October Policy Watch: Taxes, Budget & More

WIPP Government Affairs

GOP Releases Tax Reform Proposal: What’s in it for you?

Congress has finally taken the long-awaited steps toward implementing tax reform. GOP leaders released their framework for tax reform in a proposal entitled, “Unified Framework for Fixing Our Broken Tax Code.” Provisions pertinent for small business in the plan include:

  • Limits the maximum rate applied to pass-through entities to 25% (currently 39.6%)
  • Reduces the corporate rate to 20% (currently 35%)
  • Consolidates the seven individual tax brackets to three: 12%, 25%, and 35%
  • Allows room for Congress to add a fourth bracket for high income earners
  • Repeals the Estate Tax
  • Repeals the Alternative Minimum Tax (AMT)
  • Eliminates taxes on the first $24,000 of income earned by a married couple and the first $12,000 of income earned by a single individual (currently $12,700 for married filers and $6,350 for single filers)
  • Eliminates the standard deduction and personal exemption for filers
  • Allows businesses to expense the cost of new investments in depreciable assets for five years
  • Partially limits the deduction for net interest expense incurred by C corporations
  • Eliminates some itemized deductions (but does not specify which provisions)
  • Eliminates § 199 manufacturing deduction
  • Retains tax benefits for retirement security (401K, IRA)
  • Implements territorial tax system

House Ways and Means Committee Chair Kevin Brady (R-TX) attended the WIPP Annual Leadership Meeting Luncheon to talk about the plan and to answer questions from members.

Finalizing the Budget: Why Does It Matter?

If both the House and the Senate do not pass an FY2018 Budget, the GOP tax reform framework cannot pass in its current form. Congress hopes to pass tax reform though reconciliation, a process that allows the Senate to pass budget-related legislation with a simple 51 majority vote, instead of the 60 votes typically required. The GOP has a 52-48 majority in the Senate. If the budget resolutions do not pass, the tax reform package negotiated by the Administration and GOP Congressional leaders would require at least eight Democratic votes.

Last week, the House passed their FY2018 Budget Resolution, H. Con. Res. 71, which contains reconciliation language that directs the House Ways and Means Committee to begin drafting tax reform legislation. The House resolution provides $300 billion over 10 years to pay for tax reform. The Senate Budget Committee also passed their FY2018 Budget Resolution.  The Senate resolution contains reconciliation language that provides the Senate Finance Committee with $1.5 trillion over 10 years for tax reform.

The bill will be taken up by the Senate when they return from recess next week.

SBA Issues Notice of WOSB NAICS Changes

SBA is responsible for implementing and administering the Woman-Owned Small Business (WOSB) Program. The WOSB Program authorizes federal contracting officers to restrict competition for an acquisition to WOSBs, provided that appropriate conditions are met. In order to identify the industries eligible for set-asides under the WOSB Program, the SBA administrator has to conduct a study every five years to identify which industries WOSBs are underrepresented in in the Federal marketplace. As a result of the 2014 study findings, SBA increased the number of NAICS codes authorized for use under the WOSB Program to 113 four-digit NAICS industry groups, effective March 3, 2016. Consequently, WOSBs have been able to compete for and receive contract awards in 92 four-digit NAICS industry groups or 365 six-digit NAICS codes. EDWOSBs have been able to compete for and receive contract awards in 21 designated four-digit NAICS industry groups or 80 six-digit NAICS codes, in addition to those authorized for WOSBs.

On August 8, 2016, OMB published its most recent update to the NAICS industry groups, NAICS 2017, “Notice of NAICS 2017 final decisions.” These went into effect on January 1, 2017. In order to align the WOSB Program with the Notice of NAICS 2017 final decisions and SBA’s adoption of NAICS 2017 for its size standards, SBA is issuing this notice to amend the NAICS codes eligible for use under the WOSB Program.

