I

104TH CONGRESS

2D SESSION H. R. 4313

To amend the Small Business Act to strengthen existing protections for

small business participation in Federal contracting opportunities, to provide for assessments of the impacts on small businesses of the steadily

increasing use of contract bundling by the procurement activities of

the various Federal agencies, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 28, 1996

Mrs. MEYERS of Kansas introduced the following bill; which was referred to

the Committee on Small Business, and in addition to the Committee on

Government Reform and Oversight, 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 amend the Small Business Act to strengthen existing

protections for small business participation in Federal

contracting opportunities, to provide for assessments of

the impacts on small businesses of the steadily increasing

use of contract bundling by the procurement activities

of the various Federal agencies, 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 AND TABLE OF CONTENTS.

2 (a) SHORT TITLE.—This Act may be cited as the

3 ‘‘Small Business Opportunity Preservation Act of 1996’’.

4 (b) TABLE OF CONTENTS.—

Sec. 1. Short title and table of contents.

Sec. 2. Statement of policy.

Sec. 3. Definition of contract bundling.

Sec. 4. Assessing proposed contract bundling.

Sec. 5. Fostering contractor teaming.

Sec. 6. Reporting of bundled contract opportunities.

Sec. 7. Evaluating subcontract participation in awarding contracts.

Sec. 8. Improved notice of subcontracting opportunities.

Sec. 9. Deadlines for issuance of regulations.

5 SEC. 2. STATEMENT OF POLICY.

6 (a) SUSTAINING SMALL BUSINESS PARTICIPATION IN

7 GOVERNMENT CONTRACTING DESPITE CONTRACT BUN8 DLING.—Section 2 of the Small Business Act (15 U.S.C.

9 631) is amended by adding at the end the following new

10 subsection:

11 ‘‘(j) In complying with the statement of congressional

12 policy expressed in subsection (a)(2)(B), relating to foster13 ing the participation of small business concerns in the con14 tracting opportunities of the Government, each Federal

15 agency, to the maximum practicable extent, shall—

16 ‘‘(1) comply with the provisions of this Act ex17 pressing congressional intent to foster the participa18 tion of small business concerns as prime contractors,

19 especially section 15;

20 ‘‘(2) structure its contracting requirements to

21 facilitate competition by and among small business
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1 concerns, taking all reasonable steps to eliminate ob2 stacles to their participation;

3 ‘‘(3) avoid the bundling of contract require4 ments that preclude small business participation as

5 prime contractors; and

6 ‘‘(4) comply with the provisions of this Act ex7 pressing congressional intent to foster the participa8 tion of small business concerns as subcontractors

9 (including suppliers), especially section 8(d).’’.

10 (b) CONFORMING AMENDMENT.—Section 2(a) of the

11 Small Business Act (15 U.S.C. 631(a)) is amended—

12 (1) in the first sentence, by striking ‘‘The es13 sence’’ and inserting ‘‘(1) The essence’’; and

14 (2) by striking the fifth sentence and inserting

15 the following:

16 ‘‘(2) It is the declared policy of the Congress that

17 the government should aid, counsel, assist, and protect,

18 in so far as is possible, the interests of small business con19 cerns in order to—

20 ‘‘(A) preserve free competitive enterprise;

21 ‘‘(B) insure that a fair proportion of the total

22 purchases for property or services (including con23 struction) be placed with small business concerns as

24 prime contractors or subcontractors (including sup25 pliers);
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1 ‘‘(C) insure that a fair proportion of the total

2 sales of Government property be made to small busi3 ness concerns; and

4 ‘‘(D) maintain and strengthen the overall econ5 omy of the Nation.’’.

6 SEC. 3. DEFINITION OF CONTRACT BUNDLING.

7 Section 3 of the Small Business Act (15 U.S.C. 632)

8 is amended by adding at the end the following new sub9 section:

10 ‘‘(o) For the purposes of this Act, the terms ‘contract

11 bundling’, ‘bundled contract’, and ‘bundling of contract re12 quirements’ mean the practice of consolidating two or

13 more procurement requirements of a type that were pre14 viously solicited and awarded as separate smaller contracts

15 into a single contract solicitation likely to be unsuitable

16 for award to a small business concern because of—

17 ‘‘(1) the diversity and size of the elements of

18 performance specified;

19 ‘‘(2) the aggregate dollar value of the antici20 pated award;

21 ‘‘(3) the geographical dispersion of the contract

22 performance sites; or

23 ‘‘(4) any combination of the factors described in

24 paragraphs (1), (2), and (3).’’.
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1 SEC. 4. ASSESSING PROPOSED CONTRACT BUNDLING.

