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Agencies fail to report on contract bundling

Nearly half of federal departments and agencies have failed to provide the White House with information on their efforts to reduce contract bundling, according to administration officials.

Testifying before the Senate Small Business Committee, Angela Styles, the administration's head of procurement policy, said the Commerce, Education, Interior, Justice, and State departments, along with the Environmental Protection Agency, Agency for International Development, General Services Administration and Office of Personnel Management are delinquent in filing reports.

"That's bothersome," said Senate Small Business Committee Chairwoman Olympia Snowe, R-Maine. "It suggests that some agencies are not taking this seriously."

The reports, due to the Office of Management and Budget on a quarterly basis, are part of the administration's effort to boost small business contracting. The first reports were due Jan. 31. Under contract bundling, agencies consolidate multiple projects into one mega-deal. The practice is seen as a way of streamlining the procurement process. Critics say it prevents small businesses with limited resources from competing against large companies.

"We share your concerns," Styles told Snowe, adding that OMB is working with the agencies to get the data as quickly as possible.

Still, data already provided to OMB is not sufficient to determine if agencies are actually reducing unnecessary bundling, said David Cooper, director of acquisition and sourcing management at the General Accounting Office. Most of the reports are process-oriented, outlining such things as who is filing reports.

He suggested that OMB come up with more concrete output measures, such as how many contracts were subject to review and what action was taken when an unnecessary consolidation was uncovered. "We need more quantitative analysis," Cooper said.

Styles agreed. She said the first reports focused on process to get a snapshot of what is currently happening governmentwide. Subsequent reports will require agencies to provide more detailed information.

Last October, OMB issued a 12-point plan to reduce contract bundling. Requiring quarterly reports is the administration's attempt to hold agency officials accountable for meeting that goal. There is nothing in the plan, however, that penalizes agencies for failing to limit consolidations.

Small businesses often cite bundling as the major barrier for gaining access to the federal marketplace. The practice has been on the rise for the past decade. In fact, the 28,916 bundled contracts in fiscal 2001 represented an 8 percent increase from fiscal 2000 and a 19 percent jump since 1992, according to Paul Murphy, president of Eagle Eye Publishing, a Fairfax, Va.-based firm that tracks federal procurement spending. In 2001, bundled contracts accounted for 16.4 percent of all prime contracts and 51 percent of all reported prime contract spending.

While the small business share of bundled contracts was 52 percent in 2001, their share of money attributed to those contracts was 16 percent, Murphy said.