79–006 

115TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 115–942 

INCENTIVIZING FAIRNESS IN SUBCONTRACTING ACT 

SEPTEMBER 12, 2018.—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. 6367] 

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

(H.R. 6367) to amend the Small Business Act to specify what credit 

is given for certain subcontractors and to provide a dispute process 

for non-payment to subcontractors, and for other purposes, having 

considered the same, report favorably thereon with an amendment 

and recommend that the bill as amended do pass. 

CONTENTS 

Page 

I. Purpose and Bill Summary ........................................................................ 3 

II. Need for Legislation .................................................................................... 3 

III. Hearings ....................................................................................................... 6 

IV. Committee Consideration ........................................................................... 6 

V. Committee Votes ......................................................................................... 7 

VI. Section-by-Section of H.R. 6367 ................................................................. 9 

VII. Congressional Budget Office Cost Estimate ............................................. 9 

VIII. Unfunded Mandates .................................................................................... 9 

IX. New Budget Authority, Entitlement Authority, and Tax Expenditures 10 

X. Oversight Findings ...................................................................................... 10 

XI. Statement of Constitutional Authority ...................................................... 10 

XII. Congressional Accountability Act .............................................................. 10 

XIII. Federal Advisory Committee Act Statement ............................................ 10 

XIV. Statement of No Earmarks ........................................................................ 10 

XV. Statement of Duplication of Federal Programs ........................................ 10 

XVI. Disclosure of Directed Rule Makings ........................................................ 11 

XVII. Performance Goals and Objectives ............................................................ 11 

XVIII. Changes in Existing Law, Made by the Bill, As Reported ...................... 11 

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Incentivizing Fairness in Subcontracting Act’’. 


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SEC. 2. SMALL BUSINESS LOWER-TIER SUBCONTRACTING. 

Section 8(d) of the Small Business Act (15 U.S.C. 637(d)) is amended— 

(1) by amending paragraph (16) to read as follows: 

‘‘(16) CREDIT FOR CERTAIN SMALL BUSINESS CONCERN SUBCONTRACTORS.— 

‘‘(A) IN GENERAL.—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 Federal agency, the prime contractor may elect to 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 Federal agencies, or to one contract with more than 

one Federal agency, the prime contractor may only count first tier subcontractors that are small business concerns. 

‘‘(B) COLLECTION AND REVIEW OF DATA ON SUBCONTRACTING PLANS.—The 

head of each contracting agency shall ensure that— 

‘‘(i) 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 

‘‘(ii) 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. 

‘‘(C) RULE OF CONSTRUCTION.—Nothing in this paragraph shall permit 

lower-tier subcontracting goaling requirements of prime contractors that 

are eligible to receive lower-tier subcontracting credit under this paragraph.’’; and 

(2) by adding at the end the following: 

‘‘(18) DISPUTE PROCESS FOR NON-PAYMENT TO SUBCONTRACTORS.— 

‘‘(A) NOTICE TO AGENCY.—With respect to a contract with a Federal agency, a subcontractor of a prime contractor on such contract may, if the subcontractor has not received payment for work performed within 90 days of 

the completion of such work, notify the Office of Small and Disadvantaged 

Business Utilization (‘OSDBU’) of the Federal agency and the prime contractor of such lack of payment, if such notice is provided to the agency 

within the 15-day period following the end of such 90 days. 

‘‘(B) AGENCY DETERMINATION.— 

‘‘(i) IN GENERAL.—Upon receipt of a notice described under subparagraph (A), the OSDBU shall verify whether such lack of payment has 

occurred and determine whether such lack of payment is due to an 

undue restriction placed on the prime contractor by an action of the 

Federal agency. 

‘‘(ii) RESPONSE DURING DETERMINATION.—During the period in which 

the OSDBU is making the determination under clause (i), the prime 

contractor may respond to both the subcontractor and the OSDBU with 

relevant verifying documentation to either prove payment or allowable 

status of nonpayment. 

‘‘(C) CURE PERIOD.—If the OSDBU verifies the lack of payment under 

subparagraph (B) and determines that such lack of payment is not due to 

an action of the Federal agency, the OSDBU shall notify the prime contractor and provide the prime contractor with a 15-day period in which the 

prime contractor may make the payment owed to the subcontractor. 

