October 1, 2010 by ei2admin
The small business contracting parity debate is finally over.
On Monday, President Obama signed legislation that re-establishes equality among each of the small business subcategories that competes for government contracts.
The 2010 Small Business Jobs Act, which also provides tax cuts for undersized firms and creates programs to support private sector lending, makes a technical revision to the 1953 Small Business Act by replacing the word “shall” in the Historically Underutilized Business Zone statute with the word “may.”
The old language in the Small Business Act stated that a procurement officer shall award contracts based on limited competition to HUBZone small businesses. But, the statutes creating the service-disabled veteran-owned small business program and the Small Business Administration’s 8(a) Business Development Program used the word “may” when referring to set-aside contracts.
The Government Accountability Office and the U.S. Court of Federal Claims determined the difference unambiguously established a preference for HUBZone firms.
The Small Business Administration lobbied lawmakers for months to support legislation that would place contractors in the 8(a) and service-disabled veteran-owned small business programs — and the pending women-owned small businesses program — on equal footing with HUBZone companies. HUBZone companies are located in economically depressed neighborhoods.
“This clarification will help federal agencies meet each of the government’s small business contracting goals,” said SBA spokeswoman Hayley Matz.
The agency now will work with the Federal Acquisition Regulatory Council to “put in place, as expeditiously as possible, provisions implementing parity among all of SBA’s contracting and business development programs,” Matz said.
But, some small businesses are worried the new legislation could spell the end of the HUBZone program. “This is going to seal the fate of the HUBZone program,” said Jim Slagle, executive vice president for sales and marketing at Mission Critical Solutions, a Tampa, Fla. HUBZone firm that first challenged the parity statute in court. “They are not going to prioritize HUBZone firms. I don’t know that we will survive this.”
The federal government has not met its goal of awarding 3 percent of all contract dollars to HUBZone small businesses, while it generally exceeds its 5 percent goal for small disadvantaged businesses — a category that includes the 8(a) program.
Sen. Olympia Snowe, R-Maine, and ranking member of the Small Business and Entrepreneurship Committee, sponsored the parity language in the Small Business Jobs Act. Snowe, however, did not vote for the overall legislation because of its cost and questions surrounding the structure of several lending programs.
The jobs act also:
- Directs SBA to establish a mentor-protégé program to assist small businesses owned by women, service-disabled veterans and those operating in HUBZones. The initiative would be modeled after the 8(a) mentor-protégé program.
- Requires OMB’s Office of Federal Procurement Policy to establish a governmentwide policy for contract bundling — a process in which several small contracts are consolidated and awarded to one firm, often out of the reach of small businesses. Prior to bundling a contract, procurement officials would be required to conduct market research and to have a senior acquisition official sign off on the decision. The rationale for bundling then would be publicly disclosed.
- Instructs OFPP to develop guidance that would allow agencies to set aside orders placed against multiple-award contracts exclusively for small businesses. The policy would apply to indefinite delivery-indefinite quantity contracts and task and delivery-order awards.
- Establishes a pilot program for collaboration and joint ventures involving small business contractors. Under the five-year program, $5 million in federal grants will be awarded to eligible small business teams seeking to compete for larger procurement contracts.
- Mandates small businesses recertify their size status annually. The law also establishes a governmentwide policy for prosecuting companies that fraudulently disclose themselves to be a small business.
The parity controversy was sparked in May 2009 when Mission Critical Solutions, which had lost out on an Army IT contract to an 8(a) minority-owned small business, filed a protest with GAO. The company argued, and GAO agreed, that HUBZone firms were legally at the top of the small business pecking order and the government should have given Mission Critical Solutions the first crack at the contract.
The ruling sparked a fury of activity, with the Office of Management and Budget and Justice Department issuing rare contradictory memos instructing agencies to disregard GAO’s nonbinding decision because it could “significantly limit the discretion” of contracting officers.
