II 118th CONGRESS 1st Session S. 2720 IN THE SENATE OF THE UNITED STATES September 5, 2023 Ms. Ernst introduced the following bill; which was read twice and referred to the Committee on Small Business and Entrepreneurship A BILL To amend the Small Business Act regarding Federal contract requirements.

1. Short title This Act may be cited as the Accountability and Clarity in Contracts to Engage Small Suppliers and Small Businesses Act . 2. Small Business Industrial Base Federal Contracting Matters (a) Accessibility and Clarity in Small Business Contracts (1) Definitions In this section— (A) the term covered notice means a notice pertaining to small business concerns, such as a sources sought notice or solicitation restricted to competition among small business concerns or covered small business concerns, published by a Federal agency on SAM.gov or any successor website marketing Federal contract opportunities; (B) the term covered small business concern means— (i) a small business concern owned and controlled by women, a small business concern owned and controlled by veterans, a small business concern owned and controlled by service-disabled veterans, or a qualified HUBZone small business concern, as those terms are defined in section 3 of the Small Business Act ( 15 U.S.C. 632 ); and (ii) a socially and economically disadvantaged small business concern, as defined in section 8(a)(4)(A) of the Small Business Act ( 15 U.S.C. 637(a)(4)(A) ); and (C) the terms Federal agency and small business concern have the meanings given those terms in section 3 of the Small Business Act ( 15 U.S.C. 632 ). (2) Inclusion of key words in notices for small business contract actions Each covered notice shall, to the maximum extent practicable, include key words and contract requirements in the title or description of the covered notice such that small business concerns seeking contract opportunities using the search function of SAM.gov or any successor website can easily identify and understand those opportunities. (3) Plain language (A) In general Each covered notice shall be written in a manner that is clear, concise, and accessible to the reader such that a small business concern can easily understand the intent of the Federal agency. (B) Exception If the covered notice cannot meet the requirement under subparagraph (A) due to requirements applicable to the covered notice from regulation or law, the Federal agency shall include with the covered notice a cover page adequately summarizing the contents of the covered notice, written in a clear, concise, and accessible manner, such that a small business concern can easily understand the intent of the Federal agency. (4) Attachments A Federal agency may not meet the requirement in paragraph (2) by only including key words and contract requirements in a document that is attached to the covered notice. (5) Rulemaking Not later than 90 days after the date of enactment of this Act, the Administrator of the Small Business Administration shall promulgate regulations to carry out this section. (b) Prioritizing Engaging More Small Businesses in Federal Procurement (1) In general Section 15 of the Small Business Act ( 15 U.S.C. 644 ) is amended— (A) in subsection (g)— (i) by inserting after (g) the following: Goals for participation of small business concerns in procurement contracts .— ; and (ii) in paragraph (1)— (I) in subparagraph (A)(i), by striking the second sentence; and (II) by adding at the end the following: (C) Requirement In meeting each of the goals under subparagraph (A), the Government shall ensure the participation of a broad spectrum of small business concerns from a wide variety of industries. ; (B) in subsection (h)(1)— (i) in subparagraph (C), by striking and at the end; (ii) in subparagraph (D), by striking the period at the end and inserting ; and ; and (iii) by adding at the end the following: (E) the information described in clauses (ii) through (iv) of subsection (y)(2)(B). ; and (C) in subsection (y)— (i) in paragraph (2)— (I) by redesignating subparagraphs (A) and (B) as clauses (i) and (ii), respectively, and adjusting the margins accordingly; (II) by inserting before clause (i), as so redesignated, the following: (A) Goals ; (III) in clause (i), as so redesignated, by inserting Prime contract goals .— before A determination ; (IV) in clause (ii), as so redesignated, by inserting Subcontract goals .— before A determination ; (V) by striking subparagraphs (C) and (D) and inserting the following: (B) Composition of the small business industrial base (i) Total number of small business concerns The number of small business concerns, small business concerns owned and controlled by service-disabled veterans, qualified HUBZone small business concerns, small business concerns owned and controlled by socially and economically disadvantaged individuals, and small business concerns owned and controlled by women— (I) awarded prime contracts during the fiscal year compared to the prior fiscal year, including a breakdown by North American Industry Classification System code, if available; and (II) awarded subcontracts during the fiscal year compared to the prior fiscal year, including a breakdown by North American Industry Classification System code, if available. (ii) Maturity of small business concerns A breakdown of the number of new small business entrants, recent