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 dis-
pute process for non-payment to subcontractors, and for 
other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Incentivizing Fairness 
in Subcontracting Act’’. 
SEC. 2. SMALL BUSINESS LOWER-TIER SUBCONTRACTING. 
Section 8(d) of the Small Business Act (15 U.S.C. 
637(d)) is amended— 
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(1) by amending paragraph (16) to read as fol-
lows: 
‘‘(16) CREDIT FOR CERTAIN SMALL BUSINESS 
CONCERN SUBCONTRACTORS.— 
‘‘(A) IN GENERAL.—For purposes of deter-
mining whether or not a prime contractor has 
attained the percentage goals specified in para-
graph (6)— 
‘‘(i) if the subcontracting goals per-
tain only to a single contract with the Fed-
eral agency, the prime contractor may elect 
to receive credit for small business con-
cerns performing as first tier subcontrac-
tors or subcontractors at any tier pursuant 
to the subcontracting plans required under 
paragraph (6)(D) in an amount equal to 
the total dollar value of any subcontracts 
awarded to such small business concerns; 
and 
‘‘(ii) if the subcontracting goals per-
tain 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 receive credit 
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for 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 en-
suring that such contractors comply in 
good faith with the requirements of this 
subsection and subcontracting plans sub-
mitted by the contractors pursuant to this 
subsection. 
‘‘(C) RULE OF CONSTRUCTION.—Nothing 
in this paragraph shall be construed to allow a 
Federal agency to establish a goaling require-
ment for lower-tier subcontractors of a prime 
contractor that is eligible to receive lower-tier 
subcontracting credit under this paragraph’’; 
and 
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(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 subcon-
tractor of a prime contractor on such contract 
may, if the subcontractor has not received pay-
ment for performance on such contract within 
30 days of the completion of such performance, 
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 agen-
cy within the 15-day period following the end of 
such 30 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 con-
tractor by an action of the Federal agency. 
‘‘(ii) RESPONSE DURING DETERMINA-
TION.—During the period in which the 
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OSDBU is making the determination 
under clause (i), the prime contractor may 
respond to both the subcontractor and the 
OSDBU with relevant verifying docu-
mentation to either prove payment or al-
lowable status of nonpayment. 
‘‘(C) CURE
PERIOD.—If the OSDBU 
verifies the lack of payment under subpara-
graph (B) and determines that such lack of 
payment is not due to an action of the Federal 
agency, the OSDBU shall notify the prime con-
tractor and provide the prime contractor with a 
15-day period in which the prime contractor 
may make the payment owed to the subcon-
tractor. 
‘‘(D) RESULT OF NONPAYMENT.—If, after 
notifying the prime contractor under subpara-
graph (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 en-
sure that such failure to pay is reflected in the 
Contractor Performance Assessment Reporting 
system (or any successor system).’’. 
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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 
conforming the margins accordingly); and 
(2) by inserting after subparagraph (F) the fol-
lowing: 
‘‘(G) a recitation of the types of records the 
successful offeror or bidder will maintain to dem-
onstrate that procedures have been adopted to sub-
stantiate the credit the successful offeror or bidder 
will elect to receive under paragraph (16)(A)(i);’’. 
Æ 
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