The Corporate Transparency Act (CTA)’s Impact on Small Business
Starting on January 1, 2024, the Corporate Transparency Act (CTA) would impose new reporting requirements on certain small businesses (specifically corporations and limited liability companies with twenty or fewer employees). The legislation will require companies to disclose their beneficial owners to prevent bad actors from using shell companies to break the law or hide illicit activity.
The CTA was enacted in 2020 with the stated goal of combatting money laundering, terrorist financing, and other illicit activities. The statute requires the submission of regular reports to the federal government that include “personal identifiers” of the owners and senior employees and/or advisors of covered entities.
The CTA applies only to businesses with under $5 million in annual revenues and fewer than 20 employees. The Treasury Department estimates the CTA will cover over 32 million existing entities and an additional 5 million newly created entities every year. These companies and other legal entities will likely be subjected to increased paperwork, privacy risks, and potentially devastating fines and prison terms.
The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) is still crafting their implementation and administrative responsibilities regarding CTA’s enforcement. To date, the agency is behind in promulgating the key rules necessary to implement the CTA and despite a looming effective date of January 1, 2024, federal regulators have yet to finalize the “Access Rule,” which specifies who can access the database and for what purposes, as well as an updated “Customer Due Diligence Rule” which applies to financial institutions.
House Financial Services Chairman McHenry (R-SC) has introduced the Protecting Small Business Information Act, which would delay the CTA’s effective date. By delaying the reporting requirements from taking effect until Treasury finalizes its rulemaking process, this legislation would provide the certainty needed to comply with the new statute, along with giving Congress more time to rethink this whole approach.
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ASA Key Priorities in the FY24 National Defense Authorization Act (NDAA)
ASA’s key industry priorities in the context of the FY24 National Defense Authorization Act (NDAA) are the following:
SENATE (S.2226)
1. Support Senate Section 325 – Dashboard of funding relating to perfluoroalkyl substances and polyfluoroalkyl substances. This section would create an online dashboard for information pertaining to all activities of the Department of Defense (DOD) relating to perfluoroalkyl substances and polyfluoroalkyl substances. This vital information will allow federal agencies and industry be more informed about the locations and projects that may contain these “forever chemicals.” ASA urges Congress to make this information available in a manner that is easily accessible for contractors to access information about potential contamination on DOD projects.
2. Support Senate Section 820 – Prohibition on requiring defense contractors to provide information relating to greenhouse gas emissions. This section would prohibit requiring defense contractors from reporting information relating to greenhouse gas emissions (GHG). Currently, there are multiple proposed federal regulations that will soon dramatically increase reporting and compliance with GHG standards. The technology and expertise currently do not exist to support these proposed rules on a large scale. ASA urges Congress to include language to make it clear that the regulatory agencies cannot require contractors to pay a fee to circumvent this prohibition of funding.
3. Oppose Senate Section 851 – Increase in Governmentwide goal for participation in Federal contracts by small business concerns owned and controlled by service-disabled veterans. This section would increase the small business goals for procurement contracts awarded to service-disabled veteran-owned small businesses from three percent to five percent. According to a recent report by the Congressional Research Services, federal agencies and prime contractors consistently have difficulty meeting small business goals. Arbitrarily increasing the small business goals will not increase small business participation.
4. Support Senate Section 1041 – Extension of admission to Guam or the Commonwealth of the Northern Mariana Islands for certain nonimmigrant H-2B workers. This section will extend the current admissions of H-2B workers in Guam until 2029. The H-2B program currently has strict labor and wage protections that construction contractors who utilize the program must stringently abide by. ASAencourages Congress to extend H-2B worker status in all areas of the country to address the severe workforce shortage in the construction industry.
5. Support Senate Section 2802 – Ordering authority for maintenance, repair, and construction of facilities of Department of Defense. This section will allow maintenance and repair of a facility of the Department of Defense or for a minor military construction project, including allowing contingency expenses up to exceed 10 percent of the cost of the project. This authority will allow construction agencies to cope with the rising cost of construction materials and reduce the need for these agencies to go back to Congress for additional funding on ongoing projects.
6. Oppose Senate Section 2877 – Requirement that all material types be considered for design-bid-build military construction projects. This section seems to be a solution in search of a problem. DODconstruction agencies are already required to evaluate Best Value procurement methods. In addition, requiring SES-level certification of every design-bid-build will likely cause needless delays on an already lengthy construction procurement process.
HOUSE OF REPRESENTATIVES (H.R.2670)
1. Support House Section 332 – Prizes for development of technology for thermal destruction of perfluoroalkyl substances or polyfluoroalkyl substances. This section would create a grant program for research and development relating to PFAS-free alternatives for currently unavoidable (i.e., essential) uses of perfluorooctanesulfonic acid (PFOS). There are approximately 5,000 PFAS in use in a wide variety of common commercial products like cosmetics, apparel, carpeting, sealants, and fire-retardants. Environmental Protection Agency is focusing most of its efforts on a handful of PFAS, chiefly perfluorooctanoic acid (PFOA) and PFOS that are considered ubiquitous, meaning that trace amounts are found nearly everywhere. This section will provide support for efforts to find commonsense solutions for products often considered hazardous.
