IIB 116th CONGRESS 1st Session H. R. 227 IN THE SENATE OF THE UNITED STATES January 9, 2019 Received; read twice and referred to the Committee on Small Business and Entrepreneurship 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. Short title This Act may be cited as the Incentivizing Fairness in Subcontracting Act . 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). . 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); .

Passed the House of Representatives January 8, 2019. Karen L. Haas, Clerk.