1. Short title
This Act may be referred to as the “ESOP Business Act of 2019”.
ESOP Business Act of 2019
A BILL
To establish certain procurement procedures with respect to businesses wholly-owned through an ESOP, and for other purposes.
2. Findings
Congress finds the following:
Businesses wholly-owned through an ESOP—
offer unique benefits to the United States and to customers of such businesses;
provide better retirement security, work culture, and wage growth for workers; and
reduce wealth inequality among managers and employees.
Current Federal contracting laws may inadvertently exclude businesses wholly-owned through an ESOP from key projects.
The growth of the number of businesses wholly-owned through an ESOP benefits employees of such businesses.
3. Sense of Congress
It is the sense of Congress that—
businesses wholly-owned through an ESOP are beneficial to the economy;
Congress should provide incentives for businesses to become businesses wholly-owned through an ESOP; and
businesses wholly-owned through an ESOP should be rewarded through the Federal contracting process for the benefits that such businesses provide.
4. Deeming of businesses wholly-owned through an ESOP as small business concerns
Section 3(a) of the Small Business Act (15 U.S.C. 632(a)) is amended by adding at the end the following new paragraph:
“(10) Application to businesses wholly-owned through an ESOP
“(A) In general—Notwithstanding the requirements relating to size standards in this subsection, a business wholly-owned through an ESOP shall be deemed to be a small business concern for the purposes of any Federal procurement programs.
“(B) Definition—The term business wholly-owned through an ESOP means a business for which 100 percent of the outstanding stock is held through an employee stock ownership plan (as defined in section 4795(e)(7) of the Internal Revenue Code).”
5. Pricing preference for contracts awarded to businesses wholly-owned through an ESOP
Pricing preference for defense contracts— Section 2304 of title 10, United States Code, is amended by adding at the end the following new subsection:
“(m) For a contract awarded pursuant to this section, the head of the agency may enter into a contract with a business wholly-owned through an ESOP using a price evaluation preference not in excess of 10 percent when evaluating an offer received from such a business. In this subsection, the term business wholly-owned through an ESOP means a business for which 100 percent of the outstanding stock is held through an employee stock ownership plan (as defined in section 4795(e)(7) of the Internal Revenue Code).”
Pricing preference for civilian contracts— Section 3301 of title 41, United States Code, is amended by adding at the end the following new subsection:
“(g) Pricing preference for contracts—For a contract awarded pursuant to this section, the head of an agency may enter into a contract with a business wholly-owned through an ESOP using a price evaluation preference not in excess of 10 percent when evaluating an offer received from such a business. In this subsection, the term business wholly-owned through an ESOP means a business for which 100 percent of the outstanding stock is held through an employee stock ownership plan (as defined in section 4795(e)(7) of the Internal Revenue Code).”
6. Follow-on contracts for businesses wholly-owned through an ESOP
Use of noncompetitive procedures for defense contracts— Section 2304(d)(1) of title 10, United States Code, is amended by adding at the end the following new subparagraph:
“(C) in the case of a follow-on contract for the delivery of goods or services that are the same as or substantially similar to the goods or services delivered under a prior contract awarded to a source that is a business wholly-owned through an ESOP (as defined in subsection (m)), such goods or services shall be deemed to be available only from that source if the Secretary rates the performance of that source on the prior contract as satisfactory or better (or the equivalent) in the applicable past performance database used by the Secretary for making source selection decisions”
Use of noncompetitive procedures for civilian contracts— Section 3304(b) of title 41, United States Code, is amended—
in paragraph (1), by striking “or” after “procurement;”;
in paragraph (2)(B), by striking the period and inserting “; or”; and
by adding at the end the following:
“(3) a follow-on contract for the delivery of goods or services determined by the head of the executive agency to be substantially similar to the goods or services delivered under a prior contract awarded to a source that is a business wholly-owned through an ESOP, such goods or services shall be deemed to be available only from that source if the executive agency rates the performance of that source on the prior contract as satisfactory or better (or the equivalent) in the applicable past performance database used by the head of the agency for making source selection decisions.”