On September 27, President Obama signed the Small Business Jobs & Credit Act of 2010, enacting numerous tax breaks for small businesses and several significant contracting reform provisions that will have a wide-reaching impact on federal contractors.
First and foremost, the legislation puts an end to the uncertainty over parity in the small business program by re-establishing equality among each of the small business subcategories that competes for government contracts. The legislation now states that a contracting officer “may” – instead of “shall” – award contracts based on limited competition to HUBZone small businesses as a first option. Numerous Government Accountability Office and the U.S. Court of Federal Claims decisions in recent years determined that using “shall” unambiguously established a preference for HUBZone firms. AGC argued that in order to preserve the concept of free and open competition, even within the small business program, there must be parity within the program. There are other provisions in the legislation designed to improve the contracting process, including:- Directions for SBA to establish a mentor-protégé program to assist small businesses owned by women, service-disabled veterans and those operating in HUBZones. The initiative would be modeled after the 8(a) mentor-protégé program.
- Requiring OMB's Office of Federal Procurement Policy to establish a government-wide policy for contract bundling -- a process in which several small contracts are consolidated and awarded to one firm, often out of the reach of small businesses. Prior to bundling a contract, procurement officials would be required to conduct market research and to have a senior acquisition official sign off on the decision. The rationale for bundling then would be publicly disclosed.
- Requiring small businesses to recertify their size status annually. The law also establishes a government-wide policy for prosecuting companies that fraudulently proclaim themselves to be a small business.
Finally, there are two provisions that could make substantial changes to the prime-subcontractor relationship. One provision requires a prime to "make a good faith effort to acquire articles, equipment, supplies, services, or materials, or obtain the performance of construction work from the small business concerns used in preparing and submitting to the contracting agency the bid or proposal, in the same amount and quality used in preparing and submitting the bid or proposal," and "provide to the contracting officer a written explanation if the offeror or bidder fails to acquire articles, equipment, supplies, services, or materials or obtain the performance of construction work as described in clause.” A second provision governing payment to subcontractors could put prime contractors at undue risk for a poor performance evaluation if there is a dispute over timing or amount of payment to a subcontractor. AGC is greatly concerned that these provisions could lead to a form of bid listing and is pushing Congress to explain in more detail their intent of this provision.
AGC also will be deeply involved in the regulatory process as the rules are promulgated to implement this legislation.
For more information, contact Marco Giamberardino at (703) 837-5325 orgiamberm@agc.org.