‘‘(D) RESULT OF NONPAYMENT.—If, after notifying the prime contractor 

under subparagraph (C), the OSDBU determines that the prime contractor 

has not fully paid the amount owed within the 15-day cure period described 

under subparagraph (C), the OSDBU shall ensure that such failure to pay 

is reflected in the Contractor Performance Assessment Reporting system.’’. 

SEC. 3. MAINTENANCE OF RECORDS WITH RESPECT TO CREDIT UNDER A SUBCONTRACTING 

PLAN. 

Section 8(d)(6) of the Small Business Act (15 U.S.C. 637(d)(6)) is amended— 

(1) by redesignating subparagraphs (G) and (H) as subparagraphs (H) and (I), 

respectively; and 

(2) by inserting after subparagraph (F) the following: 

‘‘(G) a recitation of the types of records the successful offeror or bidder will 

maintain to demonstrate that procedures have been adopted to substantiate the 


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1 15 U.S.C. § 637(d)(4); 48 C.F.R. § 19.702. A subcontractor is defined as ‘‘any supplier, distributor, vendor, or firm that furnishes supplies or services to or for a prime contractor or another subcontractor.’’ 48 C.F.R. § 44.101. 2 48 C.F.R. § 19.704. 

3See, e.g., FirstLine Transp. Sec., Inc. v. United States, 12–601C, 2012 WL 5939228 (Fed. Cl. 

Nov. 19, 2012)(Court of Federal Claims denied a pre-award protest challenging a solicitation’s 

small business subcontracting goal of 40% of the total contract value, holding that this goal was 

within the high level of discretion afforded to the agency). 4 15 U.S.C. § 637(d)(9); 48 C.F.R. § 19.705–4. 

credit the successful offeror or bidder will elect to receive under paragraph 

(16)(A)(i);’’. 

I. PURPOSE AND BILL SUMMARY

The purpose of H.R. 6367, the ‘‘Incentivizing Fairness in Subcontracting Act,’’ is to ensure greater accountability for prime contractors electing to receive subcontracting credit for subcontracting 

with small businesses at lower tiers, and to provide small businesses with an alternative avenue for nonpayment issues with the 

prime contractor. 

H.R. 6367 clarifies that large prime contractors have the ability 

to receive subcontracting credit for small businesses at lower tiers; 

strengthens the agency’s ability to collect and review data regarding prime contractors achievement of their subcontracting plans; 

requires the prime contractor to keep and maintain records to demonstrate subcontracting credit claimed; and implements a new dispute process allowing small subcontractors to bring nonpayment 

issues to the agency small business advocate. 

II. BACKGROUND AND NEED FOR LEGISLATION

H.R. 6367 was introduced by Rep. Al Lawson, Jr. (D–FL) and 

Rep. Trent Kelly (R–MS) on July 13, 2018. Background on each of 

the bill’s provisions is provided below, along with an explanation of 

the need for legislation. 

A. SUBCONTRACTING: REQUIREMENTS OF THE SMALL BUSINESS ACT

The Small Business Act requires that any other-than-small business receiving a prime contract worth more than $700,000 (or $1.5 

million in the case of contracts for construction) must negotiate a 

subcontracting plan with the contracting agency as a material condition of the contract.1 Likewise, if the prime contractor is an 

other-than-small business that in turn subcontracts to an otherthan-small business for an amount above the aforementioned dollar 

thresholds, the subcontractor must also negotiate a subcontracting 

plan with the prime contractor. These subcontracting plans delineate subcontracting opportunities for each of the five categories of 

small businesses, usually as a percentage of work that will be subcontracted.2 Some plans state the goals as a percentage of contract 

value.3 Failure to meet the subcontracting goals is reflected in past 

performance ratings on prime contractors, and if the failure is due 

to a lack of good faith, it can be treated as a material breach of 

the contract.4 If the prime contractor is found not to have made a 

good faith effort to comply with the subcontracting plan, the contracting agency may pursue liquidated damages equivalent to the 


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5 48 C.F.R. § 19.707–7(b). 

