December 22, 2022

Young, Colleagues Introduce Bill to Help Small Businesses Grow and Expand

WASHINGTON — Today, U.S. Senators Todd Young (R-Ind.), John Hickenlooper (D-Colo.), and Mark Kelly (D-Ariz.) introduced the Solving the Unnecessary Contracting Cliff for Enterprises to Scale Successfully (SUCCESS) Act, bipartisan legislation to encourage the growth of small construction and engineering businesses as they compete in the federal marketplace.

After hearing from constituent employers about the “contracting cliff” that was impacting their ability to compete, I am pleased to introduce the SUCCESS Act,” said Senator Young. “This bill will pilot a way for advanced small businesses to bridge the gap when growing from a small company to what is referred to as an “other-than-small” business in federal contracting terms. Removing barriers for job creators is an important way to increase the competitiveness of our industrial base.”

Under current regulations, federal contractors transitioning from “small” to “other-than-small” status are ineligible for set-aside contracts, throwing newly-minted mid-sized firms into head-to-head competition against multinational conglomerates in highly concentrated sectors.

Consequently, some small businesses are dissuaded from growing and expanding their operations, should they then be ineligible for certain federal contracts. This often applies even to companies that had previously been capable of fulfilling these contracts. Typically referred to as the “contracting cliff,” this problem means there are very few mid-sized competitors within the federal marketplace, which, when combined with fewer new businesses in the market, has contributed to an existential shrinking of the industrial base.

The SUCCESS Act would allow small businesses within the North American Industry Classification System (NAICS) Codes 236220 (commercial and institutional building construction) or 541330 (engineering services) to elect to participate in a seven-year pilot program upon outgrowing their NAICS size standard, which would qualify them as “small” for federal contracts above a certain dollar threshold. To complete the program, participating firms would need to certify that they have met applicable activity targets and complied with certain restrictions to protect the smallest of small businesses.

“As a small business federal contractor, it never really made sense to try to grow the business beyond small business status. A 2019 GAO report confirmed this reality, noting only 2.5% of small business federal contractors that outgrow their size standard successfully transition to the next levels. This transitioning initiative paves the way for a meaningful level of growth to enable companies in Indiana and across the country to remain viable at the next size level of federal government contracting. Our thanks to Senator Young for understanding the issues and putting forth thoughtful legislation that dramatically improves our odds of success,” said Luke Leising, President of Indianapolis-based Guidon Design. 

“We should all be concerned with the shrinking defense industrial base and its adverse impact on the economy and our national security. This transitioning initiative gives federal contractor owners in Indiana and throughout the United States a real chance to take our companies to the next level – to not only grow and remain competitive in the federal contracting market, but also to help grow the economy and strengthen our defense industrial base. Many thanks to Senator Young for acknowledging these challenges and sponsoring this legislation, which will have direct and meaningful impact in each of these areas,” said Mercedes Enrique, President of Bargersville-based CMS Corporation.

U.S. Representatives Andy Barr (R-KY-06), Jason Crow (D-CO-06), and Blaine Luetkemeyer (R-MO-03) introduced the House companion version of the bill today.

To view the full bill text, click here.