NDAA FY 2019 – What’s Ahead for Small Business

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On May 24, 2018, the House passed H.R. 5515, the National Defense Authorization Act FY2019. This bill authorizes FY2019 appropriations and sets forth policies for Department of Defense (DOD) programs and activities, including military personnel strengths. It does not provide budget authority, which is provided in subsequent appropriations legislation.

Rep. Mac Thornberry’s (Chair, Armed Service Com.) comments on included reforms:
“For the 58th year, the House has passed an NDAA, one that puts the men and women in uniform first and is another large step in rebuilding and repairing our long-neglected military. Our service members selflessly fight for our freedom every day, and in return, we must ensure that they have the best training, equipment, and support our nation can provide. This bill also continues to reform the Pentagon to help speed up decision-making and get equipment to our warfighters faster.”

The provisions set ahead in the NDAA for 2019 in regards to small business(es) are promising. Rep. Steve Chabot’s (Chair, Small Business Committee) comments regarding small business protections:

“Small businesses play an immeasurable role in keeping America safe and strong. Not only are they the lifeblood of the economy, but they also the lifeblood of our nation’s industrial base. The common sense reforms in this bill will open new avenues for small businesses to flourish in our economy.”

In a series of posts, we will look into six NDAA FY19 bills that will impact small business, summarized below:

H.R. 2056, the Microloan Modernization Act

(Sec. 3) This bill amends the Small Business Act, with respect to the Small Business Administration (SBA) Microloan Program (assisting low-income individuals to start and operate a small business), to increase from $5 million to $6 million the total amount of loans outstanding and committed to any particular intermediary (excluding outstanding grants) from the SBA business loan and investment fund for the remaining years of the intermediary’s participation in the program.

(Sec. 4) SBA-designated microloan intermediary lenders may expend up to 50% (currently, 25%) of the intensive marketing, management, and technical assistance grant funds they receive from the SBA to provide information and technical assistance to small business concerns that are their prospective borrowers.

(Sec. 5) The SBA shall:
● compare the operations of a representative sample of eligible intermediaries that participate in the microloan program and of eligible intermediaries that do not,
● study the reasons why the latter do not participate,
● recommend how to encourage increased participation by intermediaries in the microloan program, and
● recommend how to decrease the associated costs for intermediary participation.

(Sec. 6) The Government Accountability Office shall evaluate:
● SBA oversight of the microloan program, including oversight of participating intermediaries; and
● the specific processes the SBA uses to ensure program compliance by participating intermediaries and overall microloan program performance.

H.R. 4754, the Change Order Transparency for Federal Contractors

Amends the Small Business Act to provide prospective construction contractors with information about an agency’s policies on the administration of change orders to allow such contractors to make informed business decisions regarding the pricing of bids or proposals.

This bill was received in the Senate and read twice and referred to the Committee on Small Business and Entrepreneurship on May 9, 2018.

H.R. 2333, the Small Business Investment Opportunity Act

(Sec. 2) This bill amends the Small Business Investment Act of 1958 to increase the maximum amount of outstanding leverage (i.e., borrowing power) made available to any licensed small business investment company from $150 million to $175 million. This bill was signed into law on June 21, 2018.

H.R. 2364, the Investing in Main Street America Act

(Sec. 2) This bill amends the Small Business Investment Act of 1958 to increase from 5% to 15% of its capital and surplus, the amount a national bank, a member bank of the Federal Reserve System, a nonmember insured bank (to the extent permitted under applicable state law), or a federal savings association may invest in one or more small business investment companies (SBICs), or in any entity established to invest solely in SBICs. The increase is subject to the approval of the appropriate federal banking agency.

H.R. 5337, the Accelerated Payments for Small Businesses Act (applies only to the Department of Defense)

To amend section 3903 of title 31, United States Code, to establish accelerated payments applicable to contracts with certain small business concerns. This bill was referred to the House Committee on Oversight and Government Reform on March 20, 2018.

H.R. 2763, the Small Business Innovation Research and Small Business Technology Transfer Improvements Act (significant portions)

This bill amends the Small Business Act to require:
● the Small Business Administration’s (SBA’s) annual report on the Small Business Information and Research (SBIR) and Small Business Technology Transfer (STTR) programs to be submitted by December 31, and
● each federal agency required to establish an SBIR program to submit its annual report on such program by March 30.

The bill requires (current law authorizes) the Department of Defense (DOD), for any contract under the Commercial Readiness Program with a value of at least $100 million, to:
● establish goals for the transition of Phase III technologies in subcontracting plans, and
● require a prime contractor to report the number and dollar amount of contacts entered into for Phase III SBIR or STTR projects.

The bill authorizes all agencies participating in the SBIR program, during FY2018-FY2022, to provide SBIR Phase II awards for a project to a small business concern without regard to whether such concern was provided a Phase I award for such project.

The bill changes the temporary pilot program that a covered agency may establish for the allocation of SBIR and STTR program funds for awards for technology development, testing, evaluation, and commercialization assistance for SBIR and STTR phase II technologies, or to support the progress of research, research and development, and commercialization conducted under such programs to phase III, to a permanent Civilian Agency Commercialization Readiness Program.

The bill extends until September 30, 2022, the deadline until which the SBA shall allow each agency required to conduct an SBIR program to use not more than 3% of program funds for administrative, oversight, and contract processing costs.


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