March Madness: A Policy Version—The Elite Eight

By Ann Sullivan, WIPP Chief Advocate

For many years, my son Matt and I watched March Madness together (that was until he moved to Los Angeles). Not only are many of the games squeakers, I love the upsets and Cinderella teams that emerge during the tournament. Half of the fun is filling out the brackets and guessing which teams will move forward.

So, in honor of March madness, we bring you March policy madness. We have created a policy bracket of the issues we expect will make it past the first round of Congressional action. Just for fun.

WIPP Works Bracket March 2017.png 

Here’s an explanation of the Policy Brackets:

Upper Left: Healthcare vs. Border Wall

President Trump’s Executive Actions have identified both repeal of Obamacare and the potential construction of a border wall. Congressional attention is focused on repealing and or replacing the Affordable Care Act.

Healthcare wins this round.

Upper Left: Regulatory Reform vs. FY2018 Appropriations

Congress is hungry to take back policy-making power from the Executive Branch and has found a sweet spot—rolling back regulations—a move President Trump agrees with. He has already signed legislation repealing a Department of Interior rule and is expected to sign more repeals in the coming months.

On the other hand, appropriations is a long and cumbersome process. To get started, on Fiscal Year 2018 appropriations, President Trump needs to share a budget outline with Congress expected next month, and both the House and Senate Appropriations Committees will need to pass all 11 appropriations bills by the end of September. This is a process that has not occurred in over 20 years.

Regulatory reform wins this round.

Lower Left: Trade vs. Supreme Court Nominee

President Trump has indicated that reforming trade policy is a high priority.  But revamping global trade deals into bilateral negotiations will prove to be complicated. The Supreme Court vacancy, on the other hand, has been top of mind. Some Senate Democrats have privately conceded that they expect Neil Gorsuch to be confirmed, taking the place of Antonin Scalia.

The bracket goes to Supreme Court nominee Neil Gorsuch.

Lower Left: Debt Ceiling v. Government Shutdown

Toward the end of the summer, the Treasury Department will have exhausted all “extraordinary measures” to continue paying the government’s bills. Once again, Congress will need to raise the debt ceiling. This close-to-annual exercise used to be non-controversial. But not anymore. This is an opportunity for Congress to discuss fiscal policy.

Another opportunity to discuss fiscal policy is the expiration of the Continuing Resolution on April 28th. In the past, government shutdowns have been threatened/executed, putting continued funding of the government at risk. Given that both Houses of Congress and the president are from the same party, it doesn’t seem likely that shutting down the government is an option. That being said, crazier things have happened in Washington.

Due to timing, debt ceiling wins by a single foul shot.

Upper Right: Taxes vs. Immigration

Tax reform, a priority of both the president and the Congress, is long overdue. In fact, comprehensive tax reform has not been successful since 1986. But don’t look for action overnight. Congressional Republicans are suggesting it will be undertaken sometime this fall.

On the other hand, immigration is even more contentious and bipartisan reform plans were last successful in 1996 under President Clinton. Since then, although there have been many efforts, reform has been elusive.

Tax wins this round.

Upper Right: Defense Spending vs. Infrastructure

Appropriators are currently preparing a special supplemental funding bill for the Defense Department and President Trump announced he would like to add $54 billion to the defense budget. The infrastructure bill hasn’t gained as much traction as the rhetoric about its importance.

Defense spending wins this round.

Lower right: FY17 Omnibus Appropriations vs. NDAA

The National Defense Authorization Act has a 55-year history of being signed into law each year. It is considered in Congress a “must pass” bill. Omnibus appropriations that combine multiple appropriations into a single bill have a spotty record at best. While Omnibus appropriations passed in Fiscal Year 2016, it is still unclear how the rest of FY17 will be funded. Because no one is quite sure, we declare NDAA the winner.

NDAA wins this round.

Lower right: Spending Cuts vs. Elimination of a Federal Agency

President Trump made a campaign promise to significantly decrease agency spending and is expected to propose major cuts in the FY2018 budget. Although eliminating agencies is possible, it is easier to starve an agency than eliminate it altogether.

Spending cuts win this round.

