subcontracting plan 

may delay acceptance of the plan for a 30-day period 

by providing written notice of the determination to the 

head of the procuring activity of the contracting agency 

that includes recommendations for altering the plan to 

provide the maximum practicable opportunity described in that subparagraph. 

(ii) EXCEPTION.—In the case of the Department of Defense—— 

(I) a procurement center representative or commercial market representative who makes a determination under subparagraph (B) with respect to 

a subcontracting plan may delay acceptance of the 

plan for a 15-day period by providing written notice of the determination to appropriate personnel 

of the Department of Defense that includes recommendations for altering the plan to provide the 

maximum practicable opportunity described in 

that subparagraph; and 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
110 

(II) the authority of a procurement center representative or commercial market representative to 

delay acceptance of a subcontracting plan as provided in subparagraph (B) does not include the authority to delay the award or performance of the 

contract concerned. 

(D) DISAGREEMENTS.—If a procurement center representative or commercial market representative delays the acceptance of a subcontracting plan under subparagraph (C) 

and does not reach agreement with the head of the procuring activity of the contracting agency to alter the plan 

to provide the maximum practicable opportunity described 

in subparagraph (B) not later than 30 days after the date 

on which written notice was provided, the disagreement 

shall be submitted to the head of the contracting agency by 

the Administrator for a final determination. 

(E) EXCEPTION.—A procurement center representative or 

commercial market representative may not delay the acceptance of a subcontracting plan if the head of the contracting 

agency certifies that the need of the agency for the supplies 

or services is of such an unusual and compelling urgency 

that the United States would be seriously injured unless 

the agency is permitted to accept the subcontracting plan. 

(18) PILOT PROGRAM PROVIDING PAST PERFORMANCE RATINGS

FOR OTHER SMALL BUSINESS SUBCONTRACTORS.— 

(A) ESTABLISHMENT.—The Administrator shall establish 

a pilot program for a small business concern performing as 

a first tier subcontractor for a covered contract (as defined 

in paragraph 13(A)) to request a past performance rating 

in the system used by the Federal Government to monitor 

or record contractor past performance. 

(B) APPLICATION.—A small business concern described in 

subparagraph (A) shall submit an application to the appropriate official for a past performance rating. Such application shall include written evidence of the past performance 

factors for which the small business concern seeks a rating 

and a suggested rating. 

(C) DETERMINATION.—The appropriate official shall submit the application from the small business concern to the 

contracting officer (or a designee of such officer) for the covered contract and to the prime contractor for review. The 

contracting officer (or designee) and the prime contractor 

shall, not later than 30 days after receipt of the application, 

submit to the appropriate official a response regarding the 

application. 

(i) AGREEMENT ON RATING.—If the contracting officer 

(or designee) and the prime contractor agree on a past 

performance rating, or if either the contracting officer 

(or designee) or the prime contractor fail to respond 

and the responding individual agrees with the rating 

of the applicant small business concern, the appropriate official shall enter the agreed-upon past performance rating in the system described in subparagraph 

(A). 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
111 

(ii) DISAGREEMENT ON RATING.—If the contracting officer (or designee) and the prime contractor fail to respond within 30 days or if they disagree about the rating, or if either the contracting officer (or designee) or 

the prime contractor fail to respond and the responding 

individual disagrees with the rating of the applicant 

small business concern, the contracting officer (or designee) or the prime contractor shall submit a notice 

contesting the application to appropriate official. The 

appropriate official shall follow the requirements of 

subparagraph (D). 

(D) PROCEDURE FOR RATING.—Not later than 14 calendar 

days after receipt of a notice under subparagraph (C)(ii), 

the appropriate official shall submit such notice to the applicant small business concern. Such concern may submit 

comments, rebuttals, or additional information relating to 

the past performance of such concern not later 14 calendar 

days after receipt of such notice. The appropriate official 

shall enter the into the system described in subparagraph 

(A) a rating that is neither favorable nor unfavorable along 

with the initial application from the small business concern, the responses of the contracting officer (or designee) 

and the prime contractor, and any additional information 

provided by the small business concern. 

(E) USE OF INFORMATION.—A small business subcontractor may use a past performance rating given under this 

paragraph to establish its past performance for a prime 

contract. 

(F) DURATION.—The pilot program established under this 

paragraph shall terminate 3 years after the date on which 

the first small business concern receives a past performance 

rating for performance as a first tier subcontractor. 

(G) REPORT.—The Comptroller General of the United 

States shall begin an assessment of the pilot program 1 

year after the establishment of such program. Not later 

than 6 months after beginning such assessment, the Comptroller General shall submit a report to the Committee on 

Small Business and Entrepreneurship of the Senate and 

the Committee on Small Business of the House of Representatives, which shall include— 

(i) the number of small business concerns that have 

received past performance ratings under the pilot program; 

(ii) the number of applications in which the contracting officer (or designee) or the prime contractor 

contested the application of the small business concern; 

(iii) any suggestions or recommendations the Comptroller General or the small business concerns participating in the program have to address disputes between the small business concern, the contracting officer (or designee), and the prime contractor on past performance ratings; and 

(iv) any suggestions or recommendation the Comptroller General has to improve the operation of the pilot 

program. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
112 

(H) APPROPRIATE OFFICIAL DEFINED.—In this paragraph, 

the term ‘‘appropriate official’’ means a Commercial Market 

Representative or other individual designated by the senior 

official appointed by the Administrator with responsibilities 

under sections 8, 15, 31, and 36. 

(e)(1) Except as provided in subsection (g)—— 

(A) an executive agency intending to—— 

(i) solicit bids or proposals for a contract for property or 

services for a price expected to exceed $25,000; or 

(ii) place an order, expected to exceed $25,000, under a 

basic agreement, basis ordering agreement, or similar arrangement, 

shall publish a notice described in subsection (f); 

(B) an executive agency intending to solicit bids or proposals 

for a contract for property or services shall post, for a period 

of not less than ten days, in a public place at the contracting 

office issuing the solicitation a notice of solicitation described 

in subsection (f)— 

(i) in the case of an executive agency other than the Department of Defense, if the contract is for a price expected 

to exceed $10,000, but not to exceed $25,000; and 

(ii) in the case of the Department of Defense, if the contract is for a price expected to exceed $5,000, but not to exceed $25,000; and 

(C) an executive agency awarding a contract for property or 

services for a price exceeding $100,000, or placing an order referred to in clause (A)(ii) exceeding $100,000, shall furnish for 

publication by the Secretary of Commerce a notice announcing 

the award or order if there is likely to be any subcontract 

under such contract or order. 

(2)(A) A notice of solicitation required to be published under 

paragraph (1) may be published— 

(i) by electronic means that meet the accessibility requirements under section 18(a)(7) of the Office of Federal Procurement Policy Act (41 U.S.C. 416(a)(7)); or 

(ii) by the Secretary of Commerce in the Commerce Business 

Daily. 

(B) The Secretary of Commerce shall promptly publish in the 

Commerce Business Daily each notice or announcement received 

under this subsection for publication by that means. 

(3) Whenever an executive agency is required by paragraph 

(1)(A) to publish a notice of solicitation, such executive agency may 

not— 

(A) issue the solicitation earlier than 15 days after the date 

on which the notice is published; or 

(B) in the case of a contract or order estimated to be greater 

than the simplified acquisition threshold, establish a deadline 

for the submission of all bids or proposals in response to the 

notice required by paragraph (1)(A) that— 

(i) in the case of an order under a basic agreement, basic 

ordering agreement, or similar arrangement, is earlier 

than the date 30 days after the date the notice required 

by paragraph (1)(A)(ii) is published; 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
113 

(ii) in the case of a solicitation for research and development, is earlier than the date 45 days after the date the 

notice required by paragraph (1)(A)(i) is published; or 

(iii) in any other case, is earlier than the date 30 days 

after the date the solicitation is issued. 

(f) Each notice of solicitation required by subparagraph (A) or (B) 

of subsection (e)(1) shall include—— 

(1) an accurate description of the property or services to be 

contracted for, which description (A) shall not be unnecessarily 

restrictive of competition, and (B) shall include, as appropriate, 

the agency nomenclature, National Stock Number or other part 

number, and a brief description of the item’s form, fit, or function, physical dimensions, predominant material of manufacture, or similar information that will assist a prospective contractor to make an informed business judgment as to whether 

a copy of the solicitation should be requested; 

(2) provisions that—— 

(A) state whether the technical data required to respond 

to the solicitation will not be furnished as part of such solicitation, and identify the source in the Government, if 

any, from which the technical data may be obtained; and 

(B) state whether an offeror, its product, or service must 

meet a qualification requirement in order to be eligible for 

award, and, if so, identify the office from which a qualification requirement may be obtained; 

(3) the name, business address, and telephone number of the 

contracting officer; 

(4) a statement that all responsible sources may submit a 

bid, proposal, or quotation (as appropriate) which shall be considered by the agency; 

(5) in the case of a procurement using procedures other than 

competitive procedures, a statement of the reason justifying 

the use of such procedures and the identity of the intended 

source; and 

(6) in the case of a contract in an amount estimated to be 

greater than $25,000 but not greater than the simplified acquisition threshold—— 

(A) a description of the procedures to be used in awarding the contract; and 

(B) a statement specifying the periods for prospective 

offerors and the contracting officer to take the necessary 

preaward and award actions. 

(g)(1) A notice is not required under subsection (e)(1) if— 

(A) the proposed procurement is for an amount not greater 

than the simplified acquisition threshold and is to be conducted by— 

(i) using widespread electronic public notice of the solicitation in a form that allows convenient and universal user 

access through a single, Government-wide point of entry; 

and 

(ii) permitting the public to respond to the solicitation 

electronically. 

(B) the notice would disclose the executive agency’s needs 

and the disclosure of such needs would compromise the national security; 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
114 

(C) the proposed procurement would result from acceptance 

of—— 

(i) any unsolicited proposal that demonstrates a unique 

and innovative research concept and the publication of any 

notice of such unsolicited research proposal would disclose 

the originality of thought or innovativeness of the proposal 

or would disclose proprietary information associated with 

the proposal; or 

(ii) a proposal submitted under section 9 of this Act; 

(D) the procurement is made against an order placed under 

a requirements contract; 

(E) the procurement is made for perishable subsistence supplies; 

(F) the procurement is for utility services, other than telecommunication services, and only one source is available; or 

(G) the procurement is for the services of an expert for use 

in any litigation or dispute (including preparation for any foreseeable litigation or dispute) that involves or could involve the 

Federal Government in any trial, hearing, or proceeding before 

any court, administrative tribunal, or agency, or in any part of 

an alternative dispute resolution process, whether or not the 

expert is expected to testify. 

(2) The requirements of subsection (a)(1)(A) do not apply to any 

procurement under conditions described in paragraph (2), (3), (4), 

(5), or (7) of section 303(c) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 253(c)) or paragraph (2), (3), 

(4), (5), and (7) of section 2304(c) of title 10, United States Code. 

(3) The requirements of subsection (a)(1)(A) shall not apply in the 

case of any procurement for which the head of the executive agency 

makes a determination in writing, after consultation with the Administrator for Federal Procurement Policy and the Administrator 

of the Small Business Administration, that it is not appropriate or 

reasonable to publish a notice before issuing a solicitation. 

(h)(1) An executive agency may not award a contract using procedures other than competitive procedures unless—— 

(A) except as provided in paragraph (2), a written justification for the use of such procedures has been approved—— 

(i) in the case of a contract for an amount exceeding 

$100,000 (but equal to or less than $1,000,000), by the advocate for competition for the procuring activity (without 

further delegation); 

(ii) in the case of a contract for an amount exceeding 

$1,000,000 (but equal to or less than $10,000,000), by the 

head of the procuring activity or a delegate who, if a member of the Armed Forces, is a general or flag officer, or, if 

a civilian, is serving in a position in grade GS–16 or above 

under the General Schedule (or in a comparable or higher 

position under another schedule); or 

(iii) in the case of a contract for an amount exceeding 

$10,000,000, by the senior procurement executive of the 

agency designated pursuant to section 16(3) of the Office 

of Federal Procurement Policy Act (41 U.S.C. 414(3)) (without further delegation); and 

(B) all other requirements applicable to the use of such procedures under title III of the Federal Property and AdministraVerDate Sep 11 2014 07:19 Jul 27, 2016 Jkt 059006 PO 00000 Frm 00114 Fmt 6659 Sfmt 6601 E:\HR\OC\HR704P1.XXX HR704P1

smartinez on DSK3GLQ082PROD with REPORTS-HSE
115 

tive Services Act of 1949 (41 U.S.C. 251 et sq.) or chapter 137 

of title 10, United States Code, as appropriate, have been satisfied. 

(2) The same exceptions as are provided in section 303(f)(2) of the 

Federal Property and Administrative Services Act of 1949 (41 

U.S.C. 253(f)(2)) or section 2304(f)(2) of title 10, United States 

Code, shall apply with respect to the requirements of paragraph 

(1)(A) of this subsection in the same manner as such exceptions 

apply to the requirements of section 303(f)(1) of such Act or section 

2304(f)(1) of such title, as appropriate. 

(i) An executive agency shall make available to any business concern, or the authorized representative of such concern, the complete 

solicitation package for any on-going procurement announced pursuant to a notice under subsection (e). An executive agency may require the payment of a fee, not exceeding the actual cost of duplication, for a copy of such package. 

(j) For purposes of this section, the term ‘‘executive agency’’ has 

the meaning provided such term in section 4(1) of the Office of Federal Procurement Policy Act (41 U.S.C. 403(1)). 

