Protecting Volunteer Firefighters and Emergency Responders Act of 2014
Floor Speech
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Ms. VELÁZQUEZ. Mr. Speaker, the National Defense Authorization Act of Fiscal Year 2015 includes several small business sections, including Section 825 which was taken from my legislation H.R. 2452, The Women's Procurement Program Equalization Act of 2013. This bill was considered by the full Small Business Committee, of which I am the Ranking Member, and passed out by voice vote. This bill is an expansion of the Women's Procurement Program that was created as a result of legislation that I authored almost fifteen years ago and was passed by Congress in 2000. It increases the opportunities for legitimate women-owned small businesses to participate in the Federal marketplace and increase their share of federally awarded dollars. The legislation creates a level playing field between the existing small business government contracting programs under the Small Business Act by allowing contracting officers to award contracts to these businesses through a sole source mechanism, similar to those that exist for the HUBZone and Service-Disabled Veterans programs. Additionally, the language of the legislation eliminates the ability for businesses to self-certify for the Women's Procurement Program, thereby reducing the potential for fraud and increasing the dollars that genuine small businesses receive. As the author of the provisions, I would like to provide some background to be taken into consideration as we move forward to implement the legislation.
The number and economic contributions of women-owned firms continue to grow. For example, the rate of growth in the number of women-owned enterprises over the past 16 years remains higher than the national average. Between 1997 and 2013, when the number of businesses in the U.S. increased by 41%, women-owned firms grew by 59%--about 1 1/2 times the national average. Furthermore, over the past six years, since the depth of the U.S. recession, privately held majority women-owned firms have provided a net increase in employment.
Yet, during this time women-owned small businesses continue to face challenges in the Federal marketplace. In 1994, the Federal government established a five percent procurement goal for women-owned businesses. However, twenty years later that goal has never been achieved. In FY 2013 year, women-owned small businesses received $15.4 billion, or 4.33 percent of contracting dollars, missing their goal by 3 percent--a loss of over $2.6 billion. It has been estimated that if women-owned small businesses received their 5 percent of the market, more than 673,000 jobs could be created; thus, not only helping their business but also the national economy.
One of the primary obstacles facing women-owned businesses that wish to do business with the government was the failure to implement for 10 years the section 8(m) of the Small Business Act, the Women's Procurement Program. That obstacle was removed in 2011 when the final regulations for the Program were released and implemented. Through this program, women-owned small businesses are eligible for contracts through restricted competition in eighty-three industries that have historically had underutilization of women-owned businesses. Nonetheless, three years after its implementation we have seen little improvement in awards to these businesses as the mechanisms currently at the disposal of contracting officers are limited compared to other programs. While other program participants regularly receive in the billions of Federal contracting dollars, since its implementation this program has seen awards only in the millions. In FY2013, the government only awarded 1,249 contracts worth $101.1 million, approximately 0.120% of small business dollars and 0.021% of all contracting dollars, through the Women's Procurement Program's existing mechanisms. Thus, changes are necessary to increase the participation of this group of businesses and ensure that they receive their fair share of contracting dollars.
The regulations of the program currently allow for either self-certification or third-party certification. Because of the lack of involvement in the certification, there is a high likelihood of fraud In numerous reports, GAO has highlighted these issues of fraud in other self-certification programs like the service-disabled veteran-owned small business program That program has seen several millions of dollars awarded to companies who self-certified they met program criteria when they were filing misleading or false statements to contracting officers in order to qualify for the contracts. This has made contracting officers weary of award to businesses as they are required to review self-certifications and determine their validity, taking them away from the other contracts they oversee. Also, in the implementation of the self-certification of the Women's Procurement Program, SBA requested only 1 million dollars to fund the document repository, eligibility examinations, as well as processing protests. Yet, the agency has not subsequently requested additional funds to maintain and provide oversight for these items further increasing the potential for fraudulent actions.
The bill, therefore, requires that businesses be certified by the Small Business Administration (SBA), among other entities. This ensures that the entity charged with determining the size of a business, SBA, has full control of the certification process. This provision puts the program on par with other small business contracting programs such as the 8(a) Business Development Program and the HUBZone program that rely on SBA certification. By having their own certification departments, the agency has been able to stop many ineligible businesses from entering their programs due to the vast amount of resources and manpower it has compared to other certifying entities. With these tools, SBA has the ability to provide greater oversight and quality control over the certification process.
