House Defense Bill Would Raise Small Business Contracting Goals

The defense policy bill that cleared the House May 22 is controversial for multiple reasons, most stemming from its rejection of many of the Obama administration’s cost-cutting proposals in troop compensation, military bases and weapons systems.

But deep inside the 700-plus page National Defense Authorization Act are also provisions to open more federal contracting opportunities to small businesses, and some of these measures are troubling to major contractors.

“The contracting amendments offered to the NDAA are common-sense reforms that will provide opportunities for small companies trying to break into the federal marketplace,” said Rep. Sam Graves, R-Mo., chairman of the House Small Business Committee. “These amendments address many of the barriers created due to the federal procurement system’s bureaucracy and inefficiency.”

The Graves-sought provisions include one to increase the governmentwide small business prime contracting goal from 23 percent of contracting dollars to 25 percent and establish a 40 percent subcontracting goal. Another would require that the administration publish contract bundling and consolidation justifications before issuing requests for proposals for awards under the General Services Administration-run Federal Strategic Sourcing Initiative.

Graves noted that 70 percent of federal contracts come through the Defense Department.

The Professional Services Council, a contractors trade group, does not back either of those provisions. “We are opposed to expansion of small business goals at this time because right now we don’t believe there are accurate data about total small business participation in the federal space,” said Vice President for Government Relations Roger Jordan. “We have a pretty good accounting of prime contacting dollars, but no reliable ones on subcontractors. Despite an effort at transparency in the last few years, we’re not there, and before they make a decision to raise goals at either the prime or subcontractor level, we ought to have a clear picture.”

The council is equally lukewarm on requiring a justification for consolidating contracts. “Laws on the books now require agencies to report on bundling and consolidation, but where its gets tricky is how to define them,” Jordan said. “A collection of multiple-award indefinite-delivery, indefinite-quantity contracts could be seen as bundled or consolidated, so requiring agencies to jump through more hoops to go that route, in order to identify mitigating ways to improve opportunities for small business adds some time to the procurement process.”

The White House issued a veto threat of the House bill on May 19, but not over the contracting components.

The Senate version of the bill, which cleared the Armed Services Committee on Thursday, does not contain the exact House-passed language, though House members are optimistic the provisions could be added as floor amendments.

The Senate bill would, however, reauthorize “the Small Business Comprehensive Subcontracting Plans with a process for transitioning out of the program when such transition increases small business opportunities,” according to a staff summary. And it would clarify that the Defense Contract Audit Agency has the specific authority to interview contractor employees as part of an audit.

Broader tensions within the House on the Defense Department’s reliance on contractors were highlighted on Tuesday when the American Federation of Government Employees circulated a trio of “Dear Colleague” letters opposing potential portions of the bill that would downsize civilian Defense employees. Signed by various members and topped by Reps. Tom Cole, R-Okla., and Jim Moran, D-Va., the letters argued that efforts to use sequestration to cut civilian workers by as much as 15 percent betray “a lack of understanding of DoD missions.” The Defense Department’s “civilian workforce grew from 687,000 in 2001 to 807,000 in 2011,” one letter stated. “As the DoD Comptroller’s Office made clear in a recent paper, the increases in the civilian workforce either saved money by substituting less expensive civilian employees for more expensive military and contractor personnel or addressed urgent departmental needs.”

The letters quoted a report from Pentagon Controller Robert Hale as saying, “The Congress and the acquisition community have supported this increase (in the civilian workforce) because the resulting acquisition savings far outweigh the increase in personnel costs. (I)nsourcing -- using DoD civilians to perform functions then being done by contractors -- … added 17,000 civilians to cut costs and minimize the chances that contractors were performing inherently governmental tasks.” The House version of the authorization bill would grant the full Pentagon request for civilian manpower.

CORRECTION: This article has been corrected to clarify that AFGE's dear colleague letters were in regard to potential provisions in the bill, not language already included.