6 According to the SBA, PCRs ‘‘increase the small business share of Federal procurement 

awards by initiating small business set-asides, reserving procurements for competition among 

small business firms; providing small business sources to Federal buying activities; and counseling small firms. In addition, PCRs, advocate for the breakout of items for full and open competition to affect savings to the Federal Government.’’ SBA, GOVERNMENT CONTRACTING FIELD

STAFF DIRECTORY (2011) available at http://www.sba.gov/content/government-contracting-fieldstaff-directory. 7 CMRs also assist small businesses seeking subcontracts through counseling and matchmaking. FIELD STAFF DIRECTORY. 8 48 C.F.R. § 19.704. 

9The average CMR is responsible for 90 to 200 prime contractors. GAO, IMPROVEMENTS NEEDED TO HELP ENSURE RELIABILITY OF SBA’S PERFORMANCE DATA ON PROCUREMENT CENTER REPRESENTATIVES 2 (2011). 10FAR Subpart 19.7, The Small Business Subcontracting Program. 11Pub. L. 114–328, § 1821. 

amount by which the contractor failed to achieve its subcontracting 

goals.5

B. RESPONSIBILITY TO MONITOR PRIME CONTRACTOR COMPLIANCE

WITH SUBCONTRACTING PLANS

Firms with subcontracting plans are required to submit semiannual individual contract reports and summary subcontracting reports annually or semiannually, depending on the federal agency’s 

specific requirements, to the Electronic Subcontracting Reporting 

System (ESRS). The SBA Procurement Center Representative 

(PCR),6 when available, provides an opinion to the contracting officer on the appropriate subcontracting goals, and then the Commercial Market Representative (CMR) 7 and contracting officer assume 

responsibility for post-award compliance. Agencies and prime contractors are required to report on subcontract performance, and 

compliance with the subcontracting goal is reflected in past performance reports on prime contractors.8 However, given the sheer 

volume of other-than-small prime contractors compared to the 

number of full and part time CMRs,9 contracting officers are the 

primary officials responsible for ensuring compliance with subcontracting plans. 

Specifically, the contracting officer is responsible for certain responsibilities regarding subcontracting plans. This includes ‘‘determining whether the contract requires a subcontracting plan, reviewing the subcontracting plan for adequacy, acknowledging receipt of subcontracting reports in the Electronic Subcontracting Reporting System (eSRS), and determining whether the contractor 

made a good faith effort to meet its subcontracting goals.’’ 10 Additionally, section 1821 of Public Law 114–328, the National Defense 

Authorization Act of 2017 imposed a statutory requirement that 

the Offices of Small and Disadvantaged Business Utilization 

(OSDBUs) ‘‘shall review all subcontracting plans . . . to ensure the 

plan provides maximum practicable opportunity for small business 

concerns to participate in the performance of the contract to which 

the plan applies.’’ 11

C. LIQUIDATED DAMAGES FOR FAILURE TO MEET SUBCONTRACTING

PLANS

Since the liquidated damages penalty is triggered by the failure 

to make a good faith effort to comply with a subcontracting plan 

rather than the failure to achieve the goals in the plan, the important issue becomes how the SBA defines a good faith effort. A 


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12 13 C.F.R. § 125.3(d). 13 48 C.F.R. § 19.705–6(f). 14DODIG, SMALL BUSINESS CONTRACTING AT TWO ARMY CONTRACTING COMMAND LOCATIONS

(DODIG–2018–086), available at https://media.defense.gov/2018/Mar/20/2001892168/-1/-1/1/ 

DODIG-2018-086.PDF [hereinafter ‘‘ACC Report’’]. 15 Id. 16 ACC Report at 1. 17 ACC Report at 19. 18 ACC Report at 14. 

prime contractor can demonstrate that it has made a good faith effort in one of three ways: (1) by meeting its goals; (2) by overachieving in some categories to make up for an underachievement 

in other categories; or (3) by performing one of a laundry list of actions.12 This list of actions is so broad that it is almost impossible 

for a contracting officer to issue a notice that a large prime contractor has failed to make a good faith effort to comply with its 

subcontracting plan. However, if such notice is issued, the contracting officer is then responsible for ‘‘[i]nitiating action to assess 

liquidated damages.’’ 13

The threat of liquidated damages is an empty one for many 

prime contractors. Given the sheer volume of work contracting officers undertake, along with pressure by federal agencies to do more 

with less, many contracting officers disregard post-award compliance as a priority as opposed to acquiring the goods and services 

the agency needs to function on a daily basis. As a result, the liquidated damages clause is not often invoked, minimizing its deterrent effect. Thus, small businesses continue to struggle to receive 

subcontracting opportunities. 

