The Office of Small and Disadvantaged Business Utilization (OSDBU) is governed by and administers a number of laws, regulations and policy directives. A brief summary and of these and their application to OSDBU follows:
- Public Law 95-507, The Small Business Act
On October 24, 1978, President Carter signed Public Law 95-507 amending the Small Business Act and the Small Business Investment Act of 1958, making federal procurement contracting more readily accessible to all small businesses. PL 95-507 stipulates that it is the policy of the Government to provide maximum practicable opportunities in its acquisitions to small businesses, small disadvantaged businesses and women-owned businesses. This stipulation also extends to having the maximum practicable opportunity to participate as subcontractors in contracts awarded by any executive agency.
The head of each agency is responsible for effectively implementing the small business programs within his agency, including setting and achieving yearly procurement opportunity program (POP) goals for small and small disadvantaged business contracting.
Office of Federal Procurement Policy (OFPP) Letter No. 79-1, dated March 7, 1979 on the implementation of Section 15(k) of the SBA Act requires each agency with contracting authority to establish an OSDBU, and appoint a director, who reports to the agency head (or deputy), and who will have responsibility for carrying out the purposes of the Act. Specifically the OFPP directs that the position of OSDBU director include the following:
In addition to these duties, Section 211 of P.L. 95-507 requires the OSDBU to review all subcontractor plans submitted by prime contractors to ensure compliance. This Section directs that the successful offeror or bidder on contracts valued at $500,000 or more must submit, before an award is made, a subcontracting plan setting percentage and dollar goals for the award of subcontracts to small and disadvantaged businesses.
- Responsibility for the implementation and execution of the functions and duties of Section 8 and 15 of the SBA Act. [Section 15 states that a fair proportion of the total purchases and contracts for property and services for the Government are to be placed with small business concerns. Because the law requires the Government to buy at competitive prices, contracts are set-aside only when at least two qualified small businesses are expected to bid. Section 8(a) of the SBA Act authorizes the SBA to enter into contracts with other Federal agencies to supply needed goods and services. SBA then subcontracts the actual performance of the work to small businesses owned and controlled by socially and economically disadvantaged individuals. The objective of the 8(a) program is to assist eligible small firms to become independently competitive.]
- Assigning a small business technical advisor who shall be a full time employee of the procuring activity and whose principal duty shall be to assist the SBA procurement representative in his duties related to Section 8 and 15.
- Cooperate and consult on a regular basis with SBA with respect to carrying out the functions and duties of Sections 8 and 15.
- Developing systematic procedures for insuring the effective execution of the SBA Act, as amended.
- Recommending agency goals.
- Training and education of agency staff whose duties and functions relate to Sections 8 and 15.
- Conducting outreach, liaison, source listings and seminars for small and disadvantaged business.
- Publishing required information brochures and documents.
- Interagency liaison of program procurement activities relating to small and disadvantaged businesses.
- Oversight of the implementation of Section 223(a) of P.L. 95-507. [This section requires that for any contract being let by a Federal agency, the agency will provide to any small business upon request a copy of the bid specifications; the name and telephone number of a employee to answer questions with respect to the contract and adequate citations to each major Federal law or agency rule to which the business must comply in performing the contract.
- Public Law 100-656, The Business Opportunity Development Reform Act of 1988
Public Law 100-656 amends the SBA Act for the purpose of reforming the Capital Ownership Development (Section 8(a) Program). This legislation basically tightened the requirements of the 8(a) program to among other things, reduce the time it took to enter the program, established time frames for staying in the program and established requirements for GAO program reviews and periodic SBA reviews of 8(a) certified firms. The law established civil penalties in response to documented cases of kickbacks, misrepresentation of minority status and manipulation of the program by majority controlled firms participating in the 8(a) program. , P.L. 100-656 refocused the intent of the program as one of making small and disadvantaged firms more competitive in the marketplace as opposed to merely one of facilitating the award of contracts. The law also set $5 million and $3 million as thresholds for competitive 8(a) grants, established a requirement that agencies publicize to the small business community their annual contracting forecasts and set government wide contracting goals of 20% for small business (increased to 23% by the SBA Reauthorization Act of 1999) and 5% for small disadvantaged business.
