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Graves, Hanna Introduce Bipartisan Legislation To Benefit Small Construction Contractors

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Washington D.C., July 19, 2013 | comments
House Small Business Committee Chairman Sam Graves (R-MO) and Subcommittee on Contracting and Workforce Chairman Richard Hanna (R-NY) today introduced bills that will bring more efficiency and cost-savings to the construction contracting process. The Design Build Efficiency and Jobs Act of 2013, sponsored by Graves, is bipartisan legislation to decrease the cost for both the government and small businesses when the government buys design-build services. The Commonsense Construction Contracting Act of 2013 (CCCA), sponsored by Hanna, is bipartisan legislation to change the way the federal government chooses construction services, ensuring a more thorough bidding process, which benefits the taxpayer and government.

Last year, Construction and Architectural & Engineering contracting accounted for over $41 billion in federal spending – about eight percent of federal prime contract dollars, and over 17 percent of the total procurement awards to small businesses.

Design Build Efficiency and Jobs Act of 2013

Currently, the federal government often solicits proposals for design-build contracts through a cost-intensive, single-phase procurement process. A May 23 hearing by the Small Business Subcommittee on Contracting and Workforce showed that the cost of bidding on these jobs can exceed three percent of the value of the contract, which poses a real barrier to entry for small firms and excludes many qualified firms from the market. Consequently, some agencies have adopted a policy of using a two-phase process – the preliminary phase to narrow the field before a significant investment is made in completing a proposal. This ensures that there is meaningful competition in a way that doesn’t dissuade small businesses from participating. The Design Build Efficiency and Jobs Act of 2013 would require a two-phase process that allows the government to assess technical qualification in the first round, but doesn’t ask small businesses to expend significant funds unless they make the list of the top five most qualified, competitive companies in the second phase.  This saves the government time and money, since they do not have to evaluate proposals that have no chance of success, and allows businesses to reserve their bid and proposal funds for contracts where they will be highly competitive.  

Oversight and Government Reform Subcommittee on Government Operations Ranking Member Rep. Gerry Connolly (D-VA) is a lead co-sponsor. Hanna, Rep. Jaime Herrera Beutler (R-WA), Rep. Mick Mulvaney (R-SC), Rep. Mark Meadows (R-NC), and Subcommittee on Contracting and Workforce Ranking Member Grace Meng (D-NY) are original co-sponsors.

“Because the federal government spends half a trillion dollars on contracted goods and services, the government owes it to taxpayers to make sure their money is used wisely and efficiently,” said Chairman Graves. “If the bid and proposal process can be streamlined to make it more efficient and cheaper for all involved, without sacrificing quality, we should do it.”

“Two-step design-build contracts have proven incredibly effective in enhancing federal contracting competition and strengthening our Nation’s most innovative and talented small businesses,” said Rep. Connolly. “The Army Corps of Engineers already recognizes two-step design-build contracts as a best practice, and our bipartisan legislation will simply ensure the federal government accelerates the adoption of this superior procurement process.”

Commonsense Construction Contracting Act of 2013

Currently, some federal agencies are using a “reverse auction” process to award some contracts for construction services. For this method, the government advertises its service needs, and bidders are allowed to offer multiple, consecutively lower bids on a rapid basis, until the lowest price wins. Often conducted electronically, this method is best suited to buying well-defined commodities, but not skilled services with a high degree of variability like construction and design services.

The May 23 hearing by the Small Business Subcommittee on Contracting and Workforce showed that the reverse auction process for construction contracting resulted in imprudent bidding, a poor evaluation of businesses, and unfair competition for many small construction contractors. The CCCA would ban the use of reverse auctions for construction services, so agencies would be required to use one of the other statutorily approved contracting processes, such as a sealed bid procurement or a negotiated procurement. The bill prohibits the use of reverse auctions when a construction services contract is suitable for award to a small business, or when the procurement is made using a small business program.

Subcommittee on Contracting and Workforce Ranking Member Grace Meng (D-NY) and Chairman Graves are original co-sponsors for this legislation.

“Having worked for 30 years in the construction industry, I appreciate the challenges facing small businesses doing construction and related work for the government,” said Chairman Hanna. “Reverse auctions simply do not make sense for these kind of services, because they fail to guarantee the lowest price, lead to imprudent bidding, and inadequately ensure that the winning bidder is responsive and responsible. The Commonsense Construction Contracting Act directs the government to use better methods for choosing construction and design services – so that taxpayers get the best value possible and small businesses, as well as the jobs they support, are protected from unscrupulous bidding behavior.”

“I thank Chairman Hanna for introducing this important piece of legislation,” said Ranking Member Meng. “Although I’ve only been in Congress for six months, it’s become apparent that reverse auctions for construction projects are not a wise use of tax payer dollars. Chairman Hanna’s bill would go a long way towards fixing this problem, and improving the bidding process for contractors. I’m happy to support it.”

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