D. EXAMPLE: DEPARTMENT OF DEFENSE INSPECTOR GENERAL (DODIG)

AUDIT FOUND SIGNIFICANT ISSUES WITH SUBCONTRACTING PLAN

ADMINISTRATION AT ARMY

In 2018, the DODIG examined two Army Contracting Commands 

(ACC), Redstone and Warren, assessing their administration of 

subcontracting plans. Of the 50 contracts reviewed (valued at $1.6 

billion), the DODIG found that for 23 contracts—nearly half—ACC 

failed to ensure prime contractors provided small businesses with 

adequate subcontracting opportunities.14 This totaled to a value of 

$914.8 million in subcontracting opportunities that small business 

may have been denied, and that prime contractors were required 

to make a good-faith effort to provide.15

In addition, the DODIG found that ACC contracting officials ‘‘did 

not obtain subcontracting reports, did not follow up on reports that 

showed contractors were not meeting their small business goals, 

and did not determine whether prime contractors made good faith 

efforts to comply with negotiated subcontracting goals . . . Therefore, ACC-Redstone and ACC-Warren . . . may have missed opportunities to recoup liquidated damages of up to $82.3 million.’’ 16

During the audit, the DODIG notified ACC of these findings who 

took action, determining that good-faith efforts were met by 9 out 

of the 17 contracts brought to their attention.17

The DODIG found a number of reasons why ACC failed to meet 

its subcontracting plan requirements. First, the DODIG found that 

ACC ‘‘did not provide adequate training or standard operating procedures on the administration of subcontracting plans.’’ 18 ACC 

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19 Id. 20 ACC Report at 14. 21 Id. 22 ACC Report at 16. 23 ACC Report at 9–10. 24 ACC Report at 15. 

tracting plans, with little guidance on post-award responsibilities.19

Notably, the DODIG found that the Army Federal Acquisition Regulation Supplement (AFARS) did not include any guidance on responsibilities of contracting officials in administering subcontracting plans.20 Additionally, the DODIG also found that the high 

turnover rate at ACC 21 and lack of guidance regarding transferring subcontracting administration duties compounded the problem.22 This rendered the ACC unable to make the necessary assessments of prime contractors’ compliance with their subcontracting responsibilities.23

A key finding by the DODIG found that ACC contracting officials 

‘‘stated that administering subcontracting plans was not a high priority,’’ explaining that they were busy fulfilling customer requirements.24 During a hearing conducted by the Committee on May 17, 

2018 examining the results of this DODIG audit, the witness representing the Association of Procurement Technical Assistance 

Centers testified that this finding was widespread across the federal government, and not specific to only the ACC or military. 

III. HEARINGS

In the 115th Congress, the Committee held a hearing examining 

the issues covered in H.R. 6367. On May 17, 2018, the Committee 

on Small Business Subcommittee on Contracting and Workforce 

met for a hearing titled ‘‘Hotline Truths II: Audit Reveals Inconsistencies in Defense Subcontracting.’’ This hearing continued the 

Committee’s longstanding and ongoing efforts to identify waste, 

fraud, and abuse in the federal contracting system and to ensure 

small contractors have an opportunity to compete at the prime and 

subcontracting levels. As a result of hotline complaints, the DODIG 

reviewed contracting activities at Army Contracting Commands 

Redstone and Warren for compliance with the Small Business Act. 

Witnesses included the Assistant Inspector General for Readiness 

and Global Operations for the Department of Defense Inspector 

General, the Director of the Army Office of Small Business Programs, and the President of the Association of Procurement Technical Assistance Centers. 

IV. COMMITTEE CONSIDERATION

The Committee on Small Business met in open session, with a 

quorum being present, on July 18, 2018 and ordered H.R. 6367 favorably reported to the House. During the markup, one amendment 

was offered. 

Amendment Number One was offered by Rep. Trent Kelly of Mississippi. This amendment requires that prime contractors electing 

to receive subcontracting credit at lower tiers be able to justify 

their credit through accurate recordkeeping. The amendment also 

requires that subcontractors using the new dispute process created 

by the bill must also notify the prime contractor. The amendment 

passed by voice vote at 11:50 a.m. 


