Strategic sourcing, bundling, subcontracting goals lead several small biz proposals on Capitol Hill

Several small business proposals are working their way through Congress and could impact strategic sourcing, contract bundling, subcontracting goals and even reverse auctions.

Emily Murphy, senior counsel on the House Small Business Committee, and John Shoraka, associate administrator of government contracting and business development for the Small Business Administration, gave an update on small business issues as part of the GovConNet Procurement Conference.

The conference is put on annually by the Montgomery County, Md., Chamber of Commerce. Washington Technology was a media sponsor.

Murphy said her committee has pushed out seven contracting bills and right now has six provisions in the 2014 National Defense Authorization bill with four more to be added.

The provision related to contract bundling will put pressure on agencies to properly identify contracts that are bundled. When a contract is labeled as bundled it kicks off other requirements that protect small businesses, she said.

But those requirements don’t kick in unless the contract is properly identified.

The committee is also pushing to raise the small business contracting goal to 23 percent for prime contracts and 40 percent for subcontracts.

Murphy said the concern with strategic sourcing is the long term damage it can do to competitiveness. She used the example of the Office Supplies 3 contract, which reduced the number of vendors from 500 to 30.

Many small businesses don’t have the resources to wait out a contract and bid the next time it comes around. The result is fewer companies bidding on subsequent versions of the contract, she said.

“The savings will go away on the recompetes because the small business base has eroded,” she said.

SBA needs a stronger voice in formulating these large strategic sourcing contracts, Murphy said.

For SBA’s part, Shoraka urged the businesses in attendance to get involved in the rulemaking process and comment on proposed regulations. “My office reads all the comments,” he said.

SBA is still formulating the regulations for changes mandated in the 2013 National Defense Authorization Act, he said.

One of those changes will affect teaming and joint ventures by small businesses. Current, regulations required that the prime contract on a small business set aside perform 51 percent of the work, but the new laws will allow work by the small business prime and small business subcontractors to count together toward the 51 percent goal, he said.

SBA also is working on the regulations to hold prime contractors more accountable for small business contracting goals. One mechanism will be for the primes to report changes to their small business agreements to the contracting officer at the agency, he said.

Reverse auctions also are becoming a concern because of the way they are being used and the question of whether their structure puts small businesses at a disadvantage, Murphy said.

Some of the rule changes under consideration are to not use reverse auctions to buy services or to buy items where the purchasing decision is based on a technical attribute. The example she used were bullet proof vests for the military.

Murphy said the committee also wants to require that auctions have more than one bidder and more than one round of bids. Too many auctions have just one bidder or just one round of bids, she said.

“If you only get one offer than your procurement strategy wasn’t successful,” she said.

 Shoraka also gave a brief update on SBA efforts to reform the size standards for small businesses. The agency has finished changes to the size standards based on revenue and now is looking at standards based on the number of employees.

He warned, however, that the changes present a double-edge sword.

The size standard for consulting services, for example, has moved from $7 million to $14 million. So a $7 million firm now has to compete with firms twice their size. But an $8 million firm is no longer competing against firms with $100 million in revenue because they are back in the small business category.

“There are always trade-offs; there are always winners and losers,” Shoraka said.