small business entrants, and established small business concerns awarded prime contracts or subcontracts during the fiscal year, including a breakdown of such entities that are small business concerns owned and controlled by service-disabled veterans, qualified HUBZone small business concerns, small business concerns owned and controlled by socially and economically disadvantaged individuals, and small business concerns owned and controlled by women. (iii) Dollar distribution among small business concerns The total dollar value of prime contract awards for the top 20 small business concerns that received the most Federal procurement funding in the fiscal year, compared to the combined total dollar value for the remaining small business concerns, and a comparison of that data with the prior fiscal year. (iv) Small business participation by industry The total dollar value of prime contract awards made to small business concerns in all industry sectors and sorted by highest dollar amount per major industry sector to the least, including— (I) the number of individual small business contractors awarded contracts in each industry sector; and (II) the top 10 industries in which small business concerns, small business concerns owned and controlled by service-disabled veterans, qualified HUBZone small business concerns, small business concerns owned and controlled by socially and economically disadvantaged individuals, and small business concerns owned and controlled by women participate, compared to the 10 industries in which those concerns have the least participation. ; and (VI) in subparagraph (E), by striking (E) and inserting (C) Other factors .— ; and (ii) in paragraph (3), by striking subparagraphs (A) and (B) and inserting the following: (A) not more than 40 percent of the score on the dollar value of prime contracts described in paragraph (2)(A), as determined by the Administrator; (B) not less than 30 percent of the score on the information provided in paragraph (2)(B), as determined by the Administrator; and (C) the appropriate percent of the score on the information provided in paragraph (2)(C), as determined by the Administrator. . (2) Regulations Not later than 90 days after the date of enactment of this Act, the Administrator of the Small Business Administration shall issue regulations to define the terms new small business entrant , recent small business entrant , and established small business concern for purposes of subparagraph (B)(ii) of section 15(y)(2) of the Small Business Act ( 15 U.S.C. 644(y)(2) ), as added by paragraph (1). (c) Limitation on Federal agency credit for meeting contracting goals Section 15(g) of the Small Business Act ( 15 U.S.C. 644(g) ), as amended by subsection (b), is amended by adding at the end the following: (4) Limitation on credit for meeting contracting goals (A) Definitions In this paragraph— (i) the term covered category of small business concern means— (I) a small business concern owned and controlled by service-disabled veterans; (II) a qualified HUBZone small business concern; (III) a small business concern owned and controlled by socially and economically disadvantaged individuals; or (IV) a small business concern owned and controlled by women; and (ii) the term credit means the value of a prime contract. (B) General rule A Federal agency may allocate credit for a single prime contract awarded to a small business concern not more than 2 times for purposes of demonstrating compliance with the goals of the Federal agency established under paragraph (2)(A). (C) Allocation of credit (i) First allocation The first allocation of credit described in subparagraph (B) shall be applied towards the goal of the Federal agency established under paragraph (2)(A) for participation by small business concerns. (ii) Second allocation A second allocation of credit described in subparagraph (B) shall be applied as follows: (I) If the prime contract was awarded as a sole-source contract or through competition restricted to a covered category of small business concern, the credit shall be applied towards the goal of the Federal agency established under paragraph (2)(A) for participation by the applicable covered category of small business concern. (II) If the prime contract was not awarded as a sole-source contract or through competition restricted to a covered category of small business concern, the credit may only be applied towards a single goal of the Federal agency established under paragraph (2)(A), determined at the election of the contracting officer, for participation by a covered category of small business concern that is applicable to the recipient of the prime contract, without regard to whether the recipient of the prime contract qualifies as more than 1 covered category of small business concern. . (d) Testimony on Small Business Engagement before Congress Section 15(g) of the Small Business Act ( 15 U.S.C. 644(g) ), as amended by subsections (b) and (c), is amended— (1) in paragraph (2)— (A) by striking (2) (A) The head and inserting the following: (2) Agency goals (A) Establishment The head ; (B) by moving subparagraphs (B), (C), and (D) 2 ems to the right; (C) in subparagraph (B), by inserting Requirements for goals .— before Goals established ; (D) in subparagraph (C), by inserting Failure to agree on goals .