I 

116TH CONGRESS 

1ST SESSION H. R. 227 

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. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 3, 2019 

Ms. VELA ́ZQUEZ (for herself and Mr. KELLY of Mississippi) introduced the 

following bill; which was referred to the Committee on Small Business 

A BILL 

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. 

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 cited as the ‘‘Incentivizing Fairness 

5 in Subcontracting Act’’. 

6 SEC. 2. SMALL BUSINESS LOWER-TIER SUBCONTRACTING. 

7 Section 8(d) of the Small Business Act (15 U.S.C. 

8 637(d)) is amended— 


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1 (1) by amending paragraph (16) to read as fol2 lows: 

3 ‘‘(16) CREDIT FOR CERTAIN SMALL BUSINESS

4 CONCERN SUBCONTRACTORS.— 

5 ‘‘(A) IN GENERAL.—For purposes of deter6 mining whether or not a prime contractor has 

7 attained the percentage goals specified in para8 graph (6)— 

9 ‘‘(i) if the subcontracting goals per10 tain only to a single contract with the Fed11 eral agency, the prime contractor may elect 

12 to receive credit for small business con13 cerns performing as first tier subcontrac14 tors or subcontractors at any tier pursuant 

15 to the subcontracting plans required under 

16 paragraph (6)(D) in an amount equal to 

17 the total dollar value of any subcontracts 

18 awarded to such small business concerns; 

19 and 

20 ‘‘(ii) if the subcontracting goals per21 tain to more than one contract with one or 

22 more Federal agencies, or to one contract 

23 with more than one Federal agency, the 

24 prime contractor may only receive credit 


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1 for first tier subcontractors that are small 

2 business concerns. 

3 ‘‘(B) COLLECTION AND REVIEW OF DATA

4 ON SUBCONTRACTING PLANS.—The head of 

5 each contracting agency shall ensure that— 

6 ‘‘(i) the agency collects and reports 

7 data on the extent to which contractors of 

8 the agency meet the goals and objectives 

9 set forth in subcontracting plans submitted 

10 pursuant to this subsection; and 

11 ‘‘(ii) the agency periodically reviews 

12 data collected and reported pursuant to 

13 subparagraph (A) for the purpose of en14 suring that such contractors comply in 

15 good faith with the requirements of this 

16 subsection and subcontracting plans sub17 mitted by the contractors pursuant to this 

18 subsection. 

19 ‘‘(C) RULE OF CONSTRUCTION.—Nothing 

20 in this paragraph shall be construed to allow a 

21 Federal agency to establish a goaling require22 ment for lower-tier subcontractors of a prime 

23 contractor that is eligible to receive lower-tier 

24 subcontracting credit under this paragraph’’; 

25 and 


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1 (2) by adding at the end the following: 

2 ‘‘(18) DISPUTE PROCESS FOR NON-PAYMENT TO

3 SUBCONTRACTORS.— 

4 ‘‘(A) NOTICE TO AGENCY.—With respect 

5 to a contract with a Federal agency, a subcon6 tractor of a prime contractor on such contract 

7 may, if the subcontractor has not received pay8 ment for performance on such contract within 

9 30 days of the completion of such performance, 

10 notify the Office of Small and Disadvantaged 

11 Business Utilization (‘OSDBU’) of the Federal 

12 agency and the prime contractor of such lack of 

13 payment, if such notice is provided to the agen14 cy within the 15-day period following the end of 

15 such 30 days. 

16 ‘‘(B) AGENCY DETERMINATION.— 

17 ‘‘(i) IN GENERAL.—Upon receipt of a 

18 notice described under subparagraph (A), 

19 the OSDBU shall verify whether such lack 

20 of payment has occurred and determine 

21 whether such lack of payment is due to an 

22 undue restriction placed on the prime con23 tractor by an action of the Federal agency. 

24 ‘‘(ii) RESPONSE DURING DETERMINA25 TION.—During the period in which the 


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1 OSDBU is making the determination 

2 under clause (i), the prime contractor may 

3 respond to both the subcontractor and the 

4 OSDBU with relevant verifying docu5 mentation to either prove payment or al6 lowable status of nonpayment. 

7 ‘‘(C) CURE PERIOD.—If the OSDBU 

8 verifies the lack of payment under subpara9 graph (B) and determines that such lack of 

10 payment is not due to an action of the Federal 

11 agency, the OSDBU shall notify the prime con12 tractor and provide the prime contractor with a 

13 15-day period in which the prime contractor 

14 may make the payment owed to the subcon15 tractor. 

16 ‘‘(D) RESULT OF NONPAYMENT.—If, after 

17 notifying the prime contractor under subpara18 graph (C), the OSDBU determines that the 

19 prime contractor has not fully paid the amount 

20 owed within the 15-day cure period described 

21 under subparagraph (C), the OSDBU shall en22 sure that such failure to pay is reflected in the 

23 Contractor Performance Assessment Reporting 

24 system (or any successor system).’’. 


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1 SEC. 3. MAINTENANCE OF RECORDS WITH RESPECT TO 

2 CREDIT UNDER A SUBCONTRACTING PLAN. 

3 Section 8(d)(6) of the Small Business Act (15 U.S.C. 

4 637(d)(6)) is amended— 

5 (1) by redesignating subparagraphs (G) and 

6 (H) as subparagraphs (H) and (I), respectively (and 

7 conforming the margins accordingly); and 

8 (2) by inserting after subparagraph (F) the fol9 lowing: 

10 ‘‘(G) a recitation of the types of records the 

11 successful offeror or bidder will maintain to dem12 onstrate that procedures have been adopted to sub13 stantiate the credit the successful offeror or bidder 

14 will elect to receive under paragraph (16)(A)(i);’’. 

Æ 


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