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115th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 115-250
======================================================================
ENSURING VETERAN ENTERPRISE PARTICIPATION IN STRATEGIC SOURCING ACT
_______
July 24, 2017.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Roe of Tennessee, from the Committee on Veterans' Affairs,
submitted the following
R E P O R T
[To accompany H.R. 2781]
The Committee on Veterans' Affairs, to whom was referred
the bill (H.R. 2781) to direct the Secretary of Veterans
Affairs to certify the sufficient participation of small
business concerns owned and controlled by veterans and small
business concerns owned by veterans with service-connected
disabilities in contracts under the Federal Strategic Sourcing
Initiative, and for other purposes, having considered the same,
report favorably thereon with an amendment and recommend that
the bill as amended do pass.
CONTENTS
Page
Amendment........................................................ 2
Purpose and Summary.............................................. 2
Background and Need for Legislation.............................. 2
Hearings......................................................... 4
Subcommittee Consideration....................................... 4
Committee Consideration.......................................... 4
Committee Votes.................................................. 4
Committee Oversight Findings..................................... 5
Statement of General Performance Goals and Objectives............ 5
New Budget Authority, Entitlement Authority, and Tax Expenditures 5
Earmarks and Tax and Tariff Benefits............................. 5
Committee Cost Estimate.......................................... 5
Congressional Budget Office Estimate............................. 5
Federal Mandates Statement....................................... 5
Advisory Committee Statement..................................... 5
Constitutional Authority Statement............................... 5
Applicability to Legislative Branch.............................. 6
Statement on Duplication of Federal Programs..................... 6
Disclosure of Directed Rulemaking................................ 6
Section-by-Section Analysis of the Legislation................... 6
Changes in Existing Law Made by the Bill as Reported............. 7
AMENDMENT
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Ensuring Veteran Enterprise
Participation in Strategic Sourcing Act''.
SEC. 2. SECRETARY OF VETERANS AFFAIRS CERTIFICATION OF SUFFICIENT
PARTICIPATION OF SMALL BUSINESS CONCERNS OWNED AND
CONTROLLED BY VETERANS AND SMALL BUSINESS CONCERNS
OWNED BY VETERANS WITH SERVICE-CONNECTED
DISABILITIES IN CONTRACTS UNDER THE FEDERAL
STRATEGIC SOURCING INITIATIVE.
(a) Certification Required.--Not later than 180 days after the date
of the enactment of this Act, the Secretary of Veterans Affairs shall
submit to the Committees on Veterans' Affairs of the House of
Representatives and the Senate certification in writing that with
respect to each contract (except for domestic delivery services)
awarded under the Federal Strategic Sourcing Initiative (managed by the
Office of Federal Procurement Policy) a sufficient number of small
business concerns owned and controlled by veterans and a sufficient
number of small business concerns owned and controlled by veterans with
service-connected disabilities are represented within each category.
(b) Insufficient Representation.--If the Secretary determines that
the representation by small business concerns owned and controlled by
veterans or small business concerns owned and controlled by veterans
with service-connected disabilities within a category of the contracts
awarded under such Federal Strategic Sourcing Initiative is not a
sufficient number, the Secretary shall--
(1) consult with the Administrator of the General Services
Administration to increase the number of such concerns awarded
contracts under such category; or
(2) require the Department of Veterans Affairs to stop
awarding orders under that category of the Initiative,
effective on the date of such determination.
(c) Definitions.--In this section:
(1) The terms ``small business concern owned and controlled
by veterans'' and ``small business concern owned and controlled
by veterans with service-connected disabilities'' have the
meaning given such terms in section 8127(k) of title 38, United
States Code.
(2) The term ``category'' means--
(A) a type of supply or service for which a suite of
contracts has been established under the Federal
Strategic Sourcing Initiative; or
(B) any further subdivision or grouping within such a
suite of contracts.
(3) The term ``sufficient number'', with respect to a type of
business concern, means not fewer than two and enough to
maximize the percentage of orders entered into by the Secretary
with such business concerns, as determined by the Secretary.
PURPOSE AND SUMMARY
H.R. 2781, the ``Ensuring Veteran Enterprise Participation
in Strategic Sourcing Act,'' was introduced by Representative
Neal Dunn of Florida on June 6, 2017. H.R. 2781, as amended,
would direct the Secretary of the Department of Veterans
Affairs (VA) to certify whether the number of Veteran- and
Service Disabled Veteran-Owned Small Businesses represented on
each category of contract within the Federal Strategic Sourcing
Initiative is sufficient. If insufficient in any category, VA
shall consult with the General Services Administration (GSA) to
increase the number of contracts held by Veteran- and Service
Disabled Veteran-Owned Small Businesses holding the contracts,
or stop purchasing in the insufficient category.
