[House Report 106-879]
[From the U.S. Government Publishing Office]
106th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 106-879
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EQUITY IN CONTRACTING FOR WOMEN ACT OF 2000
_______
September 21, 2000.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Talent, from the Committee on Small Business, submitted the
following
R E P O R T
[To accompany H.R. 4897]
[Including cost estimate of the Congressional Budget Office]
The Committee on Small Business, to whom was referred the
bill (H.R. 4897) to amend the Small Business Act to establish a
program to provide Federal contracting assistance to small
business concerns owned and controlled by women, having
considered the same, report favorably thereon without amendment
and recommend that the bill do pass.
Purpose
The purpose of H.R. 4897, the ``Equity in Contracting for
Women Act of 2000,'' is to allow contracts, in industries
historically underrepresented by women-owned small businesses,
to be reserved for competition by women-owned small businesses.
The bill mandates that contracting officers reserve any
contract within certain limitations for competition solely by
women owned businesses that are economically disadvantaged.
Without this change, contracting officers do not have any
mechanism to identify and award contracts to women-owned small
businesses.
Need for Legislation
There are approximately nine million women-owned businesses
according to the statistics of the United States Small Business
Administration. Women-owned businesses employ over 27 million
people and are a vital element in the unprecedented growth and
productivity of the American economy. Nearly half of the
businesses owned by women provide goods and services to the
federal government according to the National Foundation for
Women Business Owners.
From 1997 to 1999, the number of federal government
contracts awarded to women decreased by more than 38 percent.
So while the private sector was increasing the use of women-
owned small businesses, the federal government utilization was
decreasing.
Congress recognized the valuable contribution of women-
owned businesses when it established a five percent procurement
goal in the Federal Acquisition Streamlining Act of 1994
(``FASA''). However, data from the Federal Procurement Data
System shows that the highest utilization of women-owned
businesses was 2.47 percent in 1999--not even half of the
statutory goal. The Committee finds that this simply is
unacceptable.
The Committee has heard testimony concerning the reasons
for the failure of the federal government to achieve the five
percent goal. Contract bundling, or the consolidation of
smaller contract requirements into larger contracts, makes it
difficult for women-owned small businesses to file responsive
bids to bundled solicitations. The federal government also is
increasing the use of the Federal Supply Schedule which
increases the efficiency for purchasing commercial off-the-
shelf items. However, only 30 percent of the contractors on
Federal Supply Schedules are small businesses and an even
smaller amount are women-owned small businesses. Nothing in the
Federal Supply Schedule contracting process mandates that a
contracting officer select specific contractors for an award.
Thus, being on the Federal Supply Schedule does not guarantee
that the contractor will be used for the purchase of goods and
services. The Federal Supply Schedule, while increasing the
efficiency of government procurements for commercially-
available items, also may perpetuate the use of well-known
firms that are not women-owned businesses.
As the Committee has seen on numerous occasions, the drive
for efficiency in procurement often places Congressionally-
mandated contracting goals for small businesses in general, and
women-owned businesses in particular, in jeopardy. Current
procurement practices enable contracting officers to reserve
competition among small businesses for contracts in value
between $2,500 and $100,000 if the contracting officer finds
that there will be at least two responsible small businesses to
bid on the contract. The Committee believes that a similar
mechanism should be established for women-owned small
businesses in historically underrepresented industries. This
would help contracting officers meet the procurement goal for
women established in FASA while still ensuring that government
receives the benefits of competitive bidding for goods and
services.
The Committee believes that this action is necessary even
though the President issued Executive Order 13,157 on May 23,
2000 affirming the Administration's goal of increasing
opportunities for women-owned small businesses. The Executive
order provides a mechanism by which the Small Business
Administration and the Office of Federal Procurement Policy
within the Office of Management and Budget can monitor and
measure compliance with the women-owned procurement goal in
FASA. The Executive Order also would authorize the collection
and dissemination of best practices among agencies for
achieving the procurement goal established in FASA. However,
the Executive Order does not provide any tool by which
contracting officers can identify and utilize women-owned small
businesses. The Committee believes that the goals expressed in
FASA and reaffirmed in the Executive Order will not be achieved
without the use of some mandatory tool which enables
contracting officers to identify women-owned small businesses
and establish competition among those businesses for the
provision of goods and services to the federal government.
Committee Action
The Committee on Small Business held no separate hearings
on H.R. 4897. During the 106th Congress, the committee
regularly heard from women-owned businesses about their
inability to obtain federal prime contracts. The issue also was
a central focus of a June 8, 2000 hearing by the Subcommittee
on Government Programs and Oversight entitled ``Focus on
Women's Business Enterprises.'' During that hearing, both the
National Black Chamber of Commerce and the National Association
of Women Business Owners expressed concern with the federal
government's failure to meet the five percent goal set forth in
FASA.
