Contract bundling faces scrutiny

Rep. Don Manzullo (R-Ill.), the new chairman of the House Small Business Committee, intends to take a hard look at the federal government's contract bundling practices.

"Small business gets shut out because of the bundling issue. We're very concerned," said Rich Carter, a spokesman for Manzullo.

Carter said the committee would be organizing in the coming weeks and plans to hold a series of oversight hearings on the government's procurement practices.

Bundled contracts combine several small contracts into one large one. Advocates say bundling saves agencies time and money; opponents believe it cuts small businesses out of procurement opportunities.

"Small business doesn't have a chance to compete. It happens a lot in the defense industry," Carter said. "Government says they can do it cheaper that way and a lot of times, it's not the case."

Most of the biggest government contracts employ contract bundling. Among them are the Navy Marine Corps Intranet and the Internal Revenue Service's modernization program — each worth billions of dollars. Proponents of bundling say that although a large company was designated the prime contractor, the contracts provide subcontractor opportunities for dozens of other companies.

Craig Brooks, president of Electra International Telecommunications, Bethesda, Md., a small telecommunications company that provides services to the federal government, said bundling is unfair to small businesses.

"Bundling acts as a gatekeeper. It essentially locks out any business that is not an awardee of the bundled contracts," Brooks said.

But Harris Miller, president of the Information Technology Association of America, said, "We believe small business should have every opportunity to participate in government contracts. But the government has to run efficiently.... [Bundling] doesn't usually exclude small business from participating, but they have to be secondary, not prime contractors."