(Washington, D.C.) – U.S. Senate Committee on Small Business & Entrepreneurship Chair Ben Cardin (D-Md.) and U.S. Senator Tammy Duckworth (D-Ill.) today introduced the Federal Contracting Fairness Act, which would increase fairness and equity in federal contracting. The legislation will reform the federal contracting programs operated by the U.S. Small Business Administration (SBA) to help small businesses owned by socially and disadvantaged individuals, including minorities, women and veterans, secure federal contracts.
“Federal contracting has long been one of the most reliable paths to the middle class for minority entrepreneurs, but the path has narrowed in recent years,” Cardin said. “The Federal Contracting Fairness Act will set up underserved small businesses for greater success in federal contracting and begin reversing the decade-long trend of larger contracts going to fewer small businesses.”
“If we want to make sure that no one is left behind on the road to economic recovery, we need to make it easier for all small businesses—including those owned by women, Veterans and people of color—to access federal contracts so they can grow their business and create new jobs in their communities, said Duckworth. “I’m proud to co-sponsor the Federal Contracting Fairness Act, which would help level the playing field for historically disadvantaged small business owners, expand opportunities in federal contracting and boost our economy.”
The Federal Contracting Fairness Act builds on the Biden-Harris Administration’s commitment to direct more federal contracting dollars to Small Disadvantaged Businesses (SDBs). In July, the U.S. Small Business Administration (SBA) announced that, for the first time in history, federal agencies awarded more than 11 percent of all contracting dollars to SDBs during Fiscal Year 2021. Although the administration reached its dollar value goals, the number of small businesses that received prime contracts decreased during FY21. The reduction continues a more than decade-long trend of larger federal contracts going to fewer and fewer small businesses.
The bill makes the following reforms to small business contracting programs:
- SBA Representation on the FAR Council. The legislation would amend the Federal Acquisition Regulatory (FAR) Council to include the SBA as a member. This will allow the SBA to better advocate for small business utilization in larger contracts and have a voice in regulations and practices surrounding category management and contract bundling.
- Provide equal footing for all 8(a) participating firms. Extend the 8(a) program term from 9 years to 10 years for equal footing between firms in the program before Sept. 2020 and after September 2020.
- Create a ramp up period. 8(a) individually owned business will be able to opt into a ramp up period at the time of certification. If a business chooses to enter in the ramp up period, they will be required to have 12 hours of technical assistance training per year for up to three years. The ten year program clock will begin at the earliest of either the completion of the three year ramp up period with a total of 36 hours of technical assistance training or after securing their first 8(a) contract.
- Create a transition period for 8(a) firms. Small businesses in the last three years of the 8(a) program would be allowed to have an increased personal net income and adjusted gross income set by the Administrator of up to three times the current limit. To qualify, the owner must demonstrate an investment in their company to continue to compete in the federal contracting market, such as investment in company infrastructure and a plan for how their company is being structured to compete for federal contracts after the completion of the 8(a) program.
- Streamline administrative processes. The legislation creates a more efficient annual review process for both 8(a) firms recertifying and for business operation specialists reviewing the annual certifications. Additionally, the legislation directs the Administration to streamline the past performance questionnaire for both the 8(a) firms and participating agencies.
- Streamline SBA certification processes. The legislation directs the Administrator to streamline the certification process for a small business to become a participant of the 8(a) program, the Women-Owned Small Business (WOSB) program, the Historically Underutilized Business Zone (HUBZone) program, and the Service-Disabled Veteran-Owned Small Business (SDVOSB) program.
- Increase sole source thresholds. The legislation would increase sole-source contract thresholds across the 8(a), WOSB, HUBZone, and SDVOSB programs. Goods and services thresholds would be increased from $4.5 million to $10 million and manufacturing thresholds would increase from $7 million to $14 million. Additionally, the legislation would create a new $12 million sole-source set aside for contracts with research and development NAICS codes. If the small business partners with HBCUs, MSIs, or Tribal Colleges, the threshold would be increased to $14 million.
- Provide incentives for mentor-protégé program. In an effort to increase participation from mentors in the 8(a) mentor-protégé program, the legislation would provide a further increased sole-source threshold for mentors who choose to participate as a mentor. Further, protégés will no longer have a restriction on having only two mentors throughout the lifetime of the program.
- New reports. The legislation directs the SBA to publish or submit three reports. First, the legislation directs the SBA to release disaggregated data across participating agencies on the size of contracts awarded by demographics and number of contracts awarded by demographics. Second, the legislation directs the SBA to review size standards and issue appropriate regulations to allow 8(a) firms to grow and continue to exist after completion of the program. Finally, the legislation requires the SBA to deliver a report to Congress on the ability of 8(a) firms that are not Alaskan Native Corporations or Native Hawaiian Organizations to successfully attain 8(a) sole-source contracts and to determine the best sole source thresholds to enable 8(a) firms to secure a sole source contract.
- Appropriations. The legislation authorizes $20 million annually to increase the number of procurement center representatives and commercial market representatives. Additionally, the legislation authorizes annually $20 million to increase the number of regional business operational specialists, $5 million to administer the women owned small business certification process, $400,000 for processing the mentor-protégé program, and a one-time authorization of $2.5 million to replace the Dynamic Small Business Search website.
The Federal Contracting Fairness Act is endorsed by the National Urban League, U.S. Black Chambers, United States Hispanic Chamber of Commerce, National Asian/Pacific Islander American Chamber of Commerce and Entrepreneurship, Association for Enterprise Opportunity, Women Impacting Public Policy, Association of Women’s Business Centers, Capital Regional Minority Supplier Development Council, National Minority Supplier Development Council, and the Small Business Majority.
Click here to view a PDF of the bill text.