Enhancing Competition in Contracting Orders Act
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Summary
House Report 118–381 of the 118th Congress, 2d Session, submitted February 13, 2024 by Mr. Williams of Texas from the Committee on Small Business to accompany H.R. 5450, with minority views. The committee reports the bill favorably with an amendment in the nature of a substitute that amends section 31(c)(3) of the Small Business Act (15 U.S.C. 657a(c)(3)) so the HUBZone price evaluation preference applies to unrestricted orders under unrestricted multiple award contracts. The substitute requires the Small Business Administration to revise its rules within 90 days. The report describes a May 11, 2023 hearing, the January 31, 2024 markup and a voice vote to report, and sets out changes in existing law to section 31. It closes with a letter signed by Ranking Member Nydia M. Velázquez on HUBZone price preferences for task orders.
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“Enhancing Competition in Contracting Orders Act.”
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118TH CONGRESS REPORT
" HOUSE OF REPRESENTATIVES !
2d Session 118–381
TO AMEND THE SMALL BUSINESS ACT TO MODIFY THE
APPLICATION OF PRICE EVALUATION PREFERENCE FOR
QUALIFIED HUBZONE SMALL BUSINESS CONCERNS TO
CERTAIN CONTRACTS, AND FOR OTHER PURPOSES
FEBRUARY 13, 2024.—Committed to the Committee of the Whole House on the State
of the Union and ordered to be printed
Mr. WILLIAMS of Texas, from the Committee on Small Business,
submitted the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 5450]
The Committee on Small Business, to whom was referred the bill
(H.R. 5450) to amend the Small Business Act to modify the applica-
tion of price evaluation preference for qualified HUBZone small
business concerns to certain contracts, and for other purposes, hav-
ing considered the same, reports favorably thereon with an amend-
ment and recommends that the bill as amended do pass.
CONTENTS
Page
I. Purpose and Bill Summary ........................................................................ 2
II. Need for Legislation .................................................................................... 2
III. Hearings ....................................................................................................... 2
IV. Committee Consideration ........................................................................... 2
V. Committee Votes ......................................................................................... 3
VI. Section-by-Section of H.R. 5450 ................................................................. 3
VII. Congressional Budget Office Cost Estimate ............................................. 3
VIII. New Budget Authority, Entitlement Authority, and Tax Expenditures 3
IX. Oversight Findings & Recommendations .................................................. 3
X. Performance Goals and Objectives ............................................................ 3
XI. Statement of Duplication of Federal Programs ........................................ 4
XII. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits ..................................................................................................... 4
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XIII. Federal Mandates Statement ..................................................................... 4
XIV. Federal Advisory Committee Statement ................................................... 4
49–006
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XV. Applicability to Legislative Branch ........................................................... 4
XVI. Statement of Constitutional Authority ...................................................... 4
XVII. Changes in Existing Law Made by the Bill, as Reported ........................ 4
XVIII. Minority Views ............................................................................................ 16
The amendment is as follows:
Strike all after the enacting clause and insert the following:
SECTION 1. APPLICATION OF PRICE EVALUATION PREFERENCE FOR QUALIFIED HUBZONE
SMALL BUSINESS CONCERNS TO CERTAIN CONTRACTS.
(a) IN GENERAL.—Section 31(c)(3) of the Small Business Act (15 U.S.C. 657a(c)(3))
is amended by adding at the end the following new subparagraph:
‘‘(E) APPLICATION TO CERTAIN CONTRACTS.—The requirements of subpara-
graph (A) shall apply to an unrestricted order issued under an unrestricted
multiple award contract or the unrestricted portion of a contract that is
partially set aside for competition restricted to small business concerns.’’.
(b) RULEMAKING.—Not later than 90 days after the date of the enactment of this
section, the Administrator of the Small Business Administration shall revise any
rules or guidance to implement the requirements of this section.
(c) COMPLIANCE WITH CUTGO.—No additional amounts are authorized to be appro-
priated to carry out this Act or the amendments made by this Act.
I. PURPOSE AND BILL SUMMARY
On September 13, 2023, Rep. Scholten, along with Rep. Salazar,
introduced H.R. 5450. The purpose of H.R. 5450, the ‘‘Enhancing
Competition in Contracting Orders Act,’’ is to amend the Small
Business Act to clarify when the Historically Underutilized Busi-
ness Zone (HUBZone) price evaluation preference tool is required
to be used.
Firms in the HUBZone program receive a price preference when
their bid is within 10 percent of a non-HUBZone firm. Under this
legislation, the HUBZone firm’s bid will be considered lower than
a non-HUBZone firm if the cost proposal is within 10 percent of the
other firm.
