Defense Bill Extends Disputed Small Business Program

The massive fiscal 2015 defense authorization bill that cleared Congress on Friday renews for three years an obscure small business program that some industry advocates and the Pentagon itself had argued should be terminated.

Known as the Comprehensive Subcontracting Plan Test Program, it was set up in 1990 to “determine if comprehensive subcontracting plans on a corporate, division or plant-wide basis [instead of for individual contracts] would lead to increased opportunities for small businesses,” according to its website.

But critics have noted that the program has yet to publish a single report or data set from the major contractors such as Lockheed Martin Corp. and Northrop Grumman Corp. And small business advocates have charged that its existence is actually costing them opportunities by allowing the major firms leeway to get around the governmentwide goal of awarding 23 percent of contract dollars to small business.

This summer, Rep. Sam Graves, R-Mo., chairman of the Small Business Committee, pressed for provisions in the National Defense Authorization Act to “increase transparency and accountability” in the program. Senators on the Armed Services Committee were less enthusiastic, calling for an end to the program barring a new endorsement from the Defense secretary.

The final bill, which President Obama is expected to sign, extends the program for three years, to December 31, 2017, but it requires contractors to report greater detail on subcontracting more frequently. A Pentagon spokeswoman in July had told Government Executive that the program, while well intended, “has not produced quantifiable results.”

A longtime opponent of the program, Lloyd Chapman, president of the Petaluma, Calif.-based American Small Business League, is preparing to file suit for an injunction to halt the program. “This is the pinnacle of corruption in government,” he told Government Executive, citing criticism of the program from outgoing House Armed Services Committee Chairman Buck McKeon, R-Calif.

Chapman’s group has gone to court seeking to force release of the program’s results, which, he said, “consist of six to eight numbers on the company goals and progress that will show that the Pentagon has lied to Congress and public for 25 years on how much contracts go to small business.”

One of Graves’ proposals that did not make it in the final bill was his plan to raise the small business contracting goals for each agency from the current 23 percent of contract dollars to 25 percent.

Other notable contracting and management provisions in this year’s NDAA highlighted by Graves and industry groups include:

• A reiteration of Congress’ intent not to accede to the Defense Department’s request for another round of Base Closure and Realignment commission recommended cuts in domestic defense facilities;
• A reorganization of the Office of the Secretary of Defense  to combine the deputy chief management officer and the chief information officer into a new title for the third in command called “undersecretary of Defense for business management and information;"
• A requirement for a new report to Congress on the status of implementation of various information technology acquisition reforms to take better advantage of existing commercial products;
• A clarification of a ban on reverse auctions of single-bid contracts except under well-defined circumstances;
• An allowance for more sole-source contracts to go to women-owned small business;
• A prohibition on reimbursement of contractors for costs of complying with congressional investigations that eventually lead to a conviction or liability or suspension;
• A plan to improve data on bundled or consolidated contracts  by requiring the Small Business Administration, the Office of Federal Procurement Policy and the General Services Administration to recommend changes to mitigate ill-effects of such contracts;  and,
• Authority to provide small businesses with new education on export opportunities under the Arms Export Control Act.