I 

116TH CONGRESS 

1ST SESSION H. R. 2022 

To establish certain procurement procedures with respect to businesses whollyowned through an ESOP, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 2, 2019 

Mr. BUCSHON introduced the following bill; which was referred to the Committee on Oversight and Reform, and in addition to the Committees on 

Armed Services, and Small Business, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions 

as fall within the jurisdiction of the committee concerned 

A BILL 

To establish certain procurement procedures with respect 

to businesses wholly-owned through an ESOP, and for 

other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be referred to as the ‘‘ESOP Business 

5 Act of 2019’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 


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1 (1) Businesses wholly-owned through an 

2 ESOP— 

3 (A) offer unique benefits to the United 

4 States and to customers of such businesses; 

5 (B) provide better retirement security, 

6 work culture, and wage growth for workers; and 

7 (C) reduce wealth inequality among man8 agers and employees. 

9 (2) Current Federal contracting laws may inad10 vertently exclude businesses wholly-owned through 

11 an ESOP from key projects. 

12 (3) The growth of the number of businesses 

13 wholly-owned through an ESOP benefits employees 

14 of such businesses. 

15 SEC. 3. SENSE OF CONGRESS. 

16 It is the sense of Congress that— 

17 (1) businesses wholly-owned through an ESOP 

18 are beneficial to the economy; 

19 (2) Congress should provide incentives for busi20 nesses to become businesses wholly-owned through 

21 an ESOP; and 

22 (3) businesses wholly-owned through an ESOP 

23 should be rewarded through the Federal contracting 

24 process for the benefits that such businesses provide. 


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1 SEC. 4. DEEMING OF BUSINESSES WHOLLY-OWNED 

2 THROUGH AN ESOP AS SMALL BUSINESS 

3 CONCERNS. 

4 Section 3(a) of the Small Business Act (15 U.S.C. 

5 632(a)) is amended by adding at the end the following 

6 new paragraph: 

7 ‘‘(10) APPLICATION TO BUSINESSES WHOLLY8 OWNED THROUGH AN ESOP.— 

9 ‘‘(A) IN GENERAL.—Notwithstanding the 

10 requirements relating to size standards in this 

11 subsection, a business wholly-owned through an 

12 ESOP shall be deemed to be a small business 

13 concern for the purposes of any Federal pro14 curement programs. 

15 ‘‘(B) DEFINITION.—The term ‘business 

16 wholly-owned through an ESOP’ means a busi17 ness for which 100 percent of the outstanding 

18 stock is held through an employee stock owner19 ship plan (as defined in section 4795(e)(7) of 

20 the Internal Revenue Code).’’. 

21 SEC. 5. PRICING PREFERENCE FOR CONTRACTS AWARDED 

22 TO BUSINESSES WHOLLY-OWNED THROUGH 

23 AN ESOP. 

24 (a) PRICING PREFERENCE FOR DEFENSE CON25 TRACTS.—Section 2304 of title 10, United States Code, 


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1 is amended by adding at the end the following new sub2 section: 

3 ‘‘(m) For a contract awarded pursuant to this sec4 tion, the head of the agency may enter into a contract 

5 with a business wholly-owned through an ESOP using a 

6 price evaluation preference not in excess of 10 percent 

7 when evaluating an offer received from such a business. 

8 In this subsection, the term ‘business wholly-owned 

9 through an ESOP’ means a business for which 100 per10 cent of the outstanding stock is held through an employee 

11 stock ownership plan (as defined in section 4795(e)(7) of 

12 the Internal Revenue Code).’’. 

13 (b) PRICING PREFERENCE FOR CIVILIAN CON14 TRACTS.—Section 3301 of title 41, United States Code, 

15 is amended by adding at the end the following new sub16 section: 

17 ‘‘(g) PRICING PREFERENCE FOR CONTRACTS.—For 

18 a contract awarded pursuant to this section, the head of 

19 an agency may enter into a contract with a business whol20 ly-owned through an ESOP using a price evaluation pref21 erence not in excess of 10 percent when evaluating an 

22 offer received from such a business. In this subsection, 

23 the term ‘business wholly-owned through an ESOP’ means 

24 a business for which 100 percent of the outstanding stock 

25 is held through an employee stock ownership plan (as deVerDate Sep 11 2014 01:05 Apr 13, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2022.IH H2022

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1 fined in section 4795(e)(7) of the Internal Revenue 

2 Code).’’. 

3 SEC. 6. FOLLOW-ON CONTRACTS FOR BUSINESSES WHOL4 LY-OWNED THROUGH AN ESOP. 

5 (a) USE OF NONCOMPETITIVE PROCEDURES FOR

6 DEFENSE CONTRACTS.—Section 2304(d)(1) of title 10, 

7 United States Code, is amended by adding at the end the 

8 following new subparagraph: 

9 ‘‘(C) in the case of a follow-on contract for the 

10 delivery of goods or services that are the same as or 

11 substantially similar to the goods or services deliv12 ered under a prior contract awarded to a source that 

13 is a business wholly-owned through an ESOP (as de14 fined in subsection (m)), such goods or services shall 

15 be deemed to be available only from that source if 

16 the Secretary rates the performance of that source 

17 on the prior contract as satisfactory or better (or the 

18 equivalent) in the applicable past performance data19 base used by the Secretary for making source selec20 tion decisions’’. 

21 (b) USE OF NONCOMPETITIVE PROCEDURES FOR CI22 VILIAN CONTRACTS.—Section 3304(b) of title 41, United 

23 States Code, is amended— 

24 (1) in paragraph (1), by striking ‘‘or’’ after 

25 ‘‘procurement;’’; 


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1 (2) in paragraph (2)(B), by striking the period 

2 and inserting ‘‘; or’’; and 

3 (3) by adding at the end the following: 

4 ‘‘(3) a follow-on contract for the delivery of 

5 goods or services determined by the head of the ex6 ecutive agency to be substantially similar to the 

7 goods or services delivered under a prior contract 

8 awarded to a source that is a business wholly-owned 

9 through an ESOP, such goods or services shall be 

10 deemed to be available only from that source if the 

11 executive agency rates the performance of that 

12 source on the prior contract as satisfactory or better 

13 (or the equivalent) in the applicable past perform14 ance database used by the head of the agency for 

15 making source selection decisions.’’. 

Æ 


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