II. NEED FOR LEGISLATION
The HUBZone price preference is already standard procedure for
other contracts. However, statutory interpretation by the Executive
Branch has led to the price preference not being used with task or-
ders.
III. HEARINGS
In the 118th Congress, the Committee held one hearing exam-
ining the issues covered in H.R. 5450. On May 11, 2023, the Com-
mittee held a hearing titled ‘‘Leveling the Playing Field: The State
of Small Business Contracting.’’ Witnesses described the challenges
associated with participating in federal contracting programs like
the HUBZone program.
IV. COMMITTEE CONSIDERATION
The Committee on Small Business met in open session, with a
quorum being present, on January 31, 2024, and ordered H.R. 5450
reported favorably to the House of Representatives. During the
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markup an amendment in the nature of a substitute was offered
and adopted by voice vote.
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V. COMMITTEE VOTES
Clause 3(b) of rule XIII of the Rules of the House of Representa-
tives requires the Committee to list the recorded votes on the mo-
tion to report legislation and amendments thereto. The Committee
voted to favorably report H.R. 5450, as amended, to the House of
Representatives at 10:04 a.m. by voice vote.
VI. SECTION-BY-SECTION OF H.R. 5450
Section 1—Application of price evaluation preference for qualified
HUBZone Small Business Concerns to certain contracts
This section amends the Small Business Act to allow the
HUBZone price preferences to be used in unrestricted orders under
unrestricted multiple award contracts or the unrestricted portion of
a partially set aside contract.
It also requires the Administrator of the SBA to revise the rel-
evant rules and regulations within 90 days.
VII. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE
Pursuant to clause 3(d)(1) of House rule XIII, the Committee
adopts as its own the cost estimate prepared by the Director of the
Congressional Budget Office pursuant to section 402 of the Con-
gressional Budget Act of 1974. The Committee has requested but
not received from the Director of the Congressional Budget Office
a cost estimate for the Committee’s provisions. Once available, the
cost estimate will be published in the Congressional Record.
VIII. NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX
EXPENDITURES
Pursuant to clause 3(c)(2) of rule XIII of the Rules of the House
of Representatives and section 308(a)(I) of the Congressional Budg-
et Act of 1974, the Committee provides the following opinion and
estimate with respect to new budget authority, entitlement author-
ity, and tax expenditures. While the Committee has not received an
estimate of new budget authority contained in the cost estimate
prepared by the Director of the Congressional Budget Office pursu-
ant to Sec. 402 of the Congressional Budget Act of 1974, the Com-
mittee does not believe that there will be any additional costs at-
tributable to this legislation. H.R. 5450 does not direct new spend-
ing, but instead reallocates funding independently authorized and
appropriated.
IX. OVERSIGHT FINDINGS & RECOMMENDATIONS
In accordance with clause 3(c)(1) of rule XIII and clause 2(b)(1)
of rule X of the Rules of the House of Representatives, the over-
sight findings and recommendations of the Committee on Small
Business with respect to the subject matter contained in the H.R.
5450 are incorporated into the descriptive portions of this report.
X. PERFORMANCE GOALS AND OBJECTIVES
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With respect to the requirements of clause 3(c)(1) of rule XIII of
the Rules of the House of Representatives, there are no additional
performance goals and objectives required by H.R. 5450.
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XI. STATEMENT OF DUPLICATION OF FEDERAL PROGRAMS
Pursuant to clause 3(c)(5) of rule XIII of the Rules of the House
of Representatives, no provision of H.R. 5450 is known to be dupli-
cative of another Federal program, including any program that was
included in a report to Congress pursuant to section 21 of Public
Law 111–139 or the most recent Catalog of Federal Domestic As-
sistance.
XII. CONGRESSIONAL EARMARKS, LIMITED TAX BENEFITS, AND
LIMITED TARIFF BENEFITS
With respect to clause 9 of rule XXI of the Rules of the House
of Representatives, the Committee finds that the bill does not con-
tain any congressional earmarks, limited tax benefits, or limited
tariff benefits as defined in clause 9(e), 9(f), or 9(g) of rule XXI of
the Rules of the House of Representatives.
XIII. FEDERAL MANDATES STATEMENT
The Committee adopts as its own the estimate of Federal man-
dates prepared by the Director of the Congressional Budget Office
pursuant to section 423 of the Unfunded Mandates Reform Act.
XIV. FEDERAL ADVISORY COMMITTEE STATEMENT
No advisory committees within the meaning of section 5(b) of the
Federal Advisory Committee Act were created by this legislation.
XV. APPLICABILITY TO LEGISLATIVE BRANCH
The Committee finds that the legislation does not relate to the
terms and conditions of employment or access to public services or
accommodations within the meaning of section 102(b)(3) of the Con-
gressional Accountability Act.
