Search Results

By: Ann Sullivan If you’ve read any of my blogs on regulations, you know that regulations are published on Regulations.gov. You also know that there is a process to take a proposed regulation all the way to the final release. In case you missed it, regulations are called “rules” in government speak. In the past several months, SBA has taken significant actions on contracting policy that affect small government contractors. They are in various stages—some proposed rules, some finalized. Since this has been difficult to keep track of, below is a summary and status of the actions federal contractors should be following. Most of our summaries have been prepared by the law firm PilieroMazza because we couldn’t have said it better. 1. SBA Adopts a Five-Year Calculation Instead of the Current Three-Year Size Calculation for Revenue Based Size Standards. Effective January 6, 2020. Final Rule. · This regulation implements a change in the law through legislation known as the Small Business Runway Extension Act passed in 2018. 2. Changes to the HUBZone Program. Effective December 26, 2019. Final Rule. Key changes to the HUBZone Program include: · An individual will continue to be treated as a HUBZone resident if that individual worked for the firm and resided in a HUBZone at the time the concern was certified or recertified as a HUBZone—even if the area where the individual lives no longer qualifies as a HUBZone or the individual has moved to a non-HUBZone area; HUBZone firms will only be required to certify on an annual basis, meaning such concerns will no longer be required to expressly qualify as a HUBZone at the time of each offer for a HUBZone contract and award; for compliance purposes, HUBZone firms must maintain at least 20% HUBZone residents as employees when performing on HUBZone contracts, or SBA will propose the firm for decertification. · HUBZone firms have an affirmative duty to notify SBA if they fall below the 20% attempt to maintain the standard; when a company buys an office located in a HUBZone or enters into a long-term, 10-year lease for such office space, intending the space to be its principal office, the concern will be able to meet the principal office HUBZone criterion for a period of at least 10 years—even if at some point after the property is purchased or leased, the office location no longer qualifies as a HUBZone. The idea behind this rule is that the HUBZone program should incentivize and reward companies that invest in HUBZones. 3. Implementation of Changes Contained in FY2016 and FY2017 NDAA and the RISE Act. Effective December 30, 2019. Final Rule. Subcontracting Plans · Consistent with the 2017 NDAA, the Rule provides that it will be a material breach of contract when a contractor or subcontractor fails to comply in good faith with its subcontracting plan requirements, including failing to provide reports and/or cooperate in studies or surveys to determine the extent of compliance. The Rule provides a number of examples of what constitutes a failure to make “good faith” efforts, including, among others, (1) failing to timely submit subcontracting reports and (2) failing to pay small business subcontractors in accordance with the terms of the contract. According to SBA, the examples set forth in the Rule are not intended to be inclusive and factors beyond those identified in the Rule may be considered in determining whether good faith efforts were made. The Rule also provides that failure to make a good-faith effort may be considered in any past performance evaluation of the contractor. · With respect to subcontracting plans, the Rule also requires other than small prime contractors with commercial subcontracting plans to include indirect costs in their subcontracting goals. Small Business Contracting in Disaster Areas · As provided in the RISE Act, SBA is establishing contracting preferences for small business concerns (“SBC”) located in disaster areas and will provide agencies with double credit for awards to such concerns. SBA will use the existing Federal Acquisition Regulation definitions to provide that an agency will receive credit for an “emergency response contract” awarded to a “local firm” that qualifies as an SBC under the applicable size standard for a “major disaster or emergency area.” · According to the Rule, a concern is “located in a disaster area,” if, during the last twelve months, it had its main operating office in the area and that office generated at least half of the firm’s gross revenues and employed at least half of the firm’s permanent employees. The Rule provides a number of factors that SBA will consider if the firm does not meet the foregoing criteria in order to determine whether the firm resides or primarily does business in a disaster area. NMR Size Standard Does Not Apply to ITVAR Procurements · The Rule amends the NMR to expressly state that a firm may qualify as an SBC to provide manufactured products or other supply items as a nonmanufacturer if, among other things, it does not exceed 500 employees “(or 150 employees for the Information Technology Value Added Reseller exception to NAICS Code 541519, which is found at § 121.201, footnote 18)”. According to SBA, because contractors under the ITVAR exception are non-manufacturers, it would make no sense for SBA to retain a 150-employee size standard if concerns could also qualify under the NMR 500-employee size standard. Allowing a Set-Aside Within a Set-Aside · The Rule provides contracting officers the authority to set aside orders for a socio-economic small business program (e.g., 8(a), HUBZone, SDVO, WOSB) under a multiple award contract (“MAC”) awarded as a generic small business set-aside. This is significant because although SBA has considered implementing such a rule in the past, it has chosen not to, in part because it was concerned that such a rule would unfairly deprive SBCs of an opportunity to compete for orders issued under their MACs. 4. Mentor/Protégé, Joint Ventures and 8(a) Changes. Proposed rule. Status: Public comment period ends January 17, 2020. Mentor-Protégé Programs The proposed rule would: · Merge the 8(a) Mentor-Protégé Program into the All Small Mentor-Protégé Program; clarify eligibility criteria for proposed mentors and request comments on whether mentors should be restricted to mid-sized firms; provide flexibility for mentors with protégés with principle places of business in Puerto Rico; provide relief from the two mentors over the life of a protégé rule; and; provide generally that protégés should be performing work under the North American Industry Classification System (NAICS) code used to qualify for the program. Joint Ventures The proposed rule would: · Eliminate joint venture approval requirements for competitive 8(a) contracts, but not sole source awards; eliminate the “three in two” rule; disallow