No pain, no gain on small-biz goals

Census Bureau applies pressure via contract award fees

Show me the numbers

Government officials want accurate information about where departments are spending contracting dollars.

“Because so much key information about subcontracting plans was incomplete in federal procurement data systems...we cannot tell the extent to which the agencies are complying with the regulations,” William Shear, director of financial markets and community investment at the Government Accountability Office, said in testimony Sept. 26 before the House Oversight and Government Reform Committee’s Government Management, Organization and Procurement Subcommittee.

Shear recommended that the largest government buyers, the Defense and Homeland Security departments and the General Services Administration, issue guidance on the importance of keeping accurate
information.

He said agencies also should have the information publicly available so they can explain their reasoning for contracting decisions. It’s particularly important when an agency decides against requiring subcontracting plans, he said.

— Matthew Weigelt

Agencies can pressure prime contractors with tough consequences to make them adhere to their small-business subcontracting goals, but some lawmakers wonder why agencies aren’t under the same pressure to meet their own goals.

The Census Bureau, for example, urged two prime contractors working on its 2010 census to meet their planned small-business subcontracting goals. In the contract language, the bureau warned them that their award fees for doing good work would otherwise be in jeopardy.

Preston Jay Waite, deputy director at the Census Bureau, said Lockheed Martin must send 31 percent of the contract’s total value to small businesses. Meanwhile, Harris must send 21 percent. However, if bureau officials find that either company is lagging behind or not working to meet the goals, the bureau could withhold as much as 25 percent of Lockheed Martin’s award fee and 33 percent of Harris’ award, Waite said.

“If you want accountability, you have to have some kind of penalty,” Waite told the House Oversight and Government Reform Committee’s Government Management, Organization and Procurement Subcommittee Sept. 26. If those contractors failed to meet the goals, “they didn’t get as much profit.”

Although Census has put provisions in its contracts to ensure it meets its goals, many other agencies have not been as
determined. The Small Business Administration found in August that half of the major departments failed to reach small-business goals in fiscal 2006.

And for those agencies that fall short, there is little repercussion. Agencies are supposed to award 23 percent of all contracting dollars to small businesses. They also are expected to award certain percentages of contracting dollars to 8(a) businesses, companies in Historically Underutilized Business Zones, and those owned by minorities and service-disabled veterans.

Rep. Edolphus Towns (D-N.Y.), subcommittee chairman, said agencies don’t face penalties, such as a hold on funding, if they miss small-business contracting goals. “It is a problem, and they even acknowledge now it’s a problem,” Towns said.

He said he hopes agency officials will solve the problem on their own.

Agency officials offered some suggestions to Towns. Calvin Jenkins, SBA’s deputy associate administrator for government contracting and business development, said a first step is publicly presenting an agency with a failing score if it deserves it.

Part of the problem may be organizational. In some departments, directors of the offices of small and disadvantaged business utilization do not report directly to their agencies’ leaders or their deputies, as the law requires, said William Shear, director of financial markets and community investment at the Government Accountability Office.

The decision regarding “who gets each federal contract ultimately rests with the agencies’ contracting offices, not with [the advocates] and not with SBA,” Shear said.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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