(k) NOTICES OF SUBCONTRACTING OPPORTUNITIES.— 

(1) IN GENERAL.—Notices of subcontracting opportunities 

may be submitted for publication on the appropriate Federal 

Web site (as determined by the Administrator) by— 

(A) a business concern awarded a contract by an executive agency subject to subsection (e)(1)(C); and 

(B) a business concern that is a subcontractor or supplier (at any tier) to such contractor having a subcontracting opportunity in excess of $10,000. 

(2) CONTENT OF NOTICE.—The notice of a subcontracting opportunity shall include—— 

(A) a description of the business opportunity that is comparable to the description specified in paragraphs (1), (2), 

(3), and (4) of subsection (f); and 

(B) the due date for receipt of offers. 

(l) MANAGEMENT ASSISTANCE FOR SMALL BUSINESSES AFFECTED

BY MILITARY OPERATIONS.—The Administration shall utilize, as appropriate, its entrepreneurial development and management assistance programs, including programs involving State or private sector partners, to provide business counseling and training to any 

small business concern adversely affected by the deployment of 

units of the Armed Forces of the United States in support of a period of military conflict (as defined in section 7(n)(1)). 

(m) PROCUREMENT PROGRAM FOR WOMEN-OWNED SMALL BUSINESS CONCERNS.— 

(1) DEFINITIONS.—In this subsection, the following definitions apply: 

(A) CONTRACTING OFFICER.—The term ‘‘contracting officer’’ has the meaning given such term in section 27(f)(5) of 

the Office of Federal Procurement Policy Act (41 U.S.C. 

423(f)(5)). 

(B) SMALL BUSINESS CONCERN OWNED AND CONTROLLED

BY WOMEN.—The term ‘‘small business concern owned and 

controlled by women’’ has the meaning given such term in 

section 3(n), except that ownership shall be determined 

without regard to any community property law. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
116 

(2) AUTHORITY TO RESTRICT COMPETITION.—In accordance 

with this subsection, a contracting officer may restrict competition for any contract for the procurement of goods or services 

by the Federal Government to small business concerns owned 

and controlled by women, if— 

(A) each of the concerns is not less than 51 percent 

owned by one or more women who are economically disadvantaged (and such ownership is determined without regard to any community property law); 

(B) the contracting officer has a reasonable expectation 

that two or more small business concerns owned and controlled by women will submit offers for the contract; 

(C) the contract is for the procurement of goods or services with respect to an industry identified by the Administrator pursuant to paragraph (3); 

(D) in the estimation of the contracting officer, the contract award can be made at a fair and reasonable price; 

and 

(E) each of the concerns is certified by a Federal agency, 

a State government, the Administrator, or a national certifying entity approved by the Administrator as a small 

business concern owned and controlled by women. 

(3) WAIVER.—With respect to a small business concern 

owned and controlled by women, the Administrator may waive 

subparagraph (2)(A) if the Administrator determines that the 

concern is in an industry in which small business concerns 

owned and controlled by women are substantially underrepresented. 

(4) IDENTIFICATION OF INDUSTRIES.—The Administrator shall 

conduct a study to identify industries in which small business 

concerns owned and controlled by women are underrepresented 

with respect to Federal procurement contracting. 

(5) ENFORCEMENT; PENALTIES.— 

(A) VERIFICATION OF ELIGIBILITY.—In carrying out this 

subsection, the Administrator shall establish procedures 

relating to— 

(i) the filing, investigation, and disposition by the 

Administration of any challenge to the eligibility of a 

small business concern to receive assistance under this 

subsection (including a challenge, filed by an interested party, relating to the veracity of a certification 

made or information provided to the Administration 

by a small business concern under paragraph (2)(E)); 

and 

(ii) verification by the Administrator of the accuracy 

of any certification made or information provided to 

the Administration by a small business concern under 

paragraph (2)(E). 

(B) EXAMINATIONS.—The procedures established under 

subparagraph (A) may provide for program examinations 

(including random program examinations) by the Administrator of any small business concern making a certification 

or providing information to the Administrator under paragraph (2)(E). 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
117 

(C) PENALTIES.—In addition to the penalties described in 

section 16(d), any small business concern that is determined by the Administrator to have misrepresented the 

status of that concern as a small business concern owned 

and controlled by women for purposes of this subsection, 

shall be subject to— 

(i) section 1001 of title 18, United States Code; and 

(ii) sections 3729 through 3733 of title 31, United 

States Code. 

(6) PROVISION OF DATA.—Upon the request of the Administrator, the head of any Federal department or agency shall 

promptly provide to the Administrator such information as the 

Administrator determines to be necessary to carry out this subsection. 

(7) AUTHORITY FOR SOLE SOURCE CONTRACTS FOR ECONOMICALLY DISADVANTAGED SMALL BUSINESS CONCERNS OWNED AND

CONTROLLED BY WOMEN.—A contracting officer may award a 

sole source contract under this subsection to any small business concern owned and controlled by women described in 

paragraph (2)(A) and certified under paragraph (2)(E) if— 

(A) such concern is determined to be a responsible contractor with respect to performance of the contract opportunity and the contracting officer does not have a reasonable expectation that 2 or more businesses described in 

paragraph (2)(A) will submit offers; 

(B) the anticipated award price of the contract (including 

options) will not exceed—— 

(i) $6,500,000, in the case of a contract opportunity 

assigned a standard industrial classification code for 

manufacturing; or 

(ii) $4,000,000, in the case of any other contract opportunity; and 

(C) in the estimation of the contracting officer, the contract award can be made at a fair and reasonable price. 

(8) AUTHORITY FOR SOLE SOURCE CONTRACTS FOR SMALL BUSINESS CONCERNS OWNED AND CONTROLLED BY WOMEN IN SUBSTANTIALLY UNDERREPRESENTED INDUSTRIES.—A contracting officer may award a sole source contract under this subsection 

to any small business concern owned and controlled by women 

certified under paragraph (2)(E) that is in an industry in which 

small business concerns owned and controlled by women are 

substantially underrepresented (as determined by the Administrator under paragraph (3)) if—— 

(A) such concern is determined to be a responsible contractor with respect to performance of the contract opportunity and the contracting officer does not have a reasonable expectation that 2 or more businesses in an industry 

that has received a waiver under paragraph (3) will submit offers; 

(B) the anticipated award price of the contract (including 

options) will not exceed—— 

(i) $6,500,000, in the case of a contract opportunity 

assigned a standard industrial classification code for 

manufacturing; or 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
118 

(ii) $4,000,000, in the case of any other contract opportunity; and 

(C) in the estimation of the contracting officer, the contract award can be made at a fair and reasonable price. 

(n) BUSINESS GRANTS AND COOPERATIVE AGREEMENTS.— (1) IN GENERAL.—In accordance with this subsection, the Administrator may make grants to and enter into cooperative 

agreements with any coalition of private entities, public entities, or any combination of private and public entities—— 

(A) to expand business-to-business relationships between 

large and small businesses; and 

(B) to provide businesses, directly or indirectly, with online information and a database of companies that are interested in mentor-protege programs or community-based, 

statewide, or local business development programs. 

(2) MATCHING REQUIREMENT.—Subject to subparagraph (B), 

the Administrator may make a grant to a coalition under paragraph (1) only if the coalition provides for activities described 

in paragraph (1)(A) or (1)(B) an amount, either in kind or in 

cash, equal to the grant amount. 

(3) AUTHORIZATION OF APPROPRIATIONS.—There is authorized 

to be appropriated to carry out this subsection $6,600,000, to 

remain available until expended, for each of fiscal years 2001 

through 2006. 

* * * * * * * 

SEC. 15. ø(a) To effectuate the purposes 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 be in the interest of assuring that 

a fair proportion of the total purchases 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 

property be made to small-business concerns; but nothing contained in this Act shall be construed to change any preferences or 

priorities established by law with respect to the sale of electrical 

power or other property by the Government or any agency thereof. 

These determinations may be made for individual awards or contracts or for classes of awards or contracts. If a proposed procurement includes in its statement of work goods or services currently 

being performed by a small business, and if the proposed procurement is in a quantity or estimated dollar value the magnitude of 

which renders small business prime contract participation unlikely, 

or if a proposed procurement for construction seeks to package or 

consolidate discrete construction projects, or the solicitation involves an unnecessary or unjustified bundling of contract requirements, as determined by the Administration, the Procurement Activity shall provide a copy of the proposed procurement to the Procurement Activity’s Small Business Procurement Center Representative at least 30 days prior to the solicitation’s issuance along with 

a statement explaining (1) why the proposed acquisition cannot be 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
119 

divided into reasonably small lots (not less than economic production runs) to permit offers on quantities less than the total requirement, (2) why delivery schedules cannot be established on a realistic basis that will encourage small business participation to the 

extent consistent with the actual requirements of the Government, 

(3) why the proposed acquisition cannot be offered so as to make 

small business participation likely, (4) why construction cannot be 

procured as separate discrete projects, or (5) why the agency has 

determined that the bundled contract (as defined in section 3(o)) is 

necessary and justified. The thirty-day notification process shall 

occur concurrently with other processing steps required prior to 

issuance of the solicitation. Within 15 days after receipt of the proposed procurement and accompanying statement, if the Procurement Center Representative believes that the procurement as proposed will render small business prime contract participation unlikely, the Representative shall recommend to the Procurement Activity alternative procurement methods which would increase small 

business prime contracting opportunities. Whenever the Administration and the contracting procurement agency fail to agree, the 

matter shall be submitted for determination to the Secretary or the 

head of the appropriate department or agency by the Administrator. For purposes of clause (3) of the first sentence of this subsection, an industry category is a discrete group of similar goods 

and services. Such groups shall be determined by the Administration in accordance with the definition of a ‘‘United States industry’’ 

under the North American Industry Classification System, as established by the Office of Management and Budget, except that the 

Administration shall limit such an industry category to a greater 

extent than provided under such classification codes if the Administration receives evidence indicating that further segmentation for 

purposes of this paragraph is warranted due to special capital 

equipment needs or special labor or geographic requirements or to 

recognize a new industry. A market for goods or services may not 

be segmented under the preceding sentence due to geographic requirements unless the Government typically designates the area 

where work for contracts for such goods or services is to be performed and Government purchases comprise the major portion of 

the entire domestic market for such goods or services and, due to 

the fixed location of facilities, high mobilization costs, or similar 

economic factors, it is unreasonable to expect competition from 

business concerns located outside of the general areas where such 

concerns are located. A contract may not be awarded under this 

subsection if the award of the contract would result in a cost to the 

awarding agency which exceeds a fair market price.¿ 

(a) SMALL BUSINESS PROCUREMENTS.— 

(1) IN GENERAL.—For purposes of this Act, small business 

concerns shall receive any award or contract if such award or 

contract is, in the determination of the Administrator and the 

contracting agency, in the interest of— 

(A) maintaining or mobilizing the full productive capacity of the United States; 

(B) war or national defense programs; or 

(C) assuring that a fair proportion of the total purchase 

and contracts for goods and services of the Government in 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
120 

each industry category (as described under paragraph (2)) 

are awarded to small business concerns. 

(2) INDUSTRY CATEGORY DEFINED.— 

(A) IN GENERAL.—In this subsection, the term ‘‘industry 

category’’ means a discrete group of similar goods and services, as determined by the Administrator in accordance 

with the North American Industry Classification System 

codes used to establish small business size standards, except that the Administrator shall limit an industry category 

to a greater extent than provided under the North American Industry Classification codes if the Administrator receives evidence indicating that further segmentation of the 

industry category is warranted—— 

(i) due to special capital equipment needs; 

(ii) due to special labor requirements; 

(iii) due to special geographic requirements, except as 

provided in subparagraph (B); 

(iv) due to unique Federal buying patterns or requirements; or 

(v) to recognize a new industry. 

(B) EXCEPTION FOR GEOGRAPHIC REQUIREMENTS.—The 

Administrator may not further segment an industry category based on geographic requirements unless— 

(i) the Government typically designates the geographic area where work for contracts for goods or 

services is to be performed; 

(ii) Government purchases comprise the major portion of the entire domestic market for such goods or 

services; and 

(iii) it is unreasonable to expect competition from 

business concerns located outside of the general geographic area due to the fixed location of facilities, high 

mobilization costs, or similar economic factors. 

(3) DETERMINATIONS WITH RESPECT TO AWARDS OR CONTRACTS.—Determinations made pursuant to paragraph (1) may 

be made for individual awards or contracts, any part of an 

award or contract or task order, or for classes of awards or contracts or task orders. 

(4) INCREASING PRIME CONTRACTING OPPORTUNITIES FOR

SMALL BUSINESS CONCERNS.— 

(A) DESCRIPTION OF COVERED PROPOSED PROCUREMENTS.—The requirements of this paragraph shall apply to 

a proposed procurement that includes in its statement of 

work goods or services currently being supplied or performed by a small business concern and, as determined by 

the Administrator—— 

(i) is in a quantity or of an estimated dollar value 

which makes the participation of a small business concern as a prime contractor unlikely; 

(ii) in the case of a proposed procurement for construction, if such proposed procurement seeks to bundle 

or consolidate discrete construction projects; or 

(iii) is a solicitation that involves an unnecessary or 

unjustified bundling of contract requirements. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
121 

(B) NOTICE TO PROCUREMENT CENTER REPRESENTA- TIVES.—With respect to proposed procurements described in 

subparagraph (A), at least 30 days before issuing a solicitation and concurrent with other processing steps required 

before issuing the solicitation, the contracting agency shall 

provide a copy of the proposed procurement to the procurement center representative of the contracting agency (as described in subsection (l)) along with a statement explaining— 

(i) why the proposed procurement cannot be divided 

into reasonably small lots (not less than economic production runs) to permit offers on quantities less than 

the total requirement; 

(ii) why delivery schedules cannot be established on 

a realistic basis that will encourage the participation of 

small business concerns in a manner consistent with 

the actual requirements of the Government; 

(iii) why the proposed procurement cannot be offered 

to increase the likelihood of the participation of small 

business concerns; 

(iv) in the case of a proposed procurement for construction, why the proposed procurement cannot be offered as separate discrete projects; or 

(v) why the agency has determined that the bundling 

of contract requirements is necessary and justified. 