substitution of joint venture partners who exceed the size standard for long-term contracts prior to recertification; and allow joint ventures to be populated with FSOs and provide guidance to agencies on when to allow joint ventures to bid on contracts requiring a clearance. Multiple-Award Contracts (MAC) The proposed rule would: · Require contracting officers to assign the most appropriate single NAICS code to each order under an MAC, whether for a supply or a service to ensure compliance with the non-manufacturer rule, requiring that each NAICS code be included in the underlying MAC; require an offeror to certify as to size and status in order to qualify at the time it submits its initial offer including price for an order under an UNRESTRICTED MAC, except for orders or BPAs issued under an FSS contract; require that, where the socio-economic status is first required at the order level, firms must qualify at that time; and permit size and status protests where the underlying MAC was unrestricted, except for BPAs and orders issued under an FSS schedule. Certification Self certification · The proposed rule would allow a prime to rely on the self-certification of its subcontractor, provided the prime does not have a reason to doubt the certification. Recertification · The proposed rule would clarify that if a party to a joint venture becomes acquired or merges, only that partner (and not the non-affected partner) must recertify in order to qualify the joint venture to recertify; a firm that mergers between proposal submission and award does not qualify for award if it could not or did not recertify, though size protests are permitted; and tribal entities are not required to recertify where ownership changes but the firm is owned to the same extent (i.e. 51%) by the ultimate entity. 8(a) Program The proposed rule would: · Define “follow on contract” for purposes of retaining requirements in the program; loosen the prohibition on immediate family members owning 8(a) firms; allow for certain changes of ownership to occur without prior SBA approval; clarify SBA policy on voluntary withdrawals and early graduations from the program; and under some circumstances, allow firms to seek and obtain a multiple contract waiver from the sole-source restrictions for failure to comply with the business activity targets where certain extenuating circumstances exist that apply to multiple contracts. Small Business Rules The proposed rule would: · Require that mixed contracts include any combination of services, supplies, or construction though construction was inadvertently omitted from the proposed rule; require that contracting officers consider past performance of first-tier subcontractors for certain bundled or consolidated contracts and for MACs over a certain dollar threshold; clarify that affiliation may be found under the newly organized concern rule where both former and current officers, directors, principal stockholders, managing members, or key employees of one company organize a new company in the same or a related industry; and request comments on how the non-manufacturer rule should be applied to multiple item procurements where one or more of the items are subject to a class waiver.

In the 2019 National Defense Authorization Act, Congress directed federal agencies to stop using products and services from six Chinese companies in Section 889 of the bill. Those companies include: Huawei, ZTE Corporation, Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company, and Dahua Technology Company. Moving quickly, the FAR Council issued an interim final rule, Prohibition on Certain Telecommunications and Video Surveillance Services or Equipment, which became effective on August 13, 2019, and broadly prohibits federal agencies from using telecommunications or surveillance equipment or services from these six companies. Next year, step two, which prohibits any government contractor from using any components or services from these companies is expected to go into effect. Known as Section 889, this action has the potential of impacting all government contractors, large or small—even micropurchases. While no one doubts that these companies pose a threat to the nation’s cybersecurity, any government action that affects 139,730 small entities will have wide reaching effects. That was the theme of my participation on a panel at GSA on Section 889. I joined five other panelists to speak about how Section 889 will affect government contractors, especially small businesses. Think for a minute about complying with this new requirement. For example, do you know who manufacturers your desk phones? Do you know what brand the surveillance equipment in your building? If you travel internationally, do you know the telecom carrier you use in your office or hotel? Replacement of equipment will surely carry a cost, but figuring out usage of any components or services from these six companies will prove to be difficult. The new FAR rules will not only impact your employees and your physical facility, it will also extend to your workforce comprised of 1099 contractors. A small business owner shared that this new Section 889 requirement could result in her contractors opting out of federal work because the new requirements will be too tough to comply with. One of my fellow panelists joked that these new requirements will provide full employment to lawyers and compliance experts for years to come. Small businesses will likely need to hire a compliance specialist as well as a specialist to source equipment to stay in compliance with the new rule. One small business stated that it will cost them $10,000 to conduct an audit and provide governance structure, $10,000 for new equipment, and $10,000 to change all of her contracts and educate her 1099s. An audience participant estimated a cost of $150,000 just for new equipment alone. My greatest concern is that small businesses will not understand the implications of this new requirement until it smacks them in the face—until they don’t qualify for federal work or a prime contractor demands a certification of compliance. So, what can the government do to increase awareness among industry about the potential impact of Section 889? First, the government can use small business offices (OSDBUs) and small business specialists to share information about Section 889. Second, GSA can do informational webinars about the impact of the new rule. Third, the government should involve the Small Business Administration (SBA) and Procurement Technical Assistance Centers (PTACs) network. And finally, the government should engage organizations, like WIPP to spread the word about the new Section 889 rule. Staying on top of acquisition policies, like Section 889, directly affects your bottom line. That’s the beauty of WIPP – we are dedicated to keeping you informed and engaged.