BACKGROUND AND NEED FOR LEGISLATION
The Federal Strategic Sourcing Initiative (FSSI) is a suite
of contracts awarded by GSA for use by all federal agencies to
purchase common supplies and services, including building
maintenance, mobile phone services, janitorial products, office
supplies, domestic delivery, and maintenance and repair. The
term ``Federal Strategic Sourcing Initiative'' does not include
or pertain to any other contracts, awarded by GSA or any other
agency, for the purpose of strategic sourcing. There are many
contracts for the purpose of strategic sourcing, referred to
variously as Federal Supply Schedule contracts, Government-wide
Acquisition Contracts, Multiple-award Contracts, or other
terms; the legislation has no bearing on these contracts.
The FSSI contracts for most of the six types of items
listed above are awarded to between 10 and 20 companies,
consisting of large businesses and various types of small
businesses, including Veteran Owned Small Businesses (VOSBs)
and Service Disabled Veteran Owned Small Businesses (SDVOSBs).
The categories of contracts are further subdivided into
groupings, variously called tracks or contract line items. Each
grouping consists of fewer contracts. No contractor receives
any business by merely holding an FSSI contract. An agency must
decide to place an order against the FSSI contract, and
agencies typically do this by selecting the appropriate
contract category or subdivision grouping and requesting
pricing from each company represented within it. Agencies then
award an order to the company quoting the lowest price. In some
subdivision groupings, no VOSBs or SDVOSBs hold contracts,
meaning no VOSBs or SDVOSBs are eligible to receive any orders.
Agencies wishing to avoid doing business with VOSBs or SDVOSBs,
including VA, may deliberately select groupings where they are
not represented. This is relatively easy to do, because many of
the same items can be obtained in multiple groupings.
The Veterans Benefits, Health Care, and Information
Technology Act of 2006 (38 U.S.C. 8127) gave VOSBs and SDVOSBs
particular preference in VA contracting, called the Rule of
Two. VA must set aside contracts for competition among them,
with SDVOSBs having first preference and VOSBs having second
preference, when it expects that two or more such businesses
will submit an offer, and the contract can be awarded at a fair
and reasonable price. The Supreme Court ruled in Kingdomware
Technologies, Inc. v. United States on June 16, 2016 that the
Rule of Two applies to all VA contracting, including in
particular contracts awarded and administered by other agencies
but used by VA, such as the FSSI contracts.
The FSSI contracts have emerged as a loophole to the Rule
of Two's proper application since Kingdomware. When there are
no VOSBs or SDVOSBs holding contracts within a particular FSSI
category or subdivision grouping, some contracting officers
have searched for VOSBs or SDVOSBs, found none because there
are none represented, and proceeded to order from another type
of business. This is contrary to the letter and spirit of the
Rule of Two. VA's policy in that situation directs the
contracting officer to disregard the FSSI and either use
another equivalent, existing contract or create a new contract.
Contracting officers do not always follow this policy, and when
they do, disregarding the FSSI contracts and replicating them
is inefficient. A much better solution is to make VOSB and
SDVOSB representation adequate in all aspects of the FSSI
contracts, so they can always be used.
HEARINGS
There were no full Committee hearings held on H.R. 2781.
On June 29, 2017, the Subcommittee on Oversight and
Investigations conducted a legislative hearing on: H.R. 2006,
H.R. 2749, H.R. 2781, and a draft bill to improve the hiring,
training, and efficiency of acquisition personnel and
organizations of the Department of Veterans Affairs, and for
other purposes (now H.R. 3169).
The following witnesses testified:
The Honorable Jack Bergman of Michigan; the Honorable
Ann McLane Kuster of New Hampshire; the Honorable Mike
Coffman of Colorado; the Honorable Neal Dunn of
Florida; the Honorable Jimmy Panetta of California; the
Honorable Bruce Poliquin of Maine; Mr. Thomas Burgess,
Associate Deputy Assistant Secretary, Office of
Logistics and Supply Chain Management, Department of
Veterans Affairs; Mr. Thomas Leney, Executive Director,
Small and Veteran Business Programs, Office of Small
and Disadvantaged Business Utilization, Department of
Veterans Affairs; Ms. Kaitlin Gray, Assistant Director,
National Veterans Employment and Education Division,
The American Legion; Mr. Patrick Murray, Associate
Director, National Legislative Service, Veterans of
Foreign Wars of the United States; and Mr. Wayne
Simpson, Member, National Veterans Small Business
Coalition.
A statement for the record was submitted by:
The Associated General Contractors of America.
SUBCOMMITTEE CONSIDERATION
On July 12, 2017, the Subcommittee on Oversight and
Investigations met in open markup session, a quorum being
present, and ordered H.R. 2781 reported favorably to the full
Committee. A motion by Representative Ann McLane Kuster of New
Hampshire to report H.R. 2781 favorably to the House of
Representatives was agreed to by voice vote.