(C) ALTERNATIVES TO INCREASE PRIME CONTRACTING OP- PORTUNITIES FOR SMALL BUSINESS CONCERNS.—If the procurement center representative believes that the proposed 

procurement will make the participation of small business 

concerns as prime contractors unlikely, the procurement 

center representative, within 15 days after receiving the 

statement described in subparagraph (B), shall recommend 

to the contracting agency alternative procurement methods 

for increasing prime contracting opportunities for small 

business concerns. 

(D) FAILURE TO AGREE ON AN ALTERNATIVE PROCURE- MENT METHOD.—If the procurement center representative 

and the contracting agency fail to agree on an alternative 

procurement method, the Administrator shall submit the 

matter to the head of the appropriate department or agency 

for a determination. 

(5) CONTRACTS FOR SALE OF GOVERNMENT PROPERTY.—With 

respect to a contract for the sale of Government property, small 

business concerns shall receive any such contract if, in the determination of the Administrator and the disposal agency, the 

award of such contract is in the interest of assuring that a fair 

proportion of the total sales of Government property be made to 

small business concerns. 

(6) SALE OF ELECTRICAL POWER OR OTHER PROPERY.—Nothing 

in this subsection shall be construed to change any preferences 

or priorities established by law with respect to the sale of electrical power or other property by the Federal Government. 

(7) COSTS EXCEEDING FAIR MARKET PRICE.—A contract may 

not be awarded under this subsection if the cost of the contract 

to the awarding agency exceeds a fair market price. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
122 

(b) With respect to any work to be performed the amount of 

which would exceed the maximum amount of any contract for 

which a surety may be guaranteed against loss under section 411 

of the Small Business Investment Act of 1958 (15 U.S.C. 694(b)), 

the contracting procurement agency shall, to the extent practicable, 

place contracts so as to allow more than one small business concern 

to perform such work. 

(c)(1) As used in this subsection: 

(A) The term ‘‘Committee’’ means the Committee for Purchase from the Blind and Other Severely Handicapped established under the first section of the Act entitled ‘‘An Act to create a Committee on Purchases of Blind-made Products, and for 

other purposes’’, approved June 25, 1938 (41 U.S.C. 46). 

(B) The term ‘‘public or private organization for the handicapped’’ has the same meaning given such term in section 3(e). 

(C) The term ‘‘handicapped individual’’ has the same meaning given such term in section 3(f). 

(2)(A) During fiscal year 1995, public or private organizations for 

the handicapped shall be eligible to participate in programs authorized under this section in an aggregate amount not to exceed 

$40,000,000. 

(B) None of the amounts authorized for participation by subparagraph (A) may be placed on the procurement list maintained by the 

Committee pursuant to section 2 of the Act entitled ‘‘An Act to create a Committee on Purchases of Blind-made Products, and for 

other purposes’’, approved June 25, 1938 (41 U.S.C. 47). 

(3) The Administrator shall monitor and evaluate such participation. 

(4)(A) Not later than ten days after the announcement of a proposed award of a contract by an agency or department to a public 

or private organization for the handicapped, a for-profit small business concern that has experienced or is likely to experience severe 

economic injury as the result of the proposed award may file an appeal of the proposed award with the Administrator. 

(B) If such a concern files an appeal of a proposed award under 

subparagraph (A) and the Administrator, after consultation with 

the Executive Director of the Committee, finds that the concern has 

experienced or is likely to experience severe economic injury as the 

result of the proposed award, not later than thirty days after the 

filing of the appeal, the Administration shall require each agency 

and department having procurement powers to take such action as 

may be appropriate to alleviate economic injury sustained or likely 

to be sustained by the concern. 

(5) Each agency and department having procurement powers 

shall report to the Office of Federal Procurement Policy each time 

a contract subject to paragraph (2)(A) is entered into, and shall include in its report the amount of the next higher bid submitted by 

a for-profit small business concern. The Office of Federal Procurement Policy shall collect data reported under the preceding sentence through the Federal procurement data system and shall report to the Administration which shall notify all such agencies and 

departments when the maximum amount of awards authorized 

under paragraph (2)(A) has been made during any fiscal year. 

(6) For the purpose of this subsection, a contract may be awarded 

only if at least 75 per centum of the direct labor performed on each 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
123 

item being produced under the contract in the sheltered workshop 

or performed in providing each type of service under the contract 

by the sheltered workshop is performed by handicapped individuals. 

(7) Agencies awarding one or more contracts to such an organization pursuant to the provisions of this subsection may use 

multiyear contracts, if appropriate. 

(d) For purposes of this section priority shall be given to the 

awarding of contracts and the placement of subcontracts to small 

business concerns which shall perform a substantial proportion of 

the production on those contracts and subcontracts within areas of 

concentrated unemployment or underemployment or within labor 

surplus areas. Notwithstanding any other provison of law, total 

labor surplus area set-asides pursuant to Defense Manpower Policy 

Number 4 (32A C.F.R. Chapter 1) or any successor policy shall be 

authorized if the Secretary or his designee specifically determines 

that there is a reasonable expectation that offers will be obtained 

from a sufficient number of eligible concerns so that awards will be 

made at reasonable prices. As soon as practicable and to the extent 

possible, in determining labor surplus areas, consideration shall be 

given to those persons who would be available for employment 

were suitable employment available. Until such definition reflects 

such number, the present criteria of such policy shall govern. 

(e) PROCUREMENT STRATEGIES; CONTRACT BUNDLING.— (1) IN GENERAL.—To the maximum extent practicable, procurement strategies used by a Federal department or agency 

having contracting authority shall facilitate the maximum participation of small business concerns as prime contractors, subcontractors, and suppliers, and each such Federal department 

or agency shall— 

(A) provide opportunities for the participation of small 

business concerns during acquisition planning processes 

and in acquisition plans; and 

(B) invite the participation of the appropriate Director of 

Small and Disadvantaged Business Utilization in acquisition planning processes and provide that Director access to 

acquisition plans. 

(2) MARKET RESEARCH.— (A) IN GENERAL.—Before proceeding with an acquisition 

strategy that could lead to a contract containing consolidated procurement requirements, the head of an agency 

shall conduct market research to determine whether consolidation of the requirements is necessary and justified. 

(B) FACTORS.—For purposes of subparagraph (A), consolidation of the requirements may be determined as being 

necessary and justified if, as compared to the benefits that 

would be derived from contracting to meet those requirements if not consolidated, the Federal Government would 

derive from the consolidation measurably substantial benefits, including any combination of benefits that, in combination, are measurably substantial. Benefits described in 

the preceding sentence may include the following: 

(i) Cost savings. 

(ii) Quality improvements. 

(iii) Reduction in acquisition cycle times. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
124 

(iv) Better terms and conditions. 

(v) Any other benefits. 

(C) REDUCTION OF COSTS NOT DETERMINATIVE.—The reduction of administrative or personnel costs alone shall not 

be a justification for bundling of contract requirements unless the cost savings are expected to be substantial in relation to the dollar value of the procurement requirements 

to be consolidated. 

(3) STRATEGY SPECIFICATIONS.—If the head of a contracting 

agency determines that an acquisition plan for a procurement 

involves a substantial bundling of contract requirements, the 

head of a contracting agency shall publish a notice on a public 

website that such determination has been made not later than 

7 days after making such determination. Any solicitation for a 

procurement related to the acquisition plan may not be published earlier than 7 days after such notice is published. Along 

with the publication of the solicitation, the head of a contracting agency shall publish a justification for the determination, which shall include the following information: 

(A) The specific benefits anticipated to be derived from 

the bundling of contract requirements and a determination 

that such benefits justify the bundling. 

(B) An identification of any alternative contracting approaches that would involve a lesser degree of bundling of 

contract requirements. 

(C) An assessment of— 

(i) the specific impediments to participation by small 

business concerns as prime contractors that result 

from the bundling of contract requirements; and 

(ii) the specific actions designed to maximize participation of small business concerns as subcontractors 

(including suppliers) at various tiers under the contract or contracts that are awarded to meet the requirements. 

(4) CONTRACT TEAMING.— (A) IN GENERAL.—In the case of a solicitation of offers 

for a bundled or consolidated contract that is issued by the 

head of an agency, a small business concern that provides 

for use of a particular team of subcontractors or a joint 

venture of small business concerns may submit an offer for 

the performance of the contract. 

(B) EVALUATION OF OFFERS.—The head of the agency 

shall evaluate an offer described in subparagraph (A) in 

the same manner as other offers, with due consideration to 

the capabilities of all of the proposed subcontractors or 

members of the joint venture as follows: 

(i) TEAMS.—When evaluating an offer of a small 

business prime contractor that includes a proposed 

team of small business subcontractors, the head of the 

agency shall consider the capabilities and past performance of each first tier subcontractor that is part of 

the team as the capabilities and past performance of 

the small business prime contractor. 

(ii) JOINT VENTURES.—When evaluating an offer of a 

joint venture of small business concerns, if the joint 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
125 

venture does not demonstrate sufficient capabilities or 

past performance to be considered for award of a contract opportunity, the head of the agency shall consider the capabilities and past performance of each 

member of the joint venture as the capabilities and 

past performance of the joint venture. 

(C) STATUS AS A SMALL BUSINESS CONCERN.—Participation of a small business concern in a team or a joint venture under this paragraph shall not affect the status of 

that concern as a small business concern for any other 

purpose. 

(f) CONTRACTING PREFERENCE FOR SMALL BUSINESS CONCERNS IN

A MAJOR DISASTER AREA.— 

(1) DEFINITION.—In this subsection, the term ‘‘disaster area’’ 

means the area for which the President has declared a major 

disaster, during the period of the declaration. 

(2) CONTRACTING PREFERENCE.—An agency shall provide a 

contracting preference for a small business concern located in 

a disaster area if the small business concern will perform the 

work required under the contract in the disaster area. 

(3) CREDIT FOR MEETING CONTRACTING GOALS.—If an agency 

awards a contract to a small business concern under the circumstances described in paragraph (2), the value of the contract shall be doubled for purposes of determining compliance 

with the goals for procurement contracts under subsection 

(g)(1)(A). 

(g) 

(1) GOVERNMENTWIDE GOALS.— (A) ESTABLISHMENT.—The President shall annually establish Governmentwide 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 in accordance 

with the following: 

(i) The Governmentwide 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. In meeting this goal, 

the Government shall ensure the participation of 

small business concerns from a wide variety of industries and from a broad spectrum of small business concerns within each industry. 

(ii) The Governmentwide 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. 

(iii) The Governmentwide goal for participation by 

qualified HUBZone small business concerns shall be 

established at not less than 3 percent of the total 

value of all prime contract and subcontract awards for 

each fiscal year. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
126 

(iv) The Governmentwide 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. 

(v) The Governmentwide 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. 

(B) ACHIEVEMENT OF GOVERNMENTWIDE GOALS.—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 Small Business 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 Governmentwide prime contract goal established by the President pursuant to this paragraph. 

(2)(A) The head of each Federal agency shall, after consultation 

with the Administration, establish goals for the participation by 

small business concerns, by small business concerns owned and 

controlled by service-disabled veterans, by qualified HUBZone 

small business concerns, by small business concerns owned and 

controlled by socially and economically disadvantaged individuals, 

and by small business concerns owned and controlled by women in 

procurement contracts of such agency. Such goals shall separately 

address prime contract awards and subcontract awards for each 

category of small business covered. 

(B) Goals established under this subsection shall be jointly established by the Administration and the head of each Federal agency 

and shall realistically reflect the potential of 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 perform such contracts and to 

perform subcontracts under such contracts. 

(C) Whenever the Administration and the head of any Federal 

agency fail to agree on established goals, the disagreement shall be 

submitted to the Administrator for Federal Procurement Policy for 

final determination. 

(D) After establishing goals under this paragraph for a fiscal 

year, the head of each Federal agency shall develop a plan for 

achieving such goals at both the prime contract and the subcontract level, which shall apportion responsibilities among the 

agency’s acquisition executives and officials. In establishing goals 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
127 

under this paragraph, the head of each Federal agency shall make 

a consistent effort to annually expand participation by small business concerns from each industry category in procurement contracts and subcontracts of such agency, including participation by 

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. 

(E) The head of each Federal agency, in attempting to attain 

expanded participation under subparagraph (D), shall consider—— 

(i) contracts awarded as the result of unrestricted competition; and 

(ii) contracts awarded after competition restricted to eligible small business concerns under this section and under 

the program established under section 8(a). 

(F)(i) Each procurement employee or program manager described in clause (ii) shall communicate to the subordinates of 

the procurement employee or program manager the importance 

of achieving goals established under subparagraph (A). 

