Overview
Title
To make improvements to Federal contracting practices for disadvantaged small businesses, and for other purposes.
ELI5 AI
H.R. 9832 wants to help small businesses owned by disadvantaged people get more chances to work with the government. It suggests creating a big list to see which businesses are getting work and helps make sure these businesses get paid on time.
Summary AI
H.R. 9832, titled the "Create Opportunities and Networks for Talented, Ready, and Able Contractors To Succeed Act of 2024" or the “CONTRACTS Act of 2024,” aims to improve federal contracting practices for disadvantaged small businesses. This bill introduces a public database for tracking federal contract awards to such businesses, alongside outreach and education efforts to increase their participation. It also includes provisions for technical assistance, establishes a task force to enhance opportunities, and sets reporting requirements for diversity and inclusion among federal contractors. Additionally, it updates subcontracting plans and payment processes to ensure timely payment and support for small, disadvantaged businesses.
Published
Keywords AI
Sources
Bill Statistics
Size
Language
Complexity
AnalysisAI
The proposed legislation, H.R. 9832, titled the Create Opportunities and Networks for Talented, Ready, and Able Contractors To Succeed Act of 2024 or the CONTRACTS Act of 2024, aims to improve federal contracting practices for disadvantaged small businesses. This bill seeks to create more opportunities for these businesses by enhancing transparency, establishing outreach programs, and providing technical assistance. It also proposes the formation of a task force to support these efforts and includes a series of reporting and compliance measures to ensure diversity and prompt payments in government contracts.
General Summary
The bill sets forth an ambitious plan to support disadvantaged small businesses in securing federal contracts. Key provisions of the bill include the creation of a public online database to monitor contract awards, outreach initiatives to encourage more minority-owned businesses to participate in federal contracting, and updates to existing legal frameworks to include entities owned by historically Black colleges and universities (HBCUs). Additionally, it outlines the requirement for prompt payment to subcontractors, introduces measures to enhance diversity reporting among federal contractors, and mandates annual reporting by the Chief Counsel for Advocacy of the Small Business Administration on the bill's implementation.
Significant Issues
Several issues arise from the proposed legislation. The expansion of the definition to include "HBCU business entities" as socially and economically disadvantaged small businesses might be perceived as giving preferential treatment to HBCUs over other minority-serving institutions. This could lead to concerns about fairness and potential favoritism.
Moreover, the requirement to create and maintain a database of contract awards may introduce significant costs. This aspect of the bill lacks clear budgetary guidelines, posing questions about financial feasibility and resource allocation. Additionally, the vague language around "qualitative and quantitative trends" leaves room for varied interpretations, potentially complicating implementation and accountability.
The establishment of a Federal disadvantaged small business task force, while noble in intent, might overlap with existing efforts and run the risk of bureaucratic redundancy. The task force's large membership could also pose coordination challenges.
Diversity and inclusion reporting requirements for contractors may lead to administrative burdens and privacy concerns regarding the collection of demographic data. Similarly, the requirements surrounding subcontracting plans could be seen as overbearing, especially for smaller contractors, thus hindering their participation in these contracts.
Broader Impact on the Public
The bill aims to level the playing field by providing disadvantaged small businesses better access to federal contracts. This could potentially increase job opportunities within these businesses and lead to more equitable economic growth. Improved transparency and accountability in federal contracting may foster trust in government practices, ensuring taxpayers that funds are being distributed fairly and efficiently.
However, the significant administrative and financial burdens required for compliance, particularly concerning reporting requirements, might increase costs for contractors. Such costs could be passed on to the federal government and, ultimately, taxpayers if not properly managed.
Impact on Specific Stakeholders
Disadvantaged Small Businesses: If successful, the legislation could offer substantial benefits, providing these businesses with increased contracting opportunities and improved support. The focused outreach and expanded definitions may result in greater participation from minority-owned and HBCU-affiliated businesses. However, the bill could inadvertently favor certain groups over others if favoritism complaints arise from the prioritized inclusion of HBCUs.
