H.R. 6492: Empowering Small-business Ownership Participation Act

This legislation, titled the Empowering Small-business Ownership Participation Act (or ESOP Act), proposes changes to the requirements for certain businesses seeking to contract with the Department of Defense (DoD). Specifically, it revises the criteria for what qualifies as an employee-owned business under a pilot program that incentivizes contracting with these companies.

Key Provisions of the Bill

• Current Requirements: Under the existing regulations, a business must be wholly owned by its employees to qualify as an employee-owned business for contracts with the DoD.
• Proposed Changes: The bill seeks to amend these rules by changing the ownership requirement from "wholly-owned" to simply "owned," allowing businesses with at least 30% employee ownership to qualify.
• Implications: This means that more businesses would be able to qualify as employee-owned, increasing their eligibility for certain contracts with the DoD.

Impact on Small Businesses

The primary goal of the bill is to enhance the participation of small businesses in government contracting, particularly those transitioning towards employee ownership. By lowering the threshold of employee ownership needed, the bill aims to encourage more small businesses to adopt employee stock ownership plans (ESOPs), thereby fostering employee investment and engagement in their firms.

Revisions in Terminology

The legislation also updates the terminology used in the relevant sections of the National Defense Authorization Act, replacing "wholly-owned" with "owned" in multiple subsections to reflect this new standard.

Administration of the Bill

This bill has been sponsored by Mr. Mills and was introduced in the House of Representatives. It has been referred to the Committee on Armed Services for further discussion and amendments, if necessary.

Relevant Companies