Senators push reforms for small-business contracting

Companies in economically depressed areas may not lose their chances of winning federal set-aside contracts on Oct. 1.

The Senate unanimously passed the Small Business Contracting Fraud Prevention Act (S. 633) Sept. 21, which would, in part, extend the Oct. 1 cutoff date for small companies located in Historically Underutilized Business Zones.

With new Census data, the HUBZone map will be changed to adjust to the economic shifts throughout the country in recent years. But with the changes, lawmakers say roughly 3,400 small HUBZone companies could lose the designation that allows them to compete for set-aside contracts.

However, the House and President Barack Obama would have to make the bill law before Oct. 1, the first day of fiscal 2012, or the companies will lose their status anyway. If the bill becomes law, it would extend the designation for three years.

“In these tough economic times, we can’t cut the cord to America’s small businesses,” said Sen. Mary Landrieu (D-La.), chairwoman of the Senate Small Business and Entrepreneurship Committee.

A similar bill in the House would extend the HUBZone designation, but it has not been passed.

The Senate bill also would toughen penalties in the small-business set-aside programs, which investigations and reports have shown are abused by fraudulent companies.

Service-disabled veteran-owned small companies would have to certify their status annually and register their company with the Central Contractor Registration and with the Veterans Affairs Department’s database of veteran business owners, known as VetBiz. A VA official would have to decide whether a company is owned by a veteran.

For other agencies, contracting officers would have to check the VetBiz database before awarding a sole-source contract or a set-aside contract to a service-disabled veteran-owned business, and administration officials would have to share information between the CCR and VetBiz databases.

An amendment to the legislation would give the VA time to first get its house in order. Department officials would have one year to get VetBiz running with enough resources and the capacity to run the system with the additional work.

The bill should not “add to the backlog of veterans currently awaiting verification of their small businesses and [should assure] that veterans’ businesses are not unfairly delayed in their ability to compete for contracts,” said Sen. Patty Murray (D-Wash.), who offered the amendment.

In addition, the Small Business Administration would have to determine whether the government should use additional third-party sources to check on contracting companies' statuses and allow officials to make unannounced visits. The SBA would also have to consider using more fraud-detecting tools, such as data-mining, which may require additional employee training.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

Reader Comments

Tue, Nov 22, 2011 Same Conference

As for me women are not given a fair share on government contracts, though we know for a fact this is not the way it is. Rules should be strictly implemented regarding this as it can be the cause of economic depression. Economy is getting tough these days and we need an honest government to support us in order to earn for a living to survive.

Thu, Sep 29, 2011

Sometimes, a failure to take action can hurt as much as an action that fails.
Just ask the owners and managers of approximately 3,400 small businesses across the nation in jeopardy of losing a designation which levels the playing field a bit in the competition for federal set-aside contracts.
We’re talking about businesses located in economically depressed communities. You can bet that having small companies lose opportunities to compete for lucrative government contracts sets off a negative economic ripple effect throughout those communities.
What a shame it would be if the Small Business Contracting Fraud Prevention Act doesn’t get passed by the Oct. 1st deadline.
This Act is also important because it would also toughen the penalty for abuse and fraud violations of the federal set-aside program. Thankfully, the Oct. 1st deadline does not apply to this benefit of the Act.
I was encouraged to see the Senate unanimously pass Senate Bill 633 and send it to committee last week. I was even encouraged to see that the House has a related bill (H.R. 2131 – Protect HUBZones Act of 2011), which would extend the length of time these businesses can keep this designation. H.R. 2131 is also in committee.Will lawmakers do what needs to be done so either bill becomes law by Oct. 1st? From where I stand, the chances don’t look good.

Thu, Sep 29, 2011 Brenda Wisconsin

The US government continues to purchase supplies through the use of high quantity multiple line item contracts from large prime contractors to reduce costs. These contractors have mandates that 3% of their purchases must come from HUBZone companies. If half of these companies lose this certification it is my belief that prime contractors will need to move this business away from de-certified companies in order to continue to meet the mandates. This would devastate small businesses in communities such as Montello Wisconsin (Marquette County) and lead to an increase in unemployment and a decrease in the standard of living in these areas. This would be in direct contradiction to the spirit in which the act was created .... " whose primary objective is job creation and increasing capital investment in distressed communities."

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