In a separate case, the Court of Federal Claims, a body whose rulings are binding, later decided in favor of Mission Critical Solutions. Justice has appealed that decision, although it is unclear how the new legislation will affect that case.
GAO since has ruled in favor of two HUBZone firms that filed similar contract protests. And in August the Court of Federal Claims issued its second ruling on the matter, arguing the Air Force first should have considered DGR Associates Inc., a HUBZone firm, before awarding a contract at Eielson Air Force Base in Alaska to an 8(a) small business.
– By Robert Brodsky – GovExec.com – September 27, 2010
September 29, 2010 by ei2admin
In the span of just two days last week, three government offices issued advice about improving the $550 billion per year federal procurement system long plagued by waste and inefficiency.
On Sept. 14, the Office of Management and Budget outlined in a memo ideas about how to “save money, reduce risk and get better results” from government contracts. On the same day, the Defense Department released guidance for “obtaining greater efficiency and productivity in defense spending.” On Sept. 15, a presidential task force published its recommendations for improving federal contracting opportunities for small businesses.
The flurry of top-level attention is a welcome sign that the Obama administration is serious about reforming procurement at a time of fiscal constraint and budget deficits.
But the recent directives also unintentionally underscore the immediate need for better coordination among agencies and a more coherent reform agenda. Examined side by side, they reveal conflicting guidance that could sow even more confusion in a world so complex it vexes the most sophisticated lawyers and accountants. “The rule set becomes further confusing through these many efforts, and makes me worry what exactly will be the ‘real’ rules as those leading these initiatives depart and new ones arrive,” former Air Force Secretary Michael Wynne said in an interview.
Consider, for example, last week’s guidance about how the government should go about finding the best vendors and suppliers. The OMB memo recommended “pooling the federal government’s buying power” in pursuit of strategic sourcing. The president’s small business task force, on the other hand, urged “strategies to prevent unjustified contract bundling,” or aggregating in one contract supplies or services “previously provided or performed under separate smaller contracts.”
So what should a procurement official do? Create efficiencies and drive cost savings through pooling, or create more opportunities for small business by eschewing bundling?
To be sure, there could be scenarios in which these two policies actually can complement each other, but that’s not necessarily self-evident to procurement officers and others involved in government contracts on a day-to-day basis.
There are other potential conflicts in the directives. All three documents urge data standardization, for example. But the small business task force focuses on a coding system called the North American Industry Classification System while the Defense memo prefers the Product Service Code. And there are other standards out there, such as the United Nations Standard Products and Services Code used in two governmentwide systems. The documents’ diverging guidance on competition and contract types also could confound government contracting officers.
To avoid such confusion there must be better coordination among the offices entrusted with the important work of reducing costs and eliminating waste in federal acquisitions. Here are some suggestions:
- Governmentwide procurement reform should be centrally coordinated, preferably at OMB. That doesn’t mean every initiative must be run from the White House, but there should be enough central oversight to identify and address potential conflicts.
- The implementation of reform initiatives should be formally designed with other efforts in mind. “With the plethora of rules that govern the procurement system, it is important that we provide adequate implementation guidance to avoid creating more confusion on the part of the workforce,” says Steven Kelman, a public policy professor at Harvard University’s John F. Kennedy School of Government and a former administrator of the Office of Federal Procurement Policy.
- The reform must speak in a unified voice. Ultimately, the success of these initiatives rests in the hands of thousands of government professionals, as well as the vendor community. Leadership across all agencies must commit to and deliver the same message with as little ambiguity as possible.
These communication problems are not insoluble, but left unaddressed they could hamper the administration’s admirable and intense focus on improving procurement. The stars do seem to be aligned, for the first time in years, in support of meaningful reform. We must not miss this opportunity.
By Raj Sharma – GovernmentExecutive.com – September 24, 2010 – Raj Sharma is a visiting fellow at the Center for American Progress who focuses on improving government procurement and supply chain management practices.
