Letters to the editor

Small-business Statistics Sized Up; Acquisition Chief Would Add Confusion

Small-business Statistics Sized Up

In a recent column about small business ["Nothing lies like statistics," FCW, March 17], Steve Kelman accused me of lying and "scare- mongering."

Aside from the questionable tactics, Kelman missed the point. The issue is open access to contracting opportunities. We need to keep the door open for small businesses to compete for federal contracts. When small businesses are excluded from federal opportunities, our agencies, they and, ultimately, the taxpayers lose.

The statistics Kelman quotes were included in our report to President Bush on contract bundling. The statistics clearly show a sharp decline in the number of new contracts worth more than $25,000 — contracts that small businesses would typically look to compete for — and a corresponding decline in the number of small businesses receiving these contracts.

The statistics also show a sharp increase in expenditures for orders under existing contracts, from $21 billion in fiscal 1990 to a high of $72 billion in fiscal 2001.

Ruling out nefarious intent, either Kelman didn't read the report or didn't make it to this statistic on Page 5 of our report. This statistic is extremely troubling because orders under existing contracts are awarded with limited, if any, competition or reviews for contract bundling or other small-business issues.

This trend toward larger and fewer contracts results in significantly less opportunity for open competition. Some procurement reform practices reduced effective competition and open access to contracting opportunities. We must consider the impact of procurement reform practices on small business and potential new entrants to the federal marketplace and adjust our practices accordingly.

I respectfully ask Kelman to engage in productive, substantive debate for the benefit of our procurement community, but most importantly for the benefit of the taxpayer.

We should not be asked to be so entrenched in his procurement reforms that we can't all see the need for some improvements. If we start slinging mud, our agencies and the taxpayers are the only ones that lose.

Angela Styles Administrator Office of Federal Procurement Policy Office of Management and Budget

Steve Kelman replies: The average reader or listener presented with the statistic that Angela Styles has been repeating around Washington, D.C. — that the number of new contracts going to small business has declined from 52,790 to 20,736 in a decade — would conclude that a crisis exists in small-business contracting: that small business is being awarded dramatically less business now than before.

In fact, "new contracts" is a term of art. There are now fewer "new" awards — for large and small businesses alike — because contract lengths are growing. In addition, there are fewer "contracts" and more "orders" because of the growth of the General Services Administration schedules and governmentwide acquisition contracts.

If you look at the small-business share of new contracts, whether by numbers or dollar value, it is unchanged during the past decade.

Her letter now changes tack, moving away from the misleading impression of a crisis created by these numbers and arguing that the larger proportion of federal contract dollars being spent on orders rather than new contracts (up from $21 billion to $71 billion) is what is creating a problem for small business.

But simple arithmetic implies that if the overall percentage of contract dollars going to small businesses has remained constant (which it has) and the percentage going to small businesses under "new contracts" has remained constant, then the percentage going to small businesses from orders under existing contracts also has remained constant. No crisis here either.

I have joined many others in supporting the congressional Section 803 language to deal with problems with competition on the GSA services schedules. I also support continuous improvement efforts for the procurement changes of the past decade. I oppose taxpayer rip-offs in the name of reducing contract "bundling," and I oppose efforts to return the procurement system to the days of bureaucracy and adversarial government/industry relations.

Acquisition Chief Would Add Confusion

The following is a response to an FCW.com poll question that asked: "Is it necessary to create a chief acquisition officer position at each agency?"

Federal agencies each have a senior procurement executive and typically a procurement executive. These individuals are fully responsible for the agency's acquisition program. The Federal Acquisition Regulation mandates the senior position and it sets forth acquisition responsibilities.

To permit or require each agency to establish and recruit a chief acquisition officer clearly would create additional confusion in responsibilities and cause turf battles. Moreover, the concept in and of itself contradicts the President's Management Agenda.

Susan Gerbing Department of Veterans Affairs

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