Report finds procurement reforms don’t hurt small businesses

New procurement vehicles may not be pushing small businesses out of the federal market after all, according to a new General Accounting Office report. The report, "Small Business: Trends in Federal Procurement in the 1990s" (GAO-01-119), studied the effects of recent procurement reforms on small business contractors. Members of Congress and officials with the Office of Advocacy at the Small Business Administration have argued that new types of procurement arrangements that consolidate contracts under multiple award pacts reduce the share of federal purchasing dollars that go to small businesses. In the report, GAO found that the share of federal dollars in the new kinds of contracts going to small businesses increased by one-third from fiscal 1994 to fiscal 1999. GAO looked at small business' share of multiple-award contracts, which allow agencies to purchase indefinite amounts of goods and services, and three other types of new contracts. Because of data limitations, the report did not examine the effect of governmentwide acquisition contracts on small businesses. These contracts have been blamed for contributing to the decline of small businesses' share of federal procurement dollars. GAO noted that the overall share of federal procurement dollars going to small businesses declined from about 25 percent in the mid-1990s to 23 percent in 1998 and 1999. Still, the report found that small businesses received a greater share of new contracts worth $25,000 or more in 1999 than in 1993 for most categories of federal procurement. While acknowledging that the study "shows some positive trends," the Small Business Administration expressed concern over the data used by GAO. In a Dec. 20 letter to GAO, SBA Chief Operating Officer Kristine Marcy noted that purchases made with the governmentwide purchase card have rapidly increased in recent years, but there are no data to show how many of these sales went to small businesses. Marcy wrote that preliminary data from fiscal 2000 shows agencies are having trouble meeting the governmentwide goal of awarding 23 percent of total procurement expenditures to small businesses. GAO did not include these preliminary data in its report. The Small Business Administration's Office of Advocacy has long argued that procurement reforms such as contract bundling and federal e-commerce efforts have been detrimental to small businesses. "The thrust to achieve operating efficiencies in government procurement offices is overpowering any arguments Advocacy has raised that this is bad public policy," wrote Jere W. Glover, outgoing chief counsel of the Office of Advocacy in the most recent issue of The Small Business Advocate. Current officials at the Office of Advocacy had not yet read the GAO report and would not comment on it. A spokesman for Rep. Thomas M. Davis, R-Va., who is expected to chair the House subcommittee on government management, information and technology in the 107th Congress, said the report shows the need to improve data on federal procurement practices. "The audit confirms we don't have a good way of measuring the small business picture," said Davis spokesman David Marin. "The congressman believes we need to find a better way to get a measure of how small business is doing before assuming this is bad news."
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