September 24, 2010 by ei2admin
A presidential panel is calling for major reforms of the government’s small business contracting guidelines, procedures and regulations.
The Task Force on Federal Contracting Opportunities for Small Businesses on Wednesday released its suggestions for helping undersized firms break into the government marketplace and win federal contracts, strengthening procurement policies, enhancing training for acquisition officials and improving contracting data on federal websites.
Among its most significant proposals, the task force recommended the White House require agencies to reserve work on task-and-delivery order contracts or Multiple Award Schedule contracts for small businesses. Under existing policies, considerations for small business set-asides are made prior to the award of a contract. But acquisition policy officials have been reluctant to apply set-asides for individual orders, despite a 2008 legal opinion by the Government Accountability Office, which supported the policy change.
“Existing tools that might help direct additional work toward small businesses, such as the consideration of socioeconomic status for schedule orders and partial set-asides for contracts, appear to be underutilized and misunderstood,” the report said. “Many public comments offered to the task force voiced frustration over the continued failure of policy officials to tackle these issues.”
The panel also suggested the Small Business Administration and the Office of Management and Budget’s Office of Federal Procurement Policy issue guidance to prevent unjustified contract bundling; clarify rules for small business teaming; strengthen the requirements for developing small business subcontracting plans; review the quality of small business contracting data; and assess the impact of insourcing on small business contractors.
“While some work performed by small business contractors may need to be insourced if it is inherently governmental or is of a critical nature and the agency is at risk of losing control of its operations, the task force believes much of the work will continue to be performed by contractors, including small businesses,” the report said.
President Obama created the task force in April. Several agencies, including OMB and SBA, co-chaired the group.
“When a small business gets a federal contract, it’s a win-win,” SBA Administrator Karen Mills wrote Wednesday on the White House blog. “The business gets the revenue it needs to grow and create jobs, and at the same time, the government benefits from working with some of the most diligent, innovative and responsive people in the world.”
The task force also addressed concerns about the skills and capabilities of the acquisition workforce to implement small business guidelines. The report recommends revising core certification for procurement officials and requiring for the first time mandatory training on small business policies and regulations.
Industry has complained that the government’s small business contracting goals have no teeth. For the past several years, the government has missed its goal of awarding 23 percent of all prime contracting dollars to small businesses, but little to no enforcement was taken against underperforming agencies.
The task force encouraged the Obama administration to adopt a system of carrots and sticks, rewarding agencies and employees who successfully promote small business contracting with awards and recognition, and holding officials accountable when they fall short of their goals. The report does not, however, suggest repercussions for poor-performing agencies.
Industry officials credited the task force for addressing many top concerns, but some remain skeptical. “As long as the barriers to contracting with small businesses are allowed to exist and the laws that protect their rights are not enforced, agencies will continue to fail in their efforts at contracting with them,” said Henry Thomas, co-founder of a think tank operated by the Fairness in Procurement Alliance, an association that advocates for small business contractors.
Among its most ambitious recommendations, the task force called for a systematic reorganizing and refunctioning of two leading government procurement websites. The panel suggested making FedBizOpps, which provides industry with notice of upcoming contracts, a one-stop source for annual requirements forecasting, the posting of subcontracting opportunities, the outreach calendar of all federal agency matchmaking and training events and a directory of online agency small business resources.
The much-maligned Federal Procurement Data System, which tracks all contracts, would receive an upgrade to enhance the use of its small business information. SBA unveiled on Wednesday its new Small Business Contracting Dashboard, which breaks down spending by small business category from fiscal 2000 through fiscal 2009.
“Implementing these new tools and recommendations won’t be easy,” Mills said in the blog post. “But our message today is clear: We’re going to build on what works in small business contracting. We’re going to implement new tools to help more small businesses compete and win.”
The task force will report to White House by the end of the year on progress with implementing the recommendations.
– by Robert Brodsky – GovExec.com – September 15, 2010