By Ann Sullivan As a member of WIPP, you already know more than the average person about regulations that impact small business owners – regardless of whether they are proposed, interim-final, or final rules. But, you probably don’t know exactly what that means or how they get to those stages in the first place. The first thing to know is that proposed regulations are known as “rules” and the rulemaking process is lengthier than you might expect. When Congress passes a law, the agency then gets to work to implement it. The final product is a new regulation. To get from passage of a law to a new regulation involves a number of steps by the agencies. An agency’s first step is to develop a draft regulation known as a proposed rule. Then, the agency sends the draft to the Office of Information and Regulatory Affairs (OIRA) for review. OIRA is tasked with circulating this regulation among other government agencies, taking into account this feedback. OIRA is a Federal office that was created by Congress 1980. In 1991, an Executive Order directed that the office would formally review all draft proposed and final rules before they were published in the Federal Register. OIRA makes suggested changes and sends the proposed rule back to the agency. The agency then issues a proposed rule which it publishes on www.regulations.gov for public comment. The comment period is usually open for 60 days, although some only accept comments for 30 days. Comments are not limited to organizations like WIPP – anyone or any entity can provide comments on a proposed rule. The agency reviews the public input to revise a final product which typically takes another 60 –90 days and summarizes its findings and issues a final rule. Done, right? Not quite. The final rule once again goes to OIRA for review – only when this approval process is complete can the new regulation be published as a final rule. Given this process, you now know why WIPP is very active in the regulatory space. By commenting on proposed rules, we have the ability to shape the outcome of the regulation. The devil is in the details, so this stage of advocacy is, in many cases, as important as passage of the law. WIPP has commented on a number of important proposed rules on a variety of issues. In 2019, WIPP submitted comments to SBA on a number of small business contracting rules ranging from the proposed WOSB/EDWOSB certification rule, to the rule implementing the Small Business Runway Extension Act. WIPP also submitted comments to the Department of Defense (DoD) on its proposed Cybersecurity Maturity Model Certification—a far reaching cyber certification which will affect every federal contractor and subcontractor. The Federal Acquisition Regulation (FAR) Council recently proposed an interim final rule that will amend the FAR to prohibit the federal government from procuring or obtaining, or extending or renewing a contract to procure or obtain, “any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system” in order to combat the national security and intellectual property threats that face the United States. The definition of “covered telecommunications equipment or services” are components from: Huawei, ZTE Corporation, Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company, and Dahua Technology Company. The rule prohibits contractors from providing covered telecommunications equipment or services unless the agency confirms that an exception applies or a waiver is granted; requires every offeror for a contract or order to represent whether or not it will provide covered telecommunications equipment or services as part of its offer and, if so, to furnish additional detail about the covered equipment or services; and mandates that contractors report any covered equipment or services if discovered during the course of contract performance. It is important to note that the interim rule impacts ALL contractors — not just those that offer information and communication technology. Each contractor is responsible for determining whether telecommunications equipment and services will be provided under both new and existing contracts and orders. WIPP recognized the wide-reaching importance of this rule and jointly submitted comments in response. On another note, Lowest Price Technically Acceptable (LPTA) has been a long hated acquisition pricing policy in the small business community. Seen as a “race to the bottom,” the FAR Council has issued a proposed rule to avoid using Lowest Price Technically Acceptable (LPTA) source selection criteria in circumstances that would deny the government the benefits of cost and technical tradeoffs in the source selection process. This rule also states specifically that LPTA source selection criteria should be avoided for procurements for IT services, cyber security, systems engineering services, and others. One part of the regulatory process to note— when the FAR Council issues a proposed rule it is listed with a “FAR Case” number instead of a “Regulatory Identification Number” (RIN). Advocacy comes in all forms. While our team focuses much of our attention on Congressional action, our work with agencies, especially SBA, is every bit as important. Staying vigilant on all fronts is critical to all businesses, large and small. It’s tough to keep up with everything as a small business – I know – I am one. That’s why membership in WIPP is critical to your bottom line – we follow and initiate the actions important to women-owned businesses. Your job is to get active.

By Ann Sullivan This New FAR Council Rule on Covered Telecommunication Equipment Will Impact Your Business, Even Outside of the Tech Industry The Federal Acquisition Regulation (FAR) Council has proposed an interim final rule that will amend the FAR to prohibit the Federal Government from procuring or obtaining, or extending or renewing a contract to procure or obtain, “any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system” in order to combat the national security and intellectual property threats that face the United States. The definition of “covered telecommunications equipment or services” are components from: Huawei, ZTE Corporation, Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company, and Dahua Technology Company. For all businesses, the rule: Prohibits contractors from providing covered telecommunications equipment or services unless the agency confirms that an exception applies or a waiver is granted Requires every offeror for a contract or order to represent whether or not it will provide covered telecommunications equipment or services as part of its offer and, if so, to furnish additional detail about the covered equipment or services Mandates that contractors report any covered equipment or services if discovered during the course of contract performance WIPP recognized the importance of this rule and the impact it will have on small business federal contractors. Read WIPP’s comments on this rule. Proposed Rule on Lowest Price Technically Acceptable Source Selection Process (LPTA) from FAR Council Discourages Use of Practice Across Government Lowest Price Technically Acceptable (LPTA) has been a long hated acquisition pricing policy in the small business community. Seen as a “race to the bottom,” the FAR Council has issued a proposed rule to avoid using Lowest Price Technically Acceptable (LPTA) source selection criteria in circumstances that would deny the Government the benefits of cost and technical tradeoffs in the source selection process. This rule also states specifically that LPTA source selection criteria should be avoided for procurements for IT services, cyber security, systems engineering services, and others. Think this is a good idea? Comment on this rule by December 2, 2019.

