Incentivizing Fairness in Subcontracting Act

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 dis- pute process for non-payment to subcontractors, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 VerDate Sep 11 2014 01:05 Jan 10, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H227.RFS H227 kjohnson on DSK79L0C42 with BILLS 2 HR 227 RFS SECTION 1. SHORT TITLE. 1 This Act may be cited as the ‘‘Incentivizing Fairness 2 in Subcontracting Act’’. 3 SEC. 2. SMALL BUSINESS LOWER-TIER SUBCONTRACTING. 4 Section 8(d) of the Small Business Act (15 U.S.C. 5 637(d)) is amended— 6 (1) by amending paragraph (16) to read as fol- 7 lows: 8 ‘‘(16) CREDIT FOR CERTAIN SMALL BUSINESS 9 CONCERN SUBCONTRACTORS.— 10 ‘‘(A) IN GENERAL.—For purposes of deter- 11 mining whether or not a prime contractor has 12 attained the percentage goals specified in para- 13 graph (6)— 14 ‘‘(i) if the subcontracting goals per- 15 tain only to a single contract with the Fed- 16 eral agency, the prime contractor may elect 17 to receive credit for small business con- 18 cerns performing as first tier subcontrac- 19 tors or subcontractors at any tier pursuant 20 to the subcontracting plans required under 21 paragraph (6)(D) in an amount equal to 22 the total dollar value of any subcontracts 23 awarded to such small business concerns; 24 and 25 VerDate Sep 11 2014 01:05 Jan 10, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H227.RFS H227 kjohnson on DSK79L0C42 with BILLS 3 HR 227 RFS ‘‘(ii) if the subcontracting goals per- 1 tain to more than one contract with one or 2 more Federal agencies, or to one contract 3 with more than one Federal agency, the 4 prime contractor may only receive credit 5 for first tier subcontractors that are small 6 business concerns. 7 ‘‘(B) COLLECTION AND REVIEW OF DATA 8 ON SUBCONTRACTING PLANS.—The head of 9 each contracting agency shall ensure that— 10 ‘‘(i) the agency collects and reports 11 data on the extent to which contractors of 12 the agency meet the goals and objectives 13 set forth in subcontracting plans submitted 14 pursuant to this subsection; and 15 ‘‘(ii) the agency periodically reviews 16 data collected and reported pursuant to 17 subparagraph (A) for the purpose of en- 18 suring that such contractors comply in 19 good faith with the requirements of this 20 subsection and subcontracting plans sub- 21 mitted by the contractors pursuant to this 22 subsection. 23 ‘‘(C) RULE OF CONSTRUCTION.—Nothing 24 in this paragraph shall be construed to allow a 25 VerDate Sep 11 2014 01:05 Jan 10, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H227.RFS H227 kjohnson on DSK79L0C42 with BILLS 4 HR 227 RFS Federal agency to establish a goaling require- 1 ment for lower-tier subcontractors of a prime 2 contractor that is eligible to receive lower-tier 3 subcontracting credit under this paragraph’’; 4 and 5 (2) by adding at the end the following: 6 ‘‘(18) DISPUTE PROCESS FOR NON-PAYMENT TO 7 SUBCONTRACTORS.— 8 ‘‘(A) NOTICE TO AGENCY.—With respect 9 to a contract with a Federal agency, a subcon- 10 tractor of a prime contractor on such contract 11 may, if the subcontractor has not received pay- 12 ment for performance on such contract within 13 30 days of the completion of such performance, 14 notify the Office of Small and Disadvantaged 15 Business Utilization (‘OSDBU’) of the Federal 16 agency and the prime contractor of such lack of 17 payment, if such notice is provided to the agen- 18 cy within the 15-day period following the end of 19 such 30 days. 20 ‘‘(B) AGENCY DETERMINATION.— 21 ‘‘(i) IN GENERAL.—Upon receipt of a 22 notice described under subparagraph (A), 23 the OSDBU shall verify whether such lack 24 of payment has occurred and determine 25 VerDate Sep 11 2014 01:05 Jan 10, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H227.RFS H227 kjohnson on DSK79L0C42 with BILLS 5 HR 227 RFS whether such lack of payment is due to an 1 undue restriction placed on the prime con- 2 tractor by an action of the Federal agency. 3 ‘‘(ii) RESPONSE DURING DETERMINA- 4 TION.—During the period in which the 5 OSDBU is making the determination 6 under clause (i), the prime contractor may 7 respond to both the subcontractor and the 8 OSDBU with relevant verifying docu- 9 mentation to either prove payment or al- 10 lowable status of nonpayment. 11 ‘‘(C) CURE PERIOD.—If the OSDBU 12 verifies the lack of payment under subpara- 13 graph (B) and determines that such lack of 14 payment is not due to an action of the Federal 15 agency, the OSDBU shall notify the prime con- 16 tractor and provide the prime contractor with a 17 15-day period in which the prime contractor 18 may make the payment owed to the subcon- 19 tractor. 20 ‘‘(D) RESULT OF NONPAYMENT.—If, after 21 notifying the prime contractor under subpara- 22 graph (C), the OSDBU determines that the 23 prime contractor has not fully paid the amount 24 owed within the 15-day cure period described 25 VerDate Sep 11 2014 01:05 Jan 10, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H227.RFS H227 kjohnson on DSK79L0C42 with BILLS 6 HR 227 RFS under subparagraph (C), the OSDBU shall en- 1 sure that such failure to pay is reflected in the 2 Contractor Performance Assessment Reporting 3 system (or any successor system).’’. 4 SEC. 3. MAINTENANCE OF RECORDS WITH RESPECT TO 5 CREDIT UNDER A SUBCONTRACTING PLAN. 6 Section 8(d)(6) of the Small Business Act (15 U.S.C. 7 637(d)(6)) is amended— 8 (1) by redesignating subparagraphs (G) and 9 (H) as subparagraphs (H) and (I), respectively (and 10 conforming the margins accordingly); and 11 (2) by inserting after subparagraph (F) the fol- 12 lowing: 13 ‘‘(G) a recitation of the types of records the 14 successful offeror or bidder will maintain to dem- 15 onstrate that procedures have been adopted to sub- 16 stantiate the credit the successful offeror or bidder 17 will elect to receive under paragraph (16)(A)(i);’’. 18 Passed the House of Representatives January 8, 2019. Attest: KAREN L. HAAS, Clerk. VerDate Sep 11 2014 01:05 Jan 10, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H227.RFS H227 kjohnson on DSK79L0C42 with BILLS