Overview
Title
To amend the Small Business Act to codify the Rule of Two, and for other purposes.
ELI5 AI
H. R. 2804 is a bill that says if there are at least two small businesses that can do the job at a good price, then certain contracts should only be given to them, so they have a better chance to work and grow.
Summary AI
H. R. 2804 is a bill that aims to change the Small Business Act by putting the "Rule of Two" into law. This rule makes sure that contracts and orders above a certain value are specifically set aside for small businesses if there are at least two small businesses that can provide what's needed at a fair price. The bill is titled the "Protecting Small Business Competitions Act of 2025" and was introduced by Ms. Velázquez.
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AnalysisAI
Overview of the Bill
The proposed legislation, H.R. 2804, seeks to amend the Small Business Act to formally establish the "Rule of Two" as a requirement for certain government contracts. Titled the “Protecting Small Business Competitions Act of 2025,” this bill envisions fostering competition among small businesses by reserving contracts for them, provided specific conditions are met. If a government contract exceeds a certain monetary value, known as the simplified acquisition threshold, it must be reserved for small business concerns when it is anticipated to receive offers from at least two responsible small business entities, allowing for award at a fair market price.
Significant Issues
While the bill aims to promote small business participation in government contracts, several significant issues arise from its provisions:
Undefined Threshold: The term "simplified acquisition threshold" is pivotal to the Rule of Two, yet the bill leaves this term undefined. Without clarity, stakeholders may face confusion, potentially leading to inconsistent application until the term is explicitly defined elsewhere.
Subjectivity in Expectation: The requirement that contracting officers "reasonably expect" bids from two or more small businesses introduces subjectivity. Different officers may interpret this requirement variably, leading to potential inconsistencies in how the Rule of Two is applied across different contracts and situations.
Market Price Ambiguity: The bill lacks precise criteria for what constitutes a "fair market price," creating the potential for disagreements or accusations of arbitrariness regarding contract awards.
Impact on the Public
The proposed legislation could broadly impact both the market and the economy by encouraging small businesses to participate in government contracting. Increased competition amongst small businesses might lead to better products and services for the government at competitive prices. However, the potential for ambiguous terms might lead to confusion or even misuse, which could inadvertently increase administrative burdens.
Impact on Stakeholders
For small businesses, this bill represents a significant opportunity. By mandating that certain contracts are only open to small businesses when the Rule of Two applies, they have a better chance to compete in a government marketplace that might otherwise favor larger corporations.
Government contracting officers could face challenges. The potential ambiguity in terms and the subjectivity in "reasonably expects" could demand additional training or clarification to ensure consistent application.
Lastly, large corporations might view the bill as detrimental. It does not delineate the benefits or rationale for focusing these contracts on small businesses, which could lead these larger entities to perceive the measure as unfairly limiting their opportunities for certain government contracts.
In summation, while H.R. 2804 has commendable intentions to bolster small business competition, it risks creating operational uncertainties. Policymakers must ensure clear delineations and criteria to realize its potential benefits fully and avoid unintended inequities or inconsistencies in practice.
Issues
The lack of a definition for 'simplified acquisition threshold' in Section 2 could cause ambiguity for readers not familiar with the specific value, leading to misunderstandings or misapplications of the law.
The phrase 'reasonably expects' in Section 2 is subjective and may lead to inconsistent application of the Rule of Two, depending on individual interpretations by contracting officers.
Section 2 could be perceived as potentially favoring small business concerns over larger corporations, raising questions about the fairness and broader economic impact without a detailed explanation of the intended benefits of such prioritization.
The absence of clear criteria for determining what constitutes a 'fair market price' in Section 2 risks discrepancies in contract awards and could lead to disputes or claims of unfairness.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The first section of the bill states the short title, which allows people to refer to it as the “Protecting Small Business Competitions Act of 2025.”
2. Codification of the Rule of Two Read Opens in new tab
Summary AI
The bill amends the Small Business Act by adding a new rule that requires certain government contracts to be reserved for small businesses. This "Rule of Two" applies when there is an expectation of receiving offers from at least two small businesses, and the contract can be awarded at a fair market price.