116TH CONGRESS 

1ST SESSION H. R. 227 

AN ACT 

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, 
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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Incentivizing Fairness 

3 in Subcontracting Act’’. 

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

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

6 637(d)) is amended— 

7 (1) by amending paragraph (16) to read as fol8 lows: 

9 ‘‘(16) CREDIT FOR CERTAIN SMALL BUSINESS

10 CONCERN SUBCONTRACTORS.— 

11 ‘‘(A) IN GENERAL.—For purposes of deter12 mining whether or not a prime contractor has 

13 attained the percentage goals specified in para14 graph (6)— 

15 ‘‘(i) if the subcontracting goals per16 tain only to a single contract with the Fed17 eral agency, the prime contractor may elect 

18 to receive credit for small business con19 cerns performing as first tier subcontrac20 tors or subcontractors at any tier pursuant 

21 to the subcontracting plans required under 

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

23 the total dollar value of any subcontracts 

24 awarded to such small business concerns; 

25 and 
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1 ‘‘(ii) if the subcontracting goals per2 tain to more than one contract with one or 

3 more Federal agencies, or to one contract 

4 with more than one Federal agency, the 

5 prime contractor may only receive credit 

6 for first tier subcontractors that are small 

7 business concerns. 

8 ‘‘(B) COLLECTION AND REVIEW OF DATA

9 ON SUBCONTRACTING PLANS.—The head of 

10 each contracting agency shall ensure that— 

11 ‘‘(i) the agency collects and reports 

12 data on the extent to which contractors of 

13 the agency meet the goals and objectives 

14 set forth in subcontracting plans submitted 

15 pursuant to this subsection; and 

16 ‘‘(ii) the agency periodically reviews 

17 data collected and reported pursuant to 

18 subparagraph (A) for the purpose of en19 suring that such contractors comply in 

20 good faith with the requirements of this 

21 subsection and subcontracting plans sub22 mitted by the contractors pursuant to this 

23 subsection. 

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

25 in this paragraph shall be construed to allow a 
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1 Federal agency to establish a goaling require2 ment for lower-tier subcontractors of a prime 

3 contractor that is eligible to receive lower-tier 

4 subcontracting credit under this paragraph’’; 

5 and 

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

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

8 SUBCONTRACTORS.— 

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

10 to a contract with a Federal agency, a subcon11 tractor of a prime contractor on such contract 

12 may, if the subcontractor has not received pay13 ment for performance on such contract within 

14 30 days of the completion of such performance, 

15 notify the Office of Small and Disadvantaged 

16 Business Utilization (‘OSDBU’) of the Federal 

17 agency and the prime contractor of such lack of 

18 payment, if such notice is provided to the agen19 cy within the 15-day period following the end of 

20 such 30 days. 

21 ‘‘(B) AGENCY DETERMINATION.— 

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

23 notice described under subparagraph (A), 

24 the OSDBU shall verify whether such lack 

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

2 undue restriction placed on the prime con3 tractor by an action of the Federal agency. 

4 ‘‘(ii) RESPONSE DURING DETERMINA5 TION.—During the period in which the 

6 OSDBU is making the determination 

7 under clause (i), the prime contractor may 

8 respond to both the subcontractor and the 

9 OSDBU with relevant verifying docu10 mentation to either prove payment or al11 lowable status of nonpayment. 

12 ‘‘(C) CURE PERIOD.—If the OSDBU 

13 verifies the lack of payment under subpara14 graph (B) and determines that such lack of 

15 payment is not due to an action of the Federal 

16 agency, the OSDBU shall notify the prime con17 tractor and provide the prime contractor with a 

18 15-day period in which the prime contractor 

19 may make the payment owed to the subcon20 tractor. 

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

22 notifying the prime contractor under subpara23 graph (C), the OSDBU determines that the 

24 prime contractor has not fully paid the amount 

25 owed within the 15-day cure period described 
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1 under subparagraph (C), the OSDBU shall en2 sure that such failure to pay is reflected in the 

3 Contractor Performance Assessment Reporting 

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

5 SEC. 3. MAINTENANCE OF RECORDS WITH RESPECT TO 

6 CREDIT UNDER A SUBCONTRACTING PLAN. 

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

8 637(d)(6)) is amended— 

9 (1) by redesignating subparagraphs (G) and 

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

11 conforming the margins accordingly); and 

12 (2) by inserting after subparagraph (F) the fol13 lowing: 

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

15 successful offeror or bidder will maintain to dem16 onstrate that procedures have been adopted to sub17 stantiate the credit the successful offeror or bidder 

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

Passed the House of Representatives January 8, 

2019. 

Attest: 

Clerk. 

116TH CONGRESS 

1ST SESSION H. R. 227 

AN ACT 

To amend the Small Business Act to specify what 

subcontractors, and for other purposes. provide a dispute process for non-payment to credit is given for certain subcontractors and to