AGC-Backed Procurement Reforms Pass House

On Oct. 1, the House approved the conference report for the National Defense Authorization Act for Fiscal Year 2016, which includes several AGC-supported procurement reforms. These reforms would:

  • Help prevent fraud in the federal construction surety bond market by requiring that individual sureties back their bonds with real, easy to value assets—like U.S. Treasury bonds and instruments. A number of individual sureties were using hard-to-value, over-valued or difficult to liquidate assets—like coal mine refuse, vacation homes and other real property—to back their bonds. Many such sureties declared bankruptcy upon contractor default, leaving subcontractors without any means of payment.  
  • Mandate that DOD agencies—including the U.S. Army Corps of Engineers and Naval Facilities Engineering Command—consider the past performance of the individual companies in joint venture/teaming arrangements that include a small business, not merely the past performance of the joint venture.  Many federal agencies demand that the small business and its joint venture/teaming partners only submit past relevant experience that they perform together or otherwise be disqualified from consideration.  
  • Address a recent court decision that would require small business construction contractors to only purchase their materials and supplies—i.e., steel, furniture and equipment for the project— from other small businesses. Consequently, the legislative reform provides an exclusion for construction contractors from what is called the “non-manufacturer rule” meant to prevent small business manufactures from merely acting as fronts for large manufacturers through small business set-aside contracts for goods.

AGC testified in support of these reforms earlier this year before the House Small Business Committee. AGC has also lead a coalition of 15 national construction trade associations in an effort to push such construction procurement reforms through Congress. The Senate will likely consider the NDAA conference report in the next few weeks. The president is threating to veto the NDAA conference report because it does not address defense budget cuts under the 2011 Budget Control Act.  

For more information, please contact Jimmy Christianson at 703-837-5325 or