By: Ann Sullivan October 1 marks a new fiscal year, FY2020, and the government will continue to be funded until November 21. Congress sent the continuing resolution (CR) to the President last Friday, who signed the bill into law before the September 30 deadline. It is significant that during September, the Congress and the President agreed to two additional steps to bring stability to the budget process. Legislation to suspend the federal debt ceiling and set government spending levels for two years addressed issues that have proven to be problematic in the past. Budget bills, such as these, have provided opportunities for legislators and Presidents to hold government spending hostage to their demands. That’s not to say the demands don’t hold merit but shutting down the government is not without consequences. Thirty-five days in length, the last government shutdown in January-February 2019 wreaked havoc on small federal contractors. According to a report by the Senate Permanent Subcommittee on Investigations, The True Cost of Government Shutdowns, the last three shutdowns in cost taxpayers $4 billion—at least $3.7 billion of it in back pay to furloughed federal workers and $338 million in other costs such as lost revenue. A statistic that government contractors certainly felt was the Congressional Budget Office estimate that the most recent shutdown delayed approximately $18 billion in federal spending for compensation and purchases of goods and services. Legislation was introduced this year to require compensation to low-wage workers employed by government contractors, including the Fair Compensation for Low-Wage Contractor Employees Act in the House and the Fair Compensation for Low-Wage Contractor Employees Act in the Senate. Although these efforts have yet to gain traction, it is a move applauded by many government contractors. The angst that builds in Washington around the end of the fiscal year is justified. Even though our members have strategies in place to weather a shutdown storm, a government shutdown affects everyone in the supply chain. In addition to requiring contract modifications to keep providing services during a CR, it also delays grant awards and new projects. There’s a whole new wrinkle in completion of federal funding for FY2020 that expires on November 21 – impeachment proceedings. Decisions on where the money is spent in the federal government is a key responsibility of the Congress, but it requires the President’s signature. Putting aside partisan wrangling is a requirement for getting this funding passed. Appropriations bills are determined by the Appropriations Committees in the House and the Senate. Since Democrats are in control of the House but Republicans are in control of the Senate, getting these bills to the finish line requires bipartisan cooperation. And, the President has to be willing to sign the legislation. Senate appropriators say they can “walk and chew gum” at the same time, and have expressed their intentions to keep working to complete their work despite the impeachment proceedings. There is precedent for taking care of normal legislative matters while at the same time pursuing a major matter such as impeachment. In 1998 in the in the midst of then-President Bill Clinton’s pending impeachment investigation by the House, Clinton signed all of that year’s appropriations bills. Where does this leave government contractors? Feeling pleased about averting a government shutdown until November 21, but cautiously optimistic about federal funding for FY2020 after November 21. Here’s where your advocacy comes in. Contact your Congressional delegation urging them to complete the appropriations process. Congress will need lots of encouragement by its constituents to stay the course and complete their work. The small business contracting community can ill afford another shutdown.