The Elite Eight issues that we predict will prevail to the next round in Washington are:

  • Regulatory Reform
  • Healthcare
  • Supreme Court Appointment
  • Debt Ceiling
  • Tax
  • Defense spending
  • NDAA
  • Spending Cuts

In Washington policy circles, representing women-owned businesses is often like rooting for the underdog. Women across the country who have joined our voice often end up winning the policy fight even though they are dismissed in the “first round.” But collectively, we can end up being the winners who bring home the victory. Not just for us, but for those who have come before us and those that are coming behind us.

Which issues do you think will score over the coming month? Tweet at us @WIPPWeDecide #DCelite8 with your predictions for the Final Policy Four.

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.

Reimagining Health Care

By Ann Sullivan, WIPP Chief Advocate

Affordability, predictability, and flexibility were three themes reiterated at the Feb. 7 hearing held by the House Committee on Small Business entitled “Reimagining the Health Care Marketplace for America’s Small Business.” It was held for the purpose of taking a look at the current marketplace and its recent difficulties, and to explore options to improve access, affordability, and consistency.

While no clear legislative path has yet been paved, many facts, figures, and ideas were floated around regarding how to ensure that small business is not an afterthought in the revamping of the healthcare system. Solutions presented and discussed at the hearing included tax credits for small business, across state line coverage, and Health Savings Accounts and Health Reimbursement Arrangements.

Here is more about the items discussed.

  • Tax credits for the self-employed: As the Tax Code currently stands, self-employed individuals are restricted from deducting their health insurance premiums. Small, self-employed business owners end up paying more for health insurance because their premiums are not treated the same for taxes as other businesses.

Leveling the playing field by giving these small businesses tax credits would improve affordability for small business owners, as well as expand the pool of coverage, according to Keith Hall of the National Association of the Self-Employed (NASE).

  • Across state line coverage: The number of insurers participating in the marketplace varies widely from state to state, as do the number of coverage plans. The lack of competition among insurers in the current exchanges decreases pressure to keep costs down.

Mr. Hall of the NASE believes that allowing for the sale of health insurance across state lines will boost competition, driving costs down. In order for this to happen, Congress will have to enact a health plan that will modify the existing law that inhibits the sale of health insurance across state lines.

  • Health Savings Accounts (HSAs) and Health Reimbursement Arrangements (HRAs): A provision of a law signed into Congress last session allows small employers with fewer than 50 full-time employees that do not offer a group health plan to fund employee HRAs to pay for qualified out-of-pocket medical expenses and for non-group plan health insurance premiums, including plans purchased on the public health care exchanges.

Allowing small businesses to offer a bare bones plan and HSAs would allow individuals to decide the best choice for themselves and their families, according to Tom Secor of Durable Corporation, who testified on behalf of the National Small Business Association (NSBA).

This hearing was the first of a continuing series that will take place on the discussion of healthcare repeal and replacement. To read full written testimony from each witness here.

Gloria Larkin, WIPP’s National Partner of the Month – February 2017

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Gloria Larkin, president of TargetGov, has been a staunch ally of WIPP for years. She leads GiveMe5 webinars, responds quickly and effectively to WIPP’s calls to action, and is always on the lookout for new WIPP members. It’s thanks to people like Gloria that WIPP thrives!

Read our Q&A with Gloria to learn more about her and her work.

Q: Tell us a little about TargetGov and its mission

A: TargetGov is celebrating its 20th year in business in 2017! Our mission is to help small, mid-sized and large government contractors win business and aggressively grow their companies. Our clients have won over $3.9 billion in federal contracts in just the last five years.

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

A: I have been both an employee and an entrepreneur. I took the leap 20 years ago because I wanted to do something that no one else was doing—help businesses see great success and increase their revenues with a targeted, proactive marketing and business development process.

Q: Have you encountered challenges you had to overcome as a business woman and if so, what have you learned from them?

A: The challenges have been constant, and access to capital is one of the biggest. Through the years, I have had several business loans to grow my business, and none of them were the amount I asked for. It’s an issue even to this day. In applying for a line of credit, I was offered less than half of what I thought it should be. I had the chutzpah to say exactly the amount I thought they should give me (more than double what they offered) and was pleasantly surprised that they agreed. In the past I wouldn’t have pushed, but now, I do.

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

A: My proudest moments are when our clients contact us and tell us of their awarded contracts and successful business growth. It feels like my children are successful and I am one proud parent! The first billion was a heady milestone. Now as we see the four-billion milestone coming this year, we are ecstatic about their success!