Changes to WOSB NAICS

  1. 2012 NAICS codes 333911 and 333913 à 2017 NAICS code 333914 [Due to merges from the four digit codes]
  • 333911: Pump and Pumping Equipment Manufacturing à 333914 Measuring, Dispensing, and Other Pumping Equipment Manufacturing
    • Measuring and Dispensing Pump à Measuring, Dispensing, and Other
  • 333913: Manufacturing à 333914 Pumping Equipment Manufacturing
  1. 2012 NAICS codes 512210 and 512220 à 2017 NAICS code 512250 [Merged Industries]
  • 512210 Record Production à 512250 Record Production and Distribution
  • 512220 Integrated Record Production/Distribution à 512250 Record Production and Distribution
  1. 2012 NAICS code 517110 à 2017 NAICS code 517311
  • 517110 Wired Telecommunications Carriers à 517311 Wired Telecommunications Carriers
  1. 2012 NAICS code 517210 à 2017 NAICS code 517312 [Changed without changing definitions or titles]
  • 517210 Wired Telecommunications Carriers (Except Satellite) à 517312 Wired Telecommunications Carriers (Except Satellite)
  1. 2012 NAICS code 541711 will correspond to 2017 NAICS codes 541713 and 541714 [New industries were created by splitting two industries into two parts with one part of each industry defined as a separate industry and combining other parts of the two industries to form a separate new industry]
  • 541711 Research and Development in Biotechnology will correspond to 541713 Research and Development in Nanotechnology and 541714 Research and Development in Biotechnology (except Nanotechnology)
  1. 2012 NAICS code 541712 will correspond to 2017 NAICS codes 541713 and 541715
  • Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology) will correspond to 541713 Research and Development in Nanotechnology and 541715 Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)

How Government Contractors Can Handle Changes to the Project Schedule

If you missed Misty Mayes’ GIVE ME 5 webinar last week on Changes to the Project Schedule, you can check it out here.

The Give Me 5 Program, named after the 5 percent federal contracting goal for women-owned businesses, was created by Women Impacting Public Policy

Misty Mayes

and American Express OPEN to educate women business owners on how to apply for and secure federal procurement opportunities. 

Management Solutions’ founder and CEO Misty Mayes dedicates her time and energy to multiple programs that champion excellence in project management, small business, mentoring and community. She is a regular on the speaking circuit across the country, speaking on various aspects of project management, as well as other motivational topics. Misty serves as co-chair on WIPP’s Leadership Advisory Council, co-chair of WIPP’s healthcare committee and chair of WIPP’s membership committee.

For more information on Misty and her work at Management Solutions, please visit www.managementsolutionsllc.com. 

WIPP July Partner of the Month: Pam Mazza

Pam Mazza, managing partner of PilieroMazza PLLC in Washington, D.C., serves on WIPP’s board of directors and has been a strong supporter of the organization for years through her leadership and generous contributions of time and fiscal support. Pam is one of WIPP’s inaugural “Trailblazers,” a group of women who contributed $10,000 to support our education and advocacy work in Washington, D.C. on behalf of women business owners

It’s thanks to people like Pam that WIPP thrives. Thank you, Pam!

 

Q Tell us a little about your company and its mission.

A PilieroMazza is a full-service, woman- owned law firm in Washington D.C. working primarily with government contractors nationwide. Our principle practice areas include labor and employment law, general corporate counselling, litigation and all aspects of government contracting including a strong understanding of small business and socio-economic programs. We are committed to keeping our clients abreast of pending legislation, regulations or case law that might impact the operations of their businesses, and to working with clients to apprise lawmakers and regulators of the potential impact of any proposed changes. Our goal is to help our clients nurture and grow their businesses and to build long-lasting, personal relationships.  We do our best not only to identify issues and obstacles but to develop practical, cost-effective approaches to overcoming them. We pride ourselves in being accessible, affordable and efficient in assisting with our clients’ needs.

Q Have you always been an entrepreneur? If not, what inspired you to take the leap? 

A I grew up in this firm. I was a law clerk, an associate, then a junior partner. Shortly after I became a junior partner, the managing partner and rainmaker of the firm, Dan Piliero, passed away suddenly at the age of 48 and I had a decision to make about the future of the firm. Lawyers are supposed to have their ducks in a row, but since I had just become a junior partner, we didn’t have an agreement covering this situation. It was a stressful time but after weighing the options and working with his estate, I was able to buy the firm.  That was in 1991. The short answer is I was young at the time and hadn’t thought that far ahead about what I would ultimately do. But I quickly became an entrepreneur and I’ve been sitting in this chair ever since!

Q What challenges did you encounter that you had to overcome as a business woman and what have you learned from them?

A  I think that as the years go by, the challenges are fewer and fewer because of the reputation we’ve developed. But back when I took over the practice, I did have a very big concern: the controlling person at a lot of the companies we represented was a male and I didn’t know how they were going to react to me taking over. Would they stay or leave? I was fortunate because though a few moved on, many stayed.

