Election Analysis: Capital, Contracting, Patents and Cybersecurity

November 6, 2014

pic-money-collageChief among NSBA’s member-voted priorities is access to capital for small firms and entrepreneurs, a fair federal contracting marketplace, protections for intellectual property and cybersecurity. Ushering in Republican leadership of the Senate, the midterm elections could have a lasting effect on these issues.

Access to Capital

In the absence of final regulations implementing the crowdfunding provisions under the JOBS Act, signed into law in April 2012, small businesses continue to be stymied in terms of various avenues of capital. Comments to the proposed rule were due in February of 2014, yet no final rule has been published. Some in Congress have been publicly calling on the Securities and Exchange Commission (SEC) to move forward on the rule. In August, a bipartisan group of lawmakers—including Rep. Steve Chabot (R-Ohio), the likely incoming Chair of the House Small Business Committee—wrote a letter to the SEC urging their action.

It is unlikely the crowdfunding issue or other financing issues—such as streamlining SBA’s lending processes to make it easier for borrowers and lenders alike—will be part of the lame duck session, and aren’t terribly likely to be at the top of lawmakers list once the 114th session begins.

Federal Contracting

Current House Small Business Committee Chair Sam Graves (R-Mo.) will be stepping down as chair due to Republicans’ self-imposed agreement to term limit House chairmanships to six years. In his time helming the committee, Graves has been vocal about improving the small-business federal marketplace by increasing contracting goals and streamlining processes. His likely successor, Rep. Chabot is a long-time member of the Committee who has been slightly less outspoken for federal contracting issues in the past.

On the Senate side, it is likely Sen. James Risch (R-Idaho) will take over as the Chair, and during his tenure as Ranking Member, contracting issues haven’t been at the forefront. Another possible incoming chair for the Senate Committee on Small Business and Entrepreneurship is Sen. David Vitter (R-La.) who is a senior member of the committee.

One issue that could gain traction has to do with the Federal Single Source Initiative (FSSI), or so-called “strategic sourcing,” designed by the General Services Administration to streamline the government’s purchasing process across multiple government agencies. The way it’s been implemented in certain industries has resulted in pushing out many quality, affordable small-business vendors.

Patent Reform

Despite patent lawsuits being down more than 20 percent from last year, Republicans have indicated they plan to continue pursuing legislation in-line with the NSBA-opposed Innovation Act (H.R. 3309), sponsored by Rep. Bob Goodlatte (R-Va .),which passed the House in December 2013 but has yet to gain traction in the Senate. That all is likely to change now that the Republicans have gained leadership of the Senate for the 114th Session.

Sen. Orrin Hatch (R-Utah), as the likely incoming Chair of the Finance Committee and a senior member of the Judiciary Committee has expressed his desire to move on patent reform language he introduced earlier in the 113th Session, the Patent Litigation Integrity Act of 2013 which is similar to Goodlatte’s language. Both bills, while intending to curb frivolous lawsuits from so-called patent-trolls, would inhibit small-business innovation and create an undue or unfair burden on small, innovative firms.

Click here to read NSBA’s letter of opposition to H.R. 3309

Cybersecurity

Cybersecurity is seen as an area where Congressional Republicans and the White House may be able to work together on promulgating policy. Legislation has been introduced in both the Senate and House yet neither has passed muster with privacy advocates, and the House-passed bill received a veto-threat from the White House. While legislation has stalled, President Barack Obama recently signed an Executive Order aimed at improving consumer identify theft remediation and better securing personal information on federally run websites.

House Intelligence Committee Chair Mike Rogers (R-Mich.) along with his Senate counterparts, Senate Intelligence Committee Chair Diane Feinstein (D-Calif.) and Ranking Member Sen. Saxby Chambliss (R-Ga.), is pushing for Congress to take up cybersecurity legislation during the lame duck, primarily driven by the fact that Rogers and Chambliss both are retiring from Congress upon conclusion of the lame duck session.

Because the Senate version of the cybersecurity bill, the Cybersecurity Information Sharing Act of 2014 would make compliance voluntary, Sens. Feinstein and Chambliss have stated their bill has a good chance of passing the Senate. If the bill does pass during the lame duck, Rep. Rogers has indicated he’s ready to convene a conference committee during the lame duck to reconcile the two bills.

For more details and analysis, click here.