GAO criticizes agency efforts to measure contract bundling

Federal agencies aren't adequately measuring the effects of contract bundling on small businesses, according to a General Accounting Office report published today.

In the report, GAO says that "without metrics to measure contract bundling and its impact, the information needed to ensure agency accountability to eliminate unnecessary contract bundling, mitigate the effects of unnecessary bundling, and increase small business contracting opportunities will be limited or unknown."

Bundling is the consolidation of two or more contracts for goods or services previously provided under separate, smaller contracts. Small-business executives say the requirements of bundled contracts often are too large and complex for their companies to handle.

In October 2002, the Bush administration published a strategy for limiting effects of contract bundling on small businesses. A procurement rule, published in October 2003, implemented the strategy, which called for agencies to identify unnecessary or unjustified bundling and specify alternate contracting strategies when an acquisition plan involves substantial bundling.

In its report to Republican and Democratic leaders of the House Small Business Committee, GAO said it is too early to determine whether the rule has increased federal contracting opportunities for small businesses. But even if enough time had passed, GAO said, without adequate metrics, it would be difficult to tell if agencies had successfully identified and eliminated contracts that were unnecessarily bundled.

In the report, "Impact of Strategy to Mitigate Effects of Contract Bundling Strategy on Small Business is Uncertain," GAO recommended that agency Offices of Small and Disadvantaged Business Utilization be required to include in their annual reports on contract bundling such data as:

  • Number and dollar value of bundled contract actions and contracts

  • Benefit analyses (such as dollars saved) to justify bundling

  • Number of small businesses losing federal contracts as a result of bundling

  • How bundled contracts complied with agency subcontracting plans

  • How efforts to mitigate the effects of bundling on small businesses, such as teaming arrangements, increased contracting opportunities for small businesses.

The Office of Management and Budget did not agree with GAO's recommendation, however. In a written response to the report, Robert Burton, acting administrator of OMB's Office of Federal Procurement Policy, said GAO's recommendations could require new, governmentwide reporting and record keeping requirements outside the Federal Procurement Data System, which houses information about federal contracts.

"For efficient and effective agency operations, we need to maintain our reliance on automated procurement data gathering, rather than establishing duplicative, possibly labor-intensive reporting requirements," Burton wrote to David Cooper, GAO's director of acquisition and sourcing management.

Burton recommended that OFPP work with the Small Business Administration to explore the possibility of including new reporting requirements in FPDS that would track the effects of bundling on small businesses. In its report, GAO dismissed the OFPP recommendation, saying that it would not provide enough information to understand the effects of bundling on small businesses.

The report also recommended that SBA quickly publish best practices for maximizing contract opportunities for small businesses, as required by OMB's contract bundling strategy. According to the report, SBA staff said a best practices guide has been created, but the agency has not scheduled its dissemination.

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