On Tuesday, the House Oversight and Government Reform Committee passed a bill designed to increase federal contracts awarded to small businesses, but only after adopting an amendment that scaled back several important restrictions.
The committee approved the Small Business Fairness in Contracting Act (H.R. 1873), which would increase the percent of contracts awarded to small businesses and redefine the practice of contract bundling, in which two or more contracts are combined into a single bid. Bundling tends to unfairly favor larger businesses, particularly if the combined contracts are dissimilar in nature or significantly drive up the total cost of the contract. POGO has publicly supported efforts to curb contract bundling.
The original bill (pdf) would have effectively banned all bundling. However, Committee Chairman Henry Waxman, D-Calif., and ranking member Tom Davis, R-Va., introduced an amendment (pdf) with a narrower ban which will only apply to the bundling of two or more existing contracts that were formerly performed by small businesses.
The amendment also lowered from 30 percent to 25 percent the portion of contract dollars federal agencies should strive to award to small businesses. There is concern the percentage goal, which is currently set at 23 percent, will be treated as a ceiling rather than a floor, but the Federal Procurement Data System’s “Small Business Goaling Report” for FY 2005 (pdf) shows that contract awards to small businesses actually exceeded that goal by two percent. Therefore, Congress setting this goal as high as possible would be a step in the right direction toward leveling the playing field. (Note: POGO does not vouch for the accuracy of FPDS data, nor, as will be seen below, the accuracy of contractors claiming to be a small business.)
This is happening at the same time the Small Business Administration is taking steps to crack down on federal contracts that wind up in the hands of not-so-small businesses. Starting June 30, small businesses with federal contracts will be required to alert the government whenever they are acquired, merged or buy another company. Readers of this blog might be familiar with the story of GTSI Corp., a billion-dollar-a-year firm that was nearly debarred last year for falsely portraying itself as a small business (pdf) to win a Navy contract.
-- Neil Gordon