Q: What is the biggest lesson learned working with the federal government?

A: The biggest lesson is that the federal government market is constantly changing. The rules and regulations are burdensome, yes, but success is predicated on having a strategy and plan that addresses this constant change and adapts proactively, with a trackable, measureable and scalable process. Seeing it work in real life is extraordinary!

Q: Do you have any tips you would like to share with women pursuing federal contracts?

A: This is a demanding market and one must be well prepared, have a well-thought-out roadmap, the discipline to execute it, and measurable actions to track success. This is truly the market in which you can think BIG and see results. But it takes effort and knowledge; use the experts to help you!

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: WIPP has truly changed my life. I started getting involved as a committee chair, then learned how to talk to my Congress people. I participated in virtually every area WIPP works in and found a home on the procurement committee. Then I worked my way onto the government board, and then to Chair of the Educational Foundation. Thanks to WIPP, I have testified before the House Small Business Committee, and traveled to more than 15 states and had lifetime trips to Dubai and Abu Dhabi, Japan and Oxford, England to speak or work with women in those counties. Working to start the GiveMe5 program, and supporting it through the years has been a great highlight. WIPP has impacted more than 30,000 women business owners through GiveMe5! And I am deeply honored to have many WIPP members as clients and heart-felt friends.

10 Things You Should Know From the Linda McMahon Hearing

By Ann Sullivan, WIPP Chief Advocate

On Jan. 24, the Senate Small Business Committee held a hearing on the confirmation of Linda McMahon (former WWE CEO), to become Administrator of the Small Business Administration (SBA). Here are the 10 things you should know about her hearing:

  1. SBA is still part of the cabinet—President Obama elevated the position of SBA Administrator to cabinet level. President Trump is sticking with that change.
  2. Existing programs are safe…for now—When questioned by numerous senators on specific program commitments, McMahon repeatedly said that if the program is working then it should be continued.
  3. She will go to bat for small business in the executive branch—McMahon sees herself as the small business advocate within the executive branch, and will go to other agencies and make sure that more federal contracting opportunities are provided to small businesses.
  4. She will work to expand the 5% contracting goal for women—Senator Duckworth (IL), asked about the 5% goal, and McMahon expressed support for women entrepreneurs, broadly, “I have been very forthcoming in wanting women entrepreneurship to grow. And I will continue to support that, it is very near and dear to my heart.”
  5. She has a history working with Veterans—According to McMahon, WWE was always concerned about veterans and how to help create jobs for them. Senator Cardin (MD) discussed the Veterans Institute for Procurement (VIP) program and noted its impact and high performance.
  6. Look for an emphasis on mentoring—Given McMahon’s background in business mentoring, she may focus on programs that incorporate mentorship. As co-founder of Women’s Leadership LIVE, McMahon’s organization educates entrepreneurs about all facets of starting and expanding their business.
  7. She wants to help free small businesses from burdensome regulations—While many senators asked questions about regulatory burdens on small businesses, Senator Ernst brought up the PROVE It Act—legislation passed out of committee last session that empowers the SBA Office of Advocacy to require agencies to analyze rules for their small business impact.
  8. Speaking of advocacy—McMahon expressed support for expanding the independent SBA Office of Advocacy to ensure that the voice of small business is heard on federal regulations.
  9. She wants small businesses to participate in anticipated Infrastructure projects—When asked about promoting fair opportunities for small businesses to compete for work in the highly anticipated infrastructure plan, McMahon stated that small business participation was a given.
  10. Streamlining cumbersome federal contracting—McMahon expressed support for streamlining the alphabet soup of federal websites and databases like SAM and FBO.

This was a conciliatory confirmation hearing. Given the contentious nature of other confirmation hearings, it was unknown what tone McMahon’s hearing would take. But the hearing went well. Senators were polite and McMahon was responsive to concerns. With so much partisanship in Washington, it was positive to see McMahon’s interest in working with the committee—both sides.

In With the New

By Ann Sullivan, WIPP Chief Advocate

With inauguration festivities up ahead and a newly elected Congress hard at work, it is time to get down to business. The New Year serves as a good reminder that while there may be some new faces in Washington, many of the policy ideas are those we have seen before. Below are some highlights of what is both old and new in Washington for 2017.

