Bill pressures feds to meet small-biz goals or else

The chairman of the House Small Business Committee would like to put some sharp teeth into the rules on small-business contracting goals. He has proposed increasing the annual goal and putting senior executives on the hook when their agencies miss the mark.

Rep. Sam Graves (R-Mo.) introduced Jan. 31 the Government Efficiency Through Small Business Contracting Act. The legislation raises the annual governmentwide small business contracting goal from 23 percent—a goal rarely reached—to 25 percent.

The federal government spends nearly $540 billion through contracts each year, so the 2-percent increase could potentially yield about $11 billion to small companies -- if agencies actually meet the goals. The legislation would set a goal of awarding 40 percent of all subcontracted dollars to small businesses. It’s an increase from the current goal of 35.9 percent.

The Small Business Committee said early data appears to show the government missing the 23-percent goal by more than 3 percent in fiscal 2011.

As a result, government officials would feel the pinch if their agency comes up short. The bill would withhold the agency’s senior executives from receiving bonuses. Executives also could possibly miss out on a sabbatical the following year, if the agency doesn’t award enough contracts to small business.

“Small businesses have proven time and time again that they can perform a service or produce goods for the government cheaper and often quicker than their larger counterparts. However, various bureaucratic impediments remain for small contractors. Any avenue to save taxpayer dollars, increase competition and spark growth is the route we should be taking,” Graves said.

Alan Chvotkin, executive vice president and counsel at the Professional Services Council, said the bill has good intentions, but this and another new piece of legislation on set-asides may impose a consequence on agencies that wasn’t initially intended.

Rep. Bill Owens (D-N.Y.) introduced a bill that would cut an agency’s budget by 10 percent for missing a small-business contracting goal. It and Graves’ legislation may be encouraging agencies from the wrong angle.

“Cuts in pay are rarely a motivator,” particularly when the senior executives who have no way of influencing small-business contracting decisions are affected, Chvotkin said.

Agencies may decide to reduce their contracting goals to avoid the 10-percent penalty in Owens' proposal, Tiffany Wynn, an associate at the Crowell and Moring law firm, wrote in a post on the Government Contracts Legal Forum blog about the legislation.

These bills would only add to the frustration among officials in agencies that don’t meet their contracting goals, Chvotkin said. In addition, agencies shouldn’t face increased percentages without additional tools from Congress to help them achieve the new measure.

"The small-business set-asides are just goals," not formal requirements, so tough consequences may not be the best option, he said.

Further, the goals are set within a federal procurement system built around other objectives, Chvotkin said. The system’s core objective is to get agencies quality products and services on schedule at the best price.

Set-asides are a factor in procurement decisions, and the system needs a balance between contracting goals and meeting the central objective, he said.

Reader Comments

Tue, Jan 31, 2012 Jaime Gracia Washington, DC

Carte blanche for waste, fraud, and abuse for officials to make the goals, should legislation like this be passed. One of the proposed mandates from OMB is to create a business case for any creation of another MAC that does not already exist, with justification for its need and the impact on pricing and the overall ability of the government to get the best prices on this newly desired MAC. Perhaps a similar mandate should be placed on this well-meaning, yet completely unrealistic and potentially disastrous piece of legislation. Can you imagine a business case, and impact and risk analysis, on legislation as opposed to just politics? That would be something indeed.

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above

What is your e-mail address?

My e-mail address is:

Do you have a password?

Forgot your password? Click here
close
SEARCH
contracts DB

Trending

  • Dive into our Contract Award database

    In an exclusive for WT Insider members, we are collecting all of the contract awards we cover into a database that you can sort by contractor, agency, value and other parameters. You can also download it into a spreadsheet. Read More

  • Is SBA MIA on contractor fraud? Nick Wakeman

    Editor Nick Wakeman explores the puzzle of why SBA has been so silent on the latest contractor fraud scandal when it has been so quick to act in other cases. Read More

Webcasts

  • How Do You Support the Project Lifecycle?

    How do best-in-class project-based companies create and actively mature successful organizations? They find the right mix of people, processes and tools that enable them to effectively manage the project lifecycle. REGISTER for this webinar to hear how properly managing the cycle of capture, bid, accounting, execution, IPM and analysis will allow you to better manage your programs to stay on scope, schedule and budget. Learn More!

  • Sequestration, LPTA and the Top 100

    Join Washington Technology’s Editor-in-Chief Nick Wakeman as he analyzes the annual Top 100 list and reveals critical insights into how market trends have impacted its composition. You'll learn what movements of individual companies means and how the market overall is being impacted by the current budget environment, how the Top 100 rankings reflect the major trends in the market today and how the biggest companies in the market are adapting to today’s competitive environment. Learn More!