Small Business Administration gets it wrong on GSA schedules

A recent case involving the General Services Administration's multiple-award schedule (MAS) program demonstrates that the Small Business Administration, which is usually the champion of entrepreneurs and others attempting to start or maintain small businesses, can sometimes miss seeing the forest for the trees.

In late 1997 GSA was primed to issue a new multiple-award solicitation for the procurement of information technology goods and services. The solicitation included many important procurement rules designed to make it easier for federal agencies to buy a wide variety of goods and services through the multiple-award program. This solicitation is sorely needed to allow GSA enough time to begin renegotiating new deals with existing contracts that are scheduled to expire in March 1999. As part of the approval process, a draft of the solicitation was sent to SBA for review.

While most of these reviews are usually little more than perfunctory, SBA lately has been paying closer attention to small-business utilization in government contracts. Because a court ruled that minority set-aside programs that are not narrowly tailored to remedy specific previous discrimination are unallowable, SBA has stepped up its scrutiny in other areas to ensure that federal departments maintain compliance with existing small-business utilization mandates. GSA's IT solicitation got caught in this web.

SBA apparently was concerned that the popularity of the schedules program, the wide variety of goods and services available from it and the ease of use it offers federal buyers would hurt the ability of small businesses to compete for government contracts. GSA and SBA reportedly have battled over whether specific language encouraging federal agency use of small businesses would be included in the solicitation and whether portions of the solicitation would be set aside for small businesses.

As a result, the issuance of a new solicitation has been held up for more than two months.

The irony of SBA's actions is that it is seriously harming many of the small businesses it is allegedly trying to help. The Coalition for Government Procurement has heard from several of its 8(a) and small-business members that they are quite pleased with the schedules program, and they feel that it provides them with a tremendous contracting vehicle. They feel SBA's actions put their federal business success in jeopardy.

Furthermore, no new small businesses currently can apply for IT multiple-award schedule contracts of their own. Other small businesses that are eager to partner with new or existing schedule holders face diminished business prospects through either the absence of a contract or the increasingly limited utility of an existing contract that expires in just more than one year. The ability of small and large businesses to enter into blanket purchase agreements is now nonexistent.

While SBA claims that small businesses may be harmed by the broad array of products and services on the schedules program, reality shows something quite different. Fully two-thirds of all current schedule contractors are small businesses.

This is a classic case of a government regulatory agency worried about the ability of business to do something it is already doing quite well without additional government help.

Small businesses benefit from multiple-award schedule contracts in other ways as well. Every schedule contract awarded to a large business with an estimated value of more than $500,000 must have a small-business subcontracting agreement.

The agreements are receiving close scrutiny to ensure that small-business use goals are met as a condition of maintaining a schedule contract. This way, even small companies that do not directly sell to the federal government are assured of receiving some benefit.

Overall, small IT businesses receive millions and millions of dollars each year through their participation in GSA's MAS program. The number of small businesses that participate in the program continues to increase, indicating that many feel the schedules program is a good deal for their companies.

It seems clear that SBA is not hearing from all small businesses. Although some may be worried about their ability to compete in an era of streamlined procurement, many others have hung out their "Open for Business" signs by participating in the MAS program.

-- Caggiano is president of the Coalition for Government Procurement, a multiple-industry trade association of 300 companies that sell goods and services to the federal government.

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