Old and New. For the first time in years, our Country has unified government in the House, Senate, and White House. The difference this time is that the government is united by the Republicans, not Democrats. Amazingly, it’s only been six years since the Democrats controlled the government. New—now the Republicans are in change.

Old. Some problems don’t change. Creating more opportunities for women entrepreneurs to access capital continues to be a major theme for WIPP in 2017. Today, women entrepreneurs receive only 4% of commercial loan dollars. WIPP’s access to capital platform Breaking the Bank has been well received by policy makers because it is focused on solutions.

New. Some problems just surfaced. WIPP recently released a report, “Do Not Enter: Women Shut Out of U.S. Government’s Biggest Contracts,” finding clear evidence that women-owned small businesses have limited opportunities to win some of the federal government’s most sought-after contracts, despite a proven ability to deliver innovative goods and services. The report also outlines steps policy makers can take to rectify the problem.

Old. 2016 Was certainly a year of regulations for federal contractors. From Paid Sick Leave, to Overtime, Fair Pay and Safe Workplaces—it was often difficult to keep them straight.

New. 2017 is the year of deregulation. President-elect Trump and the U.S. House have strongly indicated many Obama administration rules will be repealed. The House just passed the Midnight Relief Act to quickly repeal any rule finalized in the last 60 days of an Administration. WIPP supports efforts to make it easier for women entrepreneurs to work with the government.

New. Government contracting finalized. While it took many years, SBA has finally released the new all-small business Mentor Protégé Program, and new rules making it easier for WOSBs to work with other WOSBs. WIPP looks forward to working with SBA to ensure WOSBs can use these program changes to grow our businesses.

Old. Wait –Nothing gets repealed in government contracting, there is just more to pile on.

Old and New. In 2017, 125 women hold seats in the U.S. Capitol building. One hundred and four women hold seats in the U.S. Congress, making up over 19 percent of the chamber. A greater percentage of women serve in the U.S. Senate, where there are 21 women (making up 21 percent). While the total number of women is identical to the number last Congress, there is one key difference—64% of the new women elected are women of color.

New. Firsts in Congress. Representative Lisa Blunt Rochester of Delaware is the first woman, and woman of color to serve from Delaware. Senator Catherine Cortez-Masto is the first woman, and first woman of color Nevada has elected to the U.S. Senate.

As WIPP prepares to work in the 115th Congress, we plan to present our ideas based on input from membership. We will work with all Members of Congress, and the new Administration, because one of the few things everyone agrees on is that enabling businesses to grow strengthens our economy. Women are entering the ranks of business ownership at record rates, and launching a net of more than 1,100 new businesses each day. We will work for the next several years to reinforce and grow the success of women’s business owners.

So what are we waiting for—let’s get to work.

Why Federal Contractors Will Probably Be Working This Labor Day

By John Stanford, WIPP Government Relations

The Department of Labor and FAR Council issued final regulations that require federal contractors to disclose labor violations from the past three years. This blog updates an earlier edition with what you need to know. For more details or if this impacts your business, I encourage you to read official guidance here.

Ahhhh, Labor Day. The unofficial end of summer. A century-old government-granted day off to squeeze in another day at the pool, buy the last of the school supplies (who really needs a protractor anyway?), see the grandparents, and now – for federal contractors – an opportunity to review your company’s legal history.

It doesn’t sound quite right, does it? But for thousands of federal contractors, that is exactly what newly finalized regulations mean. I will get into to the details and timeline of the new requirement in a moment, but first, a little history on a change WIPP has watched closely.

In 2014, President Obama issued an Executive Order with the goal of barring bad companies from winning federal contracts. The following summer the Labor Department (DOL) and the FAR Council (overseers of contracting rulebook, “the FAR”) proposed how this could be achieved. Last week, final rules were published – and contractors nationwide let out a collective groan.

You see, excluding companies with a history of bad acts from winning government work – a generally universally accepted idea – is not easy. WIPP said just that in our formal comment last year. We agreed that companies that follow the rules should not have to compete against companies that break them for federal contracts. But the proposed system would place burdens on women-owned contractors and dump paperwork requirements on contracting officers.

Our comment, along with hundreds from individual business owners and other trade groups, did little to sway the government from moving forward. The new requirement detailed below goes into effect on October 25, 2016.