Federal Contractors: The requirements for prompt payments and diversity reporting could pressure contractors to adapt their practices quickly, involving increased administrative tasks. While these measures aim to enhance fairness and transparency, they might pose challenges, especially for medium-sized contractors lacking the resources to meet these new demands.
Contracting Officers and Federal Agencies: The increased oversight duties concerning subcontracting plans and compliance with diversity goals may burden federal contract administrators. The task of ensuring adherence to these new stipulations while maintaining efficient operations could strain existing resources and manpower.
In summary, while the CONTRACTS Act of 2024 outlines meaningful steps toward fostering equity in federal contracting, its implementation and potential impact require careful consideration and oversight to balance the intended benefits with the practical implications for all stakeholders involved.
Financial Assessment
The Create Opportunities and Networks for Talented, Ready, and Able Contractors To Succeed Act of 2024 (H.R. 9832) emphasizes several financial aspects primarily concerning federal contracting for disadvantaged small businesses. Let's delve into the financial nuances and how these relate to the potential issues identified.
Database on Contract Awards
The bill mandates the creation of a public online database, detailing the number and dollar value of contracts awarded to disadvantaged small businesses. This database aims to enhance transparency and improve tracking of federal spending on such businesses. However, maintaining this system could incur significant costs and administrative efforts, raising concerns about financial resource allocation without specified budgetary constraints. The absence of clear criteria or metrics for "qualitative and quantitative trends" might complicate the financial oversight necessary for effective database management, as highlighted in the issues.
Subcontractor Engagement and Reporting
H.R. 9832 introduces requirements for prime contractors to submit reports including the total dollar value of payments to disadvantaged small businesses. Any contract valued at or above $10,000,000 is classified as a "major prime contract," adding to the list of those requiring detailed reporting. While these reporting requirements promote transparency and accountability in financial transactions, they could impose administrative burdens and increased costs on contractors. This financial strain is directly linked to privacy and administrative concerns raised in the issues, particularly regarding the management of demographic data.
Modifications to Subcontracting Plans
The bill obliges contractors to detail actions taken to engage small businesses owned by socially and economically disadvantaged individuals. They must specify attempts to increase the dollar amount allocated for these subcontractors' contributions. Such detailed plans could overwhelm smaller contractors with significant administrative commitments, potentially discouraging their participation due to the financial burdens associated with compliance.
Prompt Payment and Interest Penalty Clauses
The legislation includes provisions that require prime contractors to compensate subcontractors promptly, introducing an interest penalty for delays. Although this is designed to ensure financial fluidity and fairness in contractor-subcontractor relationships, it poses a challenge regarding the measurement of "satisfactory performance" and accurate computation of interest penalties. This complexity could result in financial disputes and require clear guidelines to prevent costly legal disagreements, as noted in the issues.
Publicly Available Diversity Reports
The requirement to publish diversity reports detailing the value of significant contracts and subcontracts adds another layer of financial transparency. However, publicly sharing such financial data may inadvertently expose sensitive information, leading to privacy concerns. The financial implications of these public disclosures could thus impact contractor willingness to bid on federal contracts, as they balance transparency with the risks associated with data exposure.
In conclusion, while H.R. 9832 is crafted to improve contracting opportunities for disadvantaged small businesses, the financial allocations and references present logistical and privacy challenges that need addressing to streamline the intended transparency and equity improvements.
Issues
The definition of 'HBCU business entity' is restricted to entities owned and operated by historically Black colleges or universities (Section 6). This could be seen as prioritizing HBCUs over other minority-serving institutions, leading to potential favoritism or exclusion of other minority-owned businesses.
The requirement for establishing and maintaining a public online database on contract awards to disadvantaged small businesses (Section 3) could result in significant costs without clear budgetary constraints, potentially affecting financial resources.