I feel like I have probably had a better experience than many women I know. I see the challenges my woman-owned business clients face. Depending on the industry, it can be very hard for women in government contracting to break in. Many industries and agencies still function under the good-old-boy system and it’s hard for a woman entrepreneur to get her foot in the door. I see women struggling for recognition of their talents; struggling to have people look past their gender and consider their technical capabilities.

I think there also might be challenges when you look at the differences between males and females in leadership roles. A tough male boss is viewed as a solid taskmaster, but if you have that same personality as a female you’re viewed differently. We’ve got to continue to figure out how to co-exist.

I think my main advice is probably to keep pushing through, get your job done, don’t get wrapped up in the prejudices and figure out how to work around them.

Q Do you have a success story that you are particularly proud of? Tell us about it.

A I’m really proud of the law firm we’ve built and I think the firm is my biggest success. We employ 42 people, including 24 lawyers. We had eight when I took over. We have high-quality attorneys who are committed to what we do and the clients we serve. We try to make certain that every client has a good experience. We make certain they understand our different practice areas so they can find the person who can provide them with the knowledge and help they need. I learned many years ago that the clients who stay are the ones who know more than one person at our firm. So, I try to make sure every client has good relationships with and access to more than one lawyer.  It’s unusual for a small firm like ours to maintain such a diverse practice and to be competitive with large and small law firms and I am very proud of what we’ve built, the principles we maintain and our reputation within the government contracting community.

Q What tips would you share with other women pursuing entrepreneurship?

A It’s important to follow your dream but also to understand your market. Before you jump in, make sure you know what your potential is, what your industry is, who your customers are, and make absolutely certain that you vet your business partners. Whether they are co-owners, teaming partners or key employees, make sure you have the same ethics, the same ideas, and that you agree on expectations. That means putting it in writing. Those kinds of business relationships can go sour quickly, and the best thing to do is think things through at the beginning so there’s a roadmap if they do.

Q What obstacles do you think are the hardest for women business owners to scale? 

A Scaling a business requires financial resources, a dedicated staff and a wise business plan.  Women entrepreneurs still have trouble with access to credit and capital, which can hinder attracting and retaining the key employees necessary to take a business to the next level.  I do believe the situation has improved over the past decades but I still see clients who struggle with these challenges.  I also suspect that many women still struggle with juggling their roles as mothers—which is critically important—with their roles as entrepreneurs, which is also a critical role. Both jobs require much effort and I do not believe that many women can accomplish both to their satisfaction, especially when trying to scale a business. I don’t care what anyone says, no one can be super woman all the time and each of us needs to strike the most comfortable balance for ourselves.

Q Tell us about your experience as a WIPP member. What resources and value has WIPP provided that has been helpful to you and your company?

A I love being on the WIPP board. I have met so many interesting women and am developing better, deeper relationships with them every day. We share tips, send referrals, and are all working together to build our advocacy effort to make it a better place for women entrepreneurs. It’s a very meaningful experience for me.

As far as resources, all the networking is fantastic. Also, WIPP’s resources like the Give Me 5 program, the annual conferences, networking opportunities and the legislative initiatives have been very valuable to many of our clients.

The White House Budget and Small Business

By Jennifer White, WIPP Advocacy Team

On Tuesday, the president’s full budget proposal for Fiscal Year 2018 was released. The numbers below outline proposed funding changes for Small Business Administration programs, as well as the justifications sent to Congress on specified funding changes on our blog.

As a reminder, the president proposes and Congress appropriates. Congress will be making the final funding decisions. Here are WIPP’s recommendations for Fiscal Year 2018 appropriations.

Need to brush up on the budget process? Click here for WIPP’s webinar on the issue.

FY18 White House Budget Proposal

Program

FY17 Funding
(in millions)

FY18 Request
(in millions)
WBC 18 16*
PRIME 5 0*
HUBZone 3 2.5*
Microloan TA 31 25
Microloan Lending 44 36
CDFI Fund 248 14*
7(a) guarantees 23.5 billion 29 billion
NWBC 1.5 1.5
SBDCs 125 110*


* WBC justification by SBA to Congress

The FY 2018 request strengthens SBA outreach center programs by reducing duplicative services, coordinating best practices, and investing in communities that will benefit from SBA’s business center support. As a result, the SBA is confident that it will be better positioned to strengthen local partnerships and more efficiently serve program participants while achieving savings over the FY 2017 Enacted levels.

