OMB to review contract bundling

The federal government needs to do a better job of opening contract competitions to small businesses, the administration's top procurement official said Wednesday.

According to Angela Styles, administrator for federal procurement policy at the Office of Management and Budget, OMB is reviewing contracting rules to see where there may be roadblocks to hiring small businesses in light of the government's poor track record in this area. OMB expects to issue a report and series of recommendations later this summer or early in the fall.

Most small businesses lack the resources to cut through the "morass" of rules governing federal contracting, Styles told a group of contracting officers Wednesday at the Council for Excellence in Government. Even if they do get through the red tape, few have the money to adequately market their services, she said.

Among other things, OMB will take a hard look at contract bundling, Styles said. Approved by Congress in the 1994 Federal Acquisition and Streamlining Act, contract bundling consolidates several contracts into one large one. Small business advocates such as Rep. Nydia Velázquez, D-N.Y., and the Small Business Administration argue that contract bundling is the biggest problem for small firms. Velázquez, who released her third annual scorecard on federal contracting in May, gave the government a D for its efforts to award jobs to small companies.

But Styles acknowledged that the administration must walk a delicate balance on the issue. Agencies frequently use contract bundling to drive down costs.

"We don't want to take bundling away from agencies," Styles said. "We have to take a broader look at it. It's a tough balance of knowing when to bundle and when not to."

While it is important to assess the legal barriers, Styles said agencies also must change their attitudes toward small businesses. Because of legal requirements to award contracts to small- and minority-owned firms, there is an "unfortunate" perception that these companies are getting a handout. Styles said the government must change that image and create an environment in which small businesses can flourish.