Provisions to support economic development and job creation by speeding payments to small contractors and innovative firms; bolster lending to employee-owned and cooperative small businesses
Washington – U.S. Senator Ben Cardin (D-Md.), Ranking Member of the U.S. Senate Committee on Small Business & Entrepreneurship, today announced several provisions in the 2019 National Defense Authorization Act (NDAA) specifically focused on supporting small businesses in Maryland and nationwide. The annual defense funding bill passed the Senate Wednesday.
The Senate legislation includes two provisions written by Senator Cardin to help speed payments and other forms of competitive funding to small contractors and innovative firms doing business with the federal government. A Senator Cardin-sponsored amendment will also encourage more small companies to adopt an employee ownership structure.
“Small businesses and innovative startups in Maryland play an essential role in our economy and ensure our national security agencies have a strong and diverse supply chain to carry out their mission,” said Senator Cardin. “I am pleased this legislation includes several provisions to create and preserve jobs by making the federal government more responsive and accountable to the small businesses that support our armed services.”
Overall, Senator Cardin and his colleagues in the Senate and House collaborated on more than ten provisions related to the Small Business Administration’s capital, counseling, contracting, and innovation programs that will have a meaningful impact on our economy and national defense.
Also Wednesday, the Senate passed what is commonly referred to as ‘Minibus II’, a combined appropriations bill dealing with spending across a number of jurisdictions. The bill includes an amendment written by Senator Cardin to strengthen the U.S. government’s small business advocacy.
“OSDBUs play a critical role in helping small businesses compete for federal contracting opportunities,” said Senator Cardin. “I am pleased this amendment to strengthen their ability to advocate on behalf of small business was included in the spending package.”
The Senate’s 2019 National Defense Authorization Act:
- Speeds payments to small contractors doing business with the federal government
The bill includes Senator Cardin’s amendment directing the Department of Defense to make every effort to pay small business prime contractors and large prime contractors with small business subcontractors within 15 days of receiving an invoice. Current law requires payment in 30 days.
Senator Cardin introduced the amendment with Senators Mike Enzi (R-WY) and Deb Fischer (R-NE) to codify longstanding Office of Management and Budget policy directives that lapsed last year. This bill will permanently ensure prompt payments to small businesses working as federal contractors across the Defense Department. This is also similar to the Cardin/Enzi bill, S. 2893.
- Accelerates funding to innovative small businesses in SBIR and STTR programs
The bill includes Senator Cardin’s amendment to accelerate funding for innovative businesses that participate in the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs that increase the utilization of small, high technology firms in federal research and development. The SBIR and STTR programs play an important role in Maryland’s high-tech and biohealth sciences ecosystem. Between 1983 and 2015, Maryland firms ranked fourth in the nation for winning the most SBIR and STTR awards, pumping more than $2 billion in seed funding into 1,225 small businesses.
According to the Small Business Administration (SBA), the Defense Department took nearly 500 days in 2015 to enter into contracts with SBIR and STTR firms. When awards are not made in a timely manner, small businesses are deprived of working capital for their research needs.
Senator Cardin’s amendment establishes a pilot program to accelerate the Defense Department’s SBIR/STTR decision making and reduce contracting times for awards to as close to 90 days as possible and requires DoD to make SBIR/STTR contracts and processes uniform DoD-wide.
- Increases SBA capital and counseling support to employee-owned businesses
Senator Cardin cosponsored The Main Street Employee Ownership Act to improve access to capital and other technical assistance that can help small businesses transition to an employee ownership structure.
Baby boomers at or near retirement own nearly half of the nation’s privately-held businesses – more than 2.3 million companies that employ one in six workers nationwide (close to 25 million people). While more than half of small business owners expect to retire in the next 10 years, fewer than 15 percent have a formal exit plan. Many will close due to this lack of planning or inability to find a buyer.
The Main Street Employee Ownership Act, written by Senator Kirsten Gillibrand and Congresswoman Nydia Velazquez (both D-NY), gives SBA authority to increase access to the agency’s flagship 7(a) loan program for employee stock owned plan (ESOP) and cooperative small businesses. The amendment also directs SBA to provide a range of training, education, and consulting services on employee ownership options for small businesses.
The Senate’s 2019 Minibus II Legislation:
- Strengthens small business advocacy
To further the goal of U.S. government support for small businesses, Section 15(k) of the Small Business Act requires that each Federal agency with procurement powers establish an Office of Small and Disadvantaged Business Utilization (OSDBU) to advocate for small business. OSDBUs are expressly charged with fighting unjustified contract bundling and working with acquisition officials to increase the participation of small businesses as prime contractors, subcontractors, and suppliers. A recent Government Accountability Office’s (GAO) report found considerable noncompliance with the section 15(k) requirements. Noncompliance with the section 15(k) requirements could limit the extent to which OSDBUs can advocate on behalf of small businesses.
Senator Cardin’s amendment directs the Administrator of the Small Business Administration to work with federal agencies to review each OSDBU’s efforts to comply with the Section 15(k) requirements of the Small Business Act, and subsequently report to Congress.
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