Title: Incentivizing Fairness in Subcontracting Act
Policy area: Commerce

Summary:
Incentivizing Fairness in Subcontracting Act
This bill modifies provisions regarding the credit given to small business prime contractors for the use of certain lower-tier subcontractors in order to attain the percentage goals specified in their subcontracting plans. Such credit may be given if the goals pertain only to single contracts with federal (currently, executive) agencies or to two or more contracts with one or more of such agencies.
In addition, the bill (1) requires each contracting agency to collect and review data on subcontracting plans, and (2) establishes a dispute process for non-payment to subcontractors.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 227 Introduced in House (IH)]

<DOC>






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. Velazquez (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.

    Be it enacted by the Senate and House of Representatives 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--
            (1) by amending paragraph (16) to read as follows:
            ``(16) Credit for certain small business concern 
        subcontractors.--
                    ``(A) In general.--For purposes of determining 
                whether or not a prime contractor has attained the 
                percentage goals specified in paragraph (6)--
                            ``(i) if the subcontracting goals pertain 
                        only to a single contract with the Federal 
                        agency, the prime contractor may elect to 
                        receive credit for small business concerns 
                        performing as first tier subcontractors 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 pertain 
                        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 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 ensuring that such 
                        contractors comply in good faith with the 
                        requirements of this subsection and 
                        subcontracting plans submitted 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 requirement for lower-tier 
                subcontractors of a prime contractor that is eligible 
                to receive lower-tier subcontracting credit under this 
                paragraph''; and
            (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 subcontractor of a prime 
                contractor on such contract may, if the subcontractor 
                has not received payment 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 agency 
                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 contractor by an action of the 
                        Federal agency.
                            ``(ii) Response during determination.--
                        During the period in which the OSDBU is making 
                        the determination under clause (i), the prime 
                        contractor may respond to both the 
                        subcontractor and the OSDBU with relevant 
                        verifying documentation to either prove payment 
                        or allowable status of nonpayment.
                    ``(C) Cure period.--If the OSDBU verifies the lack 
                of payment under subparagraph (B) and determines that 
                such lack of payment is not due to an action of the 
                Federal agency, the OSDBU shall notify the prime 
                contractor and provide the prime contractor with a 15-
                day period in which the prime contractor may make the 
                payment owed to the subcontractor.
                    ``(D) Result of nonpayment.--If, after notifying 
                the prime contractor under subparagraph (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 ensure that 
                such failure to pay is reflected in the Contractor 
                Performance Assessment Reporting system (or any 
                successor system).''.

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 following:
            ``(G) a recitation of the types of records the successful 
        offeror or bidder will maintain to demonstrate that procedures 
        have been adopted to substantiate the credit the successful 
        offeror or bidder will elect to receive under paragraph 
        (16)(A)(i);''.
                                 <all>