President to Sign Law Allowing Prime Contractors to Count Lower-Tier Small Businesses
On December 19, the Senate passed the National Defense Authorization Act of 2014 (NDAA), which includes a critical 黑料不打烊-supported small business reform. 聽The 黑料不打烊-supported reform will allow prime contractors to count lower-tier small business contractors towards the prime contractor鈥檚 small business subcontracting goals. The current law only allows prime contractors to count first-tier small business subcontractors towards these goals.
The simple change in this 黑料不打烊-supported reform will encourage prime contractors to make sure small businesses have opportunities to compete for subcontracts at every tier, thereby allowing more opportunities for small business growth. In addition, it will help prevent first-tier small business 鈥減ass-through鈥 situations and help provide transparency to the small business program.
However, while the president will likely sign this change into law before the end of the year, the change itself will not be effective for at least 18 months after a rule making process occurs. 聽And, as with any rule making process impacting your construction contracting business, 黑料不打烊 will proactively work with regulators to help ensure that contractors are not overburdened by the implementation process. Please see below for more details.
Explanation of Lower-Tier Small Business Counting Legislation Enacted
Section 1614 of the National Defense Authorization Act of 2014 will allow prime contractors to count lower-tier small business contractors towards the prime contractor鈥檚 small business subcontracting goals. However, this reform will not be effective鈥攁nd therefore contractors will not see it included in contracts鈥攗ntil the fiscal year
after the U.S. Small Business Administration (SBA) issues final regulations to implement this change. Congress set a deadline of 18 months for SBA to complete the rule making process for this reform. That stated, 黑料不打烊 notes that to date, SBA has not issued many final regulations stemming from the Small Business Jobs Act of 2010, despite statutory deadlines set by Congress.
黑料不打烊 points out that:
- The newfound ability to count lower tier small business subcontractors will not eliminate the prime contractor鈥檚 responsibility to make a good-faith effort to hire small business subcontractors at the first-tier level of subcontracting;
- Many subcontractors will have to maintain small business subcontracting plans. This requirement will not apply to small businesses subcontractors with no further subcontracting opportunities or聽 subcontractors who receive subcontracts of less than 聽$ 1 million鈥
- In addition, prime contractors will be responsible for monitoring subcontractor compliance with subcontracting plans.
Questions remain as to the degree to which prime contractors must monitor or be responsible for subcontractor compliance with subcontracting plans, among other things. This is where 黑料不打烊 will continue its pro-active efforts to help ensure that the administration issues the least burdensome rules possible 鈥 as 黑料不打烊 successfully did for the 鈥
for this important small business reform.
Background on 黑料不打烊 Legislative Effort
At the request of the 黑料不打烊 Federal and Heavy Construction Division, the 黑料不打烊 Board of Directors approved this reform as a national legislative priority in late 2012. 聽黑料不打烊 of America worked closely with its chapters and members to win support of key legislators in Congress. 聽聽黑料不打烊 members throughout the country鈥攖hrough coordinated national and chapter legislative action center efforts鈥攕ent hundreds of letters to their representatives and senators in Congress on this issue. 黑料不打烊 members met with members of Congress both in Washington, D.C., and in their offices at home.
Among those key legislators 黑料不打烊 contacted were Reps. Sam Graves (R-Mo.)鈥攃hairman of the House Small Business Committee鈥攁nd Richard Hanna (R-NY)鈥攃hairman of the House Small Business Subcommittee on Contracting and Workforce. With Chairman Graves鈥 support, Rep. Hanna held a hearing and had on prospective legislation before the House Small Business Committee in May. On June 4, Chairman Graves introduced H.R. 2232, the Make Every Small Business Count Act of 2013, which included the 黑料不打烊-supported reform. Along with Reps. Graves and Hanna, Reps. Scott Peters (D-Calif.), Duncan Hunter (R-Calif.), Chris Collins (R-N.Y.), Gerald Connolly (D-Va.), Mike Coffman (R-Co.) and Derek Kilmer (D-Wa.) cosponsored the bill.听 By the end of June, the House of Representatives passed H.R. 2232 as an amendment to the National Defense Authorization Act of 2014, which also passed that chamber.
In the Senate, Sens. Chris Coons (D-Del.) and Roger Wicker (R-Miss.) introduced a lower-tiers counting amendment鈥攁t 黑料不打烊鈥檚 urging鈥攖o that chamber鈥檚 NDAA bill in November. Although the Senate never voted on any amendments to its NDAA bill鈥攁s a result of time lost and ill-will generated from the change in the Senate鈥檚 approval of administration judicial and administration nominees, called the 鈥渘uclear option鈥濃攖he Coons/Wicker amendment and 黑料不打烊 letters sent to the Senate generated momentum for the advancement of this important change.
While the final law enacted includes some implementation requirements not originally included in H.R. 2232 and the Coons/Wicker Amendment, it will allow prime contractors to count lower-tier small business subcontractors towards their small business goals. 聽黑料不打烊 will pro-actively work with the SBA and Federal Acquisition Regulation Council to help ensure that the implementation of this important reform does not overburden prime contractors.
For more information, please contact Jimmy Christianson at (703) 837-5376 or christiansonj@agc.org.听
