The Senate Small Business and Entrepreneurship Committee held a March 18 hearing to focus attention on the practice of contract bundling and its impact on small businesses. Contract bundling is the practice by a federal department or agency of consolidating several small projects, which would normally be contracted out separately, into one single mega-contract that favors large companies.
“In the years following federal procurement reform, federal agencies that have been under pressure to spend federal dollars more efficiently, have consolidated or bundled contracts to save time and money,” explained Committee Chair Olympia Snowe (R-ME), opening the hearing. “The result is that small businesses continue to lose federal contracts by the bundle,” she continued.
Last March, the President unveiled his small business agenda, which included several proposals to increase access to federal contracting opportunities for small businesses. The agenda called on the Office of Management and Budget (OMB) to develop a plan to unbundle federal contracts.
Angela Styles of OMB outlined the strategy developed by her agency in response to the President’s request. She explained that the strategy includes nine recommendations that can be divided into three categories: promoting leadership and accountability; closing regulatory loopholes; and mitigating the effects of contract bundling judged to be necessary and justified. Agencies have been asked “to report quarterly on actions they are taking to implement” the strategies, she added.
Additionally, she told the committee that her office “formed and is heading an interagency task force to develop regulations to amend both the Federal Acquisition Regulation (FAR) and Small Business Administration (SBA) bundling regulations to help implement the strategy.” Proposed regulations would make clear that multiple award contracts are subject to regulatory requirements, provide small business contracting review procedures, and require agencies to “identify alternative strategies that reduce bundling and justify decisions not to use those alternatives.”
Carol Kuc of Women Impacting Public Policy commended the President and OMB for their initiative to provide more opportunities for small businesses to compete for federal contracts. “But the President’s efforts are thwarted on a daily basis” by contract bundling, she said.
“While women-owned businesses represent 38 percent of all U.S. businesses and employ more people than the Fortune 500 companies worldwide, it is disparaging to this dynamic and growing community that the federal woman-owned goal of 5 percent has never been met,” she exlained.
“According to the Center for Women’s Business Research, contracts awarded to women-owned enterprises have only minimally increased from a 1992 benchmark of 1.3 percent, while women-owned companies have grown 14 percent between 1997-2002,” she continued. “In light of the tremendous growth of women-owned firms, under-representation of this community in the federal procurement arena is simply unacceptable,” she added.
Ms. Kuc offered several recommendations on behalf of her organization with regard to federal contracting. “We urge the Office of Federal Procurement Policy to publish a monthly scorecard on the small business percentages each agency awards,” with a breakdown of groups, such as businesses owned by women or veterans, and “clean up the small business database, to ensure those claiming to be small businesses are who they say they are,” she urged.
She also asked the committee to establish one federal certification that establishes a women- or minority-owned status. “Small women and minority businesses spend $7,000 to $10,000 to duplicate their certifications to local and state governments,” she said. A federal certification accepted by states and localities “would save significant time and money,” she added.
