House Advances Bill to Curb Contract ‘Bundling’ that Favors Large Companies

Citing a shortage of accurate data on small business contracting, a House panel last week approved an umbrella bill (H.R. 1481) aimed at forcing agencies to curb practices seen as freezing out smaller bidders and requested a new Government Accountability Office study on small business goals.

“We know that when small businesses compete for federal work, it creates jobs, improves the quality of work, and saves taxpayers’ money,” said House Small Business Committee Chairman Steve Chabot, R-Ohio. “This bill is a commonsense approach to make sure that Washington is working with Main Street – not locking it out of the procurement process altogether.”

Combining six separate bills, the package would restrict “bundling” of services or goods previously provided under separate contracts to the detriment of small business and curb use of so-called reverse auctions, in which contractors bid electronically for contracts at progressively lower prices.

The bill would require the Small Business Administration, which announced last year that agencies for the first time met the goal of awarding 23 percent of contracts to small businesses, to factor in use of subcontractors in their performance. The committee’s analysis of contract data from fiscal 2011-2014 showed that the number of small business contracting actions fell by almost 60 percent and the average size of a contract action increased 230 percent.

“Under the [SBA’s] scorecard system, the federal government received an A grade for fiscal 2013,” Chabot said in a statement. “While an A grade and a reasonable percentage of small business prime contracting dollars would seem to indicate that a healthy percentage of dollars are being awarded to small businesses, [data] show that the use of small businesses is declining even as the percentage of dollars awarded to small businesses increases. Additionally, it is worth noting that in obtaining its A, the federal government did not meet half of its numerical goals.”

In approving an amendment requiring a GAO report, Chabot said, “Holding agencies accountable for meeting the small business goals only works if we have reliable data.”

The overall package has support from the Professional Services Council, the National Defense Industrial Association, the Associated General Contractors, Women Impacting Public Policy and the National Small Business Association. 

“The continued lack of quality data about the use of small businesses on the prime and subcontracting levels serves as a major barrier to reaching consensus within the industry on a number of industrial base matters,” said Alan Chvotkin, counsel and executive vice president of the PSC. “This bill will help address some of these concerns by raising the profile of subcontracting opportunities and data collection.”

Correction: The initial version of this story said the American Small Business League supports H.R. 1481. They support only the provision that calls for a GAO study. 

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