(ii) A procurement employee or program manager described in this clause is a senior procurement executive, 

senior program manager, or Director of Small and Disadvantaged Business Utilization of a Federal agency having contracting authority. 

(3) First tier subcontracts that are awarded by Management and 

Operating contractors sponsored by the Department of Energy to 

small business concerns, small businesses 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, shall be considered 

toward the annually established agency and Government-wide 

goals for procurement contracts awarded. 

(4) DETERMINATIONS OF THE TOTAL VALUE OF CONTRACT

AWARDS.—For purposes of the goals established under paragraphs (1) and (2), the total value of contract awards for a fiscal year may not be determined in a manner that excludes the 

value of a contract based on—— 

(A) where the contract is awarded; 

(B) where the contract is performed; 

(C) whether the contract is mandated by Federal law to 

be performed by an entity other than a small business concern; 

(D) whether funding for the contract is made available in 

an appropriations Act, if the contract is subject to the requirements of chapter 33 of title 41, United States Code, or 

chapter 137 of title 10, United States Code, and the Federal 

Acquisition Regulation; or 

(E) whether the contract is otherwise subject to the Federal Acquisition Regulation. 

(h) REPORTING ON GOALS FOR PROCUREMENT CONTRACTS AWARDED TO SMALL BUSINESS CONCERNS.— 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
128 

(1) AGENCY REPORTS.—At the conclusion of each fiscal year, 

the head of each Federal agency shall submit to the Administrator a report describing— 

(A) the extent of the participation by small business concerns, small business concerns owned and controlled by 

veterans (including 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 in the procurement contracts of such agency during such fiscal year; 

(B) whether the agency achieved the goals established 

for the agency under subsection (g)(2) with respect to such 

fiscal year; 

(C) any justifications for a failure to achieve such goals; 

and 

(D) a remediation plan with proposed new practices to 

better meet such goals, including analysis of factors leading to any failure to achieve such goals. 

(2) REPORTS BY ADMINISTRATOR.—Not later than 60 days 

after receiving a report from each Federal agency under paragraph (1) with respect to a fiscal year, the Administrator shall 

submit to the President and Congress, and to make available 

on a public Web site, a report that includes— 

(A) a copy of each report submitted to the Administrator 

under paragraph (1); 

(B) a determination of whether each goal established by 

the President under subsection (g)(1) for such fiscal year 

was achieved; 

(C) a determination of whether each goal established by 

the head of a Federal agency under subsection (g)(2) for 

such fiscal year was achieved; 

(D) the reasons for any failure to achieve a goal established under paragraph (1) or (2) of subsection (g) for such 

fiscal year and a description of actions planned by the applicable agency to address such failure, including the Administrator’s comments and recommendations on the proposed remediation plan; and 

(E) for the Federal Government and each Federal agency, an analysis of the number and dollar amount of prime 

contracts awarded during such fiscal year to— 

(i) small business concerns—— 

(I) in the aggregate; 

(II) through sole source contracts; 

(III) through competitions restricted to small 

business concerns; øand¿ 

(IV) through unrestricted competition; 

(V) that were purchased by another entity after 

the initial contract was awarded and as a result of 

the purchase, would no longer be deemed to be 

small business concerns for purposes of the initial 

contract; and 

(VI) that were awarded using a procurement 

method that restricted competition to small business concerns owned and controlled by service-disVerDate Sep 11 2014 07:19 Jul 27, 2016 Jkt 059006 PO 00000 Frm 00128 Fmt 6659 Sfmt 6603 E:\HR\OC\HR704P1.XXX HR704P1

smartinez on DSK3GLQ082PROD with REPORTS-HSE
129 

abled veterans, qualified HUBZone small business 

concerns, small business concerns owned and controlled by socially and economically disadvantaged 

individuals, small business concerns owned and 

controlled by women, or a subset of any such concerns; 

(ii) small business concerns owned and controlled by 

service-disabled veterans— 

(I) in the aggregate; 

(II) through sole source contracts; 

(III) through competitions restricted to small 

business concerns; 

(IV) through competitions restricted to small 

business concerns owned and controlled by service-disabled veterans; øand¿ 

(V) through unrestricted competition; 

(VI) that were purchased by another entity after 

the initial contract was awarded and as a result of 

the purchase, would no longer be deemed to be 

small business concerns owned and controlled by 

service-disabled veterans for purposes of the initial 

contract; and 

(VII) that were awarded using a procurement 

method that restricted competition to qualified 

HUBZone small business concerns, small business 

concerns owned and controlled by socially and economically disadvantaged individuals, small business concerns owned and controlled by women, or 

a subset of any such concerns; 

(iii) qualified HUBZone small business concerns—— 

(I) in the aggregate; 

(II) through sole source contracts; 

(III) through competitions restricted to small 

business concerns; 

(IV) through competitions restricted to qualified 

HUBZone small business concerns; 

(V) through unrestricted competition where a 

price evaluation preference was used; øand¿ 

(VI) through unrestricted competition where a 

price evaluation preference was not used; 

(VII) that were purchased by another entity after 

the initial contract was awarded and as a result of 

the purchase, would no longer be deemed to be 

qualified HUBZone small business concerns for 

purposes of the initial contract; and 

(VIII) that were awarded using a procurement 

method that restricted competition to small business concerns owned and controlled by service-disabled veterans, small business concerns owned and 

controlled by socially and economically disadvantaged individuals, small business concerns owned 

and controlled by women, or a subset of any such 

concerns; 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
130 

(iv) small business concerns owned and controlled by 

socially and economically disadvantaged individuals—— 

(I) in the aggregate; 

(II) through sole source contracts; 

(III) through competitions restricted to small 

business concerns; 

(IV) through competitions restricted to small 

business concerns owned and controlled by socially and economically disadvantaged individuals; 

(V) through unrestricted competition; øand¿ 

(VI) by reason of that concern’s certification as 

a small business owned and controlled by socially 

and economically disadvantaged individuals; 

(VII) that were purchased by another entity after 

the initial contract was awarded and as a result of 

the purchase, would no longer be deemed to be 

small business concerns owned and controlled by 

socially and economically disadvantaged individuals for purposes of the initial contract; and 

(VIII) that were awarded using a procurement 

method that restricted competition to small business concerns owned and controlled by service-disabled veterans, qualified HUBZone small business 

concerns, small business concerns owned and controlled by women, or a subset of any such concerns; 

(v) small business concerns owned by an Indian 

tribe (as such term is defined in section 8(a)(13)) other 

than an Alaska Native Corporation— 

(I) in the aggregate; 

(II) through sole source contracts; 

(III) through competitions restricted to small 

business concerns; 

(IV) through competitions restricted to small 

business concerns owned and controlled by socially and economically disadvantaged individuals; 

øand¿ 

(V) through unrestricted competition; and 

(VI) that were purchased by another entity after 

the initial contract was awarded and as a result of 

the purchase, would no longer be deemed to be 

small business concerns owned by an Indian tribe 

other than an Alaska Native Corporation for purposes of the initial contract; 

(vi) small business concerns owned by a Native Hawaiian Organization—— 

(I) in the aggregate; 

(II) through sole source contracts; 

(III) through competitions restricted to small 

business concerns; 

(IV) through competitions restricted to small 

business concerns owned and controlled by socially and economically disadvantaged individuals; 

øand¿ 

(V) through unrestricted competition; and 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
131 

(VI) that were purchased by another entity after 

the initial contract was awarded and as a result of 

the purchase, would no longer be deemed to be 

small business concerns owned by a Native Hawaiian Organization for purposes of the initial contract; 

(vii) small business concerns owned by an Alaska 

Native Corporation— 

(I) in the aggregate; 

(II) through sole source contracts; 

(III) through competitions restricted to small 

business concerns; 

(IV) through competitions restricted to small 

business concerns owned and controlled by socially and economically disadvantaged individuals; 

øand¿ 

(V) through unrestricted competition; and 

(VI) that were purchased by another entity after 

the initial contract was awarded and as a result of 

the purchase, would no longer be deemed to be 

small business concerns owned by an Alaska Native Corporation for purposes of the initial contract; and 

(viii) small business concerns owned and controlled 

by women—— 

(I) in the aggregate; 

(II) through competitions restricted to small 

business concerns; 

(III) through competitions restricted using the 

authority under section 8(m)(2); 

(IV) through competitions restricted using the 

authority under section 8(m)(2) and in which the 

waiver authority under section 8(m)(3) was used; 

(V) through sole source contracts awarded using 

the authority under subsection 8(m)(7); 

(VI) through sole source contracts awarded 

using the authority under section 8(m)(8); 

(VII) by industry for contracts described in subclause (III), (IV), (V), or (VI); øand¿ 

(VIII) through unrestricted competition; øand¿ 

(IX) that were purchased by another entity after 

the initial contract was awarded and as a result of 

the purchase, would no longer be deemed to be 

small business concerns owned and controlled by 

women for purposes of the initial contract; and 

(X) that were awarded using a procurement 

method that restricted competition to 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, or a subset of any such concerns; and 

(F) for the Federal Government, the number, dollar 

amount, and distribution with respect to the North American Industry Classification System of subcontracts awardVerDate Sep 11 2014 07:19 Jul 27, 2016 Jkt 059006 PO 00000 Frm 00131 Fmt 6659 Sfmt 6601 E:\HR\OC\HR704P1.XXX HR704P1

smartinez on DSK3GLQ082PROD with REPORTS-HSE
132 

ed during such fiscal year to small business concerns, 

small business concerns owned and controlled by servicedisabled 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, 

provided that such information is publicly available 

through data systems developed pursuant to the Federal 

Funding Accountability and Transparency Act of 2006 

(Public Law 109–282), or otherwise available as provided 

in paragraph (3). 

(3) ACCESS TO DATA.— 

(A) FEDERAL PROCUREMENT DATA SYSTEM.—To assist in 

the implementation of this section, the Administration 

shall have access to information collected through the Federal Procurement Data System, Federal Subcontracting 

Reporting System, or any new or successor system. 

(B) AGENCY PROCUREMENT DATA SOURCES.—To assist in 

the implementation of this section, the head of each contracting agency shall provide, upon request of the Administration, procurement information collected through agency 

data collection sources in existence at the time of the request. Contracting agencies shall not be required to establish new data collection systems to provide such data. 

(i) Nothing in this Act or any other provision of law precludes exclusive small business set-asides for procurements of architectural 

and engineering services, research, development, test and evaluation, and each Federal agency is authorized to develop such setasides to further the interests of small business in those areas. 

(j)(1) Each contract for the purchase of goods and services that 

has an anticipated value øgreater than $2,500 but not greater than $100,000¿ greater than the micro-purchase threshold, but not greater than the simplified acquisition threshold 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. 

(2) In carrying out paragraph (1), a contracting officer shall consider a responsive offer timely received from an eligible small business offeror. 

(3) Nothing in paragraph (1) shall be construed as precluding an 

award of a contract with a value not greater than $100,000 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. 

(k) There is hereby established in each Federal agency having 

procurement powers an office to be known as the ‘‘Office of Small 

and Disadvantaged Business Utilization’’. The management of each 

such office shall be vested in an officer or employee of such agency, 

with experience serving in any combination of the following roles: 

program manager, deputy program manager, or assistant program 

manager for Federal acquisition program; chief engineer, systems 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
133 

engineer, assistant engineer, or product support manager for Federal acquisition program; Federal contracting officer; small business technical advisor; contracts administrator for Federal Government contracts; attorney specializing in Federal procurement law; 

small business liaison officer; officer or employee who managed 

Federal Government contracts for a small business; or individual 

whose primary responsibilities were for the functions and duties of 

øsection 8, 15 or 44¿ section 8, 15, 31, 36, or 44 of this Act. Such 

officer or employee—— 

(1) shall be known as the ‘‘Director of Small and Disadvantaged Business Utilization’’ for such agency; 

(2) shall be appointed by the head of such agency to a position that is a Senior Executive Service position (as such term 

is defined under section 3132(a) of title 5, United States Code), 

except that, for any agency in which the positions of Chief Acquisition Officer and senior procurement executive (as such 

terms are defined under section 44(a) of this Act) are not Senior Executive Service positions, the Director of Small and Disadvantaged Business Utilization may be appointed to a position compensated at not less than the minimum rate of basic 

pay payable for grade GS–15 of the General Schedule under 

section 5332 of such title (including comparability payments 

under section 5304 of such title); 

(3) shall be responsible only to (including with respect to performance appraisals), and report directly and exclusively to, 

the head of such agency or to the deputy of such head, except 

that the Director for the Office of the Secretary of Defense 

shall be responsible only to (including with respect to performance appraisals), and report directly and exclusively to, such 

Secretary or the Secretary’s designee; 

(4) shall be responsible for the implementation and execution 

of the functions and duties under øsections 8 and 15¿ sections 

8, 15, 31, 36, and 44 of this Act which relate to such agency; 

(5) shall identify proposed solicitations that involve significant bundling of contract requirements, and work with the 

agency acquisition officials and the Administration to revise 

the procurement strategies for such proposed solicitations 

where appropriate to increase the probability of participation 

by small businesses as prime contractors, or to facilitate small 

business participation as subcontractors and suppliers, if a solicitation for a bundled contract is to be issued; 

(6) shall assist small business concerns to obtain payments, 

required late payment interest penalties, or information regarding payments due to such concerns from an executive 

agency or a contractor, in conformity with chapter 39 of title 

31, United States Code, or any other protection for contractors 

or subcontractors (including suppliers) that is included in the 

Federal Acquisition Regulation or any individual agency supplement to such Government-wide regulation; 

