For Small Business, It’s a Jungle Out There

Much of the acquisition legislation of the 1990s was based on the notion that the federal contracting process had become so rule-bound and inefficient that it was no longer serving the needs of the nation. Eliminating special provisions or making them inapplicable at lower dollar levels was one way to promote simplification. For example, the 1994 Federal Acquisition Streamlining Act (FASA) exempted procurements below $100,000 from certain procedural requirements, including those of the 1988 Drug-Free Workplace Act, the 1935 Miller Act and the 1965 Solid Waste Disposal Act.

FASA also allowed agencies to establish multiple award contracts that, in effect, created pre-approved lists of bidders. Of course, small businesses that were not teamed up with someone on the list would be ineligible to bid for tasks under this contracting vehicle. In fact, these types of indefinite delivery, indefinite quantity contracts have become contracts of choice for federal agencies because they are quick and easy to administer. General Services Administration schedule contracts offer similar benefits. Plenty of small businesses have schedule contracts. But for those that aren't on one of these schedules, the market is closed.

FASA also eliminated the obligation to seek small businesses for micro-purchases under $2,500. This provision greatly expanded the potential of the government purchase card to simplify purchases. Card purchases are projected to account for more than $20 billion in business in 2001. Unfortunately, there is no good way to determine how much of the credit card business is going to small companies. That sort of tracking would require administratively cumbersome reporting that defeats the simplified process of using purchase cards.

In spite of these reforms, small businesses appear to be faring well, the General Accounting Office concluded in its January 2001 study, "Small Business: Trends in Federal Procurement in the 1990s" (01-119). From 1993 through 1997, agencies met or exceeded the annual goal set by law to award 20 percent of prime contracts to small businesses, GAO said. In 1998 and 1999, agencies hit the newer goal of 23 percent, set in the 1997 Small Business Reauthorization Act.

Those results may imply no problem exists, but another issue complicates the contracting equation. The governmentwide small business goal masks a multitude of smaller goals focused on all types of programs. Ones like the 8(a) Business Development Program for small disadvantaged businesses get their clout from special contracting provisions, such as the ability to award on a sole-source basis. Others such as the Women-Owned Small Business Program have nothing but goodwill to drive them along.

Here's a list of other small business programs and annual goals for their share of prime contracts:

• Small disadvantaged businesses, 5 percent.
• Women-owned businesses, 5 percent.
• Historically underutilized business zone businesses, up to 3 percent by 2003.
• Disabled veteran-owned, 3 percent.

The problem is further complicated by the shrinking pool of government contracting officers. These officials are hard-pressed to keep up with the rules and various protocols associated with each legislative requirement and reporting tools that are frequently weak or nonexistent.

The dilemma is reminiscent of the confusing array of acquisition rules in the 1980s and 1990s that ended up thwarting the good purposes of the programs they were intended to support. The paramount issue is whether these programs can be streamlined and consolidated without negating long fought-for benefits. Moreover, it remains to be seen whether the government can really obtain the data necessary to set baselines and measure performance.

During testimony June 20 before the House Small Business Committee, Deidre Lee, director of Defense Procurement, cited a newly established Defense Department policy as one way to force accountability and better focus on results. Since Defense accounts for almost two-thirds of the federal government's purchases, its initiatives are major factors in determining whether small business goals will be met.

The policy will require twice-yearly reporting on progress on small business programs to the undersecretary of Defense for acquisition, technology and logistics and the deputy secretary. According to Lee, "each DoD activity and the department as a whole will be responsible for annual small business improvement plans and will be rated on its performance."

Perhaps it's time to establish a Hill-administration task force with a similar performance-based focus to see that small businesses are, in fact, getting the support so many believe they deserve.