Small-BusinesssReforms Eyed in Congress

Small-Businesss Reforms Eyed in Congress

By Neil Munro
Staff Writer

If Congress adopts the Senate version of the Small Business Administration's reauthorization act, federal agencies could be forced to curb the bundling of many small contracts into a few large contracts. And federal agencies may also steer more dollars to small companies and companies located in poor areas.

A joint panel of legislators from the House and Senate are trying to craft a final bill by Oct. 23, despite some opposition from the SBA and concerns by small-business advocates who fear the language limiting bundling may fail to help small businesses.

"We like the House bill better ... mainly because of the [Senate's] HUBZone and contract-bundling elements," said SBA spokesman Mike Stamler.

The Senate bill was drafted by the Senate Committee on Small Business, chaired by Sen. Christopher Bond, R-Mo., while the House bill was drafted by the House Committee on Small Business, chaired by Rep. James Talent, R-Mo. The bill will set the ground rules for the SBA's minority-owned business promotion efforts and loan programs for the next three years.


Senate photo
Senator Christopher
Bond, R-Mo.

Bond's new set-aside program, dubbed HUBZone, would direct contract officers to steer up to 3 percent of federal contract dollars by 2002 to small companies that hire one-third of their labor force from poor or high-unemployment areas, said Paul Cooksey, a staff assistant to Bond. Although initially opposed by advocates of the $6 billion 8(a) program for small, minority-owned businesses, Bond won Senate approval for the HUBZone program by adding language that forbids contract officers from favoring the HUBZone program over the 8(a) program.

"We put the programs on an equal footing," said Cooksey. However, the plan may not win approval from the House, largely because it has not been debated by the House's small business, commerce and government oversight committees, said congressional staff members. If the plan does not survive in the House, Talent will try to push it forward in 1998, said Kristin Young, Talent's spokeswoman.

If enacted, the HUBZone plan could displace a plan drafted by the Department of Commerce, which would reserve a small number of contracts for companies based in poor areas. Officials at the SBA oppose the HUBZone plan, saying they would need a budget increase to collect the employment-related data required by the plan.

The second major element of the Senate bill requires the government to increase the share of annual spending directed to small companies from 20 percent to 23 percent. This reflects a compromise for advocates for small business, who favored a 25 percent goal. The higher goal is needed to protect small companies from the effects of recent procurement reforms, which allow large companies to win more government contracts, said advocates. In 1996, the federal government procured roughly $175 billion in goods and services.

The third major element of the Senate bill is a measure designed to curb contract bundling. The measure would force agencies to justify their bundling decisions and allow the SBA to object to particular decisions.

This language "is a little weak ... but it is something we may have to live with," said James Ballentine, a spokesman for Rep. Albert Wynn, D-Md., who has championed the anti-consolidation language. Wynn and other small-business advocates say the consolidation, dubbed contract bundling, hurts small companies by combining many small contracts into a few large contracts that are usually won by large or mid-sized vendors.

"We would like to improve the language in conference," preferably by adoption of a measure allowing small companies to ally when bidding for a large contract, said Ballentine.


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