Consideration of H.R. 4897
At 11:30 a.m. on July 27, 2000, the Committee on Small
Business met to consider and report H.R. 4897. Following a
brief opening statement by the Ranking Democratic Member, Ms.
Velazquez, the Chairman declared the bill open for amendment.
No amendments were offered. Chairman Talent then moved the bill
be reported, and at 12:04 p.m., by unanimous voice vote, a
quorum being present, the Committee passed H.R. 4897 and
ordered it reported.
Section-by-Section Analysis
Section 1. Short title
Designates the bill as the ``Equity in Contracting for
Women Act of 2000.''
Section 2. Procurement program for womens's small business concerns
This section modifies section 8 of the Small Business Act
by adding a new subsection (m) to establish a Procurement
Program for Women's Small Business Concerns.
Paragraph (1) gives the same definition to a ``contracting
officer'' as provided under the Office of Federal Procurement
Policy Act.
Paragraph (1) also defines a ``small business concern owned
and controlled by women'' as one that is at least 51 percent
owned and controlled by women who are economically
disadvantaged. The Committee intends that the Small Business
Administration develop standards for the determination of
economic disadvantage which are consistent with other Small
Business Administration programs designed to assist
``economically disadvantaged'' small business concerns.
Paragraph (2) authorizes federal agencies to reserve any
contract for competition by small business concerns owned and
controlled by women if the following criteria are satisfied:
(a) the firm is a responsible bidder; (b) the contracting
officer expects that two or more small business concerns owned
and controlled by women will submit bids on the contract; (c)
the contract is for the procurement of goods and services in an
industry identified by the Administrator of the Small Business
Administration as one in which small business concerns owned
and controlled by women are historically underrepresented; (d)
if the anticipated award amount of the contract does not exceed
$5,000,000 for a manufacturing business or $3,000,000 for all
other contracts; (e) if the contracting officer can anticipate
that the award will be made at reasonable price; and (f) if the
concern is certified as a small business concern owned and
controlled by women.
The Committee intends that a certification by any federal,
state or local governmental entity should satisfy this last
criterion as long as the certification tracks the definition of
small business concern owned and controlled by women as used in
this Act. However, the Committee does not intend for the
Administrator to establish a certification program for small
business concerns owned and controlled by women.
In addition, the Committee expects that the contracting
officers will accept self-certification so long as the
documentation provided along with the response to the
solicitation enables the contracting officer to determine that
the bidder is a small business concern owned and controlled by
women as used in this Act. The Committee expects that the
Administrator will develop documentation standards that will be
utilized by allcontracting officers. For purposes of developing
standards of documentation, the Committee does not expect that the
Administrator should duplicate the documentation requirements for its
8(a) program. Nevertheless, the documentation should be sufficiently
demanding so that a contracting officer can pierce the veil of various
business enterprises to ensure that the bidder meets the definition set
forth in this Act. Thus, the Committee expects that documentation would
enable the contracting officer to apply attribution rules set forth in
Title 13 of the Code of Federal Regulations to determine whether the
bidder is a small business concern owned and controlled by women.
The Committee does not intend that the contracting program
established in this Act provide a basis for contracting
officers to award contracts on a sole-source basis to small
business concerns owned and controlled by women. Rather, the
Committee intends that contracting officers utilize the
contracting mechanism established in this Act to identify small
business concerns owned and controlled by women in industries
in which they are historically represented as prime contractors
and competitively bid those contracts. Ultimately, the
Committee expects that the process for identifying these small
business concerns owned and controlled by women will lead to
greater utilization of small business concerns owned and
controlled by women throughout the federal government and not
just in contracts designated in this Act.
Paragraph (3) requires that the Administrator conduct a
study in order to identify those industries in which small
business concerns owned and controlled by women are
underrepresented in obtaining federal contracts. The Committee
expects the Administrator's study to focus on those industries
in which small business concerns owned and controlled by women
are underrepresented at the prime contractor level. The study
shall evaluate, on an industry-by-industry basis the specific
industries and regions of the United States that are
underrepresented. In order for the program established in this
Act to conform with Adarand Constructors v. Pena, 515 U.S. 200
(1995), the Committee expects that the Administrator's study
will mirror the ``benchmarking'' study performed by the
Department of Commerce for small disadvantaged businesses.