COMMITTEE CONSIDERATION
On July 19, 2017, the full Committee met in open markup
session, a quorum being present, and ordered H.R. 2781, as
amended, reported favorably to the House of Representatives by
voice vote. During consideration of the bill, the following
amendment was considered and agreed to by voice vote:
An amendment to H.R. 2781 offered by Representative Neal
Dunn of Florida.
A motion by Representative Tim Walz of Minnesota to report
H.R. 2781, as amended, favorably to the House of
Representatives was agreed to by voice vote.
COMMITTEE VOTES
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, no recorded votes were taken on
amendments or in connection with ordering H.R. 2781, as
amended, reported to the House.
COMMITTEE OVERSIGHT FINDINGS
In compliance 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 Committee's oversight findings and
recommendations are reflected in the descriptive portions of
this report.
STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES
In accordance with clause 3(c)(4) of rule XIII of the Rules
of the House of Representatives, the Committee's performance
goals and objectives are to require the Secretary of Veterans
Affairs to certify adequacy of Veteran- and Service Disabled
Veteran-Owned Small Business representation on all categories
of the Federal Strategic Sourcing Initiative contracts, and if
insufficient, consult with the General Services Administration
to increase their representation or cease using the
insufficient categories.
NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES
A Congressional Budget Office (CBO) report was not
available at the time this report was filed. The Committee
believes that there is no new budget authority, entitlement
authority, or tax expenditures.
EARMARKS AND TAX AND TARIFF BENEFITS
H.R. 2781, as amended, does not contain any Congressional
earmarks, limited tax benefits, or limited tariff benefits as
defined in clause 9 of rule XXI of the Rules of the House of
Representatives.
COMMITTEE COST ESTIMATE
A CBO report was not available at the time this report was
filed. The Committee believes that there are no effects on
direct spending or revenues.
CONGRESSIONAL BUDGET OFFICE COST ESTIMATE
A CBO report was not available at the time this report was
filed. CBO has preliminarily estimated that there are no
effects on direct spending or revenues.
FEDERAL MANDATES STATEMENT
A CBO report was not available at the time this report was
filed. The Committee believes that there are no Federal
mandates.
ADVISORY COMMITTEE STATEMENT
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act would be created by H.R.
2781, as amended,
CONSTITUTIONAL AUTHORITY STATEMENT
Pursuant to Article I, section 8 of the United States
Constitution, H.R. 2781, as amended, is authorized by Congress'
power to ``provide for the common Defense and general Welfare
of the United States.''
APPLICABILITY TO LEGISLATIVE BRANCH
The Committee finds that H.R. 2781, as amended, 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 Congressional Accountability Act.
STATEMENT ON DUPLICATION OF FEDERAL PROGRAMS
Pursuant to clause 3(c)(5) of rule XIII of the Rules of the
House of Representatives, the Committee finds that no provision
of H.R. 2781, as amended, establishes or reauthorizes a program
of the Federal Government known to be duplicative of another
Federal program, a program that was included in any report from
the Government Accountability Office to Congress pursuant to
section 21 of Public Law 111-139, or a program related to a
program identified in the most recent Catalog of Federal
Domestic Assistance.
DISCLOSURE OF DIRECTED RULEMAKING
Pursuant to section 3(i) of H. Res. 5, 115th Cong. (2017),
H.R. 2781, as amended, contains no directed rule making that
would require the Secretary to prescribe regulations.
SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION
Section 1. Short title
Section 1 cites the short title of H.R. 2781, as amended,
to be the ``Ensuring Veteran Enterprise Participation in
Strategic Sourcing Act.''
Section 2. Secretary of Veterans Affairs certification of sufficient
participation of small business concerns owned and controlled
by veterans and small business concerns owned by veterans with
service-connected disabilities in contracts under the Federal
Strategic Sourcing Initiative
Section 2(a) would require the Secretary of Veterans
Affairs to certify in writing to the Committees on Veterans'
Affairs of the House and Senate that, with respect to each
contract awarded under the Federal Strategic Sourcing
Initiative, a sufficient number of Veteran Owned Small
Businesses and Service Disabled Veteran Owned Small Businesses
are represented within each category, excluding Domestic
Delivery Services.
Section 2(b) would require the Secretary to consult with
the Administrator of the General Services Administration to
increase the number of Veteran Owned Small Businesses and
Service Disabled Veteran Owned Small Businesses awarded
contracts under a particular category of the Federal Strategic
Sourcing Initiative, or require VA to stop awarding orders
under that category effective on the date of determination, if
the Secretary determines that category of contracts does not
have a sufficient number of Veteran Owned Small Businesses and
Service Disabled Veteran Owned Small Businesses represented.
Section 2(c) would provide definitions for ``small business
concern owned and controlled by veterans'', ``small business
concern owned and controlled by veterans with service-connected
disabilities'', and ``category'' as they pertain to this
Section.
CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
If enacted, this bill would make no changes in existing
law.
[all]