By Elizabeth Sullivan Congress will be back in Washington next week, and there is certainly no shortage of items on their to-do list. One of the questions our policy team has been asked time and time again during this month-long recess is our prediction for what is to come for the rest of 2019. Will the government be funded? Will the Senate Small Business Committee’s reauthorization bill move forward? Here are the four things you should be watching in the coming months. 1. Funding the Government (Appropriations). Here we are again – headed back from August recess without clarity on whether or when the government will be funded for FY2020. If you are a federal contractor, you probably want to pull your hair out. Here is where Congress is in the process so far. The House has passed two packages, or “minibus” bills, which include: minibus 1 (H.R. 2740) – Defense, Energy & Water, Labor-HHS-Education, State-Foreign Operations and minibus 2 (H.R. 3055) – Agriculture-FDA, Commerce-Justice-Science, Interior-Environment, Military Construction-VA, Transportation-HUD. Due to tensions around funding a border wall and legislator pay raises, the House has not passed the Legislative Branch and Homeland Security bills. So technically, with most of the bills passed, the House is not in terrible shape. However, the Senate is woefully behind – they have not started drafting any appropriations bills. If you remember the budget deal wrangling a few weeks ago, the Senate was waiting on this agreement to proceed. It was signed into law right before legislators returned home for August recess. Senate Appropriations Committee Chair Richard Shelby (R-AL) has indicated that the Committee hopes to pass a three-bill spending package before the end of the fiscal year, which ends on September 30. Not to beat a dead horse, but quick refresher on the appropriations process. There are two types of bills we will keep talking about: regular appropriation bills and continuing resolutions (CR). Continuing resolutions continue the same level of funding from the previous fiscal year into the next fiscal year – a headache for federal contractors. If 12 appropriations bills are not signed into law or a CR is not passed before the new fiscal year begins on October 1, then comes a government shutdown. Many Members of Congress have indicated there is not an appetite for a government shutdown after the political mess the month-long partial shutdown caused into the beginning of this year. The usual pattern is there is some type of CR from the beginning of the new fiscal year until around the holidays where the Members of Congress compromise before the clock strikes “Christmas.” 2. Senate SBA Reauthorization. Our Action Alert for August recess asked you to tell your Senators to urge the Senate Small Business Committee to move forward with the Small Business Administration (SBA) reauthorization bill. Thank you to many of you that did this – your voices are key to keeping up the pressure for this to happen. While I can speculate on when I think this will happen, I would rather say that it is important to keep an eye out on WIPP’s communications for the current status of the bill and any additional action we need you to take. This bill has too many of WIPP’s priorities included to let it fail. 3. National Defense Authorization Act (NDAA). It has been awhile since we mentioned the NDAA, but it is still something to watch for the rest of the year. The Senate passed its $750 billion bill (S. 1790) on June 27 and the House passed its $733 billion measure (H.R. 2500) on July 12. The bill is now in the conference phase where the House and Senate have to work out the differences before sending a compromised bill to the President for signature. There are a few sticking points that could complicate the upcoming negotiations, including border wall funding and immigration, military action against Iran and nuclear warheads. There are no shortage of provisions important to the industrial base – small business contractors – in these bills. Stay tuned for the negotiation outcomes. 4. 2020 Elections. Although there is an abundance of news coverage on next year’s Presidential election, I would be remiss if I did not at least mention what is up next. Currently the Democrats are heavily in debate-mode until the end of the year trying to dwindle down the number of potential nominees. Going into the September 12 debate, there are now 10 candidates that qualify, down from the initial 21 hopefuls. Just a little throwback, in the 2016 election there were 17 Republicans vying for the nomination and 6 Democrats. So, what are the next steps? The final Democratic debate before the primary elections begin will take place in December – the first primary will take place on February in New Hampshire. On the Republican side, former Illinois Representative Joe Walsh and former Governor of Massachusetts Bill Weld have come forward to challenge President Trump. While there are no formal debates for the Republicans, state rules dictate which of these candidates will appear on the primary ballots. In past Presidential elections, WIPP has held sessions at both the Democrat and Republican National Conventions. For those of you who were members in 2016, this is when we debuted the 10 Things Candidates Need to Know about Women Entrepreneurs. Look for 2020 convention activity in the future. It is also important to note that 2020 is not just about the Presidency. The entire U.S. House of Representatives is up for reelection and a third of the U.S. Senate. No matter your party affiliation, make sure you are supporting women candidates that have thrown their hat into the ring. While the coming months will be plenty busy, it is important to remember that your voice matters. Respond to the call to action. Meet with local Congressional staff. Engage with WIPP Wednesdays. Our work on behalf of women entrepreneurs around the country cannot be done in a vacuum – we need your voice to push policy changes important to WOSBs over the finish line.

By Ann Sullivan In the early days of WIPP when advocacy for women business owners was relatively new, we routinely issued action alerts to foster the engagement of our members with their Congressional delegation. WIPP’s network generated thousands of phone calls, letters, signatures and engagement of organizations who supported our efforts to put a women’s procurement program in place. This was the cornerstone of our advocacy to encourage federal agencies to contract with women-owned firms. By giving agencies the ability to restrict contracts to women, we also encouraged women to enter the federal market. Through WIPP’s advocacy, the ability to sole source contracts through this program was enacted in 2015. Fast forward to today. When you see the list of eight contracting items contained in the Senate version of its reauthorization draft below, it is hard to believe the difference in attitudes toward women-owned firms. The Senate Small Business Committee is poised to open up access to capital for WOSB/EDWOSB federal contracting firms and make the WOSB program comparable to other SBA procurement programs, including lifting restrictions and dollar amounts that hamper contracting officers from issuing sole source awards to women. The other changes are just as important as the contracting changes. And all of this good work is coming to the small business community– maybe. The Senate Small Business Committee has been working this year to reimagine and reinvigorate programs at the Small Business Administration (SBA) through a reauthorization bill. WIPP’s policy team has been at the forefront of these efforts – providing hearing witnesses, collaborating though meetings and soliciting feedback from WIPP members on a slew of issues that are important to women business owners. The House Small Business Committee is also in the throes of holding hearings and will most likely pass individual bills making changes in SBA programs, rather than compiling a comprehensive bill. This is where you come in. We need to raise our voices once more in significant numbers. Our partners and our members need to communicate to their Congressional delegation the importance of this bill moving forward. There isn’t a bill number—not yet. When referencing these actions, just refer to them as the Senate SBA reauthorization draft. Below are the changes worth fighting for: Contracting 1. Raises sole source thresholds to $8 million generally and at $10 million for manufacturing contracts. 2. Allows sole source contracts for each option year instead of the current one-time award. 3. Amendment to eliminate the rule of two language for sole source contracts from the WOSB, HUBZone, and SDVOSB programs. 4. Solidifies Small Business Runway Extension Act, allowing for 5-year average of gross receipts for revenue based NAICS codes and adds employee based NAICS codes to the calculation by allowing them to also use a 5-year average for the purposes of size determination. 5. Requires agencies to pay small business contractors for work performed within 15 days of performance. 6. Requires the SBA to commission an independent external study to determine which industries are underrepresented by women. 7. Allows for equity investment in women and minority owned small businesses for federal contractors by women-owned/minority-owned equity firms. 8. Adds the SBA as a member of the Federal Acquisition Regulatory (FAR) Council. Access to Capital 9. Eliminates a rule that prevents SBA from distributing more than 1/55th of its microloans in any one state. 10. Requires much needed data on microloans, of which women are the largest consumers. Regulatory 11. Expands the role of the SBA Office of Advocacy to weigh in on regulations affecting small businesses. 12. Requires a five-year review of regulations’ effect on small businesses. 13. Allows the Office of Advocacy to write a letter questioning an agency’s certification that a proposed rule would not have a significant impact on a substantial number of small entities, and asking the agency to reconsider. Cybersecurity 14. Mandates that the SBA Administrator establish a program to designate employees of lead SBDCs as certified to provide cyber strategy assistance to small businesses. 15. Directs the SBA to develop a cybersecurity clearinghouse that consolidates federal government cybersecurity information specifically for small business assistance.