* PRIME justification by SBA to Congress

The PRIME program’s function and activities are not discernibly different from many other SBA entrepreneurial assistance programs such as Microloan technical assistance, the Women’s Business Center program, or the Small Business Development Center program. In particular, while the PRIME program is designed specifically for micro-level businesses, it is less targeted than the Microloan program’s technical assistance funding which supports micro-borrowers with both microloans and other support from the intermediaries. In addition, the SBA has been strengthening its partnerships with major U.S. banks, as well as community lenders, to help them to deliver billions more in financing to under-served communities.

* HUBZone Justification by SBA to Congress:

Following an FY 2017 development effort to enhance HUBZone maps, SBA anticipates decreased development needs for this effort in FY 2018.

* CDFI Justification by SBA to Congress

Unlike other CDFI Fund programs, the CDFI Bond Guarantee Program (BGP) — enacted through the Small Business Jobs Act of 2010 — does not offer grants, but is instead a zero-subsidy federal credit program, designed to function at no cost to taxpayers. Under the BGP, the secretary of the Treasury provides a 100% guarantee of long-term bonds issued to CDFIs, with a maximum maturity of 30 years. The BGP does not require discretionary budget authority for its credit subsidy, but the annual loan guarantee limitations are appropriated. Through September 30, 2016, Treasury had issued $1.1 billion in bond guarantee commitments to 17 CDFIs that have supported investments in low-income and underserved communities, including for the development of multi-family rental properties, charter schools, and healthcare facilities. The budget proposes to extend and reform the BGP through 2018 with an annual commitment limitation of $500 million and a minimum individual bond size of $50 million, while maintaining strong protections against credit risk.

* SBDCs justification by SBA to Congress

The FY 2018 request strengthens SBA outreach center programs by reducing duplicative services, coordinating best practices, and investing in communities that will benefit from SBA’s business center support. As a result, the SBA is confident that it will be better positioned to strengthen local partnerships and more efficiently serve program participants while achieving savings over the FY 2017 Enacted levels.

FY18 Legislative Proposals PROPOSAL

SBDC and WBC Data Collection

Currently, Small Business Development Centers (SBDCs) and Women’s Business Centers (WBCs) collect data on each individual and small business to whom they provide counseling and training services. Except for the limited purposes identified in the Small Business Act, SBDCs and WBCs may not disclose to SBA certain information (e.g., name, address, telephone number) that they collect. However, the SBA needs access to this type of information to be able to contact the individuals or small businesses to determine their level of success after receiving counseling and training assistance. Disclosure of the information to SBA would greatly enhance the agency’s efforts to conduct rigorous program evaluations, including the impact of the counseling and training on those who received such assistance, identify best practices, and improve efficiency of the SBDC and WBC programs. As a result, SBA is proposing to add program evaluations and similar program assessments to the list of allowable purposes for which the data may be disclosed to SBA.

Writing YOUR Success Story

By Linda McMahon, SBA Administrator

Once upon a time….

It’s the classic opening to our favorite fairy tales. As children we dream of magic potions and knights in shining armor that will provide our happily ever after. How were we to know thalinda-mcmahon-high.jpgt our own hard work, skill and determination could be far more effective?

Once upon a time, my husband and I started our business sharing a desk. As he developed our product and expanded our markets, I managed the books. When the work became too much for the two of us to handle ourselves, we hired our first employee. As our business grew, we hired another. Then another. Over decades of hard work growing our business, that company we created now has grown to a publicly traded enterprise with more than 800 employees and consumers in 180 countries worldwide.

As an entrepreneur, I have truly lived the American Dream: the classic tale of taking a risk on an idea, working hard and creating something from nothing. Don’t get me wrong – we had plenty of stumbles and challenges that provided the plot twists along the way. But it’s a story I am always proud to tell.

And as head of the U.S. Small Business Administration, my goal now is to help more people have the opportunity to live the American Dream.

Yet many aspiring entrepreneurs have no idea how to get their stories started or write their next chapters.

The SBA is here to help, with resources both online and in communities from coast to coast.

During National Small Business Week, as we celebrate the 28 million small businesses that drive our nation’s economy, we also showcase the resources and services the SBA provides to entrepreneurs at every stage, whether they are starting up, expanding or getting through a tough time.

