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[House Report 106-879]
[From the U.S. Government Publishing Office]

106th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     106-879

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              EQUITY IN CONTRACTING FOR WOMEN ACT OF 2000

                                _______
                                

 September 21, 2000.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

    Mr. Talent, from the Committee on Small Business, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 4897]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Small Business, to whom was referred the 
bill (H.R. 4897) to amend the Small Business Act to establish a 
program to provide Federal contracting assistance to small 
business concerns owned and controlled by women, having 
considered the same, report favorably thereon without amendment 
and recommend that the bill do pass.

                                Purpose

    The purpose of H.R. 4897, the ``Equity in Contracting for 
Women Act of 2000,'' is to allow contracts, in industries 
historically underrepresented by women-owned small businesses, 
to be reserved for competition by women-owned small businesses. 
The bill mandates that contracting officers reserve any 
contract within certain limitations for competition solely by 
women owned businesses that are economically disadvantaged. 
Without this change, contracting officers do not have any 
mechanism to identify and award contracts to women-owned small 
businesses.

                          Need for Legislation

    There are approximately nine million women-owned businesses 
according to the statistics of the United States Small Business 
Administration. Women-owned businesses employ over 27 million 
people and are a vital element in the unprecedented growth and 
productivity of the American economy. Nearly half of the 
businesses owned by women provide goods and services to the 
federal government according to the National Foundation for 
Women Business Owners.
    From 1997 to 1999, the number of federal government 
contracts awarded to women decreased by more than 38 percent. 
So while the private sector was increasing the use of women-
owned small businesses, the federal government utilization was 
decreasing.
    Congress recognized the valuable contribution of women-
owned businesses when it established a five percent procurement 
goal in the Federal Acquisition Streamlining Act of 1994 
(``FASA''). However, data from the Federal Procurement Data 
System shows that the highest utilization of women-owned 
businesses was 2.47 percent in 1999--not even half of the 
statutory goal. The Committee finds that this simply is 
unacceptable.
    The Committee has heard testimony concerning the reasons 
for the failure of the federal government to achieve the five 
percent goal. Contract bundling, or the consolidation of 
smaller contract requirements into larger contracts, makes it 
difficult for women-owned small businesses to file responsive 
bids to bundled solicitations. The federal government also is 
increasing the use of the Federal Supply Schedule which 
increases the efficiency for purchasing commercial off-the-
shelf items. However, only 30 percent of the contractors on 
Federal Supply Schedules are small businesses and an even 
smaller amount are women-owned small businesses. Nothing in the 
Federal Supply Schedule contracting process mandates that a 
contracting officer select specific contractors for an award. 
Thus, being on the Federal Supply Schedule does not guarantee 
that the contractor will be used for the purchase of goods and 
services. The Federal Supply Schedule, while increasing the 
efficiency of government procurements for commercially-
available items, also may perpetuate the use of well-known 
firms that are not women-owned businesses.
    As the Committee has seen on numerous occasions, the drive 
for efficiency in procurement often places Congressionally-
mandated contracting goals for small businesses in general, and 
women-owned businesses in particular, in jeopardy. Current 
procurement practices enable contracting officers to reserve 
competition among small businesses for contracts in value 
between $2,500 and $100,000 if the contracting officer finds 
that there will be at least two responsible small businesses to 
bid on the contract. The Committee believes that a similar 
mechanism should be established for women-owned small 
businesses in historically underrepresented industries. This 
would help contracting officers meet the procurement goal for 
women established in FASA while still ensuring that government 
receives the benefits of competitive bidding for goods and 
services.
    The Committee believes that this action is necessary even 
though the President issued Executive Order 13,157 on May 23, 
2000 affirming the Administration's goal of increasing 
opportunities for women-owned small businesses. The Executive 
order provides a mechanism by which the Small Business 
Administration and the Office of Federal Procurement Policy 
within the Office of Management and Budget can monitor and 
measure compliance with the women-owned procurement goal in 
FASA. The Executive Order also would authorize the collection 
and dissemination of best practices among agencies for 
achieving the procurement goal established in FASA. However, 
the Executive Order does not provide any tool by which 
contracting officers can identify and utilize women-owned small 
businesses. The Committee believes that the goals expressed in 
FASA and reaffirmed in the Executive Order will not be achieved 
without the use of some mandatory tool which enables 
contracting officers to identify women-owned small businesses 
and establish competition among those businesses for the 
provision of goods and services to the federal government.

