House Bill Would Limit Credit for Small Businesses Falling into Multiple Socioeconomic Categories

May 31, 2017

Practice Areas: Government Contracts Law and Small Business Programs & Advisory Services

A recent bill introduced in the U.S. House of Representatives seeks to amend the Small Business Act to limit the way agencies take credit for contracting with small businesses that fall into several socioeconomic categories. H.R. 2362, known as the Assuring Contracting Equity Act of 2017, was introduced on May 4, 2017 and would, if passed, add a provision titled “Limitation on Number of Categories for which a Small Business May Qualify.” This provision would prevent a Federal agency from taking small business contracting credit for an award to a small business in more than 2 “specified categories.” The “specified categories” are:
  • Small business;
  • Service-disabled veteran-owned small business (“SDVOSB”);
  • Qualified Historically Underutilized Business Zone (“HUBZone”) small business;
  • Small business owned and controlled by socially and economically disadvantaged individuals (“SDV”); and
  • Woman-owned small business (“WOSB”).
This provision would also prevent an agency that contracts with a participant in the Small Business Administration’s 8(a) Business Development Program (“8(a) Program”) from taking credit for contracting with any category other than SDV.

This provision would impact small businesses that fall into multiple socioeconomic categories, for which an agency currently can take contracting credit for all the categories into which the business falls. For example, a small business that is owned by a female service-disabled veteran that is located in a HUBZone and would fall into four of these “specified categories,” but under this provision, an agency could only take credit for contracting with a business in two of these categories. If the business is also a participant in the 8(a) Program, then the agency could only take credit for an award to an SDV, and no other categories.

The bill also proposes to increase the small business contracting goals. Specifically, it would increase the small business prime contracting goal from 23% to 25%, the goals for prime and subcontract awards to small businesses owned and controlled by socially and economically disadvantaged individuals and to WOSBs from 5% to 10%, and the goals for prime and subcontract awards to SDVOSBs and HUBZone concerns from 3% to 6%.

The bill is currently before the House Committee on Small Business.

About the Author: Julia Di Vito practices in the areas of government contracts, litigation, employment, and labor. She may be reached at jdivito@pilieromazza.com.
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