Monday, May 8, 2017

Proposed Legislation to Increase Small/Minority/Disadvantaged Subcontracting Goals

On May 4th, companion bills were introduced in the Senate and House that are designed to increase participation of small businesses in Government contracting. Both bills are titled the same - Assuring Contracting Equity (ACE) Act of 2017.

The Bills contain several provisions to raise the SBA (Small Business Administration) contracting goals and (supposedly) to increase transparency. These include:

  • Raising the SBA's government-wide small business contracting goal from 23 to 25 percent.
  • Increasing the contracting goal from 5 percent to 10 percent for businesses owned by veterans, women, and economically disadvantaged individuals.
  • Making the reporting requirements more transparent and prohibiting reporting practices that artificially inflate the appearance of contracting to minority-owned businesses (good luck on that effort).
  • Requiring the SBA to disclose the percentage of contracts that are awarded to small business from all federal contracting dollars.
  • Consider past subcontracting compliance in award decisions.

Raising small business, minority, and disadvantaged subcontracting goals are pretty straight-forward provisions. The reporting requirements designed to increase transparency however are bound to be controversial if for no other reason than it adds more, perhaps onerous, reporting requirements on prime contractors and upper-tier subcontractors. This runs counter to efforts of the current administration to reduce regulations that create barriers to sound business practices and cause many businesses to eschew Government work.  Also, the provisions that past subcontracting compliance can affect award decisions sounds very similar to the so-called "black-listing" provisions that were so controversial in the Fair Pay and Safe Workplaces rules that were overturned earlier this year by Congress and the President.

We have no idea how far these Democrat-sponsored bills will progress through the legislative process. If it were limited to increasing thresholds instead of laying on a lot of new reporting requirements as well, it might have a better shot.

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