Administration's inaction forces action

Lawmakers want to give small businesses more contracts and prevent bundling

Frustrated by the Bush administration’s inaction on small-business contracting issues, legislators are taking action and asking federal agencies to fix the problems as small businesses’ share of federal contract dollars continues to slide.

Rep. Bruce Braley (D-Iowa),  a member of the House Small Business Committee, introduced the Small Business Fairness in Contracting Act last week in an effort to separate bundled contracts and add stricter contract oversight.

One provision of the bill would raise the governmentwide goal of contracts awarded to small businesses to 30 percent, up from the current 23 percent target.

The total value of federal contracts increased by 60 percent in the past five years, while the number of contracts declined by 55 percent, the committee said. Meanwhile, administration officials have made little progress in breaking up bundled contracts whose size prevents small business from bidding, congressional leaders said.

“Contract bundling has been public enemy No. 1 for small businesses that are trying to penetrate the federal marketplace,” said Rep. Nydia Velazquez (D-N.Y.), the committee’s chairwoman.

The committee is scheduled to mark up the bill April 24. The full House likely will consider it as early as May 7, committee members said.

Bundling is when an agency that is trying to streamline the procurement process combines a variety of procurement requirements into a single contract. Such megadeals generally exceed the reach of small businesses.

The Senate has indicated its interest in legislation similar to that proposed in the House. Sen. John Kerry (D-Mass.), chairman of the Small Business and Entrepreneurship Committee, is developing contracting legislation, but the Senate has no companion to the House bill, a committee spokeswoman said.

The House bill would discourage the practice of contract bundling. It would redefine bundling and require federal procurement officials to assess the effect that new contracts would have on small-business competition.

Contract bundling largely has kept agencies from reaching small-business contracting goals and have cost the small-business community $4.5 billion in federal business, Velazquez said.

 She said she initially was excited about the administration’s vow to break up contracts. She said her excitement has since faded because administration officials have not followed through and have not explained why.

Paul Hsu, the Small Business Administration’s associate administrator for government contracting and business development and former small-business owner, said bundling is a problem, although agencies will need to bundle certain contracts.

“I don’t think the definition is the issue. Enforcement is the issue,” Hsu told the committee. He offered few details on how to achieve better enforcement.

The bill also would require agencies to spend 30 percent of their contract dollars with small businesses, compared with 23 percent under existing procurement rules. Agencies failed to meet the 23 percent goal in fiscal 2006 but exceeded the mark in 2005.

Hsu said agencies are doing better. “We are going to continue to hold agencies accountable for their progress,” he said, adding that he plans to meet with agencies during the next nine months to talk about the issue.

However, Rep. William Jefferson (D-La.) said nine months was too long to wait.
Inside the proposed small-business legislationThe Small Business Fairness in Contracting Act would attempt to level the playing field for small businesses competing for federal contracts by:
  • Redefining contract bundling to ensure that contracts are reviewed for their impact on small businesses.
  • Having the Office of Federal Procurement Policy review agency procurement decisions related to small businesses and moderate disputes between the Small Business Administration and the buying agency.
  • Increasing the governmentwide small-business goal to 30 percent.
  • Requiring prime contractors to report small-business subcontracting as a percentage of the total dollar amount of the contract award.
  • Giving bonus credits to contractors that achieve their subcontracting goals, while naming the companies that do not.

— Matthew Weigelt

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