The language regarding 'qualitative and quantitative trends' and 'recommendations for Governmentwide reforms' in the database section (Section 3) may be too vague, lacking specified criteria or metrics, leading to varied interpretations and challenges in implementation.
The establishment of a Federal disadvantaged small business task force (Section 8) might lead to redundancies if similar efforts already exist. Additionally, the extensive list of members might cause inefficiencies or coordination difficulties.
The reporting requirements for covered contractors concerning diversity and inclusion (Section 12) may impose significant administrative burdens, raising concerns about increased costs and privacy issues related to the collection and reporting of demographic data.
The bill lacks details on how compliance with payment and interest penalty clauses will be monitored or enforced (Section 9), which could lead to potential non-compliance and legal disputes.
There is ambiguity in what constitutes 'satisfactory performance' and the computation of the 'interest penalty' for payments on certain contracts (Section 3906 under Section 9), leading to potential disputes between prime contractors and subcontractors.
The extended duration of the Task Force until ten years after the first meeting (Section 8) raises concerns about its relevance or usefulness over time, given potential changes in economic and social conditions.
The seemingly burdensome subcontracting plans requirements (Section 11) could deter smaller contractors due to overwhelming administrative commitments, impacting their participation in federal contracts.
The requirement for public availability of diversity reports (Section 4715 under Section 12) could pose privacy concerns by exposing potentially sensitive contractor and subcontractor data.
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; table of contents Read Opens in new tab
Summary AI
The CONTRACTS Act of 2024 aims to enhance opportunities for disadvantaged small businesses in federal contracting by providing a database on contract awards, expanding outreach and recruitment, and including minority-owned business entities in relevant definitions. It also addresses prompt payments, requires diversity reporting from contractors, and requires additional reports on subcontractor engagement.
2. Definitions Read Opens in new tab
Summary AI
This section of the bill provides definitions for terms related to small business programs, including the 8(a) Program, the Small Business Administration and its Administrator, Agency OSDBU, demographic classifications, disadvantaged small businesses, the MBDA Under Secretary, small business concerns, and small business development centers.
3. Database on contract awards to disadvantaged small businesses Read Opens in new tab
Summary AI
The bill requires each Federal agency to create a public database listing contracts awarded to small disadvantaged businesses, broken down by race and ethnicity, while also maintaining a historical record of any discrimination they face in Federal contracting. This information will help shape policies to reduce discrimination and aid these businesses in securing contracts and addressing discrimination for legal purposes.
Money References
- Such database shall include the following: (1) The aggregate number and dollar value of contracts awarded to socially and economically disadvantaged small business concern (as defined in section 8(a)(4)(A) of the Small Business Act (15 U.S.C. 637(a)(4)(A))) during the 3-year period preceding the date of the enactment of Public Law 95–507, disaggregated by race and ethnic group.
- (2) The aggregate number and dollar value of contracts awarded to disadvantaged small businesses pursuant to Public Law 95–507 during the 10-year period preceding the date of the enactment of this Act, disaggregated by race and ethnic group.
4. Outreach and recruitment to expand participation of disadvantaged small businesses in Federal contracting Read Opens in new tab
Summary AI
The section outlines efforts to increase the participation of disadvantaged small businesses in Federal contracting. It involves outreach, education, and the creation of online directories to connect these businesses with opportunities and resources, and includes specific roles for agency officials to help facilitate these processes.
5. Determination of the date of commencement of participation in the 8(a) program Read Opens in new tab
Summary AI
The section amends the Small Business Act to specify that small businesses joining the 8(a) program after a certain date will be considered to have started their participation one year earlier than when they begin receiving the full benefits, with factors like contract awards being used to determine this timing.
6. Inclusion of concerns owned by HBCU business entities in definition of socially and economically disadvantaged small business concern Read Opens in new tab
Summary AI
The section of the bill expands the definition of "socially and economically disadvantaged small business concern" in the Small Business Act to include entities owned by historically Black colleges and universities (HBCUs). Additionally, it allows small businesses that are fully or partially owned by HBCUs to be recognized as HUBZone small business concerns, provided other owners are U.S. citizens or small businesses.
