Bill Would Open New Opportunities for Small Business Contracting

Right now, if a federal agency brings in a subcontractor to a project that itself subcontracts to another company, all the dollars that flow to that second-tier subcontractor, if it’s a small business, are able to “count” against the agency’s goal of contracting with small businesses. And that’s how it should be.

However, the prime contractor, which also has to fulfill congressionally mandated goals of pushing work to small businesses, only gets credit under the program for a direct subcontractor that’s a small business, not for a subcontractor that’s farther down the chain. That doesn’t seem to make sense.

So, as reported by Jill Aitoro in the Washington Business Journal, the chairman of the House Small Business Committee, Sam Graves (R-Mo.), has introduced a bill that would “count” those contract dollars, if they go to a small business, when they go to any subcontractor in the chain.

Agencies are supposed to award 23 percent of prime contract dollars and 35.9 percent of subcontracted dollars to small businesses, and prime contractors are supposed to award an negotiated number of dollars to small businesses through first-tier subcontracts.
Graves’ bill would give the prime contractors credit for any subcontract that ends up going to a small business, even if it’s not in the first tier.

The bill was introduced on June 4, 2013. On June 6, the Professional Services Council, the national trade association of the government professional and technical services industry, endorsed the bill.

“Small businesses, whether serving as both prime contractors and subcontractors, play a critical role in support of federal agencies’ missions. The current inability for other-than-small businesses to receive credit for small business subcontracting beyond the first tier inhibits small business subcontracting participation at those tiers, thus restricting small businesses’ ability to bring their products or services to the federal market,” the PSC wrote.

We agree that this measure would help fulfill the congressional goal of making small businesses fully equal players in the nation’s economy. Any company that is interested in fulfilling these goals should seek legal advice from a law firm that follows these developments on a day-to-day basis.

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