- Federal Acquisition Streamlining Act (FASA)
The FASA repeals or substantially modifies more than 225 provisions of law to reduce paperwork burdens, facilitate the acquisition of commercial products, enhances the use of simplified procedures for small purchases and introduces an initiative for doing procurement through electronic data interchange. Specific references to small businesses include:
- An increased thresholds for small business set-asides. All Federal purchases greater than $2,500 but not greater than $100,000 will be reserved for small businesses, unless the contracting officer is unable to obtain offers from two or more capable small firms.
- A new 5% government wide procurement goal is established for women-owned businesses.
- The authorization to create a government-wide initiative to give civilian agencies authority to set-aside certain contracts for small disadvantaged businesses (SDB) or to apply a 10% price evaluation for SDBs in unrestricted procurement.
- Creation of a "Small Business Advisory Council", composed of representatives from Federal agencies to give high level attention and focus to small business procurement issues.
- Executive Order 11625
President Nixon issued Executive Order 11625 on October 13, 1971 authorizing the Secretary of Commerce to coordinate plans, programs and operations of the Federal government which would affect Minority Business Enterprises (MBE). Heads of Federal agencies are to furnish information, assistance and reports on MBE activity as requested by the Secretary of Commerce as well as develop and implement systematic data collection processes which will provide the Office of Minority Business Enterprise Information Center current data helpful to evaluating and promoting MBE efforts.
- Executive Order 12138 (WBE)
On May 18, 1979, President Carter issued Executive Order 1238 creating a National Women’s Business Enterprise Policy and prescribing arrangements for developing, coordinating and implementing a national program for Women's Business Enterprise. The Order directs each Federal agency to take appropriate action to facilitate, preserve and strengthen women's business enterprise by ensuring their participation in all business related activities including procurement. The head of each agency is to designate a high level official to have responsibility for the participation and cooperation of that agency in carrying out the Order.
In addition, the Order established the Interagency Committee on Women's Business Enterprise, with a Chairperson to be appointed by the President and members to include a representative of a number of listed Federal agencies, one of which is HUD. The Committee is to meet quarterly to promote, coordinate and monitor the plans, programs and operations of the departments and establish policies and procedures for implementation, interpretation and application of the Order.
In regard to grants making and cooperative agreements, this Executive Order 12138 directs Federal agencies to issue regulations requiring the recipient of such assistance to take appropriate affirmative action in support of Women's Business Enterprise and to prohibit actions or policies which discriminate against women's business enterprise on the basis of sex.
- Executive Order 12432
President Reagan signed Executive Order 12432 on July 14, 1983 directing each Federal agency having substantial procurement or grant making authority to:
- furnish an annual report regarding the implementation of their program to the Secretary of Commerce.
- encourage recipients of Federal grants and cooperative agreements to achieve reasonable minority business participation in contracts let as a result of its grants and agreements.
- establish MBE programs consistent with Section 211 of P.L. 95-507 to develop and implement incentive techniques to encourage greater minority business subcontracting by Federal prime contractors.
- develop a minority business development plan and establish programs concerning provision of direct assistance, procurement assistance and management and technical assistance to MBEs.
- Executive Order 12928
President Clinton signed Executive Order 12928 on September 16, 1994 promoting procurement with small businesses owned and controlled by socially and economically disadvantaged individuals, Historically Black Colleges and Universities (HBCU) and Minority Institutions (MI). Federal agencies are to assist these entities to develop viable, self sustaining businesses capable of competing on an equal basis in the mainstream of the economy. The Executive Order establishes a contracting goal of 5% for these entities but mainly reaffirms existing laws, Executive Orders and regulations relevant to minority participation while chastising some Federal agencies for not aggressively supporting them. The Order devotes an entire Section to OSDBU, reaffirming the legal requirement that it report to the Secretary or Deputy and that agencies comply with OFPP letter No. 79-1 which provides guidance on Sec 15k of the SBA Act and the organizational placement and functions of the OSDBU.