Paragraph 4 requires the Administrator to establish
procedures for verifying the eligibility of businesses for the
program established by this Act. The Committee reiterates its
intent that the Act not be used by the Administrator to
establish a certification program. Instead, the Committee
expects the Administrator to develop regulations which will
efficiently and rapidly resolve disputes over eligibility
without unduly burdening small businesses.
Paragraph 4 also requires the Administrator to develop
regulations by which the Small Business Administration can
quickly and in a cost-effective manner verify the accuracy of
any certification, such as, but not limited to, the development
of lists of other federal, state, and local certifications that
it will accept.
Paragraph 4 also authorizes, but does not mandate, the
Administrator to provide for periodic examinations of the
program including random program examinations in order to
determine that respondents to solicitations are businesses
eligible under this Act. The Committee expects that such
examinations will not be intrusive but will be sufficient to
determine that other governmental organizations are providing
adequate certifications and that self-certification is not
being abused. The Committee does not intend that these periodic
or random examinations be transformed into an ongoing
certification program.
Paragraph 4 also requires government agencies, including
those specified in the Act, to provide information and
assistance to the Administrator in order to carry out the
purposes of the Act.
Paragraph also makes clear that small business concerns
will be subject to penalties beyond those set forth in the
Small Business Act should they misrepresent their status under
this Act.
U.S. Congress,
Congressional Budget Office,
Washington, DC, September 18, 2000.
Hon. James M. Talent,
Chairman, Committee on Small Business,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 4897, the Equity
in Contracting for Women Act of 2000.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Mark
Grabowicz.
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.
congressional budget office cost estimate
H.R. 4897--Equity in Contracting for Women Act of 2000
CBO estimates that implementing H.R. 4897 would result in
higher contracting costs for the federal government of several
million dollars per year, subject to the availability of
appropriated funds. Enactment of the bill also could affect
direct spending and receipts, so pay-as-you-go procedures would
apply. However, CBO estimates that any impact on direct
spending and receipts would not be significant. H.R. 4897
contains no intergovernmental or private-sector mandates as
defined in the Unfunded Mandates Reform Act and would not
affect the budgets of state, local, or tribal governments.
H.R. 4897 would direct the Small Business Administration
(SBA) to conduct a study to identify industries where small
businesses owned and controlled by economically disadvantaged
women are underrepresented with respect to receiving federal
contracts. The bill would then permit federal contracting
officers to set aside certain contracts involving those
industries to be awarded to such small businesses. H.R. 4897
would require that each such contract be valued at no more than
$5 million, and be awarded at a fair and reasonable price.
Because H.R. 4897 would allow agencies to set aside certain
contracts, the bill would likely restrict competition and
increase the prices of some federal contracts. In fiscal year
1999, small businesses owned by economically disadvantaged
women won 12,519 contracts under $5 million each and worth a
total of about $1.8 billion (for an average contract value of
$145,000).
It is difficult to predict the number of contracts that
would be affected by the bill and any consequent increase in
price to the government. However, if H.R. 4897 were to result
in a 5 percent increase in the number of contracts awarded to
economically disadvantaged women and if the price of each
contract would exceed the low bid by 5 percent, CBO estimates
that the bill would cost the federal government close to $5
million each year, subject to the availability of appropriated
funds. That estimate assumes that contracts set aside under
H.R. 4897 would have an average value of about $145,000. In
addition, based oninformation from SBA, CBO estimates that the
study required by the bill would cost less than $500,000 in fiscal year
2001.
Under H.R. 4897, persons who misrepresent their status as
small business concerns owned and controlled by economically
disadvantaged women would be subject to civil and criminal
fines, so the federal government might collect additional fines
if the bill is enacted. Collections of criminal fines are
recorded in the budget as governmental receipts (revenues),
which are deposited in the Crime Victims Fund and spent in
subsequent years. Civil fines are recorded as governmental
receipts. CBO expects that any additional receipts and direct
spending would be negligible because of the small number of
cases likely to be involved.
The CBO staff contact is Mark Grabowicz. This estimate was
approved by Peter H. Fontaine, Deputy Assistant Director for
Budget Analysis.
Committee Estimate of Costs
Pursuant to the Congressional Budget Act of 1974, the
Committee estimates that the amendments to the Small Business
Act contained in H.R. 4897 will not significantly increase
discretionary spending over the next five fiscal years. The
Committee also estimates that H.R. 4897 will not affect direct
spending. These estimates concur with Congressional Budget
Office (CBO) estimates.
Furthermore, pursuant to clause 3(d)(2)(A) of rule XIII of
the Rules of the House of Representatives, the Committee
estimates that implementation of H.R. 4897 will not
significantly increase other administrative costs.