XVI. STATEMENT OF CONSTITUTIONAL AUTHORITY
Pursuant to clause 7 of rule XII of the Rules of the House of Rep-
resentatives, the Committee finds that the authority for this legis-
lation in Art. I, § 8, cl.1 of the Constitution of the United States.
XVII. 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 (existing law proposed to be omit-
ted is enclosed in black brackets, new matter is printed in italics,
and existing law in which no change is proposed is shown in
roman):
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,
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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):
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SMALL BUSINESS ACT
* * * * * * *
SEC. 31. HUBZONE PROGRAM.
(a) IN GENERAL.—There is established within the Administration
a program (to be known as the HUBZone program) to be carried
out by the Administrator to provide for Federal contracting assist-
ance, including promoting economic development in economically
distressed areas (as defined in section 7(m)(11)), to qualified
HUBZone small business concerns in accordance with this section.
(b) DEFINITIONS RELATING TO HUBZONES.—In this section:
(1) HISTORICALLY UNDERUTILIZED BUSINESS ZONE.—The
terms ‘‘historically underutilized business zone’’ or ‘‘HUBZone’’
mean any area located within 1 or more—
(A) qualified census tracts;
(B) qualified nonmetropolitan counties;
(C) lands within the external boundaries of an Indian
reservation;
(D) redesignated areas;
(E) base closure areas;
(F) qualified disaster areas; or
(G) a Governor-designated covered area.
(2) HUBZONE SMALL BUSINESS CONCERN.—The term
‘‘HUBZone small business concern’’ means—
(A) a small business concern that is at least 51 percent
owned and controlled by United States citizens;
(B) a small business concern that is—
(i) an Alaska Native Corporation owned and con-
trolled by Natives (as determined pursuant to section
29(e)(1) of the Alaska Native Claims Settlement Act
(43 U.S.C. 1626(e)(1))); or
(ii) a direct or indirect subsidiary corporation, joint
venture, or partnership of an Alaska Native Corpora-
tion qualifying pursuant to section 29(e)(1) of the Alas-
ka Native Claims Settlement Act (43 U.S.C.
1626(e)(1)), if that subsidiary, joint venture, or part-
nership is owned and controlled by Natives (as deter-
mined pursuant to section 29(e)(2)) of the Alaska Na-
tive Claims Settlement Act (43 U.S.C. 1626(e)(2)));
(C) a small business concern—
(i) that is wholly owned by one or more Indian tribal
governments, or by a corporation that is wholly owned
by one or more Indian tribal governments; or
(ii) that is owned in part by one or more Indian trib-
al governments, or by a corporation that is wholly
owned by one or more Indian tribal governments, if all
other owners are either United States citizens or small
business concerns;
(D) a small business concern—
(i) that is wholly owned by one or more Native Ha-
waiian Organizations (as defined in section 8(a)(15)),
or by a corporation that is wholly owned by one or
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more Native Hawaiian Organizations; or
(ii) that is owned in part by one or more Native Ha-
waiian Organizations, or by a corporation that is whol-
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6
ly owned by one or more Native Hawaiian Organiza-
tions, if all other owners are either United States citi-
zens or small business concerns;
(E) a small business concern that is—
(i) wholly owned by a community development cor-
poration that has received financial assistance under
part 1 of subchapter A of the Community Economic
Development Act of 1981 (42 U.S.C. 9805 et seq.); or
(ii) owned in part by one or more community devel-
opment corporations, if all other owners are either
United States citizens or small business concerns; or
(F) a small business concern that is—
(i) a small agricultural cooperative organized or in-
corporated in the United States;
(ii) wholly owned by 1 or more small agricultural co-
operatives organized or incorporated in the United
States; or
(iii) owned in part by 1 or more small agricultural
cooperatives organized or incorporated in the United
States, if all owners are small business concerns or
United States citizens.
(3) QUALIFIED AREAS.—
(A) QUALIFIED CENSUS TRACT.—
(i) IN GENERAL.—The term ‘‘qualified census tract’’
means a census tract that is covered by the definition
of ‘‘qualified census tract’’ in section 42(d)(5)(B)(ii) of
the Internal Revenue Code of 1986 and that is re-
flected in an online tool prepared by the Administrator
described under subsection (d)(7).
(ii) EXCEPTION.—For any metropolitan statistical
area in the Commonwealth of Puerto Rico, the term
‘‘qualified census tract’’ has the meaning given that
term in section 42(d)(5)(B)(ii) of the Internal Revenue
Code of 1986 as applied without regard to subclause
(II) of such section and that is reflected in the online
tool described under clause (i), except that this clause
shall only apply—
(I) 10 years after the date that the Adminis-
trator implements this clause, or
(II) the date on which the Financial Oversight
and Management Board for the Commonwealth of
Puerto Rico created by the Puerto Rico Oversight,
Management, and Economic Stability Act ceases
to exist,
whichever event occurs first.
