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Dems say agencies fall short of small business contracting goals

For the fourth year in a row, Democratic lawmakers have accused federal agencies of failing to meet their small business contracting obligations.

The government earned an overall grade of 'D' in an annual small business contracting report card, released June 25 by Rep. Nydia Velázquez, D-N.Y. Last year, agencies garnered a 'C' overall.

The government awarded 22.62 percent of prime contract dollars to small businesses in fiscal 2002, down slightly from 22.8 percent in 2001, according to information from the Federal Procurement Data System. The governmentwide goal is 23 percent. Velázquez's report also noted that agencies failed to meet a variety of other goals-such as awarding 5 percent of prime contract dollars to women-owned businesses. In fiscal 2002, the total reached 2.9 percent.

Flanked by several small business owners at a press conference, Velázquez placed the blame squarely on President Bush. "What this scorecard makes clear is that the Bush procurement policies are a complete and utter failure," she said. "Once again the administration is unwilling to attack the problem head on, which is a badly broken procurement system."

Not so, said an Office of Management and Budget official. He said the administration now requires agencies to submit quarterly reports on their efforts to limit contract bundling, the practice of combining unrelated requirements into one large contract. Additionally, the Small Business Administration is close to finalizing a rule that will require greater justification for the practice.

Small business advocates complain that bundling often creates packages that are too large for small firms to go after. As a result, the firms are losing out on millions of dollars, Velázquez contended.

But the available data from the federal government on the size and scope of contract bundling is limited.

Velázquez wants to give the Small Business Administration power to review bundled contracts and break them apart if the requirements can be handled by small firms. She did not specify if that should be done once a contract reaches certain dollar thresholds, or whether it should apply to specific types of contracts. The SBA proposal suggests that reviews take place for contracts exceeding $7 million at Defense; $5 million at NASA, the Energy Department and the General Services Administration; and $2 million for all other agencies.

Rather than break up contracts without any specific reason, agencies should strive to set aside projects in areas where small businesses are most viable, said Steve Kelman, a professor at Harvard University and head of procurement policy during the Clinton administration.

"Let's spend our efforts looking for those areas where small businesses are genuinely competitive," Kelman said during an interview last week. He added that the anti-bundling movement often overlooks the benefits agencies receive, including lower costs.