7. Agency OSDBU technical assistance Read Opens in new tab
Summary AI
The section amends the Small Business Act to require the agency to offer training and technical assistance to small businesses owned by socially and economically disadvantaged individuals. This includes developing narratives of discrimination and preparing them to submit contract offers.
8. Federal disadvantaged small business task force Read Opens in new tab
Summary AI
The section establishes a Federal task force to support disadvantaged small businesses by recommending policies for increasing their opportunities in Federal contracts, expanding outreach, and enhancing strategies for participation. This task force, composed of various government officials, will meet regularly, submit reports to Congress on its findings and activities, and will terminate 10 years after its first meeting.
9. Requirements relating to prompt payment, progress payments, and performance-based payments Read Opens in new tab
Summary AI
The bill outlines requirements for federal contracts, mandating that prime contractors pay subcontractors within 14 days for satisfactory work and include interest penalties for late payments. It also requires prime contractors to disclose to small disadvantaged businesses whether they receive certain payments, verify timely payments in reports, and incorporate compliance evaluations in performance assessments, with non-compliance potentially affecting future contract eligibility.
3906. Disclosures for prompt payments on certain contracts Read Opens in new tab
Summary AI
In Section 3906, it is stated that certain contracts must include clauses ensuring that main contractors pay their subcontractors promptly and charge interest penalties if payments are late. These rules apply to contracts not involving disadvantaged small businesses and that are above a certain value.
10. Reports on subcontractor engagement Read Opens in new tab
Summary AI
The section amends the Small Business Act to require large prime contractors, who are not disadvantaged small businesses, to report yearly on subcontracts awarded under major contracts, detailing the number, types, and payments made to disadvantaged small businesses, among others. A "major prime contract" is defined as the top 50 high-value federal contracts or those worth $10 million or more, with these rules applying to contracts made after this section becomes law.
Money References
- (a) In general.—Section 8(d) of the Small Business Act (15 U.S.C. 637(d)) is amended by adding at the end the following new paragraph: “(18) REPORTS ON SUBCONTRACTOR ENGAGEMENT.— “(A) IN GENERAL.—Each prime contractor that is not a disadvantaged small business that has been awarded a major prime contract shall submit to the head of the Federal agency that awarded such contract an annual report on subcontracts awarded pursuant to such contract, including— “(i) the total number of subcontracts awarded under the contract; “(ii) the number of subcontracts and a description of such subcontracts awarded to disadvantaged small businesses, disaggregated by demographic characteristics, including the North American Industry Classification System code for each such business; “(iii) the total dollar value of payments made to subcontractors; and “(iv) the total dollar value of payments made to disadvantaged small businesses, disaggregated by demographic characteristics.
- “(ii) MAJOR PRIME CONTRACT.—The term ‘major prime contract’ means— “(I) the 50 highest dollar value prime contracts of a Federal agency; and “(II) each contract of a Federal agency that has a total dollar value greater than or equal to $10,000,000.”.
11. Modifications to subcontracting plans to enhance opportunities for small business concerns owned and controlled by socially and economically disadvantaged individuals Read Opens in new tab
Summary AI
The section outlines requirements for subcontracting plans aimed at enhancing opportunities for small businesses owned by socially and economically disadvantaged individuals. It mandates updates to these plans, establishes compliance rules and enforcement measures, and specifies how subcontractor diversity will impact contract evaluations and future eligibility, applying to contracts made after the law's enactment.
