Administration reacts to bundling language

A battle may be brewing between Clinton administration procurement officials and the leadership of the Senate Small Business Committee over proposed legislation that would discourage federal agencies from consolidating requirements that could be met through separate contracts with small businesses.

Steven Kelman director of the Office of Management and Budget's Office of Federal Procurement Policy late last month wrote to committee chairman Sen. Christopher "Kit" Bond (R-Mo.) protesting the language contained in a section of the Senate Small Business Administration Reauthorization Act. He said the language would prevent agencies from obtaining the lower prices associated with volume discounts that result from bundling requirements.

"The federal government must not be asked to forgo its ability to obtain these types of savings especially in a tight budget environment " Kelman said.

A spokesman for Bond said the senator was not swayed by Kelman's letter. He said contract bundling was at the root of the procurement abuses of the 1970s and 1980s that resulted in well-known fiascoes such as "the $500 toilet seat." He added that the practice would block from competition small businesses without the wherewithal to bid on consolidated requirements.

The spokesman accused Kelman of promoting a solution that would make procurement easier but at the expense of taxpayers and small businesses. "What is efficient for OFPP is not necessarily what is good for the country. It seems like for some reason they want to go back to the past and that is not a good idea " the spokesman said.

"The committee will oppose contract bundling in the strongest possible way " he said adding that Bond believes he has bipartisan support on the issue. "It is just a big business boon for a few companies. A fight is definitely looming on this in Congress."

Olga Grkavac vice president for systems integration at the Information Technology Association of America said her organization has not taken an official stance on the issue but will most likely side with Kelman. "It would be very costly to the government to do this " she said. "In the past we've always opposed these sort of artificial restrictions. It dilutes the size of contracts but not for efficiency purposes."

Consolidated Example

In his letter Kelman cited the Transportation Department's Information Technology Omnibus Procurement (ITOP) as an example of a consolidated contract that was set up to ensure the participation of small businesses. He said small and disadvantaged businesses have taken nearly 53 percent of the task-order dollars under ITOP.

Kelman said last week in an interview that he believes other members of Congress understand his concerns and will put forward alternate language that will not be "a one-sided blanket condemnation of contract consolidation.

"When this language was considered I don't think they had a chance to hear a taxpayer's perspective " Kelman said. "Now that this has been heard I don't think we will end up with such one-sided language."An aide to Sen. Fred Thompson (R-Tenn.) chairman of the Senate Governmental Affairs Committee said Thompson is working with members of the Senate Armed Services Committee to propose language on contract bundling to replace Bond's. The aide said Bond's legislation fails to recognize that some instances of consolidation do benefit the government and she questioned Bond's jurisdiction in proposing legislation on the issue.

She said Thompson believes Bond's proposal is "restrictive overly burdensome [and] doesn't distinguish between appropriate and inappropriate bundling." In addition she said Thompson objects to Bond's recommendation to establish "quotas" for small-business participation as federal subcontractors.

"We think their language is bad policy " Thompson's aide said adding that she was speaking on behalf of majority and minority members of the Governmental Affairs and Armed Services committees. "We will not allow their bill to pass with that language in it."

Stan Soloway a consultant and spokesman at the Contract Services Association in Washington D.C. said he believes opponents can strike a compromise by allowing bundling only when agencies can prove it will save money or when objectives for including small businesses are built into evaluation criteria.

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