(7) shall have supervisory authority over personnel of such 

agency to the extent that the functions and duties of such personnel relate to functions and duties under øsections 8 and 15¿ 

sections 8, 15, 31, 36, and 44 of this Act; 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
134 

(8) shall assign a small business technical adviser to each office to which the Administration has assigned a procurement 

center representative— 

(A) who shall be a full-time employee of the procuring 

activity and shall be well qualified, technically trained and 

familiar with the supplies or services purchased at the activity; and 

(B) whose principal duty shall be to assist the Administration procurement center representative in his duties 

and functions relating to øsections 8 and 15¿ sections 8, 

15, 31, 36, and 44 of this Act, 

(9) shall cooperate, and consult on a regular basis, with the 

Administration with respect to carrying out the functions and 

duties described in paragraph (4) of this subsection; 

(10) shall make recommendations to contracting officers as to 

whether a particular contract requirement should be awarded 

pursuant to subsection (a), øsection 8(a)¿ section 8, 15, 31, or 

36 of this Act, or section 2323 of title 10, United States Code, 

which shall be made with due regard to the requirements of 

subsection (m), and the failure of the contracting officer to accept any such recommendations shall be documented and included within the appropriate contract file; 

(11) shall review and advise such agency on any decision to 

convert an activity performed by a small business concern to 

an activity performed by a Federal employee; 

(12) shall provide to the Chief Acquisition Officer and senior 

procurement executive of such agency advice and comments on 

acquisition strategies, market research, and justifications related to section 44 of this Act; 

(13) may provide training to small business concerns and 

contract specialists, except that such training may only be provided to the extent that the training does not interfere with 

the Director carrying out other responsibilities under this subsection; 

(14) shall receive unsolicited proposals and, when appropriate, forward such proposals to personnel of the activity responsible for reviewing such proposals; 

(15) shall review purchases made by the agency greater than 

the micro-purchase threshold, and less than the simplified acquisition threshold to ensure that the purchases have been 

made in compliance with the provisions of this Act and have 

been properly recorded in the Federal Procurement Data System, if the method of payment is a purchase card issued by the 

Department of Defense pursuant to section 2784 of title 10, 

United States Code, or by the head of an executive agency pursuant to section 1909 of title 41, United States Code; 

(16) shall provide assistance to a small business concern 

awarded a contract or subcontract under this Act or under title 

10 or title 41, United States Code, in finding resources for education and training on compliance with contracting regulations 

(including the Federal Acquisition Regulation) after award of 

such a contract or subcontract. 

ø(15)¿ (17) shall carry out exclusively the duties enumerated 

in this Act, and shall, while the Director, not hold any other 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
135 

title, position, or responsibility, except as necessary to carry 

out responsibilities under this subsection; 

ø(16)¿ (18) shall submit, each fiscal year, to the Committee 

on Small Business of the House of Representatives and the 

Committee on Small Business and Entrepreneurship of the 

Senate a report describing— 

(A) the training provided by the Director under paragraph (13) in the most recently completed fiscal year; 

(B) the percentage of the budget of the Director used for 

such training in the most recently completed fiscal year; 

and 

(C) the percentage of the budget of the Director used for 

travel in the most recently completed fiscal year; and 

ø(17)¿ (19) shall, when notified by a small business concern 

prior to the award of a contract that the small business concern believes that a solicitation, request for proposal, or request for quotation unduly restricts the ability of the small 

business concern to compete for the award— 

(A) submit the notice of the small business concern to 

the contracting officer and, if necessary, recommend ways 

in which the solicitation, request for proposal, or request 

for quotation may be altered to increase the opportunity 

for competition; 

(B) inform the advocate for competition of such agency 

(as established under section 1705 of title 41, United 

States Code, or section 2318 of title 10, United States 

Code) of such notice; øand¿ 

(C) ensure that the small business concern is aware of 

other resources and processes available to address unduly 

restrictive provisions in a solicitation, request for proposal, 

or request for quotation, even if such resources and processes are provided by such agency, the Administration, the 

Comptroller General, or a procurement technical assistance program established under chapter 142 of title 10, 

United States Codeø.¿; and 

(D) any failure of the agency to comply with section 8, 15, 

31, or 36. 

This subsection shall not apply to the Administration. 

(l) PROCUREMENT CENTER REPRESENTATIVES.— (1) ASSIGNMENT AND ROLE.—The Administrator shall assign 

to each major procurement center a procurement center representative with such assistance as may be appropriate. 

(2) ACTIVITIES.—A procurement center representative is authorized to— 

(A) attend any provisioning conference or similar evaluation 

session during which determinations are made as to whether 

requirements are to be procured through other than full and 

open competition and make recommendations with respect to 

such requirements to the members of such conference or session; 

(B) review, at any time, barriers to small business participation in Federal contracting previously imposed on 

goods and services through acquisition method coding or 

similar procedures, and recommend to personnel of the appropriate activity the prompt reevaluation of such barriers; 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
136 

(C) review barriers to small business participation in 

Federal contracting arising out of restrictions on the rights 

of the United States in technical data, and, when appropriate, recommend that personnel of the appropriate activity initiate a review of the validity of such an asserted restriction; 

(D) review any bundled or consolidated solicitation or 

contract in accordance with this Act; 

(E) have access to procurement records and other data 

of the procurement center commensurate with the level of 

such representative’s approved security clearance classification, with such data provided upon request in electronic format, when available; 

(F) receive unsolicited proposals from small business 

concerns and transmit such proposals to personnel of the 

activity responsible for reviewing such proposals, who shall 

furnish the procurement center representative with information regarding the disposition of any such proposal; 

(G) consult with the Director the Office of Small and 

Disadvantaged Business Utilization of that agency and the 

agency personnel described in paragraph (7) and (8) of subsection (k) with regard to agency insourcing decisions covered by subsection (k)(11); 

(H) be an advocate for the maximum practicable utilization of small business concerns in Federal contracting, including by advocating against the consolidation or bundling of contract requirements when not justified; øand¿ 

(I) assist small business concerns with finding resources 

for education and training on compliance with contracting 

regulations (including the Federal Acquisition Regulation) 

after award of a contract or subcontract; and 

ø(I)¿ (J) carry out any other responsibility assigned by 

the Administrator. 

(3) APPEALS.—A procurement center representative is authorized to appeal the failure to act favorably on any recommendation made pursuant to paragraph (2). Such appeal 

shall be filed and processed in the same manner and subject 

to the same conditions and limitations as an appeal filed by 

the Administrator pursuant to subsection (a). 

(4) The Administration shall assign and co-locate at least two 

small business technical advisers to each major procurement center 

in addition to such other advisers as may be authorized from time 

to time. The sole duties of such advisers shall be to assist the procurement center representative for the center to which such advisers are assigned in carrying out the functions described in paragraph (2) and the representatives referred to in subsection (k)(6). 

(5) POSITION REQUIREMENTS.— 

(A) IN GENERAL.—A procurement center representative 

assigned under this subsection shall— 

(i) be a full-time employee of the Administration; 

(ii) be fully qualified, technically trained, and familiar with the goods and services procured by the major 

procurement center to which that representative is assigned; and 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
137 

(iii) have the certification described in subparagraph 

(C). 

(B) COMPENSATION.—The Administrator shall establish 

personnel positions for procurement center representatives 

assigned under this subsection, which are classified at a 

grade level of the General Schedule sufficient to attract 

and retain highly qualified personnel. 

(C) CERTIFICATION REQUIREMENTS.— (i) IN GENERAL.—Consistent with the requirements 

of clause (ii), a procurement center representative 

shall have a Level III Federal Acquisition Certification 

in Contracting (or any successor certification) or the 

equivalent Department of Defense certification, except 

that any person serving in such a position on or before 

January 3, 2013, may continue to serve in that position for a period of 5 years without the required certification. 

(ii) DELAY OF CERTIFICATION REQUIREMENTS.— (I) TIMING.—The certification described in 

clause (i) is not required for any person serving as 

a procurement center representative until the 

date that is one calendar year after the date such 

person is appointed as a procurement center representative. 

(II) APPLICATION.—The requirements of subclause (I) shall— 

(aa) be included in any initial job posting 

for the position of a procurement center representative; and 

(bb) apply to any person appointed as a procurement center representative after January 

3, 2013. 

(6) MAJOR PROCUREMENT CENTER DEFINED.—For purposes of 

this subsection, the term ‘‘major procurement center’’ means a 

procurement center that, in the opinion of the Administrator, 

purchases substantial dollar amounts of goods or services, including goods or services that are commercially available. 

(7) TRAINING.— (A) AUTHORIZATION.—At such times as the Administrator deems appropriate. the breakout procurement center 

representative shall conduct familiarization sessions for 

contracting officers and other appropriate personnel of the 

procurement center to which such representative is assigned. Such sessions shall acquaint the participants with 

the provisions of this subsection and shall instruct them in 

methods designed to further the purposes of such subsection. 

(B) LIMITATION.—A procurement center representative 

may provide training under subparagraph (A) only to the 

extent that the training does not interfere with the representative carrying out other activities under this subsection. 

(8) ANNUAL BRIEFING AND REPORT.—A procurement center 

representative shall prepare and personally deliver an annual 

briefing and report to the head of the procurement center to 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
138 

which such representative is assigned. Such briefing and report shall detail the past and planned activities of the representative and shall contain such recommendations for improvement in the operation of the center as may be appropriate. The head of such center shall personally receive such 

briefing and report and shall, within 60 calendar days after receipt, respond, in writing, to each recommendation made by 

such representative. 

(9) SCOPE OF REVIEW.—The Administrator shall not limit the 

scope of review by the Procurement Center Representative for 

any solicitation of a contract or task order without regard to 

whether the contract or task order or part of the contract or task 

order is set aside for small business concerns, whether 1 or 

more contract or task order awards are reserved for small business concerns under a multiple award contract, or whether or 

not the solicitation would result in a bundled or consolidated 

contract (as defined in subsection (s)) or a bundled or consolidated task order. 

(m)(1) Each agency subject to the requirements of section 2323 

of title 10, United States Code, shall, when implementing such requirements— 

(A) establish policies and procedures that insure that there 

will be no reduction in the number of dollar value of contracts 

awarded pursuant to this section and section 8(a) in order to 

achieve any goal or other program objective; and 

(B) assure that such requirements will not alter or change 

the procurement process used to implement this section or section 8(a). 

(2) All procurement center representatives (including those referred to in subsection (k)(6)), in addition to such other duties as 

may be assigned by the Administrator, shall— 

(A) monitor the performance of the procurement activities to 

which they are assigned to ascertain the degree of compliance 

with the requirements of paragraph (1); 

(B) report to their immediate supervisors all instances of 

noncompliance with such requirements; and 

(C) increase, insofar as possible, the number and dollar value 

of procurements that may be used for the programs established 

under this section, section 8(a), and section 2323 of title 10, 

United States Code. 

(n) For purposes of this section, the determination of labor surplus areas shall be made on the basis of the criteria in effect at 

the time of the determination, except that any minimum population criteria shall not exceed twenty-five thousand. Such determination, as modified by the preceding sentence, shall be made by 

the Secretary of Labor. 

(o) LIMITATIONS ON SUBCONTRACTING.—A concern may not be 

awarded a contract under subsection (a) as a small business concern unless the concern agrees to satisfy the requirements of section 46. 

(p) ACCESS TO DATA.— (1) BUNDLED CONTRACT DEFINED.—In this subsection, the 

term ‘‘bundled contract’’ has the meaning given such term in 

section 3(o)(1). 

(2) DATABASE.— 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
139 

(A) IN GENERAL.—Not later than 180 days after the date 

of the enactment of this subsection, the Administrator of 

the Small Business Administration shall develop and shall 

thereafter maintain a database containing data and information regarding— 

(i) each bundled contract awarded by a Federal 

agency; and 

(ii) each small business concern that has been displaced as a prime contractor as a result of the award 

of such a contract. 

(3) ANALYSIS.—For each bundled contract that is to be recompeted as a bundled contract, the Administrator shall determine— 

(A) the amount of savings and benefits (in accordance 

with subsection (e)) achieved under the bundling of contract requirements; and 

(B) whether such savings and benefits will continue to 

be realized if the contract remains bundled, and whether 

such savings and benefits would be greater if the procurement requirements were divided into separate solicitations 

suitable for award to small business concerns. 

(4) ANNUAL REPORT ON CONTRACT BUNDLING.— (A) IN GENERAL.—Not later than 1 year after the date of 

the enactment of this paragraph, and annually in March 

thereafter, the Administration shall transmit a report on 

contract bundling to the Committees on Small Business of 

the House of Representatives and the Senate. 

(B) CONTENTS.—Each report transmitted under subparagraph (A) shall include— 

(i) data on the number, arranged by industrial classification, of small business concerns displaced as 

prime contractors as a result of the award of bundled 

contracts by Federal agencies; and 

(ii) a description of the activities with respect to previously bundled contracts of each Federal agency during the preceding year, including— 

(I) data on the number and total dollar amount 

of all contract requirements that were bundled; 

and 

(II) with respect to each bundled contract, data 

or information on— 

(aa) the justification for the bundling of contract requirements; 

(bb) the cost savings realized by bundling 

the contract requirements over the life of the 

contract; 

(cc) the extent to which maintaining the 

bundled status of contract requirements is 

projected to result in continued cost savings; 

(dd) the extent to which the bundling of 

contract requirements complied with the contracting agency’s small business subcontracting plan, including the total dollar value 

awarded to small business concerns as subcontractors and the total dollar value preVerDate Sep 11 2014 07:19 Jul 27, 2016 Jkt 059006 PO 00000 Frm 00139 Fmt 6659 Sfmt 6601 E:\HR\OC\HR704P1.XXX HR704P1

smartinez on DSK3GLQ082PROD with REPORTS-HSE
140 

viously awarded to small business concerns as 

prime contractors; and 

(ee) the impact of the bundling of contract 

requirements on small business concerns unable to compete as prime contractors for the 

consolidated requirements and on the industries of such small business concerns, including a description of any changes to the proportion of any such industry that is composed of 

small business concerns. 

