Biz criticizes contract bundling

Congress and industry have become concerned about the increasingly popular trend in the Defense Department and other agencies to combine numerous small information technology contracts into one larger contract because it makes it more difficult for small businesses to compete for government work.So-called contract bundling and contract consolidation have increased to 13 percent of all contracts, up from about 11.5 percent in fiscal 1992, when the government started to collect figures on the practice, said Paul Murphy, president of Eagle Eye Publishers Inc., who testified this month at a House Small Business Committee hearing.

"Contract bundling and contract consolidation are occurring, and it is working to the detriment of small federal contractors," Murphy said in his written testimony.

Eagle Eye is conducting a study for the Small Business Administration on the impact of contract bundling. Craig Brooks, president of Electra International Telecommunications, Bethesda, Md., said the company has been shut out of DOD's Defense Information Systems Network Transmission Services-Continental United States Extension contract (DTS-CE), which was awarded to AT&T, MCI WorldCom and Sprint. Those providers "are now the only vendors who have the right to bid on future opportunities" for DOD telecom services between and within local-access telephone areas, Brooks said.

During the past 10 fiscal years, small businesses have won as much as $26 billion in prime contract awards - 23 percent of total DOD contract awards - said David Oliver, principal deputy undersecretary of Defense for acquisition, technology and logistics. "This stability suggests that at least to date contract bundling has not had a major impact on the health of the small business industrial base in general," he said.

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