Congress inches closer to pilot legislation for mid-size companies

Small and mid-size contractors have been concerned for some time about the prospect of having to compete against the top-tier firms for federal awards once they graduate from the 8(a) program or outgrow the current small-business size standard.

Their concerns have now reached Congress thanks in large measure to Mid-Tier Advocacy, a grassroots organization of small and mid-size companies that is urging lawmakers to consider legislation to establish a Small Business Growth Pilot Program aimed at creating a “mid-size category” within the federal contracting marketplace.

“This legislation and the proposed pilot program will change the dynamics for mid-size firms doing business with the federal government,” said Tonya Speed, Mid-Tier Advocacy’s executive director.

Members of the coalition gathered Feb. 7 on Capitol Hill to hear from several backers of the pilot program, which has gained the support of the General Services Administration and the Defense Department.

Rep. Sam Graves, (R-Mo.) chairman of the Small Business Committee, said the committee will direct a majority of its efforts this year to contracting reform.

The committee currently is examining nine bills with the goal of combining similar issues into separate pieces of legislation and moving them out of the committee for floor action.

“We’ll have hearings on each of those issues and it’ll cover the entire gamut of the contracting problems that we see with small business and with business in general,” he said, adding that he hopes to have one bipartisan bill ready by spring.

But Graves cautioned that there remains a lot of uncertainty in business and federal agencies about the regulatory environment, health-care costs and changes in the tax code.

“A goal for me is to create that mid-tier that goes from 1,000 to 2,500 employees so we can continue to nurture those [small businesses] and hopefully create a competitive environment for [competing against] the big guys,” said Rep. Mike Rogers, (R-Ala.), a member of the Armed Service Committee.

“It’s healthy particularly in this current economic environment to be able to have that competition,” he said, cautioning that “nothing in this business [of government] happens quick.”  “You’ve got to be patient,” he added.

Rogers has introduced a bill supporting the establishment of a small business pilot program for DOD contracts worth more than $25 million.

Rep. Gerry Connolly (D-Va.), ranking member of the Government Oversight and Procurement Committee, last May introduced the Small Business Growth Act that would establish a five-year GSA small business pilot program for federal contractors with fewer than 1,500 employees and other qualifications.

Connolly said the goal of the pilot is to give newly emerging mid-tier companies some breathing room to compete at a new level.

Small businesses have improved their share of federal contracts, and large contractors continue to be successful, he said. “It’s the mid-tier companies, that middle section, that actually has lost share in the federal marketplace. Many of them end up being acquired or going out of business,” he added.

Connolly said there has been good bipartisan progress in working for a solution. But, he added, despite the obvious need for legislation to help the mid-tier companies, “we have a lot of work to do to reassure people that we’re not trying to upend small business set-asides. In fact, quite the opposite.”

He said creation of a mid-tier level would further the federal assistance given to small businesses through existing set-aside programs.

“We’re trying to craft a bill that is as nonthreatening as possible, that takes explicit cognizance of the existing programs and doesn’t compete with them,” Connolly said.

“I really believe that we have a chance here to forge one bill – we have support for the Armed Services Committee, we have support on the Small Business Committee – and I am real hopeful that we’re going to make some headway,” he said.