ESOP Business Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 2022 To establish certain procurement procedures with respect to businesses wholly- owned through an ESOP, and for other purposes. IN THE HOUSE OF REPRESENTATIVES APRIL 2, 2019 Mr. BUCSHON introduced the following bill; which was referred to the Com- mittee on Oversight and Reform, and in addition to the Committees on Armed Services, and Small Business, for a period to be subsequently de- termined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To establish certain procurement procedures with respect to businesses wholly-owned through an ESOP, 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 SECTION 1. SHORT TITLE. 3 This Act may be referred to as the ‘‘ESOP Business 4 Act of 2019’’. 5 SEC. 2. FINDINGS. 6 Congress finds the following: 7 VerDate Sep 11 2014 01:05 Apr 13, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2022.IH H2022 pamtmann on DSKBFK8HB2PROD with BILLS 2 •HR 2022 IH (1) Businesses wholly-owned through an 1 ESOP— 2 (A) offer unique benefits to the United 3 States and to customers of such businesses; 4 (B) provide better retirement security, 5 work culture, and wage growth for workers; and 6 (C) reduce wealth inequality among man- 7 agers and employees. 8 (2) Current Federal contracting laws may inad- 9 vertently exclude businesses wholly-owned through 10 an ESOP from key projects. 11 (3) The growth of the number of businesses 12 wholly-owned through an ESOP benefits employees 13 of such businesses. 14 SEC. 3. SENSE OF CONGRESS. 15 It is the sense of Congress that— 16 (1) businesses wholly-owned through an ESOP 17 are beneficial to the economy; 18 (2) Congress should provide incentives for busi- 19 nesses to become businesses wholly-owned through 20 an ESOP; and 21 (3) businesses wholly-owned through an ESOP 22 should be rewarded through the Federal contracting 23 process for the benefits that such businesses provide. 24 VerDate Sep 11 2014 01:05 Apr 13, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2022.IH H2022 pamtmann on DSKBFK8HB2PROD with BILLS 3 •HR 2022 IH SEC. 4. DEEMING OF BUSINESSES WHOLLY-OWNED 1 THROUGH AN ESOP AS SMALL BUSINESS 2 CONCERNS. 3 Section 3(a) of the Small Business Act (15 U.S.C. 4 632(a)) is amended by adding at the end the following 5 new paragraph: 6 ‘‘(10) APPLICATION TO BUSINESSES WHOLLY- 7 OWNED THROUGH AN ESOP.— 8 ‘‘(A) IN GENERAL.—Notwithstanding the 9 requirements relating to size standards in this 10 subsection, a business wholly-owned through an 11 ESOP shall be deemed to be a small business 12 concern for the purposes of any Federal pro- 13 curement programs. 14 ‘‘(B) DEFINITION.—The term ‘business 15 wholly-owned through an ESOP’ means a busi- 16 ness for which 100 percent of the outstanding 17 stock is held through an employee stock owner- 18 ship plan (as defined in section 4795(e)(7) of 19 the Internal Revenue Code).’’. 20 SEC. 5. PRICING PREFERENCE FOR CONTRACTS AWARDED 21 TO BUSINESSES WHOLLY-OWNED THROUGH 22 AN ESOP. 23 (a) PRICING PREFERENCE FOR DEFENSE CON- 24 TRACTS.—Section 2304 of title 10, United States Code, 25 VerDate Sep 11 2014 01:05 Apr 13, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2022.IH H2022 pamtmann on DSKBFK8HB2PROD with BILLS 4 •HR 2022 IH is amended by adding at the end the following new sub- 1 section: 2 ‘‘(m) For a contract awarded pursuant to this sec- 3 tion, the head of the agency may enter into a contract 4 with a business wholly-owned through an ESOP using a 5 price evaluation preference not in excess of 10 percent 6 when evaluating an offer received from such a business. 7 In this subsection, the term ‘business wholly-owned 8 through an ESOP’ means a business for which 100 per- 9 cent of the outstanding stock is held through an employee 10 stock ownership plan (as defined in section 4795(e)(7) of 11 the Internal Revenue Code).’’. 12 (b) PRICING PREFERENCE FOR CIVILIAN CON- 13 TRACTS.—Section 3301 of title 41, United States Code, 14 is amended by adding at the end the following new sub- 15 section: 16 ‘‘(g) PRICING PREFERENCE FOR CONTRACTS.—For 17 a contract awarded pursuant to this section, the head of 18 an agency may enter into a contract with a business whol- 19 ly-owned through an ESOP using a price evaluation pref- 20 erence not in excess of 10 percent when evaluating an 21 offer received from such a business. In this subsection, 22 the term ‘business wholly-owned through an ESOP’ means 23 a business for which 100 percent of the outstanding stock 24 is held through an employee stock ownership plan (as de- 25 VerDate Sep 11 2014 01:05 Apr 13, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2022.IH H2022 pamtmann on DSKBFK8HB2PROD with BILLS 5 •HR 2022 IH fined in section 4795(e)(7) of the Internal Revenue 1 Code).’’. 2 SEC. 6. FOLLOW-ON CONTRACTS FOR BUSINESSES WHOL- 3 LY-OWNED THROUGH AN ESOP. 4 (a) USE OF NONCOMPETITIVE PROCEDURES FOR 5 DEFENSE CONTRACTS.—Section 2304(d)(1) of title 10, 6 United States Code, is amended by adding at the end the 7 following new subparagraph: 8 ‘‘(C) in the case of a follow-on contract for the 9 delivery of goods or services that are the same as or 10 substantially similar to the goods or services deliv- 11 ered under a prior contract awarded to a source that 12 is a business wholly-owned through an ESOP (as de- 13 fined in subsection (m)), such goods or services shall 14 be deemed to be available only from that source if 15 the Secretary rates the performance of that source 16 on the prior contract as satisfactory or better (or the 17 equivalent) in the applicable past performance data- 18 base used by the Secretary for making source selec- 19 tion decisions’’. 20 (b) USE OF NONCOMPETITIVE PROCEDURES FOR CI- 21 VILIAN CONTRACTS.—Section 3304(b) of title 41, United 22 States Code, is amended— 23 (1) in paragraph (1), by striking ‘‘or’’ after 24 ‘‘procurement;’’; 25 VerDate Sep 11 2014 01:05 Apr 13, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2022.IH H2022 pamtmann on DSKBFK8HB2PROD with BILLS 6 •HR 2022 IH (2) in paragraph (2)(B), by striking the period 1 and inserting ‘‘; or’’; and 2 (3) by adding at the end the following: 3 ‘‘(3) a follow-on contract for the delivery of 4 goods or services determined by the head of the ex- 5 ecutive agency to be substantially similar to the 6 goods or services delivered under a prior contract 7 awarded to a source that is a business wholly-owned 8 through an ESOP, such goods or services shall be 9 deemed to be available only from that source if the 10 executive agency rates the performance of that 11 source on the prior contract as satisfactory or better 12 (or the equivalent) in the applicable past perform- 13 ance database used by the head of the agency for 14 making source selection decisions.’’. 15 Æ VerDate Sep 11 2014 01:05 Apr 13, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\H2022.IH H2022 pamtmann on DSKBFK8HB2PROD with BILLS