(B) QUALIFIED NONMETROPOLITAN COUNTY.—The term
‘‘qualified nonmetropolitan county’’ means any county that
is reflected in the online tool described under subpara-
graph (A)(i) and—
(i) that was not located in a metropolitan statistical
area (as defined in section 143(k)(2)(B) of the Internal
Revenue Code of 1986) at the time of the most recent
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census taken for purposes of selecting qualified census
tracts under section 42(d)(5)(B)(ii) of the Internal Rev-
enue Code of 1986; and
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(ii) in which—
(I) the median household income is less than 80
percent of the State median household income,
based on a 5-year average of the available data
from the Bureau of the Census of the Department
of Commerce;
(II) the unemployment rate is not less than 140
percent of the average unemployment rate for the
United States or for the State in which such coun-
ty is located, whichever is less, based on a 5-year
average of the available data from the Secretary
of Labor; or
(III) there is located a difficult development
area, as designated by the Secretary of Housing
and Urban Development in accordance with sec-
tion 42(d)(5)(B)(iii) of the Internal Revenue Code
of 1986, within Alaska, Hawaii, or any territory or
possession of the United States outside the 48
contiguous States.
(C) REDESIGNATED AREA.—The term ‘‘redesignated area’’
means any census tract that ceases to be qualified under
subparagraph (A) and any nonmetropolitan county that
ceases to be qualified under subparagraph (B) for a period
of 3 years after the date on which the census tract or non-
metropolitan county ceased to be so qualified.
(D) BASE CLOSURE AREA.—
(i) IN GENERAL.—Subject to clause (ii), the term
‘‘base closure area’’ means—
(I) lands within the external boundaries of a
military installation that were closed through a
privatization process under the authority of—
(aa) the Defense Base Closure and Realign-
ment Act of 1990 (part A of title XXIX of divi-
sion B of Public Law 101–510; 10 U.S.C. 2687
note);
(bb) title II of the Defense Authorization
Amendments and Base Closure and Realign-
ment Act (Public Law 100–526; 10 U.S.C.
2687 note);
(cc) section 2687 of title 10, United States
Code; or
(dd) any other provision of law authorizing
or directing the Secretary of Defense or the
Secretary of a military department to dispose
of real property at the military installation for
purposes relating to base closures of redevel-
opment, while retaining the authority to enter
into a leaseback of all or a portion of the prop-
erty for military use;
(II) the census tract or nonmetropolitan county
in which the lands described in subclause (I) are
wholly contained;
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(III) a census tract or nonmetropolitan county
the boundaries of which intersect the area de-
scribed in subclause (I); and
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(IV) a census tract or nonmetropolitan county
the boundaries of which are contiguous to the area
described in subclause (II) or subclause (III).
(ii) LIMITATION.—A census tract or nonmetropolitan
county described in clause (i) shall be considered to be
a base closure area for a period beginning on the date
on which the Administrator designates such census
tract or nonmetropolitan county as a base closure area
and ending on the date on which the base closure area
ceases to be a qualified census tract under subpara-
graph (A) or a qualified nonmetropolitan county under
subparagraph (B) in accordance with the online tool
prepared by the Administrator described under sub-
section (d)(7), except that such period may not be less
than 8 years.
(iii) DEFINITIONS.—In this subparagraph:
(I) CENSUS TRACT.—The term ‘‘census tract’’
means a census tract delineated by the United
States Bureau of the Census in the most recent
decennial census that is not located in a non-
metropolitan county and does not otherwise qual-
ify as a qualified census tract.
(II) NONMETROPOLITAN COUNTY.—The term
‘‘nonmetropolitan county’’ means a county that
was not located in a metropolitan statistical area
(as defined in section 143(k)(2)(B) of the Internal
Revenue Code of 1986) at the time of the most re-
cent census taken for purposes of selecting quali-
fied census tracts and does not otherwise qualify
as a qualified nonmetropolitan county.
(E) QUALIFIED DISASTER AREA.—
(i) IN GENERAL.—Subject to clause (ii), the term
‘‘qualified disaster area’’ means any census tract or
nonmetropolitan county located in an area where a
major disaster has occurred or an area in which a cat-
astrophic incident has occurred if such census tract or
nonmetropolitan county ceased to be qualified under
subparagraph (A) or (B), as applicable, during the pe-
riod beginning 5 years before the date on which the
President declared the major disaster or the cata-
strophic incident occurred.