Oversight Findings
In accordance with clause 4(c)(2) of rule X of the Rules of
the House of Representatives, the Committee states that no
oversight findings or recommendations have been made by the
Committee on Government Reform with respect to the subject
matter contained in H.R. 4897.
In accordance with clause (2)(b)(1) of rule X of the Rules
of the House of Representatives, the oversight findings and
recommendations of the Committee on Small Business with respect
to the subject matter contained in H.R. 4897 are incorporated
into the descriptive portions of this report.
Statement of Constitutional Authority
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds the authority for
this legislation in Article I, Section 8, clause 18, of the
Constitution of the United States.
Compliance With P.L. 104-4
H.R. 4897 contains no unfunded mandates.
Congressional Accountability Act
H.R. 4897 does not relate to the terms and conditions of
employment or access to public services or accommodations with
the meaning of section 102(b)(3) of P.L. 104-1.
Federal Advisory Committee Statement
This legislation does not establish or authorize the
establishment of any new advisory committees.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (new matter is
printed in italics and existing law in which no change is
proposed is shown in roman):
SECTION 8 OF THE SMALL BUSINESS ACT
Sec. 8. (a) * * *
* * * * * * *
(m) Procurement Program for Women's Small Business
Concerns.--
(1) Definitions.--In this subsection, the following
definitions apply:
(A) Contracting officer.--The term
``contracting officer'' has the meaning given
such term in section 27(f)(5) of the Office of
Federal Procurement Policy Act (41 U.S.C.
423(f)(5)).
(B) Small business concern owned and
controlled by women.--The term ``small business
concern owned and controlled by women'' means
any small business concern--
(i) that is not less than 51 percent
owned by 1 or more women who are
economically disadvantaged; and
(ii) the management and daily
business operations of which are
controlled by 1 or more women.
(2) Authority to set aside contracts.--
Notwithstanding any other provision of law and in
accordance with this subsection, a contracting officer
may set aside to be awarded only to a small business
concern owned and controlled by women any contract for
the procurement of goods or services by the Federal
Government, if--
(A) the concern is determined to be a
responsible contractor with respect to the
performance of such contract;
(B) the contracting officer has a reasonable
expectation that 2 or more small business
concerns owned and controlled by women will
submit offers for the contract;
(C) the contract is for the procurement of
goods or services with respect to an industry
identified by the Administrator pursuant to
paragraph (3);
(D) the anticipated award price of the
contract (including options) does not exceed--
(i) $5,000,000, in the case of a
contract assigned a standard industrial
classification code for manufacturing;
or
(ii) $3,000,000, in the case of all
other contracts;
(E) in the estimation of the contracting
officer, the contract award can be made at a
fair and reasonable price; and
(F) the concern--
(i) is certified as a small business
concern owned and controlled by women
by a Federal agency or by a State or
local government; or
(ii) certifies to the contracting
officer that it is a small business
concern owned and controlled by women
and provides adequate documentation, in
accordance with standards established
by the Administration, to support such
certification.
(3) Identification of industries.--The Administrator
shall conduct a study to identify industries in which
small business concerns owned and controlled by women
are underrepresented with respect to Federal
procurement contracting.
(4) Enforcement; penalties.--
(A) Verification of eligibility.--In carrying
out this subsection, the Administrator shall
establish procedures relating to--
(i) the filing, investigation, and
disposition by the Administration of
any challenge to the eligibility of a
small business concern to receive
assistance under this subsection
(including a challenge, filed by an
interested party, relating to the
veracity of a certification made or
information provided to the
Administration by a small business
concern under paragraph (2)(F)); and
(ii) verification by the
Administrator of the accuracy of any
certification made or information
provided to the Administration by a
small business concern under paragraph
(2)(F).
(B) Examinations.--The procedures established
under subparagraph (A) may provide for program
examinations (including random program
examinations) by the Administrator of any small
business concern making a certification or
providing information to the Administrator
under paragraph (2)(F).
(C) Provision of data.--Upon the request of
the Administrator, the Secretary of Labor, the
Secretary of Housing and Urban Development, and
the Secretary of the Interior (or the Assistant
Secretary for Indian Affairs), shall promptly
provide to the Administrator such information
as the Administrator determines to be necessary
to carry out this subsection.
(D) Penalties.--In addition to the penalties
described in section 16(d), any small business
concern that is determined by the Administrator
to have misrepresented the status of that
concern as a small business concern owned and
controlled by women for purposes of this
subsection, shall be subject to--
(i) section 1001 of title 18, United
States Code; and
(ii) sections 3729 through 3733 of
title 31, United States Code.