                            Committee Action

    The Committee on Small Business held no separate hearings 
on H.R. 4897. During the 106th Congress, the committee 
regularly heard from women-owned businesses about their 
inability to obtain federal prime contracts. The issue also was 
a central focus of a June 8, 2000 hearing by the Subcommittee 
on Government Programs and Oversight entitled ``Focus on 
Women's Business Enterprises.'' During that hearing, both the 
National Black Chamber of Commerce and the National Association 
of Women Business Owners expressed concern with the federal 
government's failure to meet the five percent goal set forth in 
FASA.

                       Consideration of H.R. 4897

    At 11:30 a.m. on July 27, 2000, the Committee on Small 
Business met to consider and report H.R. 4897. Following a 
brief opening statement by the Ranking Democratic Member, Ms. 
Velazquez, the Chairman declared the bill open for amendment. 
No amendments were offered. Chairman Talent then moved the bill 
be reported, and at 12:04 p.m., by unanimous voice vote, a 
quorum being present, the Committee passed H.R. 4897 and 
ordered it reported.

                      Section-by-Section Analysis

Section 1. Short title

    Designates the bill as the ``Equity in Contracting for 
Women Act of 2000.''

Section 2. Procurement program for womens's small business concerns

    This section modifies section 8 of the Small Business Act 
by adding a new subsection (m) to establish a Procurement 
Program for Women's Small Business Concerns.
    Paragraph (1) gives the same definition to a ``contracting 
officer'' as provided under the Office of Federal Procurement 
Policy Act.
    Paragraph (1) also defines a ``small business concern owned 
and controlled by women'' as one that is at least 51 percent 
owned and controlled by women who are economically 
disadvantaged. The Committee intends that the Small Business 
Administration develop standards for the determination of 
economic disadvantage which are consistent with other Small 
Business Administration programs designed to assist 
``economically disadvantaged'' small business concerns.
    Paragraph (2) authorizes federal agencies to reserve any 
contract for competition by small business concerns owned and 
controlled by women if the following criteria are satisfied: 
(a) the firm is a responsible bidder; (b) the contracting 
officer expects that two or more small business concerns owned 
and controlled by women will submit bids on the contract; (c) 
the contract is for the procurement of goods and services in an 
industry identified by the Administrator of the Small Business 
Administration as one in which small business concerns owned 
and controlled by women are historically underrepresented; (d) 
if the anticipated award amount of the contract does not exceed 
$5,000,000 for a manufacturing business or $3,000,000 for all 
other contracts; (e) if the contracting officer can anticipate 
that the award will be made at reasonable price; and (f) if the 
concern is certified as a small business concern owned and 
controlled by women.
    The Committee intends that a certification by any federal, 
state or local governmental entity should satisfy this last 
criterion as long as the certification tracks the definition of 
small business concern owned and controlled by women as used in 
this Act. However, the Committee does not intend for the 
Administrator to establish a certification program for small 
business concerns owned and controlled by women.
    In addition, the Committee expects that the contracting 
officers will accept self-certification so long as the 
documentation provided along with the response to the 
solicitation enables the contracting officer to determine that 
the bidder is a small business concern owned and controlled by 
women as used in this Act. The Committee expects that the 
Administrator will develop documentation standards that will be 
utilized by allcontracting officers. For purposes of developing 
standards of documentation, the Committee does not expect that the 
Administrator should duplicate the documentation requirements for its 
8(a) program. Nevertheless, the documentation should be sufficiently 
demanding so that a contracting officer can pierce the veil of various 
business enterprises to ensure that the bidder meets the definition set 
forth in this Act. Thus, the Committee expects that documentation would 
enable the contracting officer to apply attribution rules set forth in 
Title 13 of the Code of Federal Regulations to determine whether the 
bidder is a small business concern owned and controlled by women.
    The Committee does not intend that the contracting program 
established in this Act provide a basis for contracting 
officers to award contracts on a sole-source basis to small 
business concerns owned and controlled by women. Rather, the 
Committee intends that contracting officers utilize the 
contracting mechanism established in this Act to identify small 
business concerns owned and controlled by women in industries 
in which they are historically represented as prime contractors 
and competitively bid those contracts. Ultimately, the 
Committee expects that the process for identifying these small 
business concerns owned and controlled by women will lead to 
greater utilization of small business concerns owned and 
controlled by women throughout the federal government and not 
just in contracts designated in this Act.
    Paragraph (3) requires that the Administrator conduct a 
study in order to identify those industries in which small 
business concerns owned and controlled by women are 
underrepresented in obtaining federal contracts. The Committee 
expects the Administrator's study to focus on those industries 
in which small business concerns owned and controlled by women 
are underrepresented at the prime contractor level. The study 
shall evaluate, on an industry-by-industry basis the specific 
industries and regions of the United States that are 
underrepresented. In order for the program established in this 
Act to conform with Adarand Constructors v. Pena, 515 U.S. 200 
(1995), the Committee expects that the Administrator's study 
will mirror the ``benchmarking'' study performed by the 
Department of Commerce for small disadvantaged businesses.
    Paragraph 4 requires the Administrator to establish 
procedures for verifying the eligibility of businesses for the 
program established by this Act. The Committee reiterates its 
intent that the Act not be used by the Administrator to 
establish a certification program. Instead, the Committee 
expects the Administrator to develop regulations which will 
efficiently and rapidly resolve disputes over eligibility 
without unduly burdening small businesses.
    Paragraph 4 also requires the Administrator to develop 
regulations by which the Small Business Administration can 
quickly and in a cost-effective manner verify the accuracy of 
any certification, such as, but not limited to, the development 
of lists of other federal, state, and local certifications that 
it will accept.
    Paragraph 4 also authorizes, but does not mandate, the 
Administrator to provide for periodic examinations of the 
program including random program examinations in order to 
determine that respondents to solicitations are businesses 
eligible under this Act. The Committee expects that such 
examinations will not be intrusive but will be sufficient to 
determine that other governmental organizations are providing 
adequate certifications and that self-certification is not 
being abused. The Committee does not intend that these periodic 
or random examinations be transformed into an ongoing 
certification program.
    Paragraph 4 also requires government agencies, including 
those specified in the Act, to provide information and 
assistance to the Administrator in order to carry out the 
purposes of the Act.
    Paragraph also makes clear that small business concerns 
will be subject to penalties beyond those set forth in the 
Small Business Act should they misrepresent their status under 
this Act.

