The provision, included in the 2010 Small Business Contracting Improvements Act introduced by Sens. Mary Landrieu, D-La., and Olympia Snowe, R-Maine, on Thursday, would require agencies to reserve for small firms a yet undetermined portion of orders placed against federal supply schedule, multiple-award and other governmentwide acquisition contracts. The Office of Management and Budget's administrator for the Office of Federal Procurement Policy would be responsible for writing guidelines to implement the change.
The measure also depends on a variety of tactics to put large and small contractors on a level playing field. For example, it would take the biggest swipe to date at contract bundling -- a maneuver in which several small and common procurements are combined into one large acquisition. Bundled contracts generally are out of reach for small businesses.
Before bundling any contract worth more than $2 million, agencies would have to conduct market research, identify alternative contracting approaches, and justify that the consolidation is necessary and would save taxpayers substantial money. In addition, agencies would be required to publicly disclose all bundling decisions.
The bill would not apply to Defense Department contracts, which made up the majority of the government's $523 billion in contract spending in fiscal 2009. Much of the language has been introduced before, but failed to garner significant support.
Still, Landrieu and Snowe said the legislation would help the government meet its obligations to small businesses. For the past three years, federal agencies have fallen slightly short of the governmentwide goal of awarding 23 percent of all contract dollars to small firms. And, while small firms captured a bigger dollar amount in fiscal 2008 than in 2007, they still earned a smaller share of total contracting dollars.
"By increasing contracts to small businesses by just 1 percent, we can create more than 100,000 new jobs -- and today, we need those jobs more than ever," Landrieu noted.
Snowe said she is "confident that this legislation will result in the changes necessary to reduce fraud and waste while paving the way for the federal government to maximize the use of America's innovative small businesses in the contracting arena."
The bill also would establish a joint venture and teaming center at the Small Business Administration that would, on a pilot basis, provide technical support and grant funding to associations and businesses interested in joining together to bid on larger contracts.
The act appropriates $5 million in grants annually through fiscal 2015, but SBA would be forced to use its existing staff to run the new Center for Small Business Teaming, according to a Senate source familiar with the bill.
SBA declined to comment on the bill.
In addition, the legislation would end SBA's Small Business Competitiveness Demonstration Program. Established in 1988, the initiative assesses the ability of small businesses to compete successfully in certain industry categories without set-asides. It also uses targeted goaling and management techniques to enhance small businesses participation in 10 other industry categories.
Snowe reportedly asked for the repeal, but her office did not respond to a request for comment on the program.
Other provisions in the act would:
- Establish guidelines for reviewing and evaluating subcontractor participation on prime contracts.
- Mandate speedier payments to small business subcontractors that have successfully completed work on behalf of the prime contractor. The government would be able to withhold funds from contractors that fail to pay their subcontractors.
- Direct OFPP to issue guidelines on how employees can purchase more goods from small businesses with government-issued credit cards.
- Require agencies to include meeting small business contracting goals in the performance evaluation of contracting and program personnel.
- Develop training programs for contracting and enforcement personnel based on small business size standards.
- Call for SBA to conduct a detailed review of the size standards for small businesses and make appropriate changes.
- Establish a presumption of loss to the government when a large business performs a small business contract.
- Require the Government Accountability Office to study the effectiveness of SBA's mentor-protégé program.