— before Whenever ; (E) in subparagraph (D), by inserting Plan for achieving goals .— before After establishing ; (F) in subparagraph (E), by inserting Considerations for achieving goals .— before The head ; (G) in subparagraph (F)— (i) by inserting Communication of goals .— after (F); (ii) by striking (i) Each and inserting: (i) In general Each ; and (iii) by striking (ii) A procurement and inserting: (ii) Procurement employee or program manager defined A procurement ; and (H) by adding at the end the following: (G) Remediation Any Federal agency failing to receive a score equivalent to a letter grade of A or above in a letter graded rating system, as established under subsection (y), in a fiscal year shall— (i) submit to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives the report required under subsection (h)(1); and (ii) testify before the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives on the reasons for failing to meet a letter grade of A or above, and the details of the report submitted under clause (i), in particular the justifications and remediation plan described in subparagraphs (C) and (D) of subsection (h)(1). ; and (2) by striking (3) First and inserting the following: (3) Department of Energy subcontracts First . (e) Evaluation of offers for contracts including subcontracting plans Section 8(d)(4) of the Small Business Act ( 15 U.S.C. 637(d)(4) ) is amended— (1) by moving subparagraph (G) 2 ems to the left; and (2) in subparagraph (G)— (A) in the matter preceding clause (i), by striking bundled contract where the head of the agency determines that the contract offers a significant opportunity for subcontracting and inserting contract that includes a subcontracting plan required under this paragraph or paragraph (5) ; and (B) in clause (i), by striking the rate provided under the subcontracting plan for small business participation and inserting a description of the extent to which the offeror proposes to use small business concerns as subcontractors at any tier . (f) Rule of Two Analysis Applies Before Using a Multiple Award Contract Section 15(r) of the Small Business Act ( 15 U.S.C. 644(r) ) is amended— (1) by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B), respectively, and adjusting the margins accordingly; (2) in the matter before subparagraph (A), as so redesignated, by striking Not later than and all that follows through discretion— and inserting the following: (1) In General .—Except as provided in paragraph (2), Federal agencies shall— ; (3) in paragraph (1)(A), as so redesignated, by adding and at the end; (4) in paragraph (1)(B), as so redesignated, by striking ; and and inserting a period; (5) by striking paragraph (3); and (6) by adding at the end the following: (2) Exceptions The requirements in paragraph (1) shall not apply— (A) in the case of contracts, including orders, awarded under subpart 8.4 of the Federal Acquisition Regulation (or any successor regulation); or (B) if the contracting officer is unable to obtain offers from 2 or more small business concerns that are— (i) competitive with market prices; and (ii) competitive with regard to the quality and delivery of the goods or services being purchased. (3) Small Business Reserve Notwithstanding paragraphs (1) and (2), a Federal agency may reserve 1 or more contract awards for small business concerns under full and open multiple award procurements, including the subcategories of small business concerns identified in subsection (g)(2). . (g) Aligning OSDBU and PCR Collaboration Regarding Bundled or Consolidated Contracts Section 15 of the Small Business Act ( 15 U.S.C. 644 ) is amended— (1) in subsection (k)— (A) in paragraph (5)— (i) by inserting or consolidation after bundling ; (ii) by inserting procurement center representative, after work with the ; (iii) by inserting a comma after acquisition officials ; and (iv) by inserting or consolidated after bundled ; (B) in paragraph (8), in the matter preceding subparagraph (A), by inserting , as required under subsection (l)(4) after procurement center representative, ; and (C) in paragraph (17)— (i) in subparagraph (B), by striking and at the end; (ii) by redesignating subparagraph (C) as subparagraph (D); and (iii) by inserting after subparagraph (B) the following: (C) inform the procurement center representative at such agency of the notice if the notice pertains to contract bundling or consolidation and work with the procurement center representative and appropriate agency personnel to increase the opportunity for competition; and ; and (2) in subsection (l)(2)— (A) by moving subparagraph (A) 2 ems to the right; (B) by redesignating subparagraphs (H), (I), (J), and (K) as subparagraphs (I), (J), (K), and (L), respectively; (C) by inserting after subparagraph (G) the following: (H) consult with the Director of the Office of Small and Disadvantaged Business Utilization of that agency and appropriate agency personnel with regard to— (i) proposed solicitations involving significant bundling or consolidation of contract requirements as described in subsection (k)(5); and (ii) notices by small business concerns of undue restrictions on the ability of the small business concern to compete for the award due to significant bundling or consolidation of contract requirements, as described in subsection (k)(17); ; and (D) in subparagraph (K), as so redesignated, by adding and at the end.