By Ann Sullivan According to my friends, Amy Millman, who runs Springboard Enterprises, and WIPP member Sue Malone, who funds small businesses through equity investments, legislation championed by Senators Maria Cantwell (D-WA) and Marco Rubio (R-FL) solves a problem that has been discussed for 20 years. Championed by WIPP, S. 1981, the Women and Minority Equity Investment Act of 2019,allows women-owned federal contracting firms to take investment by women-owned equity firms and still meet the “51% unconditionally owned and controlled” standard set by SBA to participate in the WOSB/EDWOSB program. Just as an aside, we also brought the minority-owned firms along with us in this legislation, allowing for minority-owned firms to invest in minority-owned companies. We thought it was important and the right thing to do. It should come as no surprise that the numbers are abysmal when it comes to equity investment in women. According to Senator Cantwell, “the percentage of women-owned businesses rose from 4.6% in 1972 to 40% in 2018, but they still receive less than 4% of venture funding.” Equity investment is a term that encompasses venture capital, private equity and angel investment. Equity simply means ownership. In exchange for a percentage of ownership, the investor provides capital. An example of this investing at a very basic level is the TV show Shark Tank. The flip side of the coin is that a major obstacle to investment in women-owned companies is that not enough women are investors. Only 8% of investing partners at the top 100 venture firms globally are women, according to an analysis by TechCrunch. Additionally, Fairview Capital’s 2018 Market Review of Woman and Minority-Owned Private Equity Firms shows significant growth in funds owned by women or minorities. The estimated 312 private equity firms have doubled since 2015 and represent roughly 10% of the market. Currently, if a woman-owned firm wanted to obtain an SBA certification to participate in the WOSB/EDWOSB procurement program, she basically has to swear off any investments. We know a number of cases where women who took equity investment had to shut down their government business, which is completely counterproductive to the SBA’s mission. This legislation is groundbreaking on both sides of the women-owned equation. It not only opens a path for investment in women-owned businesses who are government contractors, but also strengthens women investors, giving them a reason to ask for greater equity positions within their firms. It has been suggested to us that giving an incentive to women-owned equity firms to invest might change the dynamic in those firms. Women-owned companies looking for investment will be incentivized to ask for women-owned investment firms—we hope this will work favorably both ways. The same holds true for minority investments under this new legislation. Any day now, a similar bill will be introduced in the House of Representatives. We fully anticipate this legislation will make it into law, doing away with a long-standing impediment to accessing capital. WIPP’s President, Candace Waterman stated upon introduction of this legislation, “we all know that access to capital is a barrier to entry and growth for women owned businesses. This bill will not only assist these businesses, it will have a positive impact on the financial industry, as it will spur growth for women-owned equity/VC firms. We applaud Senators Cantwell and Rubio for leading this breakthrough on an issue that has been an impediment to women’s business growth.”