Additionally, the bill eliminates the self-certification mechanism in the program. Removing this provision allows contracting officers the ability to focus on awarding contracts and limits fraudulent businesses from entering the program. While some may argue that the program will not function as a result of this change, this is not the case as the law still allows for certification from third-party certifiers.
The provisions in this subsection will increase the mechanisms available to contracting officers for awarding contracts through this program and equalize the small business programs by providing the ability for award of sole source contracts to women-owned small businesses. Currently, the Women's Procurement Program is the only small business contracting program under the Small Business Act that does not allow the award of sole source contracts. The provision would thus level the playing field between the small businesses groups and ensure equal participation when possible as well as more opportunities to award women-owned small business contracts than are currently available.
However, it is important to note that this bill and H.R. 2452 both retain the so-called ``Rule of Two'' in which sole source mechanisms can only be used if there is not a reasonable expectation that two or more businesses in the small business group will compete for award. The rule exists in all set-aside programs and while there have been calls by some to eliminate it, nothing in the language of this bill or
the underlying bill should be taken to support that proposition. The Rule of Two plays a vital part in not only allowing more small businesses to participate in the Federal marketplace but also by providing the government the best value from its vendors. Furthermore, this has been the lynchpin in guarding against challenges of the constitutionality of these set-aside programs.
This subsection requires for detailed reporting on contracts awarded by sole source contracts to women-owned small businesses. This is to increase the transparency of the award of these contracts, provide better oversight, and determine why certain industries do not receive these contracts so as to better focus outreach efforts.
In the implementation of these provisions, it is vital that there is no delay by the Small Business Administration (SBA). Regulations for the sole source provision should be enacted immediately and must be completed within 90 days. Additional regulations associated with this section should be released when ready and not held for completion of the entirety of the section's regulations. It is imperative that small businesses are involved in developing the regulations through outreach meetings and that their input is taken into consideration during the drafting process. Additionally, SBA should present draft regulations to the Committee on Small Business of the House of Representatives arid the Committee on Small Business and Entrepreneurship of the Senate and have regularly briefings to update the Committees on the progress of implementation of this section. When the regulations are released, the SBA should conduct outreach with relevant stakeholders, such as contracting officers and Offices of Small Disadvantaged Business Utilization, about how the new tools can be used to maximize women-owned small business participation at individual agencies.
Regarding certification provisions, it is of the upmost importance and the number one priority to prevent fraud, waste, and abuse in small business contracting and ensure only qualified women-owned small businesses enter the Women's Procurement Program. These businesses have been put at a disadvantage in the Federal marketplace for many years, and their ability to compete and receive their fair share of contracting dollars should not be diminished due to awards to unscrupulous businesses looking to cheat the system. Therefore, we fully expect the SBA to implement a robust certification program and to request full funding for such in their annual budget submission in February. The original intent of the authorizing legislation passed in 2000 for the Women's Procurement Program was to have the SBA conducting the certification process. However, the agency did not follow through with this intent. By statute, the SBA is the only entity capable of making a size determination. While properly approved third-party certifiers will play an import role in determining eligibility for this program, the agency should not rely solely on such entities to make certification decisions as to a business's eligibility. Therefore, the intent of this legislation is to reiterate that the SBA must create its own certification process to ensure a properly functioning program.
In the interim, the SBA should work with the other certifying entities to manage the increased number of applicants as a result of the loss of self-certification. Furthermore, SBA should approve and ramp in additional third-party certifiers in order to prevent a backlog of applications. In expanding the pool of certifiers, SBA should utilize the same process it used in selecting previous third-party certifiers. SBA must also create safeguard mechanisms in this certification process to limit the opportunity of fraudulent businesses to enter the program. In particular, protections should be put into place to prevent businesses from shopping around for a third-party certifier that will verify the company after they have already been determined to be ineligible for the program. Yet, after a reasonable time has passed, businesses should be allowed to reapply for the program to demonstrate that they have made corrective action on their eligibility requirements. SBA should also conduct random quality control checks on third-party certifiers to ensure that their process adheres to certification guidelines and has precautions to limit fraud, waste, and abuse.
However, it is important to note that while we are requesting additional third-party certifiers and safeguards to handle the influx of applicants to the program, these measures do not release SBA from its obligation to create its own program. As previously stated, we fully expect that the SBA create its own certification program within the agency within the next year.
Inclusion of Section 825 of the NDAA will ensure maximum and equal participation by women-owned small business in the Federal marketplace by providing a contracting mechanism available to other small business contracting programs and reduce the ability of fraud to enter the program by providing proper certification oversight.
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