The regulation requires federal contractors and subcontractors to disclose violations of 14 federal labor laws and the equivalent state laws from the previous three years. Exemptions were provided for companies with contracts valued less than $500,000. Prospective federal contractors will need to declare if they had labor violations in the previous three years when submitting an offer. During an initial evaluation, contracting officers will see that declaration (a simple “yes” or “no”), without any additional detail or explanation.

Later, if a contractor were likely to win an award, the contracting officer would have to decide if the contractor is a responsible company (a requirement of all government contracts already). It is in this phase that details like appeals, remediation, or mitigating factors could be explained. Contracting officers will attempt to identify companies with “serious”, “willful”, “repeated”, and/or “pervasive” violations and not award them contracts. Companies with minor violations could still be considered responsible and win contracts.

In what the government views as a compromise since their initial proposal, the system will be phased-in over the next two years. The DOL released the following timeline:

Phased-In Implementation Schedule

  • Week of September 12, 2016:Preassessment begins, through which current or prospective contractors may come to DOL for a voluntary assessment of their labor compliance history, in anticipation of bids on future contracts but independent of any specific acquisition.
  • October 25, 2016: Thefinal rule takes effect. Mandatory disclosure and assessment of labor law compliance begins for all prime contractors under consideration for contracts with a total value greater than or equal to $50 million. The reporting disclosure period is initially limited to one (1) year and will gradually increase to three (3) years by October 25, 2018.
  • January 1, 2017: The Paycheck Transparency clause takes effect, requiring contractors to provide wage statements and notice of any independent contractor relationship to their covered workers.
  • April 25, 2017: The total contract value threshold for prime contracts requiring disclosure and assessment of labor law compliance is reduced to $500,000.
  • October 25, 2017: Mandatory assessment begins for all subcontractors under consideration for subcontracts with a total value greater than or equal to $500,000.

 

Needless to say, our concerns remain. And before I go into a few of them, I would point out that the $50 million threshold sounds like a lot. It includes, however, companies on a multiple award contract with a ceiling amount above $50 million. Meaning a company that wins a BPA or IDIQ valued above $50 million, though not necessarily the amount of work the company will actually perform, will face the October 2016 deadline.

On a broader level, the rule simply is not ready for primetime. The Labor Department and FAR Council chose not to include what state labor law violations must be reported. It is impossible to gauge the impact of a regulation when missing significant portions.

What is in the rule, however, is equally concerning. In some cases, violations that require reporting will not be be fully adjudicated. That is, companies would have to report decisions against them that may ultimately be overturned – as nearly a third of NLRB decisions have been.

This is compounded by WIPP’s worry that simply having violations on record will “blacklist” companies without providing any opportunity to offer explanation. With limited resources and time, contracting officers may elect to avoid companies with any disclosed violations, despite the intent of the order to only bar violations of a certain severity.

Burdens on subcontractors are also being created. They must report violation history as well – directly to DOL. This was a notable change in the final rule, by making the subcontractor and the Labor Department engage each other, and not put the responsibility on the prime contractor.

At the same time the government has admitted it lacks the resources to answer all questions about weighing different labor violations from hundreds of thousands of subcontractors. Ultimately, this change could be the most damning, as many of these companies are unaware of the new requirements because they never sought business with the government in the first place.

Finally, the Fair Pay and Safe Workplaces requirement is one of many in a disconcerting trend of new regulations that specifically target federal contractors. Earlier this year, regulations raised the minimum wage solely for workers on federal contracts. New requirements regarding sick leave were also released. These make contracting with the federal government more onerous, particularly for women entrepreneurs seeking to enter the market. At a time when we want more competition and innovation in government, policies impacting only federal contractors put up barriers for entry.

Without question, WIPP supports efforts by the federal government to rid the contracting environment of businesses with a history of abusive and neglectful violations. In doing so, the government levels the playing field for the millions of businesses playing by the rules. But the government already has those tools and this rule will not achieve this goal. Instead, it will be harder to be a contractor, pushing the innovative products and services of women-owned businesses out of the federal market.

So to the federal contractors out there gearing up for a warm holiday weekend, fire up those grills, wear that final white outfit, and head into the office – it’s going to be a busy day.

 

John Stanford is part of WIPP’s Government Relations team in Washington, D.C., specializing in federal procurement and healthcare policy. When not bothering lawmakers about needed changes, he can be found in the woods at local golf courses.

