Require payments to contractors for subcontracting with Pacific Insular Area concerns

Chapter 387 of title 10, United States Code, is amended by adding at the end the following new section:

The Secretary of Defense, acting through the Director of the Office of Small Business Programs of the Department of Defense, may make a payment in accordance with subsection (b) to a prime contractor for each subcontract such prime contractor enters into with a Pacific Insular Area concern.

A payment made under this section shall be in an amount equal to five percent of the total proposed value of a subcontract described in subsection (a).

A prime contractor desiring a payment under this section shall submit to the Secretary of Defense an application for such payment after entering into a subcontract with a Pacific Insular Area concern.

Not later than one year after the date of the enactment of this section and annually thereafter for ten years, the Administrator of the Small Business Administration and the Director of the Department of Defense Office of Small Business Programs shall submit to the Committee on Small Business of the House of Representatives and the Committee on Small Business and Entrepreneurship of the Senate and the Committees on Armed Services of the House of Representatives and the Senate a report that includes the following:

(1) The number of prime contractors that received a payment under this section during the year covered by the report.

(2) The economic impact on Pacific Insular Areas as a result of subcontracts that otherwise would not have been made to Pacific Insular Area concerns.

(3) Any recommendations of the Administrator and Director for increasing the number of applications for payments under this section.

In this section:

(1) The term Pacific Insular Area means the Northern Mariana Islands, American Samoa, and Guam.

(2) The term Pacific Insular Area concern means a small business concern (as defined under section 3 of the Small Business Act (15 U.S.C. 632)), at the time of entering into a subcontract with a prime contractor described under this section—

(A) that is at least 51 percent owned and controlled by one or more individuals who are United States citizens;

(B) that has its principal office located in a Pacific Insular Area;

(C) for which at least 50 percent of the employees of such concern reside in the Pacific Insular Area in which the principal office is located;

(D) that certifies that it will attempt to maintain the employment percentage described in subparagraph (C) for the duration of performance of the subcontract; and

(E) that meets any additional requirements as required by the Secretary of Defense.

This Act and the amendments made by this Act shall apply with respect to prime contracts entered into on or after the date of the enactment of this Act.