2 (a) IN GENERAL.—Section 15(b) of the Small Busi3 ness Act (15 U.S.C. 644(b)) is amended to read as follows:

4 ‘‘(b)(1)(A) To the maximum extent practicable, pro5 curement strategies used by the various agencies having

6 contracting authority shall facilitate the maximum partici7 pation of small business concerns as prime contractors.

8 ‘‘(B) Whenever a proposed procurement strategy re9 flects a bundling of contract requirements, such proposed

10 procurement strategy shall—

11 ‘‘(i) identify specifically the benefits anticipated

12 from bundling the contract requirements;

13 ‘‘(ii) assess the specific impediments to partici14 pation by small business concerns as prime contrac15 tors and specify actions designed to maximize small

16 business participation as subcontractors (including

17 suppliers) at various tiers; and

18 ‘‘(iii) include a specific determination that the

19 anticipated benefits of the proposed bundled contract

20 justify its use.

21 ‘‘(2)(A) The Administration, acting through one of

22 its Procurement Center Representatives (or such other

23 employee of the Administration as may be designated), is

24 empowered to review for a period of 30 days a proposed

25 solicitation for compliance with the requirements of this

26 subsection and subsection (a). The 30-day review shall
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1 occur concurrently with other reviews required prior to the

2 issuance of the solicitation.

3 ‘‘(B) Within 15 days after receipt from a procure4 ment activity of a Federal agency of any proposed contract

5 solicitation that in the opinion of the representative would

6 constitute a bundling of contract requirements, the rep7 resentative (or other designee of the Administration)

8 shall—

9 ‘‘(i) request the head of the procurement activ10 ity to furnish recommendations to modify the pro11 curement strategy and the proposed solicitation for

12 the purpose of increasing the probability of partici13 pation by small businesses as prime contractors; or

14 ‘‘(ii) recommend to the procurement activity an

15 alternative procurement strategy that would increase

16 the probability of participation by small businesses

17 as prime contractors.

18 ‘‘(C) Whenever the Procurement Center Representa19 tive and the head of the procurement activity fail to agree

20 to a revision of the procurement strategy (or the proposed

21 solicitation) under subparagraph (B), the matter may be

22 submitted by the Administrator to the head of the agency

23 in which the procurement activity is located for determina24 tion.
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1 ‘‘(D) Any determination by an agency head to issue

2 a contract solicitation with no revision of the procurement

3 strategy (or the proposed solicitation) shall be supported

4 by findings and an assessment addressing the matters de5 scribed in subparagraph (E). Such determination and

6 findings shall be submitted to the Administrator.

7 ‘‘(E) The findings accompanying a determination

8 made pursuant to subparagraph (D) shall include—

9 ‘‘(i) the estimated benefits of the proposed bun10 dling of contract requirements, including improved

11 performance of programmatic objectives to be met

12 by the contract, savings in terms of acquisition costs

13 and contract administration costs, and how such es14 timated benefits were calculated;

15 ‘‘(ii) specific adverse impacts on the participa16 tion of small business concerns as prime contractors,

17 especially small business concerns that are perform18 ing (or have previously performed) contracts of the

19 type that are proposed for inclusion in the solicita20 tion for the bundled contract;

21 ‘‘(iii) specific actions to foster the participation

22 of small businesses in the performance of the bun23 dled contract as subcontractors (including suppliers)

24 at various tiers; and
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1 ‘‘(iv) such other matters as the agency head

2 considers appropriate.

3 ‘‘(F) Unless otherwise authorized by the head of the

4 agency for urgent and compelling reasons, the solicitation

5 shall not be issued until the determination under subpara6 graph (D) has been made by such agency head and sub7 mitted to the Administrator.’’.

8 (b) CONFORMING AMENDMENT.—Section 15(a) of

9 the Small Business Act (15 U.S.C. 644(a)) is amended

10 by striking the third, fourth, fifth, and sixth sentences.

11 (c) RESPONSIBILITIES OF AGENCY SMALL BUSINESS

12 ADVOCATES.—Section 15(k) of the Small Business Act

13 (15 U.S.C. 644(k)) is amended—

14 (1) by redesignating paragraphs (5), (6), (7),

15 (8), and (9) as paragraphs (6), (7), (8), (9), and

16 (10), respectively; and

17 (2) by adding after paragraph (4) the following

18 new paragraph (5):

19 ‘‘(5) identify and report on proposed solicita20 tions that represent bundling of contract require21 ments, and work with the agency acquisition officials

22 and the Administration to revise the procurement

23 strategies for such proposed solicitations to increase

24 the probability of participation by small businesses

25 as prime contractors, or to facilitate small business
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1 participation as subcontractors and suppliers, if a

2 solicitation for a bundled contract is to be issued,’’.