(ii) DURATION.—A census tract or nonmetropolitan
county shall be considered to be a qualified disaster
area under clause (i) only for the period of time ending
on the date the area ceases to be a qualified census
tract under subparagraph (A) or a qualified nonmetro-
politan county under subparagraph (B), in accordance
with the online tool prepared by the Administrator de-
scribed under subsection (d)(7) and beginning—
(I) in the case of a major disaster, on the date
on which the President declared the major dis-
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aster for the area in which the census tract or
nonmetropolitan county, as applicable, is located;
or
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9
(II) in the case of a catastrophic incident, on the
date on which the catastrophic incident occurred
in the area in which the census tract or nonmetro-
politan county, as applicable, is located.
(iii) DEFINITIONS.—In this subparagraph:
(I) MAJOR DISASTER.—The term ‘‘major disaster’’
means a major disaster declared by the President
under section 401 of the Robert T. Stafford Dis-
aster Relief and Emergency Assistance Act (42
U.S.C. 5170).
(II) OTHER DEFINITIONS.—The terms ‘‘census
tract’’ and ‘‘nonmetropolitan county’’ have the
meanings given such terms in subparagraph
(D)(iii).
(F) GOVERNOR-DESIGNATED COVERED AREA.—
(i) IN GENERAL.—A ‘‘Governor-designated covered
area’’ means a covered area that the Administrator
has designated by approving a petition described
under clause (ii).
(ii) PETITION.—For a covered area to receive a des-
ignation as a Governor-designated covered area, the
Governor of the State in which the covered area is
wholly contained shall include such covered area in a
petition to the Administrator requesting such a des-
ignation. In reviewing a request for designation in-
cluded in such a petition, the Administrator may con-
sider—
(I) the potential for job creation and investment
in the covered area;
(II) the demonstrated interest of small business
concerns in the covered area to be designated as
a Governor-designated covered area;
(III) how State and local government officials
have incorporated the covered area into an eco-
nomic development strategy; and
(IV) if the covered area was a HUBZone before
becoming the subject of the petition, the impact on
the covered area if the Administrator did not ap-
prove the petition.
(iii) LIMITATIONS.—Each calendar year, a Governor
may submit not more than 1 petition described under
clause (ii). Such petition shall include all covered
areas in a State for which the Governor seeks designa-
tion as a Governor-designated covered area, except
that the total number of covered areas included in
such petition may not exceed 10 percent of the total
number of covered areas in the State.
(iv) CERTIFICATION.—If the Administrator grants a
petition described under clause (ii), the Governor of
the Governor-designated covered area shall, not less
frequently than annually, submit data to the Adminis-
trator certifying that each Governor-designated cov-
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ered area continues to meet the requirements of clause
(v)(I).
(v) DEFINITIONS.—In this subparagraph:
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10
(I) COVERED AREA.—The term ‘‘covered area’’
means an area in a State—
(aa) that is located outside of an urbanized
area, as determined by the Bureau of the
Census;
(bb) with a population of not more than
50,000; and
(cc) for which the average unemployment
rate is not less than 120 percent of the aver-
age unemployment rate of the United States
or of the State in which the covered area is lo-
cated, whichever is less, based on the most re-
cent data available from the American Com-
munity Survey conducted by the Bureau of
the Census.
(II) GOVERNOR.—The term ‘‘Governor’’ means
the chief executive of a State.
(III) STATE.—The term ‘‘State’’ means each of
the several States, the District of Columbia, the
Commonwealth of Puerto Rico, the United States
Virgin Islands, Guam, the Commonwealth of the
Northern Mariana Islands, and American Samoa.
(4) QUALIFIED HUBZONE SMALL BUSINESS CONCERN.—The
term ‘‘qualified HUBZone small business concern’’ means a
HUBZone small business concern that has been certified by the
Administrator in accordance with the procedures described in
this section.
(5) NATIVE AMERICAN SMALL BUSINESS CONCERNS.—
(A) ALASKA NATIVE CORPORATION.—The term ‘‘Alaska
Native Corporation’’ has the same meaning as the term
‘‘Native Corporation’’ in section 3 of the Alaska Native
Claims Settlement Act (43 U.S.C. 1602).
(B) ALASKA NATIVE VILLAGE.—The term ‘‘Alaska Native
Village’’ has the same meaning as the term ‘‘Native vil-
lage’’ in section 3 of the Alaska Native Claims Settlement
Act (43 U.S.C. 1602).