Regulatory Race to the Finish

By Debbie Kobrin, WIPP Government Relations

173414-425x283-government_regulationsWith the party conventions right around the corner, and a few months to a new President, you might think the current administration would be slowing down. But things are moving in the opposite direction. The Administration is churning out plenty of new contracting rules, and shows no signs of stopping anytime.

In June, SBA finalized a new subcontracting rule which will help WOSBs with subcontracting requirements, by easing the “50 percent rule” to allow a WOSB to do less than 50 percent of the work on a contract, as long as the WOSB subcontracts to other WOSBs. The rule also shifts the limitations on subcontracting from requiring a prime to perform at least 50 percent of the labor on the contract, to requiring a prime perform at least 50 percent of the dollar amount of the contract. The rule also contains changes to subcontracting plans, roles for Procurement Center Representatives (PCR), Joint Ventures and more.

Also last month,  the GSA finalized a new regulation requiring contractors to report transaction or task order level data on goods and services to GSA. Under the transactional data rule, businesses are required to tell GSA what federal agencies purchase through GSA. This rule applies to GSA contracts including the Federal Supply Schedule (FSS) and Government-wide Acquisition Contracts (GWAC).

Last week, the FAR Council finalized a rule strengthening subcontracting regulations by finalizing the “ list us, use us” requiring for prime contractors to make a good faith effort to utilize small subcontractors to the same degree as listed in the bid or proposal. WIPP has supported this change for a number of years, and testified on its value to women business owners. The rule also requires prime contractors to assign NAICS codes to subcontracts, and restricts prime contractors from prohibiting a subcontractor from discussing payment issues with the contracting officer.

In addition to what we have seen over the past several months, SBA is expected to release a new Mentor-Protégé Program for all-small-businesses any day now. The SBA is also expected to work on rules associated with lower-tier subcontracting credit, WOSB certification, and the WBC program.

The FAR Council continues to work through its back-log and plans to release new rules that include creating a government-wide definition for consolidation and bundling, providing subcontractors with additional payment protections, and implementing the Department of Labor Fair Pay, Safe Workplaces Executive Order.

As we enter the home stretch of the Obama Administration, there is a clear impetus to do as much as possible over the next several months. As new information about rules becomes available, WIPP is committed to keeping you informed.

 Let us know what you think about Regulations by taking We Decide 2016 Quick Poll.

Are Regulations Discouraging Entrepreneurship?

By: Jake Clabaugh, WIPP Government Relations

Is the federal regulatory process stacked against entrepreneurs? The Joint Economic Committee sought to answer this question during a hearing entitled “Encouraging Entrepreneurship: Building Business, Not Bureaucracy.” The Committee’s Vice-Chair, Pat Tiberi (R-OH) opened the hearing with this direct question to witnesses: Is the thicket of government bureaucracy strangling private initiative?

Before taking on the Vice-Chair’s question, the witnesses began by framing the landscape. Entrepreneurship – the birth of new firms – has been trending downward since President Jimmy Carter’s Administration in the 1970’s. Dr. Tim Kane, a Research Fellow at Stanford University’s Hoover Institution, highlighted the decline in the number of startup firms from 16% of total firms in the U.S. in 1977 to just 8% today.

Despite the decline in overall start-ups, National Women’s Business Council (NWBC) Chair Carla Harris lauded the growth in women-owned businesses. Since 2002, the number of women-owned firms has leaped from 6.5 million to 10 million. Women are creating businesses at 2 -1/2 times the national average. The progress made by women business owners provided a bright spot in otherwise gloomy testimony on the outlook for entrepreneurs.

When the witnesses were asked what regulations were causing the most headaches, the Affordable Care Act (ACA) was the most commonly cited culprit. Specifically, the ACA defines a full-time employee as an individual working thirty hours a week instead of the traditional forty. This definition determines whether a business is exempt from the employer mandate. The witnesses echoed the experiences of many WIPP members who have found the thirty-hour workweek definition detrimental.

To tackle this and other regulatory challenges, WIPP partnered with the National Association of Manufacturers, Small Business & Entrepreneurship Council and International Franchise Association to launch Rethink Red Tape.  As part of this initiative, WIPP will be calling on policymakers to produce better, fairer rules. In the opinion of the Joint Economic Committee and WIPP Members alike, regulatory reform will be a win for entrepreneurship.