Panel softens anti-contract bundling language

The House Oversight and Government Reform Committee passed a bill Tuesday meant to increase federal contracts awarded to small businesses, but only after an amendment was adopted loosening some of the restrictions in the original bill.

The committee approved the Small Business Fairness in Contracting Act (H.R. 1873) by voice vote. The bill would increase the percent of small business contracts the government must strive to award and would redefine a practice known as contract bundling. It also would hand the Small Business Administration an appeal process if it believed another federal agency or department unfairly bundled a contract.

Bundling refers to when a federal entity combines two or more contracts, but it is frowned upon particularly if dissimilar contracts are combined because bundled contracts tend to be gobbled up by large businesses with key inroads in the contracting process.

The original small business contracting bill would have effectively banned bundling across the board, House Oversight and Government Reform Chairman Henry Waxman, D-Calif., said. Waxman and ranking member Tom Davis, R-Va., introduced an amendment that substituted the entire bill, including the bundling provision.

Waxman and Davis' amendment changed the bill's ban on all bundling to a ban on bundling of two or more existing contracts that were formerly performed by small businesses.

The substitute amendment also lowered from 30 percent to 25 percent the portion of contract dollars federal entities should attempt to award to small businesses. The current target is 23 percent. Rep. Bruce Braley, who was the lead sponsor of the original legislation, was unhappy with the change.

"For far too long these procurement goals have been seen as a ceiling rather than a goal," Braley, D-Iowa, said.

The substitute amendment also allows the Small Business Administration to approach appropriate congressional committees if it believes a federal contract is unfairly bundled. The original bill permitted the SBA to go to the Office of Management and Budget, but Waxman determined the partisan office was not an appropriate venue.

The committee also approved an amendment offered by Reps. William Lacy Clay, D-Mo., and Elijah Cummings, D-Md., that beefs up the goal for contracts awarded to minority and women-owned business, raising it from 5 percent to 8 percent. Waxman accepted the amendment, but promised the issue would be revisited because the committee had not considered it before.

Rep. Betty McCollum, D-Minn., was the sole vocal dissenter on the vote for the entire bill as amended. McCollum expressed concern that Native American businesses are threatened by a provision in the substitute amendment that would limit the value of contracts awarded to disadvantaged businesses without competitive procedures. Sole source contracts are capped at $3 million for goods and services and $5 million for manufacturing.

McCollum called the program in the SBA "the only non-gaming economic development that has worked."

The placeholder in the substitute amendment seeks to limit the value of the contracts without giving a specific dollar figure and requires action by the end of the year with the understanding the administrator for federal procurement policy will consult with affected groups.

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