Procurement
June 2004
Background:
Contract bundling is the federal government’s policy of consolidating its purchase of goods and services into a single large contract to save money. Contract bundling shuts out small businesses from contract opportunities, due to the inability to compete on large scales. For every increase in 100 bundled contracts, there is a decrease of 60 contracts to small business. For every additional $100 awarded on bundled contracts, there is a decrease of $12 in contracts to small business. At $109 billion in FY 2001, bundled contracts cost small business $13 billion annually. SBA unbundling rules went into effect September 2003. Rules close loopholes and amend definition to address multiple award contract vehicles.
Federal agencies are required by law to develop an annual percentage of expenditure goals for small business. Currently, the overall federal small business goal is 23 percent. Some agencies have down so well in meeting this standard that they are exempt from set-aside requirements and have spending goals instead (e.g., DOD at 40%).
Federal agencies are required to spend 5% with women-owned businesses. In 2002, seven agencies met this standard. Federal spending increased in FY 2002 with women-owned businesses, but still did not reach its 5% goal. The federal government purchased over 235 billion in goods in FY2002. Overall share of dollars spent with women-owned businesses was 2.9% up from 2.1% in FY 1997.
According to the National Women’s Business Council, “the share of measurable Federal subcontract spending with women-owned small firms in 1999 and 2000 was just under 5% as a share of subcontracting among all firms, and was 12% as a share of small business subcontracting. The overall capacity of women-owned firms is approximately 20% of all small businesses. Therefore, there is an under-utilization of women-owned businesses in Federal subcontracting. If parity with all small firms is 1, the current disparity ratio of women-owned small firms in the subcontracting arena is 0.6.”
There is a movement to encourage the government to certify the certifying entities.
- SBA disparity study has not been completed.
- SBA currently considering changes to size standards that could affect application of small business set aside program.
- SBA ran a pilot program of procurements for very small businesses (the Very Small Business Set-Aside Program); pilot was extended to September 2003; SBA supposed to report to Congress on outcome.
Position:
- Support OMB bundling policy. Oppose federal legislation that supports contract bundling.
- Finish disparity study.
- Mandate 5% of contracts to be awarded to women business enterprises.
Current Legislation:
Small Business Reauthorization bills, HR 2802 (reported from Small Business Committee; place on the Union calendar in March; S1375 (passed Senate with amendments Sept. 30, 2003; held at desk)
Below is what WIPP says about language in the two bills, addressing the 5% contracting goal and the failure to implement PL 106-554 that set the 5% standard:
The House and Senate bills treat the solutions to implementation differently, but both seek to break the logjam in bringing this program to fruition. S. 1375 requires the Government Accounting Office (GAO) to conduct a study to identify industries in which small women owned businesses are underrepresented in federal procurement contracting. The GAO is directed to submit its report to Congress by Dec. 31, 2003, along with any recommendations for legislative action necessary to implement the law. H.R. 2802 requires the SBA to complete the study cited above in 90 days. However, contracting officers are given the authority to make a determination of under-representation by women owned businesses, thus allowing them to implement the procurement program for women owned businesses without waiting for SBA to complete its study.