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V. 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 legislation and amendments thereto. The Committee 

voted by voice vote to favorably report H.R. 6367 to the House at 

11:50 a.m. 


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VI. SECTION-BY-SECTION ANALYSIS OF H.R. 6367 

Section 1. Short title 

This section designates the short title as the ‘‘Incentivizing Fairness in Subcontracting Act.’’ 

Section 2. Small Business lower-tier subcontracting 

This section amends Section 8(d) of the Small Business Act pertaining to credit received by prime contractors for small business 

subcontracting by amending the statutory language that a prime 

contractor ‘‘shall’’ receive credit for small business concerns performing as subcontractors at any tier to a more flexible standard 

that the prime contractor ‘‘may elect to receive credit.’’ This section 

also changes the word ‘‘executive’’ agency to ‘‘Federal’’ agency. 

This section also creates a new subsection in the Small Business 

Act clarifying that the head of the contracting agency has the ability to collect information, report on, and review data on subcontracting plans to ensure that prime contractors are meeting their 

subcontracting plans in good faith. This section further clarifies 

that there is only one subcontracting goal, and that this goal will 

not be broken down into lower-tier sub-goals. 

In addition, this section also creates a new dispute process for 

subcontractors facing nonpayment issues by prime contractors by 

allowing a subcontractor to notify the agency Office of Small and 

Disadvantaged Business Utilization (OSDBU) of the lack of payment if the subcontractor had not received payment for work completed within 90 days of completion of such work by the prime contractor. The OSDBU may also verify whether such payment had occurred and if the nonpayment is justified by the prime contractor. 

During this time, the prime contractor is permitted to respond to 

this dispute by submitting evidence to support evidence of payment 

or allowable nonpayment. If the OSDBU determines such lack of 

payment to be unsupported, the OSDBU is required to notify the 

prime contractor, who will have a 15-day period to make the payment owed to the small business subcontractor. If the prime contractor fails to meet the 15-day deadline, this nonpayment will be 

reflected on the prime contractor’s performance assessment rating 

which is undertaken by the contracting officer. 

Section 3. Maintenance of records with respect to credit under a 

subcontracting plan 

This section amends Section 8(d)(6) of the Small Business Act by 

requiring that prime contractors engage in accurate recordkeeping 

if electing to receive subcontracting credit at lower tiers; these 

records may be used to substantiate the prime contractors claims 

to receive small business subcontracting credit at lower tiers. 

VII. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

At the time H.R. 6367 was reported to the House, the Congressional Budget Office had not provided a cost estimate. 

VIII. UNFUNDED MANDATES

H.R. 6367 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act, Public 


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Law No. 104–4, and would impose no costs on state, local, or tribal 

governments. 

IX. 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 there will be any additional costs attributable 

to this legislation. H.R. 6367 does not direct new spending, but instead reallocates funding independently authorized and appropriated. 

X. 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. 6367 are incorporated into the descriptive portions 

of this report. 

XI. STATEMENT OF CONSTITUTIONAL AUTHORITY

Pursuant to clause 7 of rule XII of the Rules of the House, the 

Committee finds that the authority for this legislation in Art. I, § 8, 

cl.1. 

XII. CONGRESSIONAL ACCOUNTABILITY ACT

H.R. 6367 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 Public Law No. 104–1. 

XIII. FEDERAL ADVISORY COMMITTEE ACT STATEMENT

H.R. 6367 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. 

XIV. STATEMENT OF NO EARMARKS

Pursuant to clause 9 of rule XXI, H.R. 6367 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. 

XV. STATEMENT OF DUPLICATION OF FEDERAL PROGRAMS

Pursuant to clause 3 of rule XIII of the Rules of the House, no 

provision of H.R. 6367 establishes or reauthorizes a program of the 

federal government known to be duplicative of another federal program, a program that was included in any report from the United 

States Government Accountability Office pursuant to § 21 of Pub. 


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L. No. 111–139, or a program related to a program identified in the 

most recent catalog of federal domestic assistance. 

XVI. DISCLOSURE OF DIRECTED RULEMAKINGS

Pursuant to clause 3 of the rule XIII of the Rules of the House, 

H.R. 6367 does not direct any rulemaking. 

