Big Plans for Small Business

rocurement reform of the early 1990s has not protected small business. We need a major change in how we are thinking about this," said Sen. John Kerry, D-Mass, at a recent roundtable session with small business leaders from all over the country. Kerry, chairman of the Senate Committee on Small Business and Entrepreneurship, insisted that rules that allow contract bundling must be stricter, saying agencies often squeeze out small firms when they consolidate small contracts into larger ones.

The small business committee convened the Washington roundtable in June to elicit views on legislative remedies. A group of federal officials who deal with small business issues also attended the roundtable.

At the same time, Angela Styles, administrator of the Office of Management and Budget's Office of Federal Procurement Policy, has been addressing major hurdles that keep small businesses from gaining a stronger foothold in the federal market, including lack of accountability and access.

In September, OMB must submit recommendations to the president on how to deal with complaints from small businesses. Two multi-agency teams-one focusing on full and open competition and the other on contract bundling-are seeking nonlegislative solutions.

Roundtable participants from industry complained that government isn't meeting its goals of awarding a percentage of its contracts to small businesses and that agencies face no real consequences for that failure.

The goals for the last two years have been narrowly missed, but the encouraging news is that the money going to small business on prime contracts has increased, from $42.4 billion in 1997 to $50.1 billion in 2001-a rise of more than 18 percent.

One participant said the Pentagon has improved responsiveness by requiring regular performance reports from Defense agencies. Kerry has proposed a similar approach for civilian agencies. He wants to establish an ombudsman at the Small Business Administration to monitor how well agencies are doing and to require plans for improvement if goals aren't being met. Having the means for measuring progress and the plans to deal with shortfalls would keep agencies focused on their targets.

Ralph Thomas, NASA's associate administrator for small and disadvantaged business utilization, said at the roundtable that progress has been understated because government figures don't account for subcontracting dollars. It doesn't matter if small business revenues flow from prime contracts or subcontracts, said one roundtable participant, "it's money." And one way to focus prime contractors on meeting subcontracting goals is to measure their performance in terms of dollars they provide to small business.

"Instilling a culture that always looks at small business," and using "a strong, integrated planning process" has helped the IRS to channel 30 percent of its funding to small businesses, Steven App, the Treasury Department's deputy chief financial officer, said at the roundtable.

Agencies must figure out what work they'll need and whether small businesses can fulfill those requirements. Knowing the marketplace is critical if contracting officers are to be effective business managers.

Sen. Kerry and other committee members introduced the Small Business Federal Contractor Safeguard Act, S 2466, in May to strengthen rules on bundled contracts. Bundling makes contract oversight easier for agencies, but it frequently makes new awards so big that small businesses can't compete for the work, critics say. Kerry proposes requiring agencies to justify any consolidated contract of more than $2 million and to conduct more extensive analysis for consolidations of more than $5 million.

A number of approaches intended to speed the contracting process have sparked concerns among small businesses. GSA schedules and governmentwide acquisition contracts list prequalified bidders who've won past awards. Agencies can make awards to those on these lists in a heartbeat. But some say these contracting tools limit competition to only those few chosen firms.

A huge transformation in contracting has taken place over the last decade as the government has sought to bring commercial firms, technology companies in particular, into its marketplace. These firms are essential if the government is to keep pace with new technology.

No two firms offer precisely the same qualifications, products, approaches or solutions to meet the government's needs.

An expeditious "best value" selection process, with all its inherent subjectivity and risks, is the most logical approach to buying products and services. The alternative is to return to the Dark Ages of procurement, when the government required firms to follow a detailed set of specifications and then picked the lowest bidder-back when it took four years to award a contract.

But choosing the best value doesn't mean making the expedient choice at the expense of denying small businesses their rightful opportunity to compete.