3 SEC. 5. FOSTERING CONTRACTOR TEAMING.

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

5 644(b)), as amended by section 2, is further amended by

6 adding at the end the following new paragraph:

7 ‘‘(3)(A) A small business concern intending to

8 submit an offer for an anticipated bundled contract

9 may propose to the Administration for approval a

10 team of subcontractors meeting the requirements of

11 subparagraph (B) without regard to the require12 ments of subsection (o) or the regulations of the Ad13 ministration regarding findings of affiliation or con14 trol, either direct or indirect.

15 ‘‘(B) A subcontracting team proposed under

16 subparagraph (A) may include—

17 ‘‘(i) other small business concerns; and

18 ‘‘(ii) business concerns other than small

19 business concerns, whose aggregate participa20 tion may not represent more than 25 percent of

21 the anticipated total value of the contract.

22 ‘‘(C) Any subcontracting team proposed under

23 subparagraph (A) and approved by the Adminis24 trator shall be subject to such alternative require-
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1 ments regarding subcontracting and affiliation or

2 control as may be specified by the Administrator.’’.

3 SEC. 6. REPORTING OF BUNDLED CONTRACT OPPORTUNI4 TIES.

5 (a) DATA COLLECTION REQUIRED.—The Federal

6 Procurement Data System described in section 6(d)(4)(A)

7 of the Office of Federal Procurement Policy Act (41

8 U.S.C. 405(d)(4)(A)) shall be modified to collect data re9 garding contract bundling. The data shall reflect the de10 termination made by the employee of the Small Business

11 Administration exercising the responsibilities of section

12 15(b) of the Small Business Act (15 U.S.C. 644(b)) (as

13 amended by section 3) regarding whether a particular so14 licitation constitutes contract bundling.

15 (b) DEFINITIONS.—For purposes of this section, the

16 term ‘‘contract bundling’’ has the meaning given such

17 term in section 3(o) of the Small Business Act (15 U.S.C.

18 632(o)) (as added by section 2).

19 SEC. 7. EVALUATING SUBCONTRACT PARTICIPATION IN

20 AWARDING CONTRACTS.

21 (a) IN GENERAL.—Section 8(d)(4) of the Small Busi22 ness Act (15 U.S.C. 637(d)(4)) is amended by striking

23 ‘‘(4)(A)’’ and all that follows through the end of subpara24 graph (D) and inserting the following:
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1 ‘‘(4)(A) Each solicitation for the award of a contract

2 (or subcontract) with an anticipated value of $1,000,000,

3 in the case of a contract for construction (including repair,

4 alteration, or demolition of existing construction) or

5 $500,000, in the case of a contract for all other types of

6 services or supplies, that can reasonably be expected to

7 offer opportunities for subcontracting in the business

8 judgment of the contracting officer, shall—

9 ‘‘(i) in the case of a contract to be awarded

10 using competitive procedures, include solicitation

11 provisions described in subparagraph (B);

12 ‘‘(ii) in the case of a contract to be awarded

13 using procedures other than competitive procedures,

14 require submission and acceptance of a subcontract15 ing plan pursuant to subparagraph (C); and

16 ‘‘(iii) in the case of a subcontract award, re17 quire submission and acceptance of a subcontracting

18 plan pursuant to subparagraph (D).

19 ‘‘(B) With respect to subcontract participation by the

20 various types of small business concerns listed in para21 graph (1), the solicitation shall—

22 ‘‘(i) specify, whenever practicable, minimum

23 percentages for subcontract participation by the var24 ious types of small business concerns listed in para25 graph (1), determined in the exercise of business
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1 judgment by the contracting officer considering the

2 matters described in subparagraph (F)(iii), that

3 must be met for an offer to be considered respon4 sive;

5 ‘‘(ii) assign a weight of not less than the nu6 merical equivalent of 5 percent of the total of all

7 evaluation factors to a contract award evaluation

8 factor that recognizes incrementally higher sub9 contract participation rates in excess of the mini10 mum percentages, if any;

11 ‘‘(iii) require the successful offeror to submit a

12 subcontracting plan that incorporates the informa13 tion prescribed in paragraph (6); and

14 ‘‘(iv) assign a significant weight in the evalua15 tion of past performance by offerors in attaining

16 subcontract participation goals.