The SBA has 68 district offices and an extensive network of resource partners across America, including Puerto Rico, the U.S. Virgin Islands, and Guam. The experienced professionals that staff these offices offer a core group of services that we call the “three Cs and a D” – capital accesscounselingcontracts, and disaster assistance.

Many entrepreneurs need capital to start or expand their small business, combining what they have with other sources of financing. While the SBA doesn’t loan money directly to small business owners, it helps facilitate loans with a guaranty that a certain portion will be repaid. We offer counseling on starting, scaling and succeeding in business, from how to draft a business plan to how to export your product overseas. And we train small businesses on how to compete for government contracts, especially those set aside exclusively for small business owners. Finally, SBA provides a helping hand to small businesses recovering from disasters.

As I think back on my own story as a small business owner, I wonder how much easier things might have been if we’d been aware of the many valuable services SBA provides. My hope is that as more people learn about the SBA, they will have the confidence, skills and resources they need to succeed as small business owners, and we can continue to revitalize a spirit of entrepreneurship in our country.

There’s room for far more success stories in our library.

And the SBA can help more entrepreneurs write their own “happily ever after.”

Linda McMahon serves as the 25th Administrator of the U.S. Small Business Administration.

 

 

 

Washington has many great traditions but this one must go

By Ann Sullivan, WIPP Chief Advocate

If you keep a close eye on Washington from year to year, you’ll notice some traditions that always take place. The annual White House Easter Egg Roll in the spring, when children gather to race eggs with wooden spoons down the South Lawn. The Congressional baseball game in the summer, when House Republicans face off against House Democrats at the Nationals park to raise money for charity.

And, of course, the talk of a looming government shutdown any time the previous funding mechanism is about to run out—a tradition that affects so much more than the District of Columbia.

We’ve heard it before and we’ll hear it again—If Congress doesn’t find a way to fund the government, it will shut down. In true fashion, with the deadline to pass a bill set for last Friday, April 28, Congress gave itself a little more time by passing a week long Continuing Resolution—until May 5, without altering the terms or conditions that apply to funding.

And then—a welcome break in tradition. Congressional negotiators in a bipartisan fashion, finalized a $1.1 trillion spending bill, keeping the government funded through September.

While a government shutdown rarely actually happens—when it does—it is not good for women business owners. In fact, it isn’t good for anyone. When federal contractors can’t get paid, they can’t pay the people who work for them. When they can’t pay the people who work for them, they can’t produce any work. The contractor suffers, the jobs she’s created suffer, and the economy suffers.

However, some contractors don’t have the option of laying off their employees during a shutdown. WIPP Board Chair Lisa Firestone struggled with this firsthand. In 2013, Lisa testified before Congress about the negative impact that year’s shutdown had on her business, as well as other women federal contractors. Because her company provides “essential” services, her employees continued to work and get paid during the duration of the government shutdown that year. Despite knowing she eventually would get paid from the government, there was no way to know when. She’s not the only one.

Many small business owners face this same problem and face the stress of preparing to maximize available cash in advance of a potential shut down. Between the options of a shutdown and a Continuing Resolution, a Continuing Resolution is the lesser of two evils. But, it may not be so great for women contractors either.

Continuing resolutions curb new government spending and, thus, new government projects. We know firsthand from our members that operating under a Continuing Resolution results in project delays as well. Since many agencies can’t open expired contracts for new bids, they often turn to uncompetitive bridge contracts with existing vendors to keep services moving. The problem is, according to the Department of Commerce, women-owned firms are 21% less likely than their male-owned counterparts to win government contracts. Given this significant barrier to entry, access to contracts is further exacerbated by this method of procuring goods and services.

The impact of a shutdown is harsh on contractors. If the government is your customer, the consequences are immediate. The Department of Homeland Security in the 2013 shutdown issued a warning to its contractors: “…as a consequence of the lapse, certain planned procurements may be canceled and certain existing contracts may be stopped, reduced in scope, terminated or partially terminated.” Not to mention, the chaos created with respect to lending. Since lenders rely on the IRS to verify income, lending was stopped dead in its tracks.