                                     U.S. Congress,
                               Congressional Budget Office,
                                Washington, DC, September 18, 2000.
Hon. James M. Talent,
Chairman, Committee on Small Business,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4897, the Equity 
in Contracting for Women Act of 2000.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Mark 
Grabowicz.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

               congressional budget office cost estimate

H.R. 4897--Equity in Contracting for Women Act of 2000

    CBO estimates that implementing H.R. 4897 would result in 
higher contracting costs for the federal government of several 
million dollars per year, subject to the availability of 
appropriated funds. Enactment of the bill also could affect 
direct spending and receipts, so pay-as-you-go procedures would 
apply. However, CBO estimates that any impact on direct 
spending and receipts would not be significant. H.R. 4897 
contains no intergovernmental or private-sector mandates as 
defined in the Unfunded Mandates Reform Act and would not 
affect the budgets of state, local, or tribal governments.
    H.R. 4897 would direct the Small Business Administration 
(SBA) to conduct a study to identify industries where small 
businesses owned and controlled by economically disadvantaged 
women are underrepresented with respect to receiving federal 
contracts. The bill would then permit federal contracting 
officers to set aside certain contracts involving those 
industries to be awarded to such small businesses. H.R. 4897 
would require that each such contract be valued at no more than 
$5 million, and be awarded at a fair and reasonable price.
    Because H.R. 4897 would allow agencies to set aside certain 
contracts, the bill would likely restrict competition and 
increase the prices of some federal contracts. In fiscal year 
1999, small businesses owned by economically disadvantaged 
women won 12,519 contracts under $5 million each and worth a 
total of about $1.8 billion (for an average contract value of 
$145,000).
    It is difficult to predict the number of contracts that 
would be affected by the bill and any consequent increase in 
price to the government. However, if H.R. 4897 were to result 
in a 5 percent increase in the number of contracts awarded to 
economically disadvantaged women and if the price of each 
contract would exceed the low bid by 5 percent, CBO estimates 
that the bill would cost the federal government close to $5 
million each year, subject to the availability of appropriated 
funds. That estimate assumes that contracts set aside under 
H.R. 4897 would have an average value of about $145,000. In 
addition, based oninformation from SBA, CBO estimates that the 
study required by the bill would cost less than $500,000 in fiscal year 
2001.
    Under H.R. 4897, persons who misrepresent their status as 
small business concerns owned and controlled by economically 
disadvantaged women would be subject to civil and criminal 
fines, so the federal government might collect additional fines 
if the bill is enacted. Collections of criminal fines are 
recorded in the budget as governmental receipts (revenues), 
which are deposited in the Crime Victims Fund and spent in 
subsequent years. Civil fines are recorded as governmental 
receipts. CBO expects that any additional receipts and direct 
spending would be negligible because of the small number of 
cases likely to be involved.
    The CBO staff contact is Mark Grabowicz. This estimate was 
approved by Peter H. Fontaine, Deputy Assistant Director for 
Budget Analysis.

