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Senators vote to limit contract bundling at Pentagon

Concerned that small businesses are being locked out of Defense Department contracts, lawmakers Wednesday launched the latest initiative to limit the practice of contract bundling.

The Senate adopted an amendment to the fiscal 2004 Defense authorization bill that would require the Pentagon to justify contract consolidations exceeding $5 million. Currently, such action occurs for contracts that exceed $7 million. The amendment was introduced by Sen. Susan Collins, R-Maine, chairwoman of the Governmental Affairs Committee. Co-sponsors included Sens. James Talent, R- Mo., Kay Bailey Hutchison, R-Texas and Olympia Snowe, R-Maine.

"The proliferation of contract bundling, especially at the Department of Defense, has dramatically reduced the government's contractor base," Collins said. "It's a losing situation for everyone-for small businesses, for the government and, ultimately, for the taxpayers."

Agencies have been turning to contract bundling for the past several years as a means of streamlining procurements. It enables agencies to package several work orders into one large contract, which, advocates say, reduces administrative costs.

Small businesses often claim that they don't have the resources to compete for mega-contracts.

Under the Collins amendment, administrative and personnel cost reductions alone would not provide a sufficient rationale for combining contracts. The amendment would force Defense to consider other issues, such as contractor performance.

Defense Department officials did not comment on the amendment.

Although he had not seen the amendment, Paul Murphy, president of Eagle Eye Publishing, a Fairfax, Va.-based firm that tracks federal procurement spending, said it does not directly address the issue of how much contracting agencies do with small businesses. "It doesn't address the money," he said. "It's another review."

Murphy suggested that agencies be forced to designate certain projects or dollar amounts for small businesses in their budgets. For subcontracting, agencies should require prime contractors to verify that they used small businesses, he argued.

"If they don't meet the goal, they shouldn't get paid," Murphy said.