2. Oppose House Section 804 – Pilot program on payment of costs for denied Government Accountability Office bid protests. This section will explore making permanent the current pilot project that requires a contractor that has revenue over $250 million and who files a protest with the Government Accountability Office (GAO) to allow that agency to withhold costs incurred possessing a protest. Those costs would be released to the contractor if it wins the protest, or the solicitation is canceled. Provisions such as this create a conflict of interest and perverse incentive where GAO will make money for its own operations if it rules against a contractor. Congress should reject any policy that requires contractors to pay for what amounts to due process in the federal construction market.
3. Support House Section 829 – Modification and extension of temporary authority to modify certain contracts and options based on the impacts of inflation. This section will allow for the extension of a temporary program to provide economic relief to industry until 2024. However, any guidance from DoD has been slow and Congress did not provide sufficient funding for this authority. ASA urges DOD to implement guidance and for Congress to robustly fund this important temporary authority.
4. Support House Section 830 – Modification of contracts and options to provide economic price adjustments. Like Section 829, this provision will allow for relief to contractors by relaxing the strict requirements for receiving economic price adjustments for certain contracts. ASA urges Congress to robustly fund this authority.
5. Support House Section 1822 – Limitation on funds relating to Federal contractor disclosure of greenhouse gas emissions and climate-related financial risk. This section will restrict funding proposed regulations requiring contractors to disclose greenhouse gas emissions levels, climate-related financial risk, greenhouse gas emissions reductions targets, and other climate metrics. Currently, there are multiple proposed federal regulations that will soon dramatically increase reporting and compliance with greenhouse gas emissions standards. The technology and expertise currently do not exist to support these reporting requirements on a large scale. ASAurges Congress to include language to make it clear that the regulatory agencies cannot require contractors to pay a fee to circumvent this prohibition of funding.
6. Oppose House Section 2807 – Certification of consideration of certain methods of construction for military construction projects and annual report. Like Senate Section 2807, this section appears to be a solution in search of a problem. Currently, there are no required design decisions for DD Form 1391, which is used by DOD to submit requirements and justifications in support of funding requests for military construction to Congress. DOD construction agencies are required to evaluate Best Value procurement methods. In addition, requiring SES-level certification of every design-bid-build will likely cause needless delays on an already length procurement process.
7. Support House Section 2831 – Improvements relating to access to military installations in United States. ASA supports the standardization of access to military installations but is concerned about aspects of requiring screening not less than 24 hours and not more than 48 hours prior to the time of such delivery will have. One of the major factors military construction contractors needed to address is how to allow large delivery trucks access to drop off their material when they arrive from across the country to deliver materials, but do not have Defense Biometric Identification System (DBIDS). Understanding this is a voluntary program for base commanders. ASA recommends report language clarifying this screening requirement that could end up delaying access rather than expediting it.
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P3 Bonding Requirements Advancing in the Senate
As you know, we support H.R. 1740, legislation clarifying that current payment and performance security requirements for federally funded infrastructure projects should apply to Water Infrastructure Finance and Innovation Act (WIFIA) financed infrastructure projects, including Public Private Partnerships (P3). To that end, late last week, we learned that this bipartisan legislation will soon be offered in the Senate by Sens. Kelly (D-AZ) and Cramer (R-ND). We continue to work with the House Transportation & Infrastructure and the Energy & Commerce Committees to build cosponsors for this legislation. Additionally, we will work with the Senate Environment and Public Works Committee once the bill is formally introduced in the Senate.
Finally, we issued the following statement on the proposed Senate legislation:
“The American Subcontractors Association (ASA) proudly supports this important bipartisan legislation because our contractor members witness firsthand the importance of financial securities such as performance and payment bonds on construction projects. These bonds assure that a contractor is qualified to perform the obligations in the award and serve as protection for the public agencies in case the contractor fails to meet their obligations under the contract,” said Gloria Hale and Courtney Little, ASA Government Relations Committee Chairs.
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ASA Opposes the Worker Walkaround Proposed Rule
ASA, along with the Coalition for Workforce Safety (CWS), sent a letter to the House Ed and Workforce Committee’s Subcommittee on Workforce Protections in advance of their hearing on September 27th on OSHA’s policies and priorities. OSHA administrator Parker testified, and we planned to bring to his attention the rule and the politicization of the agency. The letter explains that OSHA’s proposal is inconsistent with the underlying statute and applicable regulatory history, inserts OSHA staffers into labor disputes, violates NLRB jurisdiction, exposes employers and OSHA to serious liability, and infringes on workers’ rights.
Additionally, we submitted our extension request on the proposed rule asking for an additional 60 days to the comment period; 74 organizations joined this request. We will be submitting substantive comments on the proposal, which are due on October 30th.
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