(5) ACCESS TO DATA.— (A) FEDERAL PROCUREMENT DATA SYSTEM.—To assist in 

the implementation of this section, the Administration 

shall have access to information collected through the Federal Procurement Data System. 

(B) AGENCY PROCUREMENT DATA SOURCES.—To assist in 

the implementation of this section, the head of each contracting agency shall provide, upon request of the Administration, procurement information collected through existing agency data collection sources. 

(q) REPORTS RELATED TO PROCUREMENT CENTER REPRESENTA- TIVES.— 

(1) TEAMING AND JOINT VENTURE REQUIREMENTS.— (A) IN GENERAL.—Each Federal agency shall include in 

each solicitation for any multiple award contract above the 

substantial bundling threshold of the Federal agency a 

provision soliciting bids from any responsible source, including responsible small business concerns and teams or 

joint ventures of small business concerns. 

(B) TEAMS.—When evaluating an offer of a small business prime contractor that includes a proposed team of 

small business subcontractors for any multiple award contract above the substantial bundling threshold of the Federal agency, the head of the agency shall consider the capabilities and past performance of each first tier subcontractor that is part of the team as the capabilities and past 

performance of the small business prime contractor. 

(C) JOINT VENTURES.—When evaluating an offer of a 

joint venture of small business concerns for any multiple 

award contract above the substantial bundling threshold of 

the Federal agency, if the joint venture does not demonstrate sufficient capabilities or past performance to be 

considered for award of a contract opportunity, the head of 

the agency shall consider the capabilities and past performance of each member of the joint venture as the capabilities and past performance of the joint venture. 

(2) POLICIES ON REDUCTION OF CONTRACT BUNDLING.— 

(A) IN GENERAL.—Not later than 1 year after the date of 

enactment of this subsection, the Federal Acquisition Regulatory Council established under section 25(a) of the Office of Federal Procurement Policy Act (41 U.S.C. 4219(a)) 

shall amend the Federal Acquisition Regulation issued 

under section 25 of such Act to— 

(i) establish a Government-wide policy regarding 

contract bundling, including regarding the solicitation 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
141 

of teaming and joint ventures under paragraph (1); 

and 

(ii) require that the policy established under clause 

(i) be published on the website of each Federal agency. 

(B) RATIONALE FOR CONTRACT BUNDLING.—Not later 

than 30 days after the date on which the head of a Federal 

agency submits data certifications to the Administrator for 

Federal Procurement Policy, the head of the Federal agency shall publish on the website of the Federal agency a list 

and rationale for any bundled contract for which the Federal agency solicited bids or that was awarded by the Federal agency. 

(3) REPORTING.—Not later than 90 days after the date of enactment of this subsection, and every 3 years thereafter, the 

Administrator shall submit to the Committee on Small Business and Entrepreneurship of the Senate and the Committee 

on Small Business of the House of Representatives a report regarding procurement center representatives and commercial 

market representatives, which shall— 

(A) identify each area for which the Administration has 

assigned a procurement center representative or a commercial market representative; 

(B) explain why the Administration selected the areas 

identified under subparagraph (A); and 

(C) describe the activities performed by procurement 

center representatives and commercial market representatives. 

(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— 

(1) set 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 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 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). 

(s) DATA QUALITY IMPROVEMENT PLAN.— 

(1) IN GENERAL.—Not later than October 1, 2015, the Administrator of the Small Business Administration, in consultation 

with the Small Business Procurement Advisory Council, the 

Administrator for Federal Procurement Policy, and the Administrator of General Services, shall develop a plan to improve 

the quality of data reported on bundled or consolidated conVerDate Sep 11 2014 07:19 Jul 27, 2016 Jkt 059006 PO 00000 Frm 00141 Fmt 6659 Sfmt 6601 E:\HR\OC\HR704P1.XXX HR704P1

smartinez on DSK3GLQ082PROD with REPORTS-HSE
142 

tracts in the Federal procurement data system (described in 

section 1122(a)(4)(A) of title 41, United States Code). 

(2) PLAN REQUIREMENTS.—The plan shall— 

(A) describe the roles and responsibilities of the Administrator of the Small Business Administration, each Director of Small and Disadvantaged Business Utilization, the 

Administrator for Federal Procurement Policy, the Administrator of General Services, senior procurement executives, and Chief Acquisition Officers in— 

(i) improving the quality of data reported on bundled 

or consolidated contracts in the Federal procurement 

data system; and 

(ii) contributing to the annual report required by 

subsection (p)(4); 

(B) recommend changes to policies and procedures, including training procedures of relevant personnel, to properly identify and mitigate the effects of bundled or consolidated contracts; 

(C) recommend requirements for periodic and statistically valid data verification and validation; and 

(D) recommend clear data verification responsibilities. 

(3) PLAN SUBMISSION.—The Administrator of the Small Business Administration shall submit the plan to the Committee on 

Small Business of the House of Representatives and the Committee on Small Business and Entrepreneurship of the Senate 

not later than December 1, 2016. 

(4) IMPLEMENTATION.—Not later than October 1, 2016, the 

Administrator of the Small Business Administration shall implement the plan described in this subsection. 

(5) CERTIFICATION.—The Administrator shall annually provide to the Committee on Small Business of the House of Representatives and the Committee on Small Business and Entrepreneurship of the Senate a certification of the accuracy and 

completeness of data reported on bundled and consolidated 

contracts. 

(6) DEFINITIONS.—In this subsection, the following definitions apply: 

(A) CHIEF ACQUISITION OFFICER; SENIOR PROCUREMENT

EXECUTIVE.—The terms ‘‘Chief Acquisition Officer’’ and 

‘‘senior procurement executive’’ have the meanings given 

such terms in section 44(a) of this Act. 

(B) BUNDLED OR CONSOLIDATED CONTRACT.—The term 

‘‘bundled or consolidated contract’’ means a bundled contract (as defined in section 3(o)) or a contract resulting 

from the consolidation of contracting requirements (as defined in section 44(a)(2)). 

(t) POST-AWARD COMPLIANCE RESOURCES.—The Administrator 

shall provide to small business development centers and entities 

participating in the Procurement Technical Assistance Cooperative 

Agreement Program under chapter 142 of title 10, United States 

Code, and shall make available on the website of the Administration, a list of resources for small business concerns seeking education and assistance on compliance with contracting regulations 

(including the Federal Acquisition Regulation) after award of a contract or subcontract. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
143 

(u) REGULATORY CHANGES AND TRAINING MATERIALS.—Not less 

than annually, the Administrator shall provide to the Defense Acquisition University (established under section 1746 of title 10, 

United States Code), the Federal Acquisition Institute (established 

under section 1201 of title 41, United States Code), the individual 

responsible for mandatory training and education of the acquisition 

workforce of each agency (described under section 1703(f)(1)(C) of 

title 41, United States Code), small business development centers, 

and entities participating in the Procurement Technical Assistance 

Cooperative Agreement Program under chapter 142 of title 10, 

United States Code— 

(1) a list of all changes made in the prior year to regulations 

promulgated— 

(A) by the Administrator that affect Federal acquisition; 

and 

(B) by the Federal Acquisition Council that implement 

changes to this Act; and 

(2) any materials the Administrator has developed to explain, 

train, or assist Federal agencies or departments or small business concerns to comply with the regulations specified in paragraph (1). 

* * * * * * * 

SEC. 18. (a) The Administration shall not duplicate the work or 

activity of any other department or agency of the Federal Government,, and nothing contained in this Act shall be construed to authorize any such duplication unless such work or activity is expressly provided for in this Act. If loan applications are being refused or loans denied by such other department or agency responsible for such work or activity due to administrative withholding 

from obligation or withholding from apportionment, or due to administratively declared moratorium, then, for purposes of this section, no duplication shall be deemed to have occurred. 

(b) As used in this Act— 

(1) ‘‘agricultural enterprises’’ means those øbusinesses¿ 

small business concerns engaged in the production of food and 

fiber, ranching, and raising of livestock, aquaculture, and all 

other farming and agricultural related industries; and 

(2) ‘‘credit elsewhere’’ means the availability of sufficient 

credit from non-Federal sources at reasonable rates and terms, 

taking into consideration prevailing private rates and terms in 

the community in or near where the concern transacts business for similar purposes and periods of time. 

* * * * * * * 

SEC. 45. MENTOR-PROTEGE PROGRAMS. 

(a) ADMINISTRATION PROGRAM.— 

(1) AUTHORITY.—The Administrator is authorized to establish a mentor-protege program for all small business concerns. 

(2) MODEL FOR PROGRAM.—The mentor-protege program established under paragraph (1) shall be identical to the mentorprotege program of the Administration for small business concerns that participate in the program under section 8(a) (as in 

effect on the date of enactment of this section), except that the 

Administrator may modify the program to the extent necessary 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
144 

given the types of small business concerns included as proteges. 

(b) PROGRAMS OF OTHER AGENCIES.— 

(1) APPROVAL REQUIRED.—Except as provided in paragraph 

(4), a Federal department or agency may not carry out a mentor-protege program for small business concerns unless— 

(A) the head of the department or agency submits a plan 

to the Administrator for the program; and 

(B) the Administrator approves such plan. 

(2) BASIS FOR APPROVAL.—The Administrator shall approve 

or disapprove a plan submitted under paragraph (1) based on 

whether the program proposed— 

(A) will assist proteges to compete for Federal prime contracts and subcontracts; and 

(B) complies with the regulations issued under paragraph (3). 

(3) REGULATIONS.—Not later than 270 days after the date of 

enactment of this section, the Administrator shall issue, subject to notice and comment, regulations with respect to mentorprotege programs, which shall ensure that such programs improve the ability of proteges to compete for Federal prime contracts and subcontracts and which shall address, at a minimum, the following: 

(A) Eligibility criteria for program participants, including any restrictions on the number of mentor-protege relationships permitted for each participant. 

(B) The types of developmental assistance to be provided 

by mentors, including how the assistance provided shall 

improve the competitive viability of the proteges. 

(C) Whether any developmental assistance provided by a 

mentor may affect the status of a program participant as 

a small business concern due to affiliation. 

(D) The length of mentor-protege relationships. 

(E) The effect of mentor-protege relationships on contracting. 

(F) Benefits that may accrue to a mentor as a result of 

program participation. 

(G) Reporting requirements during program participation. 

(H) Postparticipation reporting requirements. 

(I) The need for a mentor-protege pair, if accepted to 

participate as a pair in a mentor-protege program of any 

Federal department or agency, to be accepted to participate as a pair in all Federal mentor-protege programs. 

(J) Actions to be taken to ensure benefits for proteges 

and to protect a protege against actions by a mentor that— 

(i) may adversely affect the protege’s status as a 

small business concern; or 

(ii) provide disproportionate economic benefits to the 

mentor relative to those provided the protege. 

(K) The extent to which assistance with compliance with 

the requirements of contracting with the Federal Government after award of a contract or subcontract under this 

section. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
145 

(4) LIMITATION ON APPLICABILITY.—Paragraph (1) does not 

apply to the following: 

ø(A) Any mentor-protege program of the Department of 

Defense.¿ 

ø(B)¿ (A) Any mentoring assistance provided under a 

Small Business Innovation Research Program or a Small 

Business Technology Transfer Program. 

ø(C)¿ (B) Until the date that is 1 year after the date on 

which the Administrator issues regulations under paragraph (3), any Federal department or agency operating a 

mentor-protege program in effect on the date of enactment 

of this section. 

(c) REPORTING.— 

(1) IN GENERAL.—Not later than 2 years after the date of enactment of this section, and annually thereafter, the Administrator shall submit to the Committee on Small Business of the 

House of Representatives and the Committee on Small Business and Entrepreneurship of the Senate a report that— 

(A) identifies each Federal mentor-protege program; 

(B) specifies the number of participants in each such 

program, including the number of participants that are— 

(i) small business concerns; 

(ii) small business concerns owned and controlled by 

service-disabled veterans; 

(iii) qualified HUBZone small business concerns; 

(iv) small business concerns owned and controlled by 

socially and economically disadvantaged individuals; 

or 

(v) small business concerns owned and controlled by 

women; 

(C) describes the type of assistance provided to proteges 

under each such program; 

(D) describes the benefits provided to mentors under 

each such program; and 

(E) describes the progress of proteges under each such 

program with respect to competing for Federal prime contracts and subcontracts. 

(2) PROVISION OF INFORMATION.—The head of each Federal 

department or agency carrying out a mentor-protege program 

shall provide to the Administrator, on an annual basis, the information necessary for the Administrator to submit a report 

required under paragraph (1). 

(d) DEFINITIONS.—In this section, the following definitions apply: 

(1) MENTOR.—The term ‘‘mentor’’ means a for-profit business 

concern, of any size, that— 

(A) has the ability to assist and commits to assisting a 

protege to compete for Federal prime contracts and subcontracts; and 

(B) satisfies any other requirements imposed by the Administrator. 