Let’s get rid of this tradition. Successful businesses plan ahead and so should Congress. The wide-reaching consequences spurred by Congressional inaction of a timely budget are significant. Contracts that aren’t funded by prior appropriations and aren’t essential probably will be put on hold during a shutdown – while contractors that are essential will have to continue to work, but while having to bear the cost of their employees’ salaries. The business community should be spending all of its capital expanding, not saving up for a possible government shutdown. Despite the good news for the remainder of Fiscal Year 2017, the fight has just begun for Fiscal Year 2018. It’s time for Congress to put together a plan to fund the government without worry of a shutdown or relying on Continuing Resolutions again and again so entrepreneurs can worry about what matters – running their business.

The confusion surrounding the federal budget debate

By Ann Sullivan, WIPP Chief Advocate

Recently, WIPP’s President Jane Campbell and I gave a webinar on the federal budget process, which attempted to explain all of the moving parts in the federal budget, including what it means to businesses and the organizations they support. Below I have laid out the steps in the process as simply as possible.

Immediate action item

  1. The funding for Fiscal Year (FY)17 ends on April 28, 2017, therefore Congress must act on or before that date to keep funding the government for the remainder of FY17, which ends on September 30, 2017. FY17 has been funded through a Continuing Resolution (CR), meaning that FY17 has been funded at FY16 levels. While under a CR, federal agencies cannot award grants or initiate new program starts.

Funding options for FY17

(a) A Continuing Resolution until the Fiscal Year ends, or

(b) An “omnibus” appropriations bill to fund the rest of the year. Omnibus simply means putting the 10 remaining agency appropriations into one big bill. The Defense Department and the Veterans Affairs Department bill were signed into law, so there are 10 agencies remaining.

The president can request supplemental appropriations in the current fiscal year, which is exactly what President Trump did in March. He requested $30 billion more for FY17 funding for defense and homeland security. Congress will decide whether or not to honor his request, which would be rolled into the FY17 Omnibus bill.

Longer-term action items

  1. Funding for FY18—which starts October 1, 2017. The House Appropriations Committee is responsible for starting the funding process, and revenue bills must start in the House. The committee is just now starting hearings on funding programs, and subcommittees of this committee have responsibility for certain federal agencies. For example, the Treasury and SBA are funded by the Financial Services and General Government Subcommittee. The three-part process is as follows: Subcommittees act first, the full Appropriations Committee considers, and then the bills go to the House floor for action.
  2. Raising the debt ceiling will be required sometime this fall. Why does that matter? If it is not raised, the federal government defaults on its debt, which would send ripples through the global economy.
  3. The FY18 Budget Resolution provides a high-level set of budget numbers that appropriators work against. Much like your own budget, the federal budget is anticipated spending, not what is actually spent (appropriations). Ideally, the Congress should agree on a resolution before it does appropriations, but that does not seem likely.

The interplay between the president’s proposed budget for FY18 (yes, there will be two: 1) a blueprint released in March and 2) a more detailed budget in May) and appropriations is worth an explanation. What we all learned in civics class, “the president proposes and the Congress appropriates,” sets the tone. The media frequently forgets to include this fact in their coverage of the budget, suggesting that the president has the sole power to determine the budget. In fact, he does not. He can only use his bully pulpit to ask for funding priorities. Generally speaking, the Congress, especially if it is from the same party as the president, tries to accommodate his requests. Side noteI say “he” because there has never been a “she.”

In his proposed budget, President Trump suggested cutting many programs that have powerful constituencies, causing widespread alarm among recipients of these programs. While this is certainly a wake-up call for many, the real alarm bells should be directed at the appropriators.

Which leads me to WIPP’s strategy with respect to FY18 funding of programs that support women entrepreneurs. We have concentrated on the appropriators and will continue to urge support. Members on the House Appropriations Subcommittees are the first line of defense and later, the full Appropriations Committee. After finishing with the House, we will turn our attention to the Senate Appropriations Committee. The last stop is floor action.

All told, the season to advocate on behalf of appropriations started in March, and will continue through the rest of the year. The Congress will continue to engage constituents with respect to budget decisions. On April 7, Congress will begin a two-week recess. Legislators will be in their home districts and conducting meetings. Echoing WIPP’s funding requests would be much appreciated. If you are a government contractor, consider voicing the need for stability in the federal budget.  If you support local nonprofit organizations, take a look at federal support dollars and speak up.

The time is now.