Money References
- (3) Information on the process and efforts of the covered person in developing such subcontracting plan, including— (A) the actions taken by the covered person to identify, solicit, and provide outreach to small business concerns owned and controlled by socially and economically disadvantaged individuals for possible inclusion in its subcontracting plan; (B) the information provided by the covered person to such concerns about subcontracting opportunities under the contract; (C) the means by which the subcontractors that were included in the subcontracting plan were selected by the covered person; and (D) the directories or lists of small business concerns owned and controlled by socially and economically disadvantaged individuals, websites and website search tools, business or professional associations, industry databases, and other resources that the covered person consulted or used to identify such concerns for possible inclusion in the subcontracting plan. (4) A description of the plans of the covered person to— (A) increase the number of disadvantaged small businesses in the subcontracting plan for subsequent years of contract performance; and (B) increase the dollar amount under the contract allocated for goods and services provided by such concerns. (b) Enforcement.— (1) COMPLIANCE WITH SUBCONTRACTING PLAN.—A covered person described in subsection (a) that is awarded a prime contract and granted a modification of a contract by the head of a Federal agency under such subsection shall remain in compliance with the terms of the updated subcontracting plan during the term of performance of the contract before receiving any amounts related to such modification.
12. Diversity and inclusion reporting requirements for covered contractors Read Opens in new tab
Summary AI
The bill requires major government contractors to report annually on their diversity and inclusion efforts, detailing contract values, board demographics, and employee numbers by race, gender, and other categories. Additionally, executive agencies must compile these reports into a summary, post them online, and include participation in diversity programs, with guidelines for major contracts and subcontractors.
Money References
- “(2) COVERED SUBCONTRACTOR.—The term ‘covered subcontractor’ means a subcontractor performing a subcontract that is one of the 10 highest aggregate value subcontracts under a major contract and any subcontract that has a total dollar value of $10,000,000 or more. “(3) DEMOGRAPHIC CLASSIFICATIONS.—The term ‘demographic classifications’ means classifications by race, gender, veteran status, or ethnicity.
- (5) MAJOR CONTRACT.—The term ‘major contract’ means— “(A) the largest 50 contracts (by total dollar value) of each agency; and “(B) each contract that has a total dollar value of $10,000,000 or more. “
4715. Diversity and inclusion reporting requirements for covered contractors Read Opens in new tab
Summary AI
The section outlines that contractors with large government contracts must report on their diversity and inclusion efforts annually, including details about their workforce and participation in diversity programs. It also requires executive agencies to compile these reports and share them publicly to ensure transparency and track diversity trends over time.
Money References
- (2) COVERED SUBCONTRACTOR.—The term “covered subcontractor” means a subcontractor performing a subcontract that is one of the 10 highest aggregate value subcontracts under a major contract and any subcontract that has a total dollar value of $10,000,000 or more.
- (4) DIVERSITY PROGRAM.—The term “diversity program” means— (A) any contracting program of an executive agency that awards contracts pursuant to section 8(a) of the Small Business Act (15 U.S.C. 637(a)); and (B) any contracting program for disadvantaged small businesses (as defined in the CONTRACTS Act of 2024) administered by the executive agency. (5) MAJOR CONTRACT.—The term “major contract” means— (A) the largest 50 contracts (by total dollar value) of each agency; and (B) each contract that has a total dollar value of $10,000,000 or more. (6) MAJOR OCCUPATIONAL GROUP.—The term “major occupational group” means a major occupational group as defined by the Bureau of Labor Statistics. (7) SENIOR LEADER.—The term “senior leader” means— (A) the president of a covered contractor; (B) any vice president in charge of a principal business unit, division, or function of a covered contractor; (C) any other officer of a covered contractor who performs a policy-making function; or (D) an individual responsible for the direct or indirect management of more than 200 individuals. ---
13. Chief Counsel for Advocacy report to Congress Read Opens in new tab
Summary AI
The section requires the Chief Counsel for Advocacy of the Small Business Administration to prepare and send a report to Congress each year, starting one year after the law is passed. This report will examine how the law is being put into practice and its impact on federal contracting opportunities for small businesses that are considered disadvantaged.