There’s No Business Like Small Business

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

Comments

[Jennifer Buttke]

HR 1873 should not pass in it's current form. It needs to reguire the removal of all fortune 1000 firms from the federal small business contracting program. This would be achieved if annual recertification was added for all firms with existing federal small business contracts. Contact your senator today and spead the word. Billions of small business contracts are lost per month! We need to change that.

[Pro Se Thoughts]

I filed a lawsuit yesterday, in the Court of Federal Claims, against Robins Air Force Base. In the relief section of the complaint, I discuss the contract bundling situation, the contractaul vehicle situation forced on small businesses, and the unfairness and abuse of the 8(a) set-aside program and the reverse discrimination it causes to those who can't get 8(a) status. I asked for several things as relief. Don't know what will happen as the documents are still on their way through the mail to the COFC.

[Scott Amey]

Thanks to Rep. Melissa Bean (D-IL), the Small Business Fairness in Contracting Act's (H.R.1873) small biz goal was raised back to 30 percent. The bill passed the House (409 - 13) and now moves over to the Senate for consideration.

[Scott Amey]

CBO weighed in also:

CBO estimates that implementing H.R. 1873 would cost $10 million in fiscal year 2008 and $75 million over the 2008-2012 period.

http://www.cbo.gov/ftpdocs/80xx/doc8071/hr1873hogr.pdf

[Scott Amey]

OMB is not a big fan of H.R. 1873.

http://www.whitehouse.gov/omb/legislative/sap/110-1/hr1873sap-r.pdf

[Jim]

we recently did a interview on this very subject http://www.mysuccessgateway.com/guru/guru.php?id=59

[Jim]

Sounds like the influence is where the money is. We did a podcast about this last week and we have another coming out tomorrow with Paul Murphy, CEO of Eagle Eye, Inc saying similar things. As a matter of fact he said that there are 4 contractors who have more business than all 140,000 small businesses doing business with the Fed. $82 Billion Something doesn't add up.

http://www.mysuccessgateway.com/guru/guru.php?id=59

[Adam]

HR 1873 does not require immediate recertification of companies registered as a small business. This goes directly against the spirit of the Small Business Act of 1953.

HR 1873 has absolutely no provisions of any kind that would stop Hundred's of Fortune 1000 firms and international firms that have received federal small business contracts from continuing to receive billions in federal small business contracts until 2012.