Bill Overview
Title: Small Business Payment for Performance Act of 2022
Description: 22 This bill allows a small business that is awarded a construction contract by a federal agency to request an equitable adjustment if the agency's contracting officer directs a change in the contract's performance without the agreement of the small business. The agency must provide the small business with an interim partial payment to cover additional costs resulting from such a change, and the small business must pay a first tier subcontractor or supplier the portion of the partial payment that is attributable to additional costs incurred due to the change.
Sponsors: Rep. Stauber, Pete [R-MN-8]
Target Audience
Population: Small construction businesses with federal contracts
Estimated Size: 192000
- The Act specifically targets small businesses that have construction contracts with federal agencies.
- The potential for a change directed by a federal agency without the small business's agreement appears statistically significant given past reporting on government contracts.
- The Act provides mechanisms to ensure that such small businesses can be compensated for unforeseen additional expenses due to contract changes.
- In the U.S., small business construction firms often rely heavily on subcontractors and suppliers, meaning the legislation affects both the contract awardees and their suppliers.
- The economic landscape includes roughly 6 million small businesses classified across various sectors in the U.S.
- About 16% are in the construction industry, suggesting fewer than 1 million small businesses could be affected globally.
- Some firms might rarely work with federal contracts, which further filters the relevant population.
Reasoning
- The policy specifically targets small construction businesses with federal contracts. Given this niche focus, not all small businesses will be affected. However, the ripple effects through subcontractors and suppliers extend the impact.
- The budget constraints mean that not all qualifying businesses may receive adjustments, but significant cases likely will.
- By focusing on various demographics, occupations, and impact levels, we capture a rounded view of the policy's effects.
- We have included individuals who represent the direct beneficiaries of the policy as well as those who might experience secondary benefits or have no change.
Simulated Interviews
Small business owner (Austin, TX)
Age: 40 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- The policy could provide much-needed relief when unexpected changes occur.
- Such measures can help maintain cash flow and retain employees during disputes.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 6 |
First tier subcontractor (Rural Montana)
Age: 58 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 6/20
Statement of Opinion:
- I rely heavily on the primary contractor to pay promptly.
- Any delay or cost overruns impact my business directly.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 6 | 5 |
Federal contracting officer (Los Angeles, CA)
Age: 35 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 2.0 years
Commonness: 10/20
Statement of Opinion:
- This policy may increase paperwork but supports fair business transactions.
- Equitable adjustments can foster better relationships with contractors.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 6 |
| Year 10 | 6 | 5 |
| Year 20 | 6 | 5 |
Construction business owner (Chicago, IL)
Age: 50 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 7.0 years
Commonness: 7/20
Statement of Opinion:
- Receiving interim payments would stabilize my cash flow during changes.
- Managing costs is crucial for survival in competitive markets.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 8 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
Legal consultant for construction firms (New York, NY)
Age: 46 | Gender: other
Wellbeing Before Policy: 8
Duration of Impact: 1.0 years
Commonness: 8/20
Statement of Opinion:
- The policy may increase demand for legal services if changes aren't well-managed.
- It's a step toward ensuring fair compensation for contractors.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Supplier of construction materials (Dallas, TX)
Age: 29 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 4.0 years
Commonness: 6/20
Statement of Opinion:
- Policies impacting contractors directly affect my business indirectly.
- Stable business relationships are built on assured cash flows.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Employee at a small construction firm (Atlanta, GA)
Age: 33 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 6.0 years
Commonness: 9/20
Statement of Opinion:
- I often deal with the stress of financial uncertainties in projects.
- Fair adjustments would ease tensions and improve job security.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 6 |
Construction firm accountant (Portland, OR)
Age: 44 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 8.0 years
Commonness: 4/20
Statement of Opinion:
- Equitable adjustments could simplify financial planning in uncertain times.
- Avoiding budget deficits due to contract modifications is beneficial.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 9 | 7 |
| Year 3 | 9 | 7 |
| Year 5 | 9 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 7 | 6 |
Owner of a niche engineering firm (Charlotte, NC)
Age: 52 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 5/20
Statement of Opinion:
- We've faced issues with delayed payments due to unmet project timelines.
- A policy to cover additional costs quickly would reduce financial stress.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 7 | 5 |
Retired civil engineer (Phoenix, AZ)
Age: 60 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 10/20
Statement of Opinion:
- Such policies could have offset some of my stress managing contracts.
- Ensuring timely funding for cost changes is a positive step.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 6 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
Cost Estimates
Year 1: $100000000 (Low: $75000000, High: $150000000)
Year 2: $105000000 (Low: $78750000, High: $157500000)
Year 3: $110250000 (Low: $82687500, High: $165375000)
Year 5: $121550000 (Low: $91162500, High: $182325000)
Year 10: $148680000 (Low: $111510000, High: $222420000)
Year 100: $1739540000 (Low: $1304655000, High: $2179470000)
Key Considerations
- Assumes a consistent pattern of agency-directed contract changes without prior small business agreement.
- Heavy reliance on estimated frequency and extent of adjustments directed by federal agencies.
- Costs and savings are strongly influenced by administrative efficiency in processing equitable adjustment claims and granting interim payments.
- Potential variability in fiscal impact due to fluctuating levels of federal construction contract awards to small businesses.