(2) MENTOR-PROTEGE PROGRAM.—The term ‘‘mentor-protege 

program’’ means a program that pairs a mentor with a protege 

for the purpose of assisting the protege to compete for Federal 

prime contracts and subcontracts. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
146 

(3) PROTEGE.—The term ‘‘protege’’ means a small business 

concern that— 

(A) is eligible to enter into Federal prime contracts and 

subcontracts; and 

(B) satisfies any other requirements imposed by the Administrator. 

(e) CURRENT MENTOR PROTEGE AGREEMENTS.—Mentors and proteges with approved agreement in a program operating pursuant to 

subsection (b)(4)(C) shall be permitted to continue their relationship according to the terms specified in their agreement until the 

expiration date specified in the agreement. 

(f) SUBMISSION OF AGENCY PLANS.—Agencies operating mentor 

protege programs pursuant to subsection (b)(4)(C) shall submit the 

plans specified in subsection (b)(1)(A) to the Administrator within 

6 months of the promulgation of rules required by subsection (b)(3). 

The Administrator shall provide initial comments on each plan 

within 60 days of receipt, and final approval or denial of each plan 

within 180 days after receipt. 

* * * * * * * 

NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL 

YEAR 1991 

* * * * * * * 

DIVISION A—DEPARTMENT OF DEFENSE AUTHORIZATIONS 

* * * * * * * 

TITLE VIII—ACQUISITION POLICY, ACQUISITION 

MANAGEMENT, AND RELATED MATTERS 

* * * * * * * 

PART D—MISCELLANEOUS

* * * * * * * 

SEC. 831. MENTOR-PROTEGE PILOT PROGRAM. 

(a) ESTABLISHMENT OF PILOT PROGRAM.—The Secretary of Defense shall establish a pilot program to be known as the ‘‘MentorProtege Program’’. 

(b) PURPOSE.—The purpose of the program is to provide incentives for major Department of Defense contractors to furnish disadvantaged small business concerns with assistance designed to— 

(1) enhance the capabilities of disadvantaged small business 

concerns to perform as subcontractors and suppliers under Department of Defense contracts and other contracts and subcontracts; and 

(2) increase the participation of such business concerns as 

subcontractors and suppliers under Department of Defense 

contracts, other Federal Government contracts, and commercial contracts. 

(c) PROGRAM PARTICIPANTS.—(1) A business concern meeting the 

eligibility requirements set out in subsection (d) may enter into 

agreements under subsection (e) and furnish assistance to disadvantaged small business concerns upon making application to 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
147 

the Secretary of Defense and being approved for participation in 

the pilot program by the Secretary. A business concern participating in the pilot program pursuant to such an approval shall be 

known, for the purposes of the program, as a ‘‘mentor firm’’. 

(2) A disadvantaged small business concern eligible for the 

award of Federal contracts may obtain assistance from a mentor firm upon entering into an agreement with the mentor firm 

as provided in subsection (e). A disadvantaged small business 

concern may not be a party to more than one agreement concurrently, and the authority to enter into agreements under 

subsection (e) shall only be available to such concern during 

the 5-year period beginning on the date such concern enters 

into the first such agreement. A disadvantaged small business 

concern receiving such assistance shall be known, for the purposes of the program, as a ‘‘protege firm’’. 

(3) In entering into an agreement pursuant to subsection (e), 

a mentor firm may rely in good faith on a written representation of a business concern that such business concern is a disadvantaged small business concern. The Small Business Administration shall determine the status of such business concern as a disadvantaged small business concern in the event of 

a protest regarding the status of such business concern. If at 

any time the business concern is determined by the Small 

Business Administration not to be a disadvantaged small business concern, assistance furnished such business concern by 

the mentor firm after the date of the determination may not 

be considered assistance furnished under the program. 

(d) MENTOR FIRM ELIGIBILITY.—Subject to subsection (c)(1), a 

mentor firm eligible for award of Federal contracts may enter into 

an agreement with one or more protege firms under subsection (e) 

and provide assistance under the program pursuant to that agreement if— 

ø(1) the mentor firm is not affiliated with the protege firm 

prior to the approval of that agreement; and¿ 

(1) prior to the approval of that agreement, the Administrator 

of the Small Business Administration had made no finding of 

affiliation between the mentor firm and the protege firm; 

(2)(A) the Administrator of the Small Business Administration does not have a current finding of affiliation between the 

mentor firm and protege firm; or 

(B) the Secretary, after considering the regulations promulgated by the Administrator of the Small Business Administration regarding affiliation— 

(i) does not have reason to believe that the mentor firm 

affiliated with the protege firm; or 

(ii) has received a formal determination of no affiliation 

between the mentor firm and protege firm from the Administrator after having submitted a question of affiliation to 

the Administrator; and 

ø(2)¿ (3) the mentor firm demonstrates that it— 

(A) is qualified to provide assistance that will contribute 

to the purpose of the program; 

(B) is of good financial health and character and does 

not appear on a Federal list of debarred or suspended contractors; and 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
148 

(C) can impart value to a protege firm because of experience gained as a Department of Defense contractor or 

through knowledge of general business operations and government contracting, as demonstrated by evidence that— 

(i) during the fiscal year preceding the fiscal year in 

which the mentor firm enters into the agreement, the 

total amount of the Department of Defense contracts 

awarded such mentor firm and the subcontracts 

awarded such mentor firm under Department of Defense contracts was equal to or greater than 

$100,000,000; or 

(ii) the mentor firm demonstrates the capability to 

assist in the development of protege firms, and is approved by the Secretary of Defense pursuant to criteria specified in the regulations prescribed pursuant 

to subsection (k). 

(e) MENTOR-PROTEGE AGREEMENT.—Before providing assistance 

to a protege firm under the program, a mentor firm shall enter into 

a mentor-protege agreement with the protege firm regarding the 

assistance to be provided by the mentor firm. The agreement shall 

include the following: 

(1) A developmental program for the protege firm, in such 

detail as may be reasonable, including— 

(A) factors to assess the protege firm’s developmental 

progress under the program; 

(B) a description of the quantitative and qualitative benefits to the Department of Defense from the agreement, if 

applicable; øand¿ 

(C) goals for additional awards that protege firm can 

compete for outside the Mentor-Protege Programø.¿; and 

(D) the assistance the mentor firm will provide to the protege firm in understanding contract regulations of the Federal Government and the Department of Defense (including 

the Federal Acquisition Regulation and the Defense Federal 

Acquisition Regulation Supplement) after award of a subcontract under this section, if applicable. 

(2) A program participation term for any period of not more 

than three years, except that the term may be a period of up 

to five years if the Secretary of Defense determines in writing 

that unusual circumstances justify a program participation 

term in excess of three years. 

(3) Procedures for the protege firm to terminate the agreement voluntarily and for the mentor firm to terminate the 

agreement for cause. 

(f) FORMS OF ASSISTANCE.—A mentor firm may provide a protege 

firm the following: 

(1) Assistance, by using mentor firm personnel, in— 

(A) general business management, including organizational management, financial management, and personnel 

management, marketing, and overall business planning; 

(B) engineering and technical matters such as production, inventory control, and quality assurance; and 

(C) any other assistance designed to develop the capabilities of the protege firm under the developmental program referred to in subsection (e). 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
149 

(2) Award of subcontracts on a noncompetitive basis to the 

protege firm under the Department of Defense or other contracts. 

(3) Payment of progress payments for performance of the 

protege firm under such a subcontract in amounts as provided 

for in the subcontract, but in no event may any such progress 

payment exceed 100 percent of the costs incurred by the protege firm for the performance. 

(4) Advance payments under such subcontracts. 

(5) Loans. 

(6) Assistance obtained by the mentor firm for the protege 

firm from one or more of the following— 

(A) small business development centers established pursuant to section 21 of the Small Business Act (15 U.S.C. 

648); 

(B) entities providing procurement technical assistance 

pursuant to chapter 142 of title 10, United States Code; 

øor¿ 

(C) a historically Black college or university or a minority institution of higher educationø.¿; or 

(D) women’s business centers described in section 29 of 

the Small Business Act (15 U.S.C. 656). 

(g) INCENTIVES FOR MENTOR FIRMS.—(1) The Secretary of Defense may provide to a mentor firm reimbursement for the total 

amount of any progress payment or advance payment made under 

the program by the mentor firm to a protege firm in connection 

with a Department of Defense contract awarded the mentor firm. 

(2)(A) The Secretary of Defense may provide to a mentor 

firm reimbursement for the costs of the assistance furnished to 

a protege firm pursuant to paragraphs (1) and (6) of subsection 

(f) (except as provided in subparagraph (D)) as provided for in 

a line item in a Department of Defense contract under which 

the mentor firm is furnishing products or services to the Department, subject to a maximum amount of reimbursement 

specified in such contract, except that this sentence does not 

apply in a case in which the Secretary of Defense determines 

in writing that unusual circumstances justify reimbursement 

using a separate contract. 

(B) The determinations made in annual performance reviews of 

a mentor firm’s mentor-protege agreement shall be a major factor 

in the determinations of amounts of reimbursement, if any, that 

the mentor firm is eligible to receive in the remaining years of the 

program participation term under the agreement. 

(C) The total amount reimbursed under this paragraph to a mentor firm for costs of assistance furnished in a fiscal year to a protege firm may not exceed $1,000,000, except in a case in which the 

Secretary of Defense determines in writing that unusual circumstances justify a reimbursement of a higher amount. 

(D) The Secretary may not reimburse any fee assessed by the 

mentor firm for services provided to the protege firm pursuant to 

subsection (f)(6) or for business development expenses incurred by 

the mentor firm under a contract awarded to the mentor firm while 

participating in a joint venture with the protege firm. 

(3)(A) Costs incurred by a mentor firm in providing assistance to a protege firm that are not reimbursed pursuant to 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
150 

paragraph (2) shall be recognized as credit in lieu of subcontract awards for purposes of determining whether the mentor firm attains a subcontracting participation goal applicable 

to such mentor firm under a Department of Defense contract, 

under a contract with another executive agency, or under a divisional or company-wide subcontracting plan negotiated with 

the Department of Defense or another executive agency. 

(B) The amount of the credit given a mentor firm for any such 

unreimbursed costs shall be equal to— 

(i) four times the total amount of such costs attributable to 

assistance provided by entities described in subsection (f)(6); 

(ii) three times the total amount of such costs attributable to 

assistance furnished by the mentor firm’s employees; and 

(iii) two times the total amount of any other such costs. 

(C) Under regulations prescribed pursuant to subsection (k), the 

Secretary of Defense shall adjust the amount of credit given a mentor firm pursuant to subparagraphs (A) and (B) if the Secretary determines that the firm’s performance regarding the award of subcontracts to disadvantaged small business concerns has declined 

without justifiable cause. 

(4) A mentor firm shall receive credit toward the attainment 

of a subcontracting participation goal applicable to such mentor firm for each subcontract for a product or service awarded 

under such contract by a mentor firm to a business concern 

that, except for its size, would be a small business concern 

owned and controlled by socially and economically disadvantaged individuals, but only if— 

(A) the size of such business concern is not more than two 

times the maximum size specified by the Administrator of the 

Small Business Administration for purposes of determining 

whether a business concern furnishing such product or service 

is a small business concern; and 

(B) the business concern formerly had a mentor-protege 

agreement with such mentor firm that was not terminated for 

cause. 

(h) RELATIONSHIP TO SMALL BUSINESS ACT.—(1) For purposes of 

the Small Business Act (15 U.S.C. 631 et seq.), no determination 

of affiliation or control (either direct or indirect) may be found between a protege firm and its mentor firm on the basis that the 

mentor firm has agreed to furnish (or has furnished) to its protege 

firm pursuant to a mentor-protege agreement any form of developmental assistance described in subsection (f). 

(2) Notwithstanding section 8 of the Small Business Act (15 

U.S.C. 637), the Small Business Administration may not determine a disadvantaged small business concern to be ineligible 

to receive any assistance authorized under the Small Business 

Act on the basis that such business concern has participated 

in the Mentor-Protege Program or has received assistance pursuant to any developmental assistance agreement authorized 

under such program. 

(3) The Small Business Administration may not require a 

firm that is entering into, or has entered into, an agreement 

under subsection (e) as a protege firm to submit the agreement, or any other document required by the Secretary of Defense in the administration of the Mentor-Protege Program, to 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
151 

the Small Business Administration for review, approval, or any 

other purpose. 

(i) PARTICIPATION IN MENTOR-PROTEGE PROGRAM NOT TO BE A

CONDITION FOR AWARD OF A CONTRACT OR SUBCONTRACT.—A mentor firm may not require a business concern to enter into an agreement with the mentor firm pursuant to subsection (e) as a condition for being awarded a contract by the mentor firm, including a 

subcontract under a contract awarded to the mentor firm. 

(j) EXPIRATION OF AUTHORITY.—(1) No mentor-protege agreement 

may be entered into under subsection (e) after September 30, 2018. 

(2) No reimbursement may be paid, and no credit toward the 

attainment of a subcontracting goal may be granted, under 

subsection (g) for any cost incurred after September 30, 2021. 

(k) REGULATIONS.—The Secretary of Defense shall prescribe regulations to carry out the pilot Mentor-Protege Program. Such regulations shall include the requirements set forth in section 8(d) of 

the Small Business Act (15 U.S.C. 637(d)) and shall prescribe procedures by which mentor firms may terminate participation in the 

program. The Secretary shall publish the proposed regulations not 

later than the date 180 days after the date of the enactment of this 

Act. The Secretary shall promulgate the final regulations not later 

than the date 270 days after the date of the enactment of this Act. 