- Historically Underutilized Business Zone (HUBZone) Program
The HUBZone Act of 1997, Title VI of Public Law 105135, created the HUBZone Program. This program provides Federal contracting opportunities for qualified small business concerns located in economically distressed communities. The goal of the HUBZone Program is to provide federal contracting assistance for qualified small business concerns located in HUBZone areas in order to increase employment opportunities, stimulate capital investments in those areas, and empower communities through economic leveraging. HUDZone areas, which roughly correspond with the census tracts for which there are low income housing tax credits, are determined by census track data including income levels, unemployment rates and Native American reservation boundaries. In order to qualify as a HUBZone business, the business must be small; owned by a US citizen; the principal office must be located in a HUBZone; and at least 35% of the employees must reside in a HUBZone. The SBA formally certifies firms as HUBZone businesses. HUBZone businesses can receive sole-source or set-aside federal contracts or receive a price preference up to 10% when competing for full and open competition procurements. A HUBZone firms must have its principal office in the HUBZone. The principal office must be the location where the greatest number of the company’s employees works. The HUBZone program is race, ethnicity and gender neutral. The federal goal for HUBZone contracts was 1% for Fiscal Year 1999, rising by one half percent per year to a maximum of 3% in 2003.
- Veteran-owned Small Businesses
Public Law 106.50, the Veterans Entrepreneurship and Small Business Development Act of 1999, amended the Small Business Act by adding Small Businesses owned and controlled by service-disabled veterans to the categories of small businesses for which the federal agencies develop prime contract goals. Federal agencies also establish goals and collect data regarding subcontracts awarded by prime contractors to veteran-owned small businesses. Small businesses owned by service-disabled veterans are small businesses that are at least 51 percent owned and controlled by one or more service-disabled veterans or in the case of a veteran with permanent or severe disability, the spouse or permanent caregiver of such veteran. P.L. 106.50 established a 3% goal for government contracting with businesses owned by service disabled veterans. No specific goal is identified for sub contracting with businesses owned by veterans.
- Federal Acquisition Regulation (FAR)
The FAR establishes uniform policies and procedures for acquisition (procurement). FAR Part 19 establishes policy regarding small businesses and small disadvantaged businesses including subcontracting requirements for contracts valued at $500,000 or more and actions necessary to strengthen WBEs. While the FAR elaborates on P.L. 95-507, it cites one significant additional role in discussing OSDBU responsibilities. Specifically, OSBDU is to make recommendations as to whether a particular acquisition should be awarded as a set-aside or 8(a) award. Furthermore, the contracting officers shall consider recommendations of the OSDBU and will document the contract file whenever the OSDBU Director's recommendations are not accepted.
- HUD Acquisition Regulations (HUDAR)
HUDAR, dated January 21 2000, Parts 2419 and 2426 describe HUD's procurement policy regarding small and small and disadvantaged businesses, set-asides for small businesses, subcontracting with small businesses and small disadvantaged businesses and contracting opportunities for women-owned businesses. In regard to MBE participation in its procurement programs, the HUDAR describes HUD policy toward voluntary certification by contractors, bidders, or offerors as to their MBE status and the role of the OSDBU.
- 24 CFR, Part 85 Section 36(e), dated May 1996
This portion of the CFR provides the required affirmative steps HUD grantees and subgrantees shall take to assure that minority firms are used when possible.
(e)"Contracting with small and minority firms, women’s business enterprise and labor surplus area firms. (1)The grantee and subgrantee will take all necessary affirmative steps to assure that minority firms, women’s business enterprises, and labor surplus area firms are used when possible. (2) Affirmative steps shall include:
- (i) Placing qualified small and minority business enterprises on solicitation lists;
- (ii) Assuring that small and minority businesses are solicited whenever they are potential sources;
- (iii) Dividing total requirements, when economically feasible to permit maximum participation by small and minority business and women’s business enterprises;
- (iv) Establishing delivery schedules, where the requirement permits, which encourage participation by small and minority business, and women’s business enterprises.
- (v) Using the services of the Small Business Administration, and the Minority Business Development Agency of the Department of Commerce; and
- (vi) Requiring the prime contractor, if subcontracts are to be let, to take the affirmative steps listed in paragraphs (e) (2)(i) through (v) of this section.
- HUD Handbook 2210.3 Revision 3, "Procurement Policies and Procedures"
Chapter 3 of the Handbook contains implementing policies and procedures regarding socioeconomic procurement programs.
