Sec. 874. PILOT PROGRAM TO INCENTIVIZE CONTRACTING WITH EMPLOYEE-OWNED BUSINESSES
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## SEC. 874 PILOT PROGRAM TO INCENTIVIZE CONTRACTING WITH EMPLOYEE-OWNED BUSINESSES **[**[10 U.S.C. 3204 note](/us/usc/t10/s3204)**]** ###
(a)Qualified Business Wholly-owned Through an Employee Stock Ownership Plan Defined The term “qualified businesses wholly-owned through an Employee Stock Ownership Plan” means an S corporation (as defined in section 1361(a)(1) of the Internal Revenue Code of 1986) for which 100 percent of the outstanding stock is held through an employee stock ownership plan (as defined in section 4975(e)(7) of such Code). ###
(b)Pilot Program to Use Noncompetitive Procedures for Certain Follow-on Contracts to Qualified Businesses Wholly-Owned Through an Employee Stock Ownership Plan ####
(1)Establishment The Secretary of Defense may establish a pilot program and prescribe regulations to carry out the requirements of this section. ####
(2)Follow-on contracts Notwithstanding the requirements of section 2304 of title 10, United States Code, and with respect to a follow-on contract for the continued development, production, or provision of products or services that are the same as or substantially similar to the products or services procured by or for the Department of Defense under a prior contract held by a qualified business wholly-owned through an Employee Stock Ownership Plan, the products or services to be procured under the follow-on contract may be procured by or for the Department of Defense through procedures other than competitive procedures if the performance of the qualified business wholly-owned through an Employee Stock Ownership Plan on the prior contract was rated as satisfactory (or the equivalent) or better in the applicable past performance database. ####
(3)Limitation Each contract held by a qualified business wholly-owned through an Employee Stock Ownership Plan may have a single opportunity for award of a sole-source follow-on contract under this section, unless a senior contracting official (as defined in section 1737 of title 10, United States Code) approves a waiver of the requirements of this section. ###
(c)Verification and Reporting of Qualified Businesses Wholly-owned Through an Employee Stock Ownership Plan Under a pilot program established under this section, the Secretary of Defense shall establish procedures— ####
(1)for businesses to verify status as a qualified businesses wholly-owned through an Employee Stock Ownership Plan for the purposes of this section by using existing Federal reporting mechanisms; ####
(2)for a qualified businesses wholly-owned through an Employee Stock Ownership Plan to certify that not more than 50 percent of the amount paid under the contract will be expended on subcontracts, except— #####
(A)to the extent subcontracted amounts exceeding 50 percent are subcontracted to other qualified businesses wholly-owned through an Employee Stock Ownership Plan; #####
(B)in the case of contracts for products, to the extent subcontracted amounts exceeding 50 percent are for materials not available from another qualified business wholly-owned through an Employee Stock Ownership Plan; or #####
(C)pursuant to such necessary and reasonable waivers as the Secretary may prescribe; and ####
(3)to record information on each follow-on contract awarded under subsection (b), including details relevant to the nature of such contract and the qualified business wholly-owned through an Employee Stock Ownership Plan that received such contract, and to provide such information to the Comptroller General of the United States. ###
(d)Data ####
(1)In general If the Secretary of Defense establishes a pilot program under this section, the Secretary shall establish mechanisms to collect and analyze data on the pilot program for the purposes of— #####
(A)developing and sharing best practices relating to the pilot program; #####
(B)providing information to leadership and the congressional defense committees on the pilot program, including with respect to each qualified business wholly-owned through an Employee Stock Ownership Plan that received a follow-on contract under this section— ######
(i)the size of such business; ######
(ii)performance of the follow-on contract; and ######
(iii)other information as determined necessary; and #####
(C)providing information to leadership and the congressional defense committees on policy issues related to the pilot program. ####
(2)Limitation The Secretary of Defense may not carry out the pilot program under this section before— #####
(A)completing a data collection and reporting strategy and plan to meet the requirements of this subsection; and #####
(B)submitting the strategy and plan to the congressional defense committees. ###
(e)Sunset Any pilot program established under this section shall expire on the date that is eight years after the date of the enactment of this Act. ###
(f)Comptroller General Report ####
(1)In general Not later than three years after the date of the enactment of this Act, the Comptroller General of the United States shall submit to Congress a report on any individual and aggregate uses of the authority under a pilot program established under this section. ####
(2)Elements The report under paragraph
(1)shall include the following elements: #####
(A)An assessment of the frequency and nature of the use of the authority under the pilot program. #####
(B)An assessment of the impact of the pilot program in supporting the national defense strategy required under section 113(g) of title 10, United States Code. #####
(C)The number of businesses that became qualified businesses wholly-owned through an Employee Stock Ownership Plan in order to benefit from the pilot program and the factors that influenced that decision. #####
(D)Acquisition authorities that could incentivize businesses to become qualified businesses wholly-owned through an Employee Stock Ownership Plan, including an extension of the pilot program. #####
(E)Any related matters the Comptroller General considers appropriate. **[**Section 875 was repealed by section 811(b)(2)(C) of division A of Public Law 119–60.**]**
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- Pub. L. 119-60
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Sec. 874
PILOT PROGRAM TO INCENTIVIZE CONTRACTING WITH EMPLOYEE-OWNED BUSINESSES
Pub. L.Pub. L. 119-60
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