The Department of Defense policy regarding the pilot Mentor-Protege Program shall be published and maintained as an appendix to 

the Department of Defense Supplement to the Federal Acquisition 

Regulation. 

(l) REPORT BY MENTOR FIRMS.—To comply with section 8(d)(7) of 

the Small Business Act (15 U.S.C. 637(d)(7)), each mentor firm 

shall submit a report to the Secretary not less than once each fiscal 

year that includes, for the preceding fiscal year— 

(1) all technical or management assistance provided by mentor firm personnel for the purposes described in subsection 

(f)(1); 

(2) any new awards of subcontracts on a competitive or noncompetitive basis to the protege firm under Department of Defense contracts or other contracts, including the value of such 

subcontracts; 

(3) any extensions, increases in the scope of work, or additional payments not previously reported for prior awards of 

subcontracts on a competitive or noncompetitive basis to the 

protege firm under Department of Defense contracts or other 

contracts, including the value of such subcontracts; 

(4) the amount of any payment of progress payments or advance payments made to the protege firm for performance 

under any subcontract made under the Mentor-Protege Program; 

(5) any loans made by mentor firm to the protege firm; 

(6) all Federal contracts awarded to the mentor firm and the 

protege firm as a joint venture, designating whether the award 

was a restricted competition or a full and open competition; 

(7) any assistance obtained by the mentor firm for the protege firm from one or more— 

(A) small business development centers established pursuant to section 21 of the Small Business Act (15 U.S.C. 

648); 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
152 

(B) entities providing procurement technical assistance 

pursuant to chapter 142 of title 10, United States Code; or 

(C) historically Black colleges or universities or minority 

institutions of higher education; 

(8) whether there have been any changes to the terms of the 

mentor-protege agreement; and 

(9) a narrative describing the success assistance provided 

under subsection (f) has had in addressing the developmental 

needs of the protege firm, the impact on Department of Defense contracts, and addressing any problems encountered. 

(m) REVIEW OF REPORT BY THE OFFICE OF SMALL BUSINESS PROGRAMS.—The Office of Small Business Programs of the Department 

of Defense shall review the report required by subsection (l) and, 

if the Office finds that the mentor-protege agreement is not furthering the purpose of the Mentor-Protege Program, decide not to 

approve any continuation of the agreement. 

(n) DEFINITIONS.—In this section: 

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

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

632). 

(2) The term ‘‘disadvantaged small business concern’’ means 

a firm that has less than half the size standard corresponding 

to its primary North American Industry Classification System 

code, is not owned or managed by individuals or entities that 

directly or indirectly have stock options or convertible securities in the mentor firm, and is— 

(A) a small business concern owned and controlled by socially and economically disadvantaged individuals; 

(B) a business entity owned and controlled by an Indian 

tribe as defined by section 8(a)(13) of the Small Business 

Act (15 U.S.C. 637(a)(13)); 

(C) a business entity owned and controlled by a Native 

Hawaiian Organization as defined by section 8(a)(15) of 

the Small Business Act (15 U.S.C. 637(a)(15)); 

(D) a qualified organization employing severely disabled 

individuals; 

(E) a small business concern owned and controlled by 

women, as defined in section 8(d)(3)(D) of the Small Business Act (15 U.S.C. 637(d)(3)(D)); 

(F) a small business concern owned and controlled by 

service–disabled veterans (as defined in section 8(d)(3) of 

the Small Business Act); and 

(G) a qualified HUBZone small business concern (as defined in section 3(p) of the Small Business Act (15 U.S.C. 

632(p)); or 

(H) a small business concern that— 

(i) is a nontraditional defense contractor, as such 

term is defined in section 2302 of title 10, United 

States Code; or 

(ii) currently provides goods or services in the private sector that are critical to enhancing the capabilities of the defense supplier base and fulfilling key Department of Defense needs. 

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

by socially and economically disadvantaged individuals’’ has 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
153 

the meaning given such term in section 8(d)(3)(C) of the Small 

Business Act (15 U.S.C. 637(d)(3)(C)). 

(4) The term ‘‘historically Black college and university’’ 

means any of the historically Black colleges and universities 

referred to in section 2323 of title 10, United States Code. 

(5) The term ‘‘minority institution of higher education’’ 

means an institution of higher education with a student body 

that reflects the composition specified in section 312(b)(3), (4), 

and (5) of the Higher Education Act of 1965 (20 U.S.C. 

1058(b)(3), (4), and (5)). 

(6) The term ‘‘subcontracting participation goal’’, with respect 

to a Department of Defense contract, means a goal for the extent of the participation by disadvantaged small business concerns in the subcontracts awarded under such contract, as established pursuant to section 2323 of title 10, United States 

Code, and section 8(d) of the Small Business Act (15 U.S.C. 

637(d)). 

(7) The term ‘‘qualified organization employing the severely 

disabled’’ means a business entity operated on a for-profit or 

nonprofit basis that— 

(A) uses rehabilitative engineering to provide employment opportunities for severely disabled individuals and 

integrates severely disabled individuals into its workforce; 

(B) employs severely disabled individuals at a rate that 

averages not less than 20 percent of its total workforce; 

(C) employs each severely disabled individual in its 

workforce generally on the basis of 40 hours per week; and 

(D) pays not less than the minimum wage prescribed 

pursuant to section 6 of the Fair Labor Standards Act (29 

U.S.C. 206) to those employees who are severely disabled 

individuals. 

(8) The term ‘‘severely disabled individual’’ means an individual who is blind (as defined in section 8501 of title 41, 

United States Code) or a severely disabled individual (as defined in such section). 

ø(9) The term ‘‘affiliated’’, with respect to the relationship between a mentor firm and a protege firm, means— 

ø(A) the mentor firm shares, directly or indirectly, with 

the protege firm ownership or management of the protege 

firm; 

ø(B) the mentor firm has an agreement, at the time the 

mentor firm enters into a mentor-protege agreement under 

subsection (e), to merge with the protege firm; 

ø(C) the owners and managers of the mentor firm are 

the parent, child, spouse, sibling, aunt, uncle, niece, nephew, grandparent, grandchild, or first cousin of an owner or 

manager of the protege firm; 

ø(D) the mentor firm has, during the 2-year period before entering into a mentor-protege agreement, employed 

any officer, director, principal stock holder, managing 

member, or key employee of the protege firm; 

ø(E) the mentor firm has engaged in a joint venture with 

the protege firm during the 2-year period before entering 

into a mentor-protege agreement, unless such joint venture 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
154 

was approved by the Small Business Administration prior 

to making any offer on a contract; 

ø(F) the mentor firm is, directly or indirectly, the primary party providing contracts to the protege firm, as 

measured by the dollar value of the contracts; and 

ø(G) the Small Business Administration has made a determination of affiliation or control under subsection (h).¿ 

(9) The term ‘‘affiliation’’, with respect to a relationship between a mentor firm and a protege firm, means a relationship 

described under section 121.103 of title 13, Code of Federal 

Regulations (or any successor regulation). 

* * * * * * * 

TITLE 41, UNITED STATES CODE 

SUBTITLE I—FEDERAL PROCUREMENT 

POLICY 

* * * * * * * 

CHAPTER 41—TASK AND DELIVERY ORDER CONTRACTS 

* * * * * * * 

§ 4106. Orders 

(a) APPLICATION.—This section applies to task and delivery order 

contracts entered into under sections 4103 and 4105 of this title. 

(b) ACTIONS NOT REQUIRED FOR ISSUANCE OF ORDERS.—The following actions are not required for issuance of a task or delivery 

order under a task or delivery order contract: 

(1) A separate notice for the order under section 1708 of this 

title or section 8(e) of the Small Business Act (15 U.S.C. 

637(e)). 

(2) Except as provided in subsection (c), a competition (or a 

waiver of competition approved in accordance with section 

3304(e) of this title) that is separate from that used for entering into the contract. 

(c) MULTIPLE AWARD CONTRACTS.—When multiple contracts are 

awarded under section 4103(d)(1)(B) or 4105(f) of this title, all contractors awarded the contracts shall be provided a fair opportunity 

to be considered, pursuant to procedures set forth in the contracts, 

for each task or delivery order in excess of $2,500 that is to be 

issued under any of the contracts, unless— 

(1) the executive agency’s need for the services or property 

ordered is of such unusual urgency that providing the opportunity to all of those contractors would result in unacceptable 

delays in fulfilling that need; 

(2) only one of those contractors is capable of providing the 

services or property required at the level of quality required 

because the services or property ordered are unique or highly 

specialized; 

(3) the task or delivery order should be issued on a solesource basis in the interest of economy and efficiency because 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
155 

it is a logical follow-on to a task or delivery order already 

issued on a competitive basis; or 

(4) it is necessary to place the order with a particular contractor to satisfy a minimum guarantee. 

(d) ENHANCED COMPETITION FOR ORDERS IN EXCESS OF

$5,000,000.—In the case of a task or delivery order in excess of 

$5,000,000, the requirement to provide all contractors a fair opportunity to be considered under subsection (c) is not met unless all 

such contractors are provided, at a minimum— 

(1) a notice of the task or delivery order that includes a clear 

statement of the executive agency’s requirements; 

(2) a reasonable period of time to provide a proposal in response to the notice; 

(3) disclosure of the significant factors and subfactors, including cost or price, that the executive agency expects to consider in evaluating such proposals, and their relative importance; 

(4) in the case of an award that is to be made on a best value 

basis, a written statement documenting— 

(A) the basis for the award; and 

(B) the relative importance of quality and price or cost 

factors; and 

(5) an opportunity for a post-award debriefing consistent 

with the requirements of section 3704 of this title. 

(e) STATEMENT OF WORK.—A task or delivery order shall include 

a statement of work that clearly specifies all tasks to be performed 

or property to be delivered under the order. 

(f) PROTESTS.— 

(1) PROTEST NOT AUTHORIZED.—A protest is not authorized in 

connection with the issuance or proposed issuance of a task or 

delivery order except for— 

(A) a protest on the ground that the order increases the 

scope, period, or maximum value of the contract under 

which the order is issued; or 

(B) a protest of an order valued in excess of $10,000,000. 

(2) JURISDICTION OVER PROTESTS.—Notwithstanding section 

3556 of title 31, the Comptroller General shall have exclusive 

jurisdiction of a protest authorized under paragraph (1)(B). 

ø(3) EFFECTIVE PERIOD.—Paragraph (1)(B) and paragraph (2) 

of this subsection shall not be in effect after September 30, 

2016.¿ 

(g) TASK AND DELIVERY ORDER OMBUDSMAN.— 

(1) APPOINTMENT OR DESIGNATION AND RESPONSIBILITIES.— 

The head of each executive agency who awards multiple task 

or delivery order contracts under section 4103(d)(1)(B) or 

4105(f) of this title shall appoint or designate a task and delivery order ombudsman who shall be responsible for reviewing 

complaints from the contractors on those contracts and ensuring that all of the contractors are afforded a fair opportunity 

to be considered for task or delivery orders when required 

under subsection (c). 

(2) WHO IS ELIGIBLE.—The task and delivery order ombudsman shall be a senior agency official who is independent of the 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
156 

contracting officer for the contracts and may be the executive 

agency’s advocate for competition. 

* * * * * * * 

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 serviceconnected 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)). 

(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 or 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
157 

a small business concern owned and controlled by veterans with 

service-connected disabilities 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 or a small business concern owned and controlled by veterans with service-connected disabilities 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 or small business concerns owned and controlled by veterans with service-connected disabilities if the contracting officer 

has a reasonable expectation that two or more small business concerns owned and controlled by veterans or small business concerns 

owned and controlled by veterans with service-connected disabilities 

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, 

small business concerns owned and controlled by veterans with 

service-connected disabilities, 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 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 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
158 

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 øverified¿ verified, using regulations issued by 

the Administrator of the Small Business Administration with respect to the status of the concern as a small business concern and 

the ownership and control of such concern, 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. 

(7) The Secretary may not issue regulations related to the status 

of a concern as a small business concern and the ownership and 

control of such small business concern. 

(8)(A) If the Secretary does not verify a concern for inclusion in 

the database under this subsection based on 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; and 

(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 awarded to the small business concern that submitted 

an offer under clause (i). 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
159 

(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. 

ø(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. 

ø(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: 

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

ø(B) The date on which the surviving spouse relinquishes an 

ownership interest in the small business concern. 

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

death. 

ø(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.¿ 

ø(i)¿ (h) 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. 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
160 

(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. 

ø(j)¿ (i) 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.). 

ø(k)¿ (j) 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. 

ø(l)¿ (k) 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). 

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

by veterans’’ means a small business concern— 

ø(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 

ø(ii) the management and daily business operations of 

which are controlled by one or more veterans; or 

ø(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 


smartinez on DSK3GLQ082PROD with REPORTS-HSE
161 

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.¿ 

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

veterans’’ has the meaning given that term under section 3(q)(3) 

of the Small Business Act (15 U.S.C. 632(q)(3)). 

(3) The term ‘‘small business concern owned and controlled by 

veterans with service-connected disabilities’’ has the meaning 

given the term ‘‘small business concern owned and controlled by 

service-disabled veterans’’ under section 3(q)(2) of the Small 

Business Act (15 U.S.C. 632(q)(2)). 

* * * * * * * 

Æ 


smartinez on DSK3GLQ082PROD with REPORTS-HSE