- Regulatory Flexibility Act, Public Law 96-354
- a description of an estimate of the number of individuals, businesses, organizations and governmental jurisdictions to which the proposed rule would apply;
- a statement that the agency will seek and consider alternatives to the proposed rule which would substantially reduce the economic impact on individuals, small businesses, small organizations and small governmental jurisdictions;
- an agency prepared analysis of the proposed rule which constitutes a preliminary agency assessment of the impact of the proposed rule on individuals, small businesses, small organizations and small governmental jurisdictions. The analysis must contain a description of alternatives to the proposed rule which accomplish the stated objectives of applicable statutes and which minimize the significant economic effect of the rule on such individuals, businesses, organizations and governments. [The final rule requires "a description of any alternative proposals to the proposed rule which were considered and a statement of the reasons for adopting the final rule rather than any of the alternative proposals which would have had a lesser adverse economic impact".]
- a statement as to the record keeping requirements the agency anticipates requiring, including their purpose, form, length, proposed use, the skills necessary to prepare the information and an estimate of the time required to comply.
Congress passed P.L. 96-354 because it felt Executive Order 12044, issued in March 1978 on the subject of "Improving Government Regulations" didn't go far enough to reduce the burden of regulation on small entities since the Order did not improve public participation in the process or provide for an assessment of alternative regulatory strategies in light of their impact on small concerns. regulations.
- Congress passed P.L. 96-354 on September 19, 1980. Its purpose is to encourage Federal agencies to utilize innovative administrative procedures in dealing with individuals, small businesses, small organizations and small governmental bodies that would otherwise be unnecessarily adversely affected by Federal regulations. The Act defines "small business" as having the same meaning as is found in the Small Business Act; "small organization" as any not for profit enterprise which is independently owned and not dominant in its field and; "small governmental jurisdiction" as the government of cities, counties, towns, townships, villages, school districts or special districts with a population of less than fifty thousand.
Unless the agency head certifies that the proposed rule will not have a significant impact on any small business or organization or that uniform requirements are mandated by statute, the Act requires Federal agencies to add the following information to that currently required when an agency publishes in the Federal Register general Notice of Proposed Rulemaking:
- The Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA)
On March 29, 1996 President Clinton signed Public Law 104-121, the SBREFA. The Act reinforces the requirements of the Regulatory Flexibility Act (RFA) with the significant addition of the provision that permits judicial review of agencies' compliance with the RFA. Since the RFA's passage, small business advocates have told Congress that many agencies neglected to comply with the law because there were no provisions in the original legislation for enforcement. The SBREFA now provides that if an agency fails to comply with the RFA in its Rulemaking, a small business that is adversely affected or aggrieved may seek review by the courts. The court can invalidate rules with inappropriate regulatory flexibility analyses or rules that have been improperly certified as having no significant effect on small businesses.
To bolster a small business' access to information, agencies are required to establish a program for responding to small business requests for informal guidance on specific rules, and to develop "small entity compliance guides". As the name implies, the guides are intended to explain the actions a small entity is required to take to comply with a rule. The program for informal guidance is to be established by March 29, 1997 with a progress report due to Congress by March 29, 1998. Both the informal guidance and the compliance guides may be considered as evidence of the reasonableness of any proposed fines or penalties in any civil or administrative action challenged by a small entity.
Section 223 of the SBREFA requires each agency regulating the activities of small entities to establish a policy or program by March 29, 1997, to reduce or, where appropriate, waive civil penalties against small entities for violations of a statutory or regulatory requirement. It also requires a progress report to Congress by March 29, 1998 on the scope of the policy or program, the number of enforcement actions that qualified or failed to qualify for the policy or program and the total amount of penalty reductions and waivers. In practice, the programs mostly likely to have a regulatory impact on small business are Manufactured Housing, RESPA, Interstate land sales, Lead Based Paint Abatement and Fair Housing.
- Executive Order 12866
President Clinton signed Executive Order 12866, "Regulatory Planning and Review" on September 30, 1993 with the intent of making the regulatory process more efficient. In addressing the Principles of Regulations, Section 1 (11) states that each agency shall tailor its regulations to impose the least burden on society including individuals, businesses of differing sizes and other entities (including small communities and governmental entities), consistent with obtaining the regulatory objectives, taking into account, among other things, the cost of cumulative regulations.
- Section 3 of the Housing and Community Development Act of 1992.
Section 3 requires that when HUD Federal assistance generates the need for the recipient of HUD funding to increase internal employment or let contracts, the recipient must give preference in hiring to low and very low income persons and must give preference in contracting to businesses owned by these persons or that substantially employ low and very low income persons.