By Ann Sullivan When I started representing WIPP in Washington some 17 years ago, Republican George W. Bush was in his second year as President and Senate Democrats held their majority by a very slim margin, while the House was controlled comfortably by Republicans. Women held 62 seats in the House and 13 seats in the Senate. No women chaired Congressional Committees and two women held Cabinet posts – Ann Veneman (Department of Agriculture) and Elaine Chao (Department of Transportation). Things are a little different now— but maybe not as much as one might think. President Trump is also a Republican, but this time the Senate is controlled by Republicans and Democrats control the House. But the game changer is women in power. As of January 2019, there are 106 women in the U.S. House of Representatives, including delegates, and 25 women in the Senate. Seven women head Congressional Committees—not to mention Speaker of the House Nancy Pelosi, who is second in the presidential line of succession, after the vice president. Even though there were relatively few women in Congress, in those early days there were a few game changers—Senator Kay Baily Hutchison and Senator Olympia Snowe. Senator Hutchison was the head of the Republican Policy Committee in the Senate and included us in her monthly meetings, even though we were the only women in the room. Senator Snowe supported women business owners from her position on the Small Business Committee highlighting our issues. Today, women owned companies in the United States make a much bigger impact than in 2002. Women owned 6.5 million nonfarm U.S. businesses in 2002, employing 7.1 million people and generating $939.5 billion in business revenues. The latest numbers, by contrast, show women own 10 million firms, generating $1.4 trillion in receipts and employing 8.4 million. WIPP was founded because women business owners were not well understood and did not have “a seat at the table.” Routinely left out of important agency and Congressional meetings, women pressed for a bigger presence. Making a difference in public policy was, and is to this day, WIPP’s mission. WIPP’s first example of making a big difference was pushing for a federal program which set aside federal contracts to women-owned companies. The women’s procurement program rallied women all over the country who believed that resistance to implement this law was just plain wrong. The game changer was locking down Presidential candidate support for implementation and when Obama won – well it was one of the first things he did. Our strategy of presenting our platform at both conventions attended by powerful women in both parties and our members worked. With WIPP’s legislative and regulatory victories, our narrative started changing. We no longer asked for a “seat at the table.” We had it. Rather, we were seated at the head of the table. Congressional Members, staff and committees consult our organization and its members for views and testimony on every aspect of policies affecting entrepreneurs. SBA became our partner through ChallengeHER, educating women nationwide on working with the private sector. Lastly, we became an integral part of the small business community and worked diligently to build a cohesive coalition with all other parts of the community – another game changer. Changing the game has been in WIPP’s DNA since its inception. In June, there are two additional opportunities to lead. First, the Senate will hold a hearing on contracting issues with an eye to making the small business programs more effective. WIPP will testify, addressing the disappointing performance of the WOSB/EDWOSB program and efforts to increase federal contracts to women owned businesses. The second opportunity is the WIPP leadership conference. Participation, just like those early days, requires everyone’s attendance. WIPP visits to Capitol Hill has never been more important. Our visibility helps all women entrepreneurs across the country, even though they may not even be aware of our efforts. Our attention to issues such as business growth requires action and this conference provides opportunity for engagement with Congressional Members and staff. Unlike the early days, we are not begging for a seat at the table. But now that we have a seat, it is our responsibility to do something with that seat. Get involved. Add your voice.

By Ann Sullivan, WIPP Chief Advocate Around this time of year, you will start to see communications from the WIPP policy team around getting legislation important to women owned businesses “into the NDAA.” If you have been around long enough, you have probably heard me decode this legislative strategy. WIPP has used this vehicle to pass a number of bills into law – including sole source authority for WOSBs. So, the question is, how can legislation about small business wind up in something authorizing defense? Let’s start with a little history of the Act. The National Defense Authorization Act (NDAA) is one of the last “must pass” pieces of legislation left in Congress. Since the Constitution requires that Congress provides for a common defense, this bill is considered to be “must pass.” Therefore, every year for the past 58 years, Congress has passed the NDAA. Not to be confused with defense appropriations, with “defense” in the title, the purpose of the massive bill is to authorize defense policies and programs under which the funding levels are set. Even though the bill is “must pass,” that does not necessarily mean must pass on time. In 33 years, the NDAA been passed only three times before the start of the new fiscal year. However, one of the three times was last year’s FY2019 NDAA. The other two years the NDAA was signed on time were FY1997 and FY1978. ***Note: the calendar year the bill is passed and the fiscal year for the NDAA do not align. Congress is always working on it for the next fiscal year – therefore, Congress is currently working on the FY2020 NDAA. So where does small business enter the mix? The bill falls under the jurisdiction of the Armed Services Committees in both the House and Senate, not the Small Business Committees. Each year, both sides of Congress craft their own version NDAA to pass in their respective chambers. Next, they come together with negotiators and hammer out the differences. Since this is not under Small Business Committee jurisdiction, adding small business provisions is a more internal process. Meaning, you won’t see us tell you about a public hearing to review proposed small business provisions, instead the House and Senate Small Business Committees work with the Armed Services Committee Members to include relevant small business provisions. The NDAA has not always had small business changes. In recent years, small business advocates in Congress realized that a stated U.S national security policy—the need for a strong industrial base— justifies inclusion of small business legislation. The NDAA quickly became the go-to legislation for procurement changes to small business programs. A prime candidate for inclusion this year is a bill that would help bring parity to sole source authority for small businesses, especially WOSBs/EDWOSBs. H.R. 190, the “Expanding Opportunities for Small Businesses Act of 2019,” would increase sole source contracts for women, veterans and HUBZones at the amounts of $4 million and $7 million each year, instead of the life of the contract. It also raises the sole source dollar threshold for construction and manufacturing from $6.5 to $7 million. This legislation passed the House and is ready for Senate action. With category management shifting the way the government buys, contracting officers will have a bigger incentive to award work to small businesses if this bill passes. It’s time to mobilize around this huge opportunity for women-owned small businesses. The NDAA might just be the mechanism to get it done.