XVII. 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. 6367 allows prime contractors to receive subcontracting 

credit for small business subcontracting at lower tiers, but requires prime contractors electing to receive such credit keep accurate records substantiating the credit claimed. The bill also 

creates an alternative dispute processes for small subcontractors that do not receive payment for work completed within 90 

days of the completed work. The objectives are to strengthen 

accountability for prime contractors electing to receive credit 

for subcontracting to small businesses, and to allow small businesses another avenue for avenue for redress, if payment is 

being withheld unfairly by the large prime contractor. 

XVIII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause (E) of rule XIII of the Rules of the 

House, 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: 

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. 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 


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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 regarding 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 


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(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. 

(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. 


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(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, packaging 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 


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15 

(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 enterprise 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 

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sistance 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 

(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 


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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. 

(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 teleVerDate Sep 11 2014 22:30 Sep 14, 2018 Jkt 079006 PO 00000 Frm 00017 Fmt 6659 Sfmt 6602 E:\HR\OC\HR942.XXX HR942

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phone 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. 

(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 


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(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. 

(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 

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turer 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 

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). 


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(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. 

(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: 


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(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 

(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— 


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(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 

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 


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(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 

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 

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standing, 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 students 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, 

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ness 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 ‘‘smallbusiness 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 


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27 

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; 

(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, 


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28 

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, 

United States Code), veterans, and members of a reserve component of the Armed Forces. 

(c) [Reserved.] 

(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 

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29 

nents, 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 

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 


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30 

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. 

(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 


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31 

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 

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, 


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32 

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 subcontracting 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 


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33 

(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; 

(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 that procedures have 

been adopted to substantiate the credit the successful offeror or 

bidder will elect to receive under paragraph (16)(A)(i); 

ø(G)¿ (H) 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 

ø(H)¿ (I) 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 

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tives 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. 

(9) MATERIAL BREACH.—The failure of any contractor or subcontractor to comply in good faith with— 

(A) the clause contained in paragraph (3) of this subsection, 

(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. 

(11) 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 findings, 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.— 


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35 

(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 

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. 

ø(16) CREDIT FOR CERTAIN SUBCONTRACTORS.— ø(A) For purposes of determining whether or not a prime 

contractor has attained the percentage goals specified in paragraph (6)— 


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36 

ø(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 

ø(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 

contractor may only count first tier subcontractors that are 

small business concerns. 

ø(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).¿ 

(16) CREDIT FOR CERTAIN SMALL BUSINESS CONCERN SUBCONTRACTORS.— 

(A) IN GENERAL.—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 Federal agency, the prime contractor 

may elect to 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 Federal agencies, or to 

one contract with more than one Federal agency, the 

prime contractor may only count first tier subcontractors that are small business concerns. 

(B) COLLECTION AND REVIEW OF DATA ON SUBCONTRACTING PLANS.—The head of each contracting agency 

shall ensure that— 

(i) 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 

(ii) 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. 

(C) RULE OF CONSTRUCTION.—Nothing in this paragraph 

shall permit lower-tier subcontracting goaling requirements 

of prime contractors that are eligible to receive lower-tier 

subcontracting credit under this paragraph. 


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37 

(17) 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 without a past performance rating as a prime contractor 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 no later than 270 

days after the small business concern completed the work for 

which it seeks a past performance rating or 180 days after the 

prime contractor completes work on the covered contract, 

whichever is earlier. 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 Office 

of Small and Disadvantaged Business Utilization for the covered contract and to the prime contractor for review. The Office 

of Small and Disadvantaged Business Utilization 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 Office of Small and 

Disadvantaged Business Utilization and the prime contractor agree on a past performance rating, or if either the 

Office of Small and Disadvantaged Business Utilization or 

the prime contractor fail to respond and the responding 

person 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 Office of Small 

and Disadvantaged Business Utilization and the prime 

contractor fail to respond within 30 days or if they disagree about the rating, or if either the Office of Small and 

Disadvantaged Business Utilization or the prime contractor fail to respond and the responding person disagrees 

with the rating of the applicant small business concern, 

the Office of Small and Disadvantaged Business Utilization or the prime contractor shall submit a notice contesting the application to the 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 into 

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38 

ther favorable nor unfavorable along with the initial application from such concern, any responses of the Office of Small 

and Disadvantaged Business Utilization and the prime contractor, and any additional information provided by such concern. A copy of the information submitted shall be provided to 

the contracting officer (or designee of such officer) for the covered contract. 