(C) INDIAN RESERVATION.—The term ‘‘Indian reserva-
tion’’—
(i) has the same meaning as the term ‘‘Indian coun-
try’’ in section 1151 of title 18, United States Code, ex-
cept that such term does not include—
(I) any lands that are located within a State in
which a tribe did not exercise governmental juris-
diction on the date of the enactment of this para-
graph, unless that tribe is recognized after that
date of the enactment by either an Act of Con-
gress or pursuant to regulations of the Secretary
of the Interior for the administrative recognition
that an Indian group exists as an Indian tribe
(part 83 of title 25, Code of Federal Regulations);
and
(II) lands taken into trust or acquired by an In-
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dian tribe after the date of the enactment of this
paragraph if such lands are not located within the
external boundaries of an Indian reservation or
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11
former reservation or are not contiguous to the
lands held in trust or restricted status on that
date of the enactment; and
(ii) in the State of Oklahoma, means lands that—
(I) are within the jurisdictional areas of an
Oklahoma Indian tribe (as determined by the Sec-
retary of the Interior); and
(II) are recognized by the Secretary of the Inte-
rior as eligible for trust land status under part
151 of title 25, Code of Federal Regulations (as in
effect on the date of the enactment of this para-
graph).
(6) AGRICULTURAL COMMODITY.—The term ‘‘agricultural com-
modity’’ has the same meaning as in section 102 of the Agricul-
tural Trade Act of 1978 (7 U.S.C. 5602).
(c) ELIGIBLE CONTRACTS.—
(1) DEFINITIONS.—In this subsection—
(A) the term ‘‘contracting officer’’ has the meaning given
that term in section 27(f)(5) of the Office of Federal Pro-
curement Policy Act (41 U.S.C. 423(f)(5)); and
(B) the term ‘‘full and open competition’’ has the mean-
ing given that term in section 4 of the Office of Federal
Procurement Policy Act (41 U.S.C. 403).
(2) AUTHORITY OF CONTRACTING OFFICER.—
(A) SOLE SOURCE CONTRACTS.—A contracting officer may
award sole source contracts under this section to any
qualified HUBZone small business concern, if—
(i) the qualified HUBZone small business concern is
determined to be a responsible contractor with respect
to performance of such contract opportunity, and the
contracting officer does not have a reasonable expecta-
tion that 2 or more qualified HUBZone small business
concerns will submit offers for the contracting oppor-
tunity;
(ii) the anticipated award price of the contract (in-
cluding options) will not exceed—
(I) $7,000,000, in the case of a contract oppor-
tunity assigned a standard industrial classifica-
tion code for manufacturing; or
(II) $3,000,000, in the case of all other contract
opportunities; and
(iii) in the estimation of the contracting officer, the
contract award can be made at a fair and reasonable
price.
(B) RESTRICTED COMPETITION.—A contract opportunity
may be awarded pursuant to this section on the basis of
competition restricted to qualified HUBZone small busi-
ness concerns if the contracting officer has a reasonable
expectation that not less than 2 qualified HUBZone small
business concerns will submit offers and that the award
can be made at a fair market price.
(C) APPEALS.—Not later than 5 days from the date the
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Administration is notified of a procurement officer’s deci-
sion not to award a contract opportunity under this section
to a qualified HUBZone small business concern, the Ad-
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12
ministrator may notify the contracting officer of the intent
to appeal the contracting officer’s decision, and within 15
days of such date the Administrator may file a written re-
quest for reconsideration of the contracting officer’s deci-
sion with the Secretary of the department or agency head.
(3) PRICE EVALUATION PREFERENCE IN FULL AND OPEN COM-
PETITIONS.—
(A) IN GENERAL.—Subject to subparagraph (B), in any
case in which a contract is to be awarded on the basis of
full and open competition, the price offered by a qualified
HUBZone small business concern shall be deemed as being
lower than the price offered by another offeror (other than
another small business concern), if the price offered by the
qualified HUBZone small business concern is not more
than 10 percent higher than the price offered by the other-
wise lowest, responsive, and responsible offeror.
(B) PROCUREMENT OF COMMODITIES.—For purchases by
the Secretary of Agriculture of agricultural commodities,
the price evaluation preference shall be—
(i) 10 percent, for the portion of a contract to be
awarded that is not greater than 25 percent of the
total volume being procured for each commodity in a
single invitation;
(ii) 5 percent, for the portion of a contract to be
awarded that is greater than 25 percent, but not
greater than 40 percent, of the total volume being pro-
cured for each commodity in a single invitation; and
(iii) zero, for the portion of a contract to be awarded
that is greater than 40 percent of the total volume
being procured for each commodity in a single invita-
tion.
(C) PROCUREMENT OF COMMODITIES FOR INTERNATIONAL
FOOD AID EXPORT OPERATIONS.—The price evaluation pref-
erence for purchases of agricultural commodities by the
Secretary of Agriculture for export operations through
international food aid programs administered by the Farm
Service Agency shall be 5 percent on the first portion of a
contract to be awarded that is not greater than 20 percent
of the total volume of each commodity being procured in a
single invitation.
