Senator seeks to relax small business contracting guidelines

A rider attached to the $82 billion fiscal 2005 supplemental spending bill, slated for final passage Tuesday by the Senate, might pave the way for relaxed Energy Department standards for compliance with federal small business contracting requirements, a provision that has small business advocates up in arms.

While watered down from an initial version -- instead of amending the Small Business Act, the provision would direct the agency and the Small Business Administration to enter into an agreement by Sept. 30 -- critics remain baffled by the provision's inclusion in an emergency bill, largely to fund military personnel and equipment needs in Iraq and Afghanistan.

Some are calling into question the timing and motivation of the provision's sponsor, Senate Energy and Natural Resources Committee Chairman Pete Domenici, R-N.M., who pushed and prodded until the issue was among a handful of final sticking points on the emergency appropriations measure.

The Energy Department is preparing to accept a bid in October for a contract to run maintenance and operations at Los Alamos National Laboratory, in Domenici's home state of New Mexico. Some of the agency's largest contractors, including potential bidders for the Los Alamos contract, have lobbied for the provision, according to people involved in the discussions.

Domenici is also chairman of the Senate Energy and Water Appropriations Subcommittee, and in that capacity he has been a longtime champion of the interests of his home-state nuclear laboratories at Sandia and Los Alamos, which are among the state's main economic engines.

Domenici did not include the language at the behest of the department's contractors, a spokesman said, but rather to target a provision of law authored by Senate Commerce Committee Chairman Ted Stevens, R-Alaska, that awards government contracts to minority and disadvantaged businesses without competitive bidding.

Alaska native corporations have received much of DOE's small business prime contracts, Domenici's office said, even though many are multi-billion dollar interests that often subcontract with larger businesses. Stevens said he did not object to the modified language, although some Alaska native firms were involved in lobbying against the initial Domenici provision.

But one person critical of Domenici's efforts said the provision has "a very limited tangential relationship to" Alaska native corporations and is really aimed at inoculating large contractors from competition.

Defense giant Lockheed Martin Corp. currently has the maintenance and operation contract at Sandia, and is putting together a bid for Los Alamos, which until 2003 was run by the University of California since the Manhattan Project in the 1940s. The university is also preparing to re-bid for the contract. Both have expressed support for the Domenici language.

Under current law, federal agencies are supposed to award at least 23 percent of prime contracts to small businesses. The Energy Department stands at about 4-5 percent, the worst rating of any Cabinet agency for small business contracts.

Domenici argues that tabulation should also factor in subcontracts with small businesses, which are often worth billions and would be considered prime contracts at other federal agencies. If subcontracts were also counted, the department would be at or near compliance, backers say.

"We need to change the way DOE measures small business participation so that it truly reflects the small business presence in the DOE complex," according to talking points distributed prior to Senate floor action last month by the Washington offices of CH2M HILL.

The firm is considered among the potential bidders for the Los Alamos contract and is already a large DOE player, with contracts to clean up nuclear facilities in Hanford, Wash., and Rocky Flats, Colo. The Rocky Flats contract includes $1.7 billion the firm paid to small businesses, which the SBA does not count, a CH2M spokesman said.

The company at one point employed Alex Flint, who is Domenici's staff director for the Energy and Natural Resources Committee, as a lobbyist. A panel spokeswoman said he had no involvement in the small business contracting issue.