Agencies falling down on small business goals, House group says

The Bush administration has not lived up to its promise to open more contracting opportunities to small businesses, House Democrats said June 25 as they released their fourth annual scorecard that tracks federal prime contracting dollars going to small businesses.

"The administration keeps saying small business is the lifeline of the American economy. These [scorecard] numbers are not reflective of that," said Nydia Velazquez, D-N.Y., ranking member of the House Committee on Small Business.

Agencies earned a D for their overall small business goal achievement in 2002, according to the scorecard, which is produced by Democratic members of the House Committee on Small Business. The scorecard is based on contract-award data collected by the Federal Procurement Data Center.

The 21 federal agencies that spend 96 percent of federal contracting dollars sent 22.62 percent of their prime contract dollars to small businesses in 2002, missing their 23 percent goal set by Congress for the third straight year. As a result, small businesses lost out on $900 million in contracting opportunities, according to the scorecard report, "Federal Agencies: Closed to Small Business."

The federal government bought $235.4 billion in goods and services in 2002, up nearly 7 percent from 220 billion in 2001, yet the number of small business contracting actions decreased more than 14 percent over that time period, according to the report.

The small-business contracting "record keeps getting worse, rather than better," said Rep. Charlie Gonzales, D-Texas. "It starts at the top ? the administration."

Administration official Angela Styles said that while government spending has increased, the percentage of work going to small businesses has decreased, but not the total dollars flowing to them.

"We've got a bigger base [of spending], and a decreasing percentage" going to small businesses, she said.

Gonzales and Velazquez said agencies should be held accountable for their small-business contracting results.

"If they can't meet the requirements, their budgets ought to be in jeopardy. Then you will see compliance," Gonzales said.

Agencies also fell short of their goals to send prime contracts to small disadvantaged, women-owned, HUBZone businesses, costing small businesses an additional $9.45 billion in contracting opportunities, according to the report.

Agency contracting with small businesses in the 8(a) set-aside program dropped from 2.86 percent of prime contracting dollars in 2001 to 2.39 percent in 2002 ? a loss of $44 million, according to the report. Agencies set their own 8(a) contracting goals; there is no federally mandated goal.

No agency received an A for its small business contracting efforts. Four agencies ? the departments of Agriculture, Interior, Health and Human Services and Veterans Affairs ? got Bs. Five agencies got Cs, nine got Ds and three got Fs.

Velazquez pointed to contract bundling as a major problem that is limiting small business opportunities. Bundling is the consolidation of two or more contracts for goods or services previously provided under separate, smaller contracts. The bundled contract is unlikely to be won by a small business because it is often not large enough to handle the requirements.

Despite a Bush administration plan to unbundle contracts where possible, "nothing has been done about unbundling," Velazquez said.

"If the Small Business Administration says a contract is bundled, the agency can say 'No, it's not,' and that's the end of that. The agency is judge and jury," she said.

Velazquez said she wants an independent third party to determine whether contracts are bundled and should be unbundled. She also recommended that agencies be barred from bundling contracts for a full fiscal year if they don't meet their small business goals.

Styles responded, saying: "We've done a lot more on contract [un]bundling than any other past administration."

The administration in October 2002 released a plan for unbundling large federal contracts. The plan called for increased accountability of high-level agency officials in eliminating unnecessary contract bundling and mitigating the effects of necessary bundling on small businesses. Draft regulations implementing the administration's plan should be final soon, she said.

"We've got a big task ahead. We are taking action with agencies we don't think are making progress [on unbundling], discussing what's appropriate and where they need to improve," Styles said.