Industry group warns against mandates for small-biz opportunities

The Barack Obama administration is acting on a legislative provision that attempts to give more opportunities to small businesses in an area where regulations have been basically silent. However, industry groups worry that strict rules could stifle a dynamic environment.

Small companies with a contract in the General Services Administration’s Multiple Award Schedules program would suffer if regulators adopt guidance that replaces agencies’ flexibility with rigid set-aside mandates, said Roger Waldron, president of the Coalition for Government Procurement.

“The rules would divide the market in an unhealthy way,” Waldron said.

Regulators issued an interim rule in November telling contracting officers to set aside task and delivery orders made to multiple-award contracts, blanket purchase agreements, and the Schedules contracts. It also tells agencies to reserve some of those types of contracts for small businesses. There is no deadline for issuing a final rule.

However, the rule gives the officers discretion. The rule is based on a provision in Small Business Jobs Act, which was enacted in 2010. The law gives contracting officers the ability to reserve orders for small business on multiple-awards contracts, including the Schedules. Like the interim rule, the law gives the contracting officers discretion to decide when to set aside a contract.

Despite that, the Coalition has concerns that officials could overstep the intent of the law.

“Regulatory guidance that limits agency flexibility when using the [Schedules] program or otherwise applies rigid, mandatory set-aside rules would lead to reduction in opportunities for small businesses by dividing the market and adding unnecessary complexity,” the coalition wrote in comments Jan. 3 about the rule.

Officials could weaken the Schedules if they went too far, Waldron. New rules could lead to two separate regulatory frameworks under the Schedules program—one for small businesses and another for “other than small” companies.

Meanwhile, the Schedules are doing well in sales to small businesses. The Schedules had $38.6 billion in sales in fiscal 2011. Through the years, roughly a third of the business goes to small companies, which exceeds the governmentwide 23-percent annual goal for small-business contracting. Many Schedules contract-holders are small businesses.

In all though, Waldron said the outstanding question is whether regulators will make these set-aside rules mandatory or discretionary for contracting officers.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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Reader comments

Wed, Jan 25, 2012 Raul Espinosa

The small business community has found refreshing that FCW is addressing issues of concern to small businesses. Our community is not pleased, however, with the comments of Mr. Waldron of the Coalition for Government Procurement. First of all, the Coalition does NOT speak for our concerns nor for our interests. Their Board, for that matter, is comprised of Fortune 500 companies. Furthermore, Mr. Waldron's comments that "Through the years, roughly a third of the (GSA Schedule) business goes to small companies, which exceeds the government wide 23-percent annual goal for small-business contracting" is not true. Robert Burton, former Deputy Administrator of OFPP - on a FCW OP-ED - had discussed the fact that the federal procurement data system indicated that more than three out of every four simplified acquisitions are going to large businesses. Simplified acquisitions are ‘exclusive’ for small businesses’ and regulators - overstepped their authority years ago when they interpreted the statutes of the Small Business Act. Their current attempt to correct their blunder through their 'interim rule on set-asides on the GSA Schedule' is, frankly, pathetic and unfair! Discretion may be used, however, on contracts above $150,000. Their original actions diverted billions away from small businesses and we're not going to be abused, again! Illegal regulations is only one of the obstacles small businesses have to overcome. The other are abusive procurement practices or barriers which limit our participation. Borrowing from a famous speech made popular by the movie Network, "We are as mad as hell at the regulations and at the barriers and we're not going to take their abuse anymore." Raul Espinosa Founder and CEO Fairness in Procurement Alliance (FPA)

Tue, Jan 24, 2012 OccupyIT

Let's solve a problem that needs solving first before chasing ghosts. Let's finally take a serious look and enforce subcontracting plans by large businesses. They are a joke and we all know it. Please include past performance of subcontracting plans in your evaluative criteria people! Do the right thing!

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