(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 applicant 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 and, set forth 

separately, the number of small business exporters, that 

have received past performance ratings under the pilot 

program; 

(ii) the number of applications, set forth separately by 

applications from small business concerns and from small 

business exporters, 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; 

(iv) the number of small business concerns awarded 

prime contracts after receiving a past performance rating 

under this pilot program; and 

(v) any suggestions or recommendation the Comptroller 

General has to improve the operation of the pilot program. 

(H) DEFINITIONS.—In this paragraph— 

(i) the term ‘‘appropriate official’’ means— 

(I) a commercial market representative; 

(II) another individual designated by the senior official appointed by the Administrator with responsibilities under sections 8, 15, 31, and 36; or 

(III) the Office of Small and Disadvantaged Business 

Utilization of a Federal agency, if the head of the Federal agency and the Administrator agree; 

(ii) the term ‘‘defense item’’ has the meaning given that 

term in section 38(j)(4)(A) of the Arms Export Control Act 

(22 U.S.C. 2778(j)(4)(A)); 


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39 

(iii) the term ‘‘major non-NATO ally’’ means a country 

designated as a major non-NATO ally under section 517 of 

the Foreign Assistance Act of 1961 (22 U.S.C. 2321k); 

(iv) the term ‘‘past performance’’ includes performance of 

a contract for a sale of defense items (under section 38 of 

the Arms Export Control Act (22 U.S.C. 2778)) to the government of a member nation of North Atlantic Treaty Organization, the government of a major non-NATO ally, or 

the government of a country with which the United States 

has a defense cooperation agreement (as certified by the 

Secretary of State); and 

(v) the term ‘‘small business exporter’’ means a small 

business concern that exports defense items under section 

38 of the Arms Export Control Act (22 U.S.C. 2778) to the 

government of a member nation of the North Atlantic 

Treaty Organization, the government of a major nonNATO ally, or the government of a country with which the 

United States has a defense cooperation agreement (as certified by the Secretary of State). 

(18) DISPUTE PROCESS FOR NON-PAYMENT TO SUBCONTRAC- TORS.— 

(A) NOTICE TO AGENCY.—With respect to a contract with 

a Federal agency, a subcontractor of a prime contractor on 

such contract may, if the subcontractor has not received 

payment for work performed within 90 days of the completion of such work, notify the Office of Small and Disadvantaged Business Utilization (‘‘OSDBU’’) of the Federal agency and the prime contractor of such lack of payment, if 

such notice is provided to the agency within the 15-day period following the end of such 90 days. 

(B) AGENCY DETERMINATION.— (i) IN GENERAL.—Upon receipt of a notice described 

under subparagraph (A), the OSDBU shall verify 

whether such lack of payment has occurred and determine whether such lack of payment is due to an undue 

restriction placed on the prime contractor by an action 

of the Federal agency. 

(ii) RESPONSE DURING DETERMINATION.—During the 

period in which the OSDBU is making the determination under clause (i), the prime contractor may respond 

to both the subcontractor and the OSDBU with relevant verifying documentation to either prove payment 

or allowable status of nonpayment. 

(C) CURE PERIOD.—If the OSDBU verifies the lack of payment under subparagraph (B) and determines that such 

lack of payment is not due to an action of the Federal agency, the OSDBU shall notify the prime contractor and provide the prime contractor with a 15-day period in which the 

prime contractor may make the payment owed to the subcontractor. 

(D) RESULT OF NONPAYMENT.—If, after notifying the 

prime contractor under subparagraph (C), the OSDBU determines that the prime contractor has not fully paid the 

amount owed within the 15-day cure period described 

under subparagraph (C), the OSDBU shall ensure that 


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such failure to pay is reflected in the Contractor Performance Assessment Reporting system. 

(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 con- tract 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; 

(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. 


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(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; 

(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 


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42 

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 Administrative 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 


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43 

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 BUSI- NESS 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. 

(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— 


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44 

(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). 

(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— 


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45 

(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 ECONOMI- CALLY 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 BUSI- NESS CONCERNS OWNED AND CONTROLLED BY WOMEN IN SUB- STANTIALLY 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 

(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 


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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. 

* * * * * * * 

Æ 


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