                      Committee Estimate of Costs

    Pursuant to the Congressional Budget Act of 1974, the 
Committee estimates that the amendments to the Small Business 
Act contained in H.R. 4897 will not significantly increase 
discretionary spending over the next five fiscal years. The 
Committee also estimates that H.R. 4897 will not affect direct 
spending. These estimates concur with Congressional Budget 
Office (CBO) estimates.
    Furthermore, pursuant to clause 3(d)(2)(A) of rule XIII of 
the Rules of the House of Representatives, the Committee 
estimates that implementation of H.R. 4897 will not 
significantly increase other administrative costs.

                           Oversight Findings

    In accordance with clause 4(c)(2) of rule X of the Rules of 
the House of Representatives, the Committee states that no 
oversight findings or recommendations have been made by the 
Committee on Government Reform with respect to the subject 
matter contained in H.R. 4897.
    In accordance with clause (2)(b)(1) of rule X of the Rules 
of the House of Representatives, the oversight findings and 
recommendations of the Committee on Small Business with respect 
to the subject matter contained in H.R. 4897 are incorporated 
into the descriptive portions of this report.

                 Statement of Constitutional Authority

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in Article I, Section 8, clause 18, of the 
Constitution of the United States.

                       Compliance With P.L. 104-4

    H.R. 4897 contains no unfunded mandates.

                    Congressional Accountability Act

    H.R. 4897 does not relate to the terms and conditions of 
employment or access to public services or accommodations with 
the meaning of section 102(b)(3) of P.L. 104-1.

                  Federal Advisory Committee Statement

    This legislation does not establish or authorize the 
establishment of any new advisory committees.

         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 (new matter is 
printed in italics and existing law in which no change is 
proposed is shown in roman):

                  SECTION 8 OF THE SMALL BUSINESS ACT

  Sec. 8. (a) * * *

           *       *       *       *       *       *       *

  (m) Procurement Program for Women's 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'' means 
                any small business concern--
                          (i) that is not less than 51 percent 
                        owned by 1 or more women who are 
                        economically disadvantaged; and
                          (ii) the management and daily 
                        business operations of which are 
                        controlled by 1 or more women.
          (2) Authority to set aside contracts.--
        Notwithstanding any other provision of law and in 
        accordance with this subsection, a contracting officer 
        may set aside to be awarded only to a small business 
        concern owned and controlled by women any contract for 
        the procurement of goods or services by the Federal 
        Government, if--
                  (A) the concern is determined to be a 
                responsible contractor with respect to the 
                performance of such contract;
                  (B) the contracting officer has a reasonable 
                expectation that 2 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) the anticipated award price of the 
                contract (including options) does not exceed--
                          (i) $5,000,000, in the case of a 
                        contract assigned a standard industrial 
                        classification code for manufacturing; 
                        or
                          (ii) $3,000,000, in the case of all 
                        other contracts;
                  (E) in the estimation of the contracting 
                officer, the contract award can be made at a 
                fair and reasonable price; and
                  (F) the concern--
                          (i) is certified as a small business 
                        concern owned and controlled by women 
                        by a Federal agency or by a State or 
                        local government; or
                          (ii) certifies to the contracting 
                        officer that it is a small business 
                        concern owned and controlled by women 
                        and provides adequate documentation, in 
                        accordance with standards established 
                        by the Administration, to support such 
                        certification.
          (3) 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.
          (4) 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)(F)); 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)(F).
                  (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)(F).
                  (C) Provision of data.--Upon the request of 
                the Administrator, the Secretary of Labor, the 
                Secretary of Housing and Urban Development, and 
                the Secretary of the Interior (or the Assistant 
                Secretary for Indian Affairs), shall promptly 
                provide to the Administrator such information 
                as the Administrator determines to be necessary 
                to carry out this subsection.
                  (D) 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.

                                  
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