OFPP touts DOT pact as model for agencies

The Office of Federal Procurement Policy wants agencies to copy a recent Transportation Department procurement for computer services as a way to expand contracting opportunities for small and small, disadvantaged businesses (SDBs).

In a memo to government procurement executives and agency directors of small and disadvantaged-business utilization released last week, OFPP administrator Steven Kelman said agencies should structure new service contracts to involve multiple awards, setting aside some for small firms and vendors in the Small Business Administration's 8(a) contracting program for SDBs.

DOT used this approach for its $1.1 billion Information Technology Omnibus Procurement (ITOP) to award nine of 20 prime contracts to small companies and 8(a)s last month.

The memo also urges agencies to use other ways of hiring more small businesses, including evaluating prime contractors on how well they comply with their subcontracting plans, allowing agency small-business advocates to have more say in procurement planning, and a pilot program that would waive procurement notice requirements and waiting periods for service contracts of less than $1 million if they are set aside for small companies.

Mainly, Kelman said, the effort is designed to address complaints that agencies "bundle" contracts.

"The tendency of many agencies to [let] large umbrella task-order contracts is disturbing because it has precluded small and [small,] disadvantaged businesses from participating in prime contracting programs," he said.

Provisions in the 1994 Federal Acquisition Streamlining Act, however, encourage agencies to use multiple awards for service contracts, which can be structured to let more small businesses in the door.

Sam Meals, a consultant whose firm, Information Technology Planning Inc., counsels small companies, said the program appears well-intentioned. Small technology companies would welcome more opportunities to bid as prime contractors, partly because it is hard to count on revenue from subcontracts. Meals said past efforts to hold prime vendors accountable for how they use subcontractors have had limited success because these policies are not well-enforced.

Ralph Thomas, director of NASA's small and disadvantaged-business utilization office, said his agency has steadily increased its contracts with small firms, particularly SDBs, using several of the practices Kelman suggests. Thomas said his office helps develop contracting strategies for all large NASA procurements.

In addition, NASA has made it easier to let medium-size contracts to small companies by using streamlined negotiations procedures, a practice Kelman's memo cites as a model.

But Thomas said NASA would not let more multiple task-order contracts along the lines of the ITOP procurement.

"We certainly applaud that," Thomas said, "but NASA is getting away from task orders all together and moving toward performance-based contracting."

Kelman said the administration also wants to ensure that contracting opportunities for small firms are not reduced when new affirmative-action policies take effect. A Justice Department proposal issued last month would restrict set-asides for minority-owned companies to industries where such firms are underrepresented in federal contracts.

Individual agencies are also searching for ways to maintain opportunities for SDBs while complying with the year-old Supreme Court Adarand v. Pena decision, which set tougher standards for race-based set-aside programs.

Robert Neal, who is expected to be appointed soon as head of the Defense Department's small and disadvantaged business utilization office, has said he wants to explore using schedule contracts to bring more SDBs into the marketplace.

Neal said he is interested in whether DOD might be able to set up schedule contracts for 8(a) vendors as well as encourage more minority-owned companies to obtain contracts for the General Services Administration's multiple-award schedule (MAS). The department could then promote the schedule as a supply source. Because DOD has clout as the largest federal purchaser, if the department supports such programs, other agencies might follow, Neal said. But before any decisions are made, he added, he would have to confer with senior Defense procurement officials as well as vendors. "I want to give them a straw man to throw rocks at first."

Ken Salaets, director of government relations with the Information Technology Industry Council, said 8(a) companies should be encouraged to participate in the MAS program, but he said he sees no need for a separate schedule for these vendors.

"The current program should meet the needs of all companies that want to sell their products to the government," he said. "I don't know of any company that has difficulty getting a schedule if they offer the products that the government requires."

Neal also endorsed the ITOP-style multiple-award procurements, saying that if portions of such buys are set aside for SDBs, "they will be able to hold their own" as they compete for task orders against other vendors.

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