Obama's consolidation plan: Boom, bust or yawn?

President Barack Obama’s announcement last week that he intends to ask Congress for the authority to consolidate several Executive Branch agencies with a goal to save $3 billion in 10 years, has not aroused undue concern within the federal contracting community.

Among the proposals Obama laid out was one that would combine the Commerce Department’s trade functions, including the Office of the U.S. Trade Representative with the Small Business Administration. If approved by lawmakers,  the plan would create one major agency for U.S. business.

Stan Soloway, president of the Professional Services Council and a Washington Technology contributor, called the plan a modest step.

“At first blush it seems like a pretty logical plan, putting the Trade and Commerce agencies together in one central place,” he said. “That seems to make some sense, but I’m not sure it has a whole lot of impact on the private sector.”

Soloway said if Congress approves Obama’s plan – and he put the chances at better than even – “the players won’t change very much, the missions won’t change very much. It’s just a more consolidated structure.”

He noted that the Republican reaction so far “seemed to be relatively warm. Obviously, there is going to be debate that we should do more but the reaction seems to be relatively positive.”

TechAmerica, a lobbying group for the U.S. technology industry, welcomed the president’s plan.

“Streamlining government to ensure that it is responsive, and less expensive, to taxpayers is a step forward,” the association said in a statement. “Reducing the hurdles that businesses must navigate allows them to focus on their energy on growing instead of dealing with untangling the maze of government agencies,” it added.

Citing the plan’s proposed elimination of 1,000 to 2,000 federal employees through attrition, Olga Grkavac, TechAmerica’s executive vice president for the Public Sector, said she couldn’t see any meaningful impact on the overall contractor industry because the cuts would be so small.

“There would be some impact [on] the contractors who have infrastructure contracts. To me, that is so specialized,” she said. “But obviously to those companies it’s a concern.”

“My reaction to [the plan] is probably going to be similar to that of a lot of people – big deal,” said Guy Timberlake, CEO of the American Small Business Coalition.

“Administrations across the board do a lot of things that are not much more than window dressing that don’t result in any real substantive impact for the small businesses that are doing government contracting,” he said.

“Talking about the proposed merger and the elevation of [SBA] Administrator [Karen] Mills to the Cabinet, as I read some of the articles and sift through the chatter, one of the big things that I’m slightly confused about is why the president bothered to elevate her when she’s going to get knocked back out again if the merger goes through?” Timberlake asked.

Timberlake acknowledged that he believes there are good intentions behind the proposed merger. “But I think in the end there are so many other aspects of government contracting that could be addressed that could provide a more immediate and more substantive benefit for small companies in the government sector.”

The National Small Business Association, a nonprofit membership organization founded in 1937, issued a statement on its website that said in part, “On the one hand, reorganizing federal agencies to create a ‘one-stop-shop’ for America’s small businesses could streamline processes and make accessing information and assistance much easier. 

"On the other hand, such a reorganization could minimize the emphasis placed on small business by the federal government and lead to an even greater imbalance toward promoting the interests of large businesses over those of small business,” the statement continued.