Senators push reforms for small-business contracting

Companies in economically depressed areas may not lose their chances of winning federal set-aside contracts on Oct. 1.

The Senate unanimously passed the Small Business Contracting Fraud Prevention Act (S. 633) Sept. 21, which would, in part, extend the Oct. 1 cutoff date for small companies located in Historically Underutilized Business Zones.

With new Census data, the HUBZone map will be changed to adjust to the economic shifts throughout the country in recent years. But with the changes, lawmakers say roughly 3,400 small HUBZone companies could lose the designation that allows them to compete for set-aside contracts.

However, the House and President Barack Obama would have to make the bill law before Oct. 1, the first day of fiscal 2012, or the companies will lose their status anyway. If the bill becomes law, it would extend the designation for three years.

“In these tough economic times, we can’t cut the cord to America’s small businesses,” said Sen. Mary Landrieu (D-La.), chairwoman of the Senate Small Business and Entrepreneurship Committee.

A similar bill in the House would extend the HUBZone designation, but it has not been passed.

The Senate bill also would toughen penalties in the small-business set-aside programs, which investigations and reports have shown are abused by fraudulent companies.

Service-disabled veteran-owned small companies would have to certify their status annually and register their company with the Central Contractor Registration and with the Veterans Affairs Department’s database of veteran business owners, known as VetBiz. A VA official would have to decide whether a company is owned by a veteran.

For other agencies, contracting officers would have to check the VetBiz database before awarding a sole-source contract or a set-aside contract to a service-disabled veteran-owned business, and administration officials would have to share information between the CCR and VetBiz databases.

An amendment to the legislation would give the VA time to first get its house in order. Department officials would have one year to get VetBiz running with enough resources and the capacity to run the system with the additional work.

The bill should not “add to the backlog of veterans currently awaiting verification of their small businesses and [should assure] that veterans’ businesses are not unfairly delayed in their ability to compete for contracts,” said Sen. Patty Murray (D-Wash.), who offered the amendment.

In addition, the Small Business Administration would have to determine whether the government should use additional third-party sources to check on contracting companies' statuses and allow officials to make unannounced visits. The SBA would also have to consider using more fraud-detecting tools, such as data-mining, which may require additional employee training.