Long live contract bundling

The Bush administration has told federal procurement officials to cut back on contract bundling because the practice makes it difficult for small businesses to compete for federal business. This may sound like a good idea, but it's not.

A 12-page Office of Management and Budget report lays out a series of measures it would take to rein in the practice of consolidating multiple procurement actions into one mega-contract.

Contract bundling came into vogue during the 1990s, when the federal government overhauled procurement regulations and reduced the acquisition workforce. The theory was that merging several contracts into one would reduce administrative costs. So why is the administration opposing bundling if it saves taxpayer dollars?

Small-business advocates — such as the Small Business Administration and Rep. Nydia Velazquez (D-N.Y.), ranking member of the House Small Business Committee — argue that contract bundling is a big problem for small firms. Most small businesses lack the resources to offer the range of services contained in a bundled procurement. And they've been complaining loudly that they don't get enough government business. So just before the November elections, the administration changed its tune and told small businesses that they'll get more government contracts from now on.

But is this really a good idea? I don't think so.

Let's say you buy a PC, printer and monitor from Dell Computer Corp. If you have a problem with any hardware component, you contact Dell. But what if you had to contact three different vendors to receive maintenance support on the PC, the printer and the monitor? Do you think you'd like such an arrangement? I doubt it. And the total package would probably cost you more because of the increased administrative costs. So is bundling a good idea from the consumer and taxpayer perspective? You bet it is!

Small-business interest groups like the National Women's Business Council and the National Black Chamber of Commerce praised the initiative, but Velazquez said OMB did not go far enough. "Given the severity of the contract-bundling problem, I was hoping for some bold vision and strong leadership," she said. "This report lacks both. It fails to recognize that the current procurement system is fatally flawed."

Velazquez noted that the OMB report cites an SBA Office of Advocacy finding that for every "100 bundled contracts, 106 individual contracts are no longer available to small businesses. For every $100 awarded on a 'bundled' contract, there is a $33 decrease to small businesses." How about savings to taxpayers?

I suspect this is a pre-election move, after which things will revert to the way they were — which is just fine by me!

Zall is a retired federal employee who since 1987 has written the Bureaucratus column for Federal Computer Week. He can be reached at milt.zall@verizon.net.

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