H.R. 1481 Explained
Monday, March 30, 2015
Section-by-Section Summary of Amendment in the Nature of a Substitute to H.R. 1481, the Small Contractors Improve Competition Act of 2015 (SCICA).
Sec. 1 – Provides the Short Title and the Table of Contents
Sec. 2. Including subcontracting goals in agency responsibilities.
Currently, when considering whether senior agency executives are eligible for bonuses, agencies must look at whether they met the small business prime contracting goals. However, agencies don’t look at whether the agency is meeting its subcontracting goals. As a consequence, the percentage of subcontract dollars awarded to small businesses has been falling, and is down 2.5% since 2010. Make no mistake about the significance of subcontracting: in FY 2013, small businesses received $86.7 billion in subcontracts. Subcontracting is an important entry point for federal contractors. Therefore, this provision holds senior agency officials accountable for meeting all the goals.
Sec. 3. Data quality improvement.
Prior to bundling or consolidating a contract, agencies are required to identify the contract as bundled or consolidated, justify the decision to bundle or consolidate the contract, mitigate any adverse effects on small businesses, and track the contract to ensure the anticipated benefits occurred. Unfortunately, these requirements are rarely observed, as hearing witnesses told of requesting justifications under the Freedom of Information Act only to discover no justification occurred. This provision would require agencies implement a plan to improve compliance with the current law.
Sec. 4. Notice and justification requirements for bundling or consolidation of contract requirements.
Small businesses and the SBA have the ability to challenge contracts that are unjustly bundled or consolidated. However, to do so requires that that SBA or company be aware that the bundling or consolidation is occurring. Currently, agencies are only required to publish justifications within a year of bundling or consolidating a contract – long after small businesses or SBA could benefit from the data. This provision requires that agencies publish bundling and consolidation justifications with the contract solicitation.
Sec. 5. Joint venturing and teaming.
The Small Business Act (the Act) encourages small businesses to team and joint venture, and the SBA will approve joint ventures to facilitate small businesses participating on federal contracts. In the 112th Congress, this Committee successfully passed legislation as part of the National Defense Authorization Act for FY 2013 to make it easier for small businesses to team by changing the limitations on subcontracting. However, small businesses that do team and joint venture are often unsuccessful at winning contracts because some agencies have stated that the agency will only consider the past performance or financial responsibility of the joint venture or the prime contractor, not the small business members of the joint venture or the parties to the team. As many joint ventures are unpopulated, this all but disqualifies the small business from competition. This provision requires that contracting officers look as the qualifications of team members and members of the joint venture.
Sec. 6. Limitations on reverse auctions.
As defined by this provision, reverse auctions are an auction between a group of offerors who compete against each other by submitting offers for requirement, and offerors have the ability to submit revised offers with lower prices throughout the course of the auction. When used properly, reverse auctions are an important tool that may benefit taxpayers and contracting agencies. However, when used inappropriately, reverse auctions may place taxpayers, warfighters and small businesses at risk. Therefore, this language creates a new section of the Act to limit the use of reverse auctions when using small business contracting authorities. Specifically, it requires training of contracting officers, and prohibits the use of reverse auctions for sole source contracts or contracts with inadequate competition. It also states that reverse auctions should only be used when the good or service being purchased can be considered only either technically acceptable or unacceptable. This provision requires that the government communicate honestly with bidders regarding the ranking of offers, as some reverse auctions have misled offerors regarding the status of bids. The bill also makes it clear that when using a third-party reverse auction service, the government must still follow all of the normal procurement rules, as there are cases where a third party provider is excluding companies from competing or using third party data to inform responsibility determinations. Finally, the provision states that reverse auctions may only be used for contracts other than contracts for construction, goods used to protect people from bodily harm, and technical goods and services.
Sec. 7. Revision to the nonmanufacturer rule.
The Nonmanufacturer rule (NMR) exists to prevent fraud. Specifically, when the competition for a contract for goods is restricted to small businesses, the NMR requires that the good bought be the product of a small business. Otherwise, the government risks restricting competition only to have the awardee provide a product it has simply passed along from a large manufacturer or international contractor. The law does provide exceptions in cases where there is not a small business manufacturer. However, a recent court case stated that the NMR applies to service contracts. While other provisions protect against small service contractors acting as fronts for large businesses, applying the NMR to these contracts will change the way in which construction and service contractors operate, and exclude more small businesses from the industrial base. Therefore, this provision clarifies that the NMR applies to contracts for goods, not contracts for services.
Sec. 8. Certification requirements for procurement center representatives.
SBA’s Procurement Center Representatives (PCRs) act as advocates for small contractors within federal agencies. Current law requires that PCRs have the highest level federal contracting certification, making it difficult to hire qualified individuals in some areas without incurring relocation expenses. This provision gives SBA one year from the date of hire to train the PCRs.
Sec. 9. Certification requirements for Business Opportunity Specialists.
SBA’s Business Opportunity Specialists (BOS) work with small contractors in the district offices. Current law requires that BOSs have an entry level federal contracting certification, making it difficult to hire qualified individuals in some areas without incurring relocation expenses. This provision gives SBA one year from the date of hire to train the BOSs.
Sec. 10. Certification requirements for commercial market representatives
SBA’s Commercial Market Representatives (CMR) work with small contractors seeking federal subcontracts and large contractors seeking to meeting the requirements of the contractual subcontracting plans. Current law does not required CMRs to have any training in contracting. This provision would require that CMRs have an entry level federal contracting certification, or that the CMR obtain the certification within one year of being hired.