Administration opposes hike in small business contracting goals

Official says tougher target would have “chilling effect” on agencies’ efforts to buy from small firms.

The White House opposes a bill that would boost small business contracting and impose stricter standards on the combination of small orders into mega-contracts, an administration official said Tuesday.

The official, who spoke to reporters on condition of anonymity, said that while the administration opposes the Small Business Fairness in Contracting Act (H.R. 1873), it has not threatened a veto should the measure reach President Bush's desk.

The official said provisions in the bill, such as tougher governmentwide goals for agencies' small business spending and new limits and reporting requirements on contract bundling, would be difficult to implement and would have a chilling effect on agencies' use of small businesses.

"I'm a strong advocate for small business, and am constantly on the lookout for constructive things we can do to provide opportunities for small business," the official said, expressing hope that the administration could work with House lawmakers on the measure.

The original version as passed unanimously by the House Small Business Committee, set a governmentwide floor for agency small business purchasing at 30 percent of contract dollars, significantly higher than the current goal of 23 percent. The House Oversight and Government Reform Committee, which also has jurisdiction, passed a 25 percent goal.

The administration official said that setting such a high target without leaving room for agencies to make the case for a lower one would make agency officials resent and lose investment in the goal.

Last year, the Small Business Administration reported that agencies spent 25.4 percent of prime contract dollars with small businesses in fiscal 2005, while House Democrats said the more accurate figure was 21.6 percent.

In a statement released by the Office of Management and Budget, the administration also opposed provisions in both versions of the House bill that would make it harder for agencies to group several small contracts into one larger one. Small business advocates say that practice puts work out of the reach of small, specialized firms.

The administration official said a new analytical requirement that agencies would have to meet to justify bundled contracts was unnecessary given existing procedures. "Every contracting officer always thinks about what can be done for small business -- it's an automatic," the official said. "This is something that we don't need, especially … when people are already alerted to and screening for small business opportunities."

The official said new reporting requirements related to subcontracts also would impose an undue burden because the information is not currently available systemwide.

Asked whether the reporting would be different from that required under a 2006 law that calls for transparency in federal contracts and grants, the official said the law's subcontract reporting requirement would be implemented through a pilot program. "After we assess it and the burden it places, then we'll determine whether it and the subcontracting part will continue," the official said.

The law, called the Federal Funding Accountability and Transparency Act, requires full implementation of sub-award reporting starting in January 2009, following the conclusion of the pilot.

The official said the administration supports elements of the proposed small business measure that are intended to reduce the impact of contract bundling on small businesses and expand useful reporting requirements.

Responding to the administration's statement of opposition, a spokeswoman for the House Small Business Committee questioned the White House's commitment to small business goals.

"The Bush Administration has said multiple times that they are opposed to contract bundling and large businesses getting small business contracts, yet they appear to oppose anything that actually helps small businesses fight contract bundling and prevents large companies from being counted as small," the spokeswoman said.

She said the measure is expected to be debated on the House floor Wednesday, with a vote scheduled for Thursday.

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