Rock, Paper, Sciss… Paper, Paper, Paper

By Jennifer White, WIPP Government Relations

The House Small Business Committee wants to know: are burdens on small businesses from paperwork being reduced by the Paperwork Reduction Act? According to Sam Batkins, the director of regulatory policy at American Action Forum, the short answer is they are not.

The Paperwork Reduction Act (PRA) was designed to reduce the total amount of paperwork the federal government imposes on private businesses and citizens. In order to achieve this goal, it imposes procedural requirements on agencies that wish to collect information from the public. However, between the sheer volume of instructions that accompany some paperwork, and the lack of resources at various agencies, it doesn’t seem to be working.

Look, for example, at the Internal Revenue Service. According to Frank Cania, founder and president of driven HR, the IRS is responsible for more paperwork than any other agency. “Small businesses fall into a cycle of having to file new forms every time an honest mistake is made in order to avoid IRS fines,” said Mr. Cania, who testified on behalf of Society for Human Resource Management.

For perspective on how time consuming and complex some of the documents can be, he explained to the committee that while an I-9 Form is only two pages long, the instructions are 15 pages long, and the instruction manual is “a slim 69 pages long.”

According to Sally Katzen, professor at NYU Law and senior advisor at Podesta Group, another key related issue with an agency like the IRS is that lack of resources to help individuals with compliance. “Used to, you could call and get someone to answer on the third ring,” she said. “Now, given the cuts to the IRS, the waiting period is well over two hours if you bother to stay on the phone. They’ve had to give up almost all of their assistance with compliance.”

When asked by the committee what Congress can do to make it better, Ms. Katzen answered that the key is investing in resources. “Somebody has to talk to somebody if you want the system to work. You need to put in the resources to enable that to happen.”

It is important for agencies to be able to collect information because it not only aids government decision making, but is often redistributed to the public which some find critical for making business decisions. However, there has to be a way to reduce the volume of paperwork. “There is only so much agencies can do. Only Congress can change the statutory requirements,” Ms. Katzen concluded.

To see the written testimony and witness list from the hearing, click here.

Executive Order Bonanza has Implications for Business

By Ann Sullivan, WIPP Chief Advocate

President Trump will complete only his third full week on Friday and has already left a lasting mark on how small businesses and government itself work with 20 Executive Orders. Through a series of presidential actions, Mr. Trump has touched on topics ranging from Immigration to healthcare. It’s time we took a deeper dive into what’s come down the pipeline and how it affects the small business community. Read the blog here.

The domestic policy action that was signed in the presence of a number of small businesses, is the “Two-for-One” Executive Order.

Here’s the rundown. The Executive Order has two parts – one aimed at Fiscal Year 2017 and one for Fiscal Year 2018:

  • FY17: “1 in and 2 out.” If a federal agency proposes a new regulation, it must recommend two regulations to the Office of Management and Budget (OMB) to be terminated. OMB, not the agency will have the final word on which regulations are eliminated.
  • FY18 and subsequent fiscal years: Agencies are ordered to offset costs of new regulations and the OMB is ordered to create a budget that limits how much a new regulation can rise.

On its face, this Executive Order spells relief for lenders and small businesses but there are a raft of unknowns still to be resolved. One question is when this directive will be implemented. For example, the administration’s OMB Director-designate Congressman Mick Mulvaney is undergoing a tough confirmation process and the timeline for his confirmation by the full Senate is still unclear.

Executive Orders generally provide broad guidelines rather than detailed plans on its execution. Questions to be answered are: What actually constitutes a “regulation?” Is it simply a single rule or a whole host of interwoven regulations that, together, provide guidance for an agency on an individual program or policy? What constitutes a “cost?” Will the benefit in a cost-benefit analysis be considered or will the analysis include only the cost? OMB is stocked with experts so we anticipate much more clarity on this as soon as the OMB director is confirmed.

Now, on to more straightforward presidential actions regarding President Trump’s infrastructure plans. One such action expedites environmental review and approval for high priority infrastructure projects and gives any Cabinet member or governor the unilateral ability to designate a project as “high priority” thus shortening the approval process, laid out in the NEPA law. He’s also issued a “Build the Wall” action which orders the Department of Homeland Security to begin building a wall along the U.S. and Mexico border using existing funds. It also authorizes the hiring of 5,000 new border agents. Congress will have to appropriate additional funds for completion because the current budget does not have funding for this project.