(D) TREATMENT OF PREFERENCE.—A contract awarded to
a HUBZone small business concern under a preference de-
scribed in subparagraph (B) shall not be counted toward
the fulfillment of any requirement partially set aside for
competition restricted to small business concerns.
(E) APPLICATION TO CERTAIN CONTRACTS.—The require-
ments of subparagraph (A) shall apply to an unrestricted
order issued under an unrestricted multiple award contract
or the unrestricted portion of a contract that is partially set
aside for competition restricted to small business concerns.
(4) RELATIONSHIP TO OTHER CONTRACTING PREFERENCES.—A
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procurement may not be made from a source on the basis of
a preference provided in paragraph (2) or (3), if the procure-
ment would otherwise be made from a different source under
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13
section 4124 or 4125 of title 18, United States Code, or the
Javits-Wagner-O’Day Act (41 U.S.C. 46 et seq.).
(d) ELIGIBILITY REQUIREMENTS; ENFORCEMENT.—
(1) CERTIFICATION.—In order to be eligible for certification by
the Administrator as a qualified HUBZone small business con-
cern, a HUBZone small business concern shall submit docu-
mentation to the Administrator stating that—
(A) at the time of certification and at each examination
conducted pursuant to paragraph (4), the principal office of
the concern is located in a HUBZone and not fewer than
35 percent of its employees reside in a HUBZone;
(B) the concern will attempt to maintain the applicable
employment percentage under subparagraph (A) during
the performance of any contract awarded to such concern
on the basis of a preference provided under subsection (c);
and
(C) the concern will ensure that the requirements of sec-
tion 46 are satisfied with respect to any subcontract en-
tered into by such concern pursuant to a contract awarded
under this section.
(2) VERIFICATION.—In carrying out this section, the Adminis-
trator shall establish procedures relating to—
(A) the filing, investigation, and disposition by the Ad-
ministration of any challenge to the eligibility of a
HUBZone small business concern to receive assistance
under this section (including a challenge, filed by an inter-
ested party, relating to the veracity of documentation pro-
vided to the Administration by such a concern under para-
graph (1)); and
(B) verification by the Administrator of the accuracy of
any documentation provided by a HUBZone small business
concern under paragraph (1).
(3) TIMING.—The Administrator shall verify the eligibility of
a HUBZone small business concern using the procedures de-
scribed in paragraph (2) within a reasonable time and not later
than 60 days after the date on which the Administrator re-
ceives sufficient and complete documentation from a HUBZone
small business concern under paragraph (1).
(4) RECERTIFICATION.—Not later than 3 years after the date
that such HUBZone small business concern was certified as a
qualified HUBZone small business concern, and every 3 years
thereafter, the Administrator shall verify the accuracy of any
documentation provided by a HUBZone small business concern
under paragraph (1) to determine if such HUBZone small busi-
ness concern remains a qualified HUBZone small business con-
cern.
(5) EXAMINATIONS.—The Administrator shall conduct pro-
gram examinations of qualified HUBZone small business con-
cerns, using a risk-based analysis to select which concerns are
examined, to ensure that any concern examined meets the re-
quirements of paragraph (1).
(6) LOSS OF CERTIFICATION.—A HUBZone small business con-
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cern that, based on the results of an examination conducted
pursuant to paragraph (5) no longer meets the requirements of
paragraph (1), shall have 30 days to submit documentation to
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14
the Administrator to be eligible to be certified as a qualified
HUBZone small business concern. During the 30-day period,
such concern may not compete for or be awarded a contract
under this section. If such concern fails to meet the require-
ments of paragraph (1) by the last day of the 30-day period,
the Administrator shall not certify such concern as a qualified
HUBZone small business concern.
(7) HUBZONE ONLINE TOOL.—
(A) IN GENERAL.—The Administrator shall develop a
publicly accessible online tool that depicts HUBZones.
Such online tool shall be updated—
(i) with respect to HUBZones described under sub-
paragraphs (A) and (B) of subsection (b)(3), beginning
on January 1, 2020, and every 5 years thereafter;
(ii) with respect to a HUBZone described under sub-
section (b)(3)(C), immediately after the area becomes,
or ceases to be, a redesignated area; and
(iii) with respect to HUBZones described under sub-
paragraphs (D), (E), and (F) of subsection (b)(3), imme-
diately after an area is designated as a base closure
area, qualified disaster area, or Governor-designated
covered area, respectively.
(B) DATA.—The online tool required under subparagraph
(A) shall clearly and conspicuously provide access to the
data used by the Administrator to determine whether or
not an area is a HUBZone in the year in which the online
tool was prepared.
(C) NOTIFICATION OF UPDATE.—The Administrator shall
include in the online tool a notification of the date on
which the online tool, and the data used to create the on-
line tool, will be updated.
