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CQ: House Committee Calls for Agencies to Justify Bundling of Private Contracts



House Committee Calls for Agencies to Justify Bundling of Private Contracts

By Eugene Mulero and Danielle Parnass
March 22, 2012

In response to growing concerns from small businesses, a House panel Thursday approved a bill that would require federal agencies to justify decisions on bundling contracts when considering bids from private firms.

By voice vote, the Small Business Committee easily backed the legislation (HR 4081), sponsored by Chairman Sam Graves of Missouri, a Republican. The bill would require agencies to submit a detailed analysis to the Small Business Administration (SBA) summarizing the benefits of a bundled contract. It also would initiate an arbitration process, allowing small businesses and the SBA to appeal the decision to bundle a federal contract to the Government Accountability Office and the agency head, respectively.

Contract bundling is the common practice of grouping contracts into larger packages, which some critics say can preclude small firms from the federal procurement bidding process. These critics, led by small-business advocates such as the National Small Business Association, maintain that bundling garners minimal savings and impedes fair competition in the marketplace. Also, several lawmakers have raised concerns that bundling may have adverse effects on the ability of women- and minority-owned small firms to receive federal contracts.

“We are halting unjustified contract bundling, which will result in more competition,” said Graves, noting that the legislation is part of a broader initiative on the part of the committee aimed at addressing concerns about small-business contracting policies this year.

The bill, within 180 days of enactment, would require the SBA to develop and maintain a database containing information on each bundled contract awarded by a federal agency and each small business that has been displaced as a prime contractor. The measure also would require the SBA to provide an annual report on contract bundling to Congress that includes data on the number of small-business concerns displaced as prime contractors, as well as a description of the federal bundled contracts within the past year and the total dollar amount of all contract requirements that were bundled and the justification for each.

Before reporting the bill to the floor, the committee adopted by a voice vote a substitute amendment offered by Graves that would make grammatical corrections to the bill.

Those who support the bundling of contracts, such as the Professional Services Council, a business advocacy group, argue that it could be advantageous at times because it assists in reducing government overhead.

In a separate voice vote, the committee reported a bill (HR 4206), sponsored by Mike Coffman, R-Colo., that would increase penalties for a firm that misrepresents its status as a small business with regard to obtaining a federal contract.

The bill also would require small-business compliance guidelines to be made available in Spanish on the SBA website, after members adopted a Janice Hahn, D-Calif., amendment, 12-11, that was amended by David Cicilline, D-R.I., in a 14-9 vote.

In other action, the committee approved in separate voice votes the following measures:

— HR 3985, which would create a mentor-protégé program, administered by the SBA, that partners small businesses with more experienced firms to help them compete for federal contracts. As amended, the bill would protect small business protégés from potential misconduct by the mentor and would require a GAO report to study the effects of the program.

— HR 3987, as amended, which would require that size standards used to classify small businesses are appropriate and that the justifications for any changes to these size standards be made publicly available. It would also prevent the SBA from artificially limiting the number of size standards it creates.

— HR 4203, which would ensure that women-owned small businesses have access to compete for government contracts.

Floor consideration on the measures is expected sometime before the August recess, a committee aide said. Despite support from some Senate Democrats about these contracting bills, it is unclear when the Senate would consider them.