17 ‘‘(C)(i) The apparent successful offeror for a contract

18 to be awarded using procedures other than competitive

19 procedures shall negotiate with the contracting officer—

20 ‘‘(I) separate goals for subcontract participation

21 by the various types of small business concerns list22 ed in paragraph (1); and

23 ‘‘(II) a plan for the attainment of the goals that

24 incorporates the information prescribed in paragraph

25 (6).
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1 ‘‘(ii) The goals and plan shall reflect the maximum

2 practicable opportunity for participation of small business

3 concerns in the performance of the contract, considering

4 the matters described in subparagraph (F)(iii). If, within

5 the time limits prescribed in the Federal Acquisition Regu6 lation, the apparent successful offeror fails to negotiate

7 such goals and subcontracting plan, such offeror shall be

8 ineligible for award of the contract.

9 ‘‘(D) An apparent subcontract awardee shall nego10 tiate with the prime contractor (or higher-tier subcontrac11 tor) a goal for the participation of the various types of

12 small business concerns listed in paragraph (1), and a

13 plan for the attainment of those goals which incorporates

14 the information prescribed in paragraph (6). Such goals

15 and plan shall reflect the maximum practicable oppor16 tunity for the participation of such small business con17 cerns in the performance of the contract, considering the

18 matters described in subparagraph (F)(iii).’’.

19 (b) CONFORMING AMENDMENTS.—Section 8(d) of

20 the Small Business Act (15 U.S.C. 637(d)) is amended

21 as follows:

22 (1) Paragraph (5) is amended to read as fol23 lows:

24 ‘‘(5) øReserved.¿’’.

25 (2) Paragraph (6) is amended—
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1 (A) in the matter preceding subparagraph

2 (A), by striking ‘‘or (5)’’; and

3 (B) in subparagraph (D), by striking ‘‘or

4 (5)’’.

5 (3) Paragraph (7) is amended by striking ‘‘(4),

6 (5),’’ and inserting ‘‘(4)’’.

7 (4) Paragraph (10) is amended—

8 (A) in the matter preceding subparagraph

9 (A), by striking ‘‘(4), (5),’’ and inserting ‘‘(4)’’;

10 and

11 (B) in subparagraph (B), by striking

12 ‘‘paragraphs (4) and (5)’’ and inserting ‘‘para13 graph (4)’’.

14 SEC. 8. IMPROVED NOTICE OF SUBCONTRACTING OPPOR15 TUNITIES.

16 (a) USE OF THE COMMERCE BUSINESS DAILY AU17 THORIZED.—Section 8 of the Small Business Act (15

18 U.S.C. 637) is amended by adding at the end the following

19 new subsection:

20 ‘‘(k) NOTICES OF SUBCONTRACTING OPPORTUNI21 TIES.—

22 ‘‘(1) IN GENERAL.—Notices of subcontracting

23 opportunities may be submitted for publication in

24 the Commerce Business Daily by—
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1 ‘‘(A) a business concern awarded a con2 tract by an executive agency subject to sub3 section (e)(1)(C); and

4 ‘‘(B) a business concern which is a sub5 contractor or supplier (at any tier) to such con6 tractor having a subcontracting opportunity in

7 excess of $10,000.

8 ‘‘(2) CONTENTS OF NOTICE.—The notice of a

9 subcontracting opportunity shall include—

10 ‘‘(A) a description of the business oppor11 tunity that is comparable to the description

12 specified in paragraphs (1), (2), (3), and (4) of

13 subsection (f); and

14 ‘‘(B) the due date for receipt of offers.’’.

15 (b) REGULATIONS REQUIRED.—The Federal Acquisi16 tion Regulation shall be amended to provide uniform im17 plementation of the amendments made by this section.

18 (c) CONFORMING AMENDMENT.—Section 8(e)(1)(C)

19 of the Small Business Act (15 U.S.C. 637(e)(1)(C)) is

20 amended by striking ‘‘$25,000’’ each place it appears and

21 inserting ‘‘$100,000’’.

22 SEC. 9. DEADLINES FOR ISSUANCE OF REGULATIONS.

23 (a) PROPOSED REGULATIONS.—Proposed amend24 ments to the Federal Acquisition Regulation or proposed

25 Small Business Administration regulations shall be pub-
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1 lished not later than 120 days after the date of enactment

2 of this Act for the purpose of obtaining public comment

3 pursuant to section 22 of the Office of Federal Procure4 ment Policy Act (41 U.S.C. 418b) or chapter 5 of title

5 5, United States Code, as appropriate. The public shall

6 be afforded not less than 60 days to submit comments.

7 (b) FINAL REGULATIONS.—Final regulations shall be

8 published not later than 270 days after the date of enact9 ment of this Act. The effective date for such regulations

10 shall be at least 30 days after the date of publication.

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