Additionally, there were two more Executive Orders issued almost immediately upon President Trump’s inauguration. One of the first actions signed by President Trump was an Executive Order that begins the process of repealing Obamacare. While it does not directly repeal the law, it directs federal agencies to give states, insurance companies and consumers maximum flexibility in complying with Obamacare until such a time as it is repealed. Full repeal and/or replace is going to take an act of Congress which has been openly wrangling with itself on whether to repeal, repeal and replace, or to “repair” the existing law. Regardless, this presidential action starts the ball rolling with respect to repeal of Obamacare while Congress considers its course of action.

The other significant action taken by the president instituted a federal agency-wide hiring freeze on all existing and open positions with exceptions for national security, military, and public safety.  The president intends this as a stopgap and allows agencies to reallocate to prevent public safety and national security from being adversely affected. The kicker, however, is that the memorandum explicitly prevents the hiring of outside contractors to prevent the circumvention of the spirit of the order. Given the number of waivers and exceptions allowed, it’s not altogether clear how this will work in practice, but it certainly lays down a marker that the president is serious about reining in the growth of the federal government.

Finally, on Feb. 3, the president signed two Executive Orders aimed at decreasing regulations for the financial industry; the first calling for a review and the scaling back of existing financial laws, including Dodd-Frank, and the second halting the implementation of the Department of Labor’s (DOL) fiduciary rule, which was set to go into effect this April.

Dodd-Frank, enacted after the 2008 meltdown, was responsible for creating more stringent rules regarding bank capitalization, increasing compliance and reporting standards for banks, introducing stricter mortgage requirements, creating the Financial Stability Oversight Council and the Consumer Financial Protection Bureau, and curbing excessive risk-taking and the existence of too-big-to-fail institutions on Wall Street. Mr. Trump’s action on Dodd-Frank requires regulators to produce a study on financial rules within 120 days—appearing as more of a demand for a review than a complete dismantling of the law.

The fiduciary rule was intended to prevent consumers from receiving conflicted advice when it comes to retirement savings. The president’s order calls for the DOL to examine the rule to determine whether it may lead to the unintended consequence of making it more difficult for advisors to provide financial advice to their clients. However, embraced by much of the financial industry, this order is expected to move quickly compared to the order on Dodd-Frank.

These Executive Actions have the potential to clear the way for even greater gains by women-owned small business moving forward. As we reach for new heights in 2017, WIPP will be fully engaged with the Congress and administration to ensure that burdensome regulations harming the growth of women-owned small business are eliminated and we continue to be the robust engine powering the small business economy.

It’s a Big MACs World

By Ann Sullivan, WIPP Chief Advocate

Earlier this week, WIPP submitted comments on a proposed rule changing the rules related to small business participation on multiple award contracts, also known as MACs.

The FAR Council, which oversees federal acquisition regulations, sought to clarify the use of set-asides, reserves, and orders placed against MACs. As contractors already know, use of these large contracts is steadily growing. Ensuring all socioeconomic groups, including women-owned small businesses (WOSBs) have access to these opportunities, is a top priority for WIPP.

The rule adds coverage for the new concept of a “reserve.” A reserve would be used on MACs where a partial set-aside is not feasible, but where agencies still want small businesses to participate as prime contractors. This “reserve” concept is very similar to the tracks outlined in WIPP’s Do Not Enter report, which shows how agencies have utilized certain socio-economic set-asides, and discriminated against women-owned firms.

While the proposal provides clarity for contracting officers, it falls short by including an out-of-date policy regarding the limitations on subcontracting. In May 2016, the Small Business Administration finalized a rule change that substantially revised the limitations on subcontracting by making it easier for women-owned firms to comply. The new rule focuses on the percentage of the award amount that has been subcontracted, not the percentage of work. The rule also provides an exemption for similarly situated entities, so WOSBs subcontracting to other WOSBs does not count against the percentage of the award subcontracted. This new policy is a win-win for small businesses, but the FAR Council does not acknowledge the new policy in its rule. If one of the purposes of the rule is to clarify small business authorities for contracting officers, the FAR should use the most up-to-date performance of work requirements.

WIPP appreciates the interest of the FAR Council in providing greater flexibility and clarity for the role of small businesses in multiple award contracts. But this proposed rule does not do enough. Without additional small business protections, this rule could hurt our nation’s biggest job creators- small businesses.

WIPPs full comments on the rule can be found here.