By Jennifer Mangone, WIPP Government Relations Last month was a busy time for WIPP here in Washington. From testifying before the House Small Business Committee (HSBC) to hosting forums on women’s entrepreneurship in both the House and Senate, the importance of WIPP’s 2019 Policy Pillars was heard ‘round the Hill. After all that work in such a short span, one of our Pillars, Increasing Access to Capital for Women-Owned Businesses, is already gaining traction through legislation on the SBA Microloan Program. The Microloan Program assists entrepreneurs in obtaining loans under $50,000. SBA provides nonprofit intermediary lenders with direct loans. Intermediaries, in turn, provide Microloans to small businesses. At 48.7%, women are the greatest consumers of these Microloans. Testifying on behalf of WIPP in a HSBC hearing on Modernization of the Microloan Program, Michelle Richards, Executive Director of the Great Lakes Women’s Business Council, called the 1/55th rule the number one pain point for microlenders and advocated for its elimination in any modernization of the program. The 1/55th rule, which was implemented as part of the pilot program in 1991, requires that for the first half of each fiscal year the lesser of $800,000 (or 1/55th of available loan funds) is made available to loan intermediaries in each state. This rule restricts the availability of capital for small businesses in larger states. Our team worked closely on this issue with Senator Tammy Duckworth (D-IL), who just introduced the Microloan Program Enhancement Act. The bill adopts two of WIPP’s key recommendations on improvements that should be made to the Microloan Program. First, the bill would eliminate the 1/55th rule. Second, Senator Duckworth’s bill would require SBA to make publicly available previously unreleased data, another prime recommendation from WIPP’s testimony. The data would include the number of small businesses that remain in business, the number of jobs created and retained, and the impact of the elimination of the 1/55th rule on rural areas by consumers of the Microloan Program. Meanwhile, back on the House side, Rep. Scott Tipton (R-CO) recently used a hearing in the House Financial Services Committee (HFS) with CEOs of large banks as an opportunity to ask the CEO of Goldman Sachs about initiatives to right the discrepancies in investment to women-owned businesses. Rep. Tipton is the Co-Chair of the House Small Business Caucus and co-led a roundtable on women’s entrepreneurship with WIPP last month. Today, only 16% of conventional loans and 4.4% of commercial loan dollars go to women-owned businesses. WIPP will continue to push for increased access to capital for women and applauds those in Congress like Senator Duckworth and Congressman Tipton, who are pushing with us.

By Ann Sullivan Recently, I heard Congressman Chip Roy from Texas state that the U.S. accumulates $100 million in debt every hour. That is a staggering, unsustainable number. It begs the question – is anyone in Congress concerned about this mounting debt, given that it is budget season? Does anyone care? According to the former Treasury Secretary Robert Rubin, “Despite rising debt, interest rates have remained low, and a fiscal crisis has not occurred. That is because private demand for business investment has been sluggish in a slow recovery, the Federal Reserve has provided liquidity through its unconventional monetary policy, and financial markets often ignore unsustainable fiscal conditions for an extended time.” He goes on to say: “Now, the imperative must be to develop a political strategy, and, in that context, a narrative, that persuades the broad American public that its economic well-being depends on getting our fiscal house in order.” Given the absence of a financial crisis, elected officials have not convinced the American public that mounting debt, even to the tune of $100 million an hour, requires action. The place where fiscal policy starts is the Senate and House Budget Committees. Since the Senate Budget Committee just passed their FY2020 budget resolution, it is instructive to note the positioning of both sides. The Republican-controlled Senate Committee lauded the plan as cutting half a trillion dollars in deficits and debt over the next five years. According to the Chair, Senator Mike Enzi (R-WY), the Senate Resolution does not increase budget caps put into place in 2011 by the Budget Control Act, thus limiting spending. In contrast, the top Senate Democrat on the Committee, Senator Bernie Sanders (I-VT), said this: “The Senate Republican Budget is immoral and bad economic policy. In almost every instance this budget ignores the needs of ordinary Americans and what the American people want, while at the same time protecting the interests of the wealthiest and most powerful people in this country – many of whom are the largest GOP campaign contributors. This is a budget that moves this country rapidly in the direction of oligarchy. It constitutes a massive transfer of wealth from the working class to the billionaire class.” The House Budget Committee, controlled by Democrats since January, has not yet announced its deliberation schedule on the FY2020 budget. However, there appears to be disagreement on the levels on non-defense spending among Democrats. The Chair, Representative John Yarmuth (D-KY), is pressing to lift the spending caps imposed in 2011, allowing the Congress to spend more money without requiring spending cuts to offset the decreases. So much for a political strategy. And frankly, so much for public engagement. While some in Congress have sounded the alarm, there appears to be little appetite for making hard choices necessary to reduce the debt. Meanwhile, while I have been writing this article, the debt just went up another $100 million. Reduction of the debt falls into the same bucket many other issues facing our country drop into—solving problems only when a crisis demands it. Short of a voter groundswell, the debt will keep piling up. You should know where your Congressional delegation stands on this important issue. Are they concerned? Have they proposed any solutions to reducing the debt? Or are they waiting for a financial crisis to force the issue? It seems to me that asking elected officials for big solutions is a reasonable request. Answers won’t be formulated unless the voters demand it.