(8) LIST OF QUALIFIED HUBZONE SMALL BUSINESS CON-
CERNS.—The Administrator shall establish and publicly main-
tain on the internet a list of qualified HUBZone small business
concerns that shall—
(A) to the extent practicable, include the name, address,
and type of business with respect to such concern;
(B) be updated by the Administrator not less than annu-
ally; and
(C) be provided upon request to any Federal agency or
other entity.
(9) PROVISION OF DATA.—Upon the request of the Adminis-
trator, the Secretary of Labor, the Administrator of the Federal
Emergency Management Agency, 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 de-
termines to be necessary to carry out this subsection.
(10) 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 ‘‘qualified HUBZone small business concern’’ for
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purposes of this section shall be subject to liability for fraud,
including section 1001 of title 18, United States Code, and sec-
tions 3729 through 3733 of title 31, United States Code.
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15
(e) PERFORMANCE METRICS.—
(1) IN GENERAL.—Not later than 1 year after the date of the
enactment of this subsection, the Administrator shall publish
performance metrics designed to measure the success of the
HUBZone program established under this section in meeting
the program’s objective of promoting economic development in
economically distressed areas (as defined in section 7(m)(11)).
(2) COLLECTING AND MANAGING HUBZONE DATA.—The Admin-
istrator shall develop processes to incentivize each regional of-
fice of the Administration to collect and manage data on
HUBZones within the geographic area served by such regional
office.
(3) REPORT.—Not later than 90 days after the last day of
each fiscal year, the Administrator shall submit to the Com-
mittee on Small Business and Entrepreneurship of the Senate
and the Committee on Small Business of the House of Rep-
resentatives a report analyzing the data from the performance
metrics established under this subsection and including—
(A) the number of HUBZone small business concerns
that lost certification as a qualified HUBZone small busi-
ness concern because of the results of an examination per-
formed under subsection (d)(5); and
(B) the number of those concerns that did not submit
documentation to be recertified under subsection (d)(6).
(f) AUTHORIZATION OF APPROPRIATIONS.—There is authorized to
be appropriated to carry out the program established by this sec-
tion $10,000,000 for each of fiscal years 2020 through 2025.
* * * * * * *
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XVIII. MINORITY VIEWS
The Small Business Administration’s (SBA) Historically Under-
utilized Business Zone (HUBZone) program is one of four small
business federal contracting programs, and the only one that as-
sists small businesses based on their geographic location. When the
government invests in small businesses, small businesses invest in
their communities. They create local jobs and buy local products.
That is a driving force behind the HUBZone program.
The program works to ‘‘promote job growth, capital investment,
and economic development to historically underutilized business
zones . . . to small businesses located in these economically dis-
tressed communities.’’ 1
To level the playing field for small business competing in the fed-
eral market, Congress has established an annual 3% goal for con-
tract dollars to HUBZone small businesses. Unfortunately, most
federal agencies fall short of meeting the HUBZone goals. In FY 22,
the federal government sent 2.6% of spend to HUBZone small busi-
nesses, and saw a reduction in the number of HUBZone smalls par-
ticipating in the federal market.2 The HUBZone prime contracting
goal has never been met government-wide.
There are three contracting authorities that federal agencies can
use on certified HUBZone small businesses: (a) set aside the con-
tract exclusively for HUBZone competition; (b) sole source the con-
tract directly to a qualified HUBZone when certain conditions are
met; and (c) provide a price preference to HUBZone firms who have
bid on work in full-and-open competitions. The preference is ap-
plied when a qualified HUBZone small business bids on a contract.
The firms bid is then ‘‘deemed as being lower than the price offered
by another offeror (other than another small business concern), if
the price offered by the qualified HUBZone small business concern
is not more than 10% higher than the price offered by the other-
wise lowest, responsive, and responsible offeror.’’
This bill will provide additional clarification to federal agencies
on how and when to apply the preference. Currently, the HUBZone
price evaluation preference is not widely used because some agen-
cies have incorrectly interpreted that the preference does not apply
to orders, only standalone contracts.
As the Federal Government increasingly drives its spending
through these vehicles, significant opportunities for HUBZone
small businesses are being lost because the HUBZone price evalua-
1 Small Business Administration, Office of the HUBZone Program: https://www.sba.gov/about-
sba/sba-locations/headquarters-offices/office-hubzone-program.
2 FY2022 Small Business Procurement Scorecard: https://www.sba.gov/agency-scorecards/score-
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card.html?agency=GW&year=2022.
(16)
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17
tion is not being applied in the award of task orders—as Congress
originally intended.
Sincerely,
NYDIA M. VELÁZQUEZ,
Ranking Member.
Æ
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