OMB, under fire, says changes in contract bundling on the way

A key Democrat assailed the White House on Thursday for failing to let small businesses compete for government contracts, but a top administration official responded by saying that measures to help small businesses are on the way.

At a Capitol Hill press conference, Rep. Nydia Velázquez, D-N.Y., said the administration had done little to implement President Bush's five-point plan, released in March, to aid small businesses. In particular, she charged that the administration has not followed through on its pledge to review contract bundling, a practice that consolidates several federal contracts into one large contract. Small businesses consider the practice harmful.

"There has not been any directive coming from the White House to the Office of Management and Budget and federal agencies to do that," said Velázquez. Earlier this year, the White House scuttled legislation that would have banned contract bundling at agencies with poor records in small business contracting, she added.

But Angela Styles, administrator for federal procurement policy at the Office of Management and Budget, said the administration has finished an interagency review of bundling practices and will release recommendations for change later this month. "I think they are very aggressive," she said of the proposed changes. "A lot of it is about accountability and leadership, and holding departments and agencies accountable for taking the law seriously."

The recommendations will probably be issued in a memorandum from OMB, but OMB will also seek to make some regulatory changes to close loopholes in existing bundling laws, she said. Styles said there was little need for new laws to restrict bundling. "Actually the bundling laws that are on the books are pretty strong laws," she said. "We can do a lot of this without having to go to the Hill and ask for changes."

Styles was unaware of any White House effort to curtail bundling legislation in Congress. "Nobody has brought up that legislation in six months, so it's not anything I know about," she said.

The Defense Department and Small Business Administration joined OMB in its review of contract bundling. The review also explored whether other contracting rules might be keeping small businesses out of the federal market. Small businesses received 16.7 percent of all "bundled" federal contract dollars in fiscal 2001, according to a report issued earlier this month by the Small Business Administration's Office of Advocacy.

The government also fell short of its overall target for awarding contracts to small businesses in fiscal 2001. Uncle Sam is supposed to award 23 percent of contracts to small businesses, but small firms captured only 22.81 percent of all federal contracts. This cost small businesses $417 million in federal contracts, according to Velázquez.