On April 17, 2012, during a hearing before the Armed Services Committee, the chairman of the Small Business Committee, Representative Sam Graves, made several recommendations for small-business contracting reform in the National Defense Authorization Act for Fiscal Year 2013, including raising the annual small business contracting goal.
Specifically, Graves recommended the inclusion of a package of eight bills that his committee approved in March 2012 to reform federal procurement legislation and help small companies in the federal marketplace:
Graves stated that “[i]mproving small business opportunities for federal contracts is a triple play: (1) small businesses win more contracts; (2) workers win because small businesses create jobs; and (3) taxpayers win because small businesses bring competition, innovation, and lower prices, sav[ing] the government money and improve[ing] the health of the industrial base.” Graves further comments that the Armed Services Committee’s report on small business contracting opportunities complements the legislation marked up by his Small Business Committee and represents a common understanding of the issues facing small business participation in federal procurement.
The eight bills that were approved by the House in March 2012 are each designed to increase federal contract opportunities for small businesses:
- Government Efficiency through Small Business Contracting Act of 2012 (H.R. 3850): Raises the government’s small business goals for procurement contracts awarded to small businesses from 23% to 25% of all prime contract awards and increase incentives (withholding certain benefits, including bonuses, from senior officials) crafted to encourage agencies to maintain these goals. The small business subcontract goals would increase from 39.5% to 40%. The goals for contracts awarded to small business concerns owned and controlled by service-disabled veterans (3%), qualified HUBZone small business concerns (3%), small business concerns owned and controlled by socially and economically disadvantaged individuals (5%), and small business concerns owned and controlled by women (5%) will remain the same.
- Small Business Advocate (H.R. 3851): Increases Small and Disadvantaged Business Utilization Agencies salaries and duties and also requires additional reviews of these agencies regarding compliance and best practices for maximizing small business utilization in federal contracting.
- Subcontracting Transparency and Reliability Act (H.R. 3893): Amends the Small Business Act to assure that more procurement dollars go to small businesses by limiting the percentage of allowable subcontracting that a small business can pass on to non-small businesses.
- Small Business Opportunity Act of 2012 (H.R. 3980) : Integrates small business advocates into the early stages of the federal agency procurement and acquisition planning processes.
- Building Better Business Partnerships Act of 2012 (H.R. 3985): The Mentor-Protégé programs, which are intended to partner small businesses with established mentors in order improve the small business’s ability to win and perform on contracts and subcontracts, have created unnecessary paperwork burdens for participants due to the duplicative programs and lack of standardized measures of success. The Building Better Business Partnerships Act allows the Small Business Administration to oversee civilian agency mentor-protégé programs to promote portability of agreements between the agencies, guarantee that the programs benefit the small businesses, and ensure that the mentor-protégé agreement doesn’t inadvertently harm the protégé’s small business status.
- Small Business Protection Act of 2012 (H.R. 3987): The SBA is creating new group size standards that will define what businesses qualify as “small.” By the SBA’s own analysis, these proposals lump different industries together and are excluding legitimate small businesses from the SBA contracting programs. This bill aims to protect legitimate small businesses by requiring that the size standard assigned to each common group remain consistent with each individual North American Industry Classification System (NAICS) code that is put in the new group.
- Contractor Opportunity Protection (COP) Act of 2012 (H.R. 4081): The Contractor Opportunity Protection Act provides a stronger process to appeal unjustified bundling through clarification of the statutory limits on bundling, the creation of a third party arbiter, and more transparency in the contracting process.
- Contracting Oversight for Small Business Jobs Act of 2012 (H.R. 4206): This bill addresses contracting fraud by helping small businesses comply with complicated contracting and size rules and providing a safe harbor for small businesses making a good faith effort to comply with those rules. The bill also ensures that potential cases of fraud are properly and transparently dealt with through the suspension and debarment process.
The bi-partisan support for these bills demonstrates agreement from both sides of the aisle that more should be done to increase opportunities for small businesses and that these firms play an important role in the country and industry’s economic recovery. For example, in 2010, according to the Small Business Administration, agencies spent $98 billion procuring products and services from small businesses, narrowly missing the current 23 percent goal. According to the committee, increasing the goal to 25 percent would translate to an additional $11 billion more per year in federal contracts for small businesses. The Armed Services Committee is expected to release its language for the National Defense Authorization Act on May 7. We will continue to provide updates as the legislation continues to progress.