Yesterday, big news from the Small committee: the Senate's Committee on Small Business and Entrepreneurship yesterday voted 19-0 on legislation meant to make sure that small firms can fairly compete for the share of federal contracts promised them by law.
The agencies of the U.S. government have a collective goal: each year, 23 percent of all prime contracts are supposed to go to small firms. But as I reported in Inc. magazine back in May, it almost never works out that way. Procurement officers face powerful disincentives to awarding small contracts, and the Small Business Administration lacks the resources and sometimes even the inclination to enforce the rules. So agencies bundle contracts up for big firms, and use loopholes in the rules to claim deals with big conglomerates as small business contracts.*
The bill passed yesterday, written by committee Chair John Kerry and Ranking Republican Olympia Snowe, would address these longstanding practices with a hodge-podge of new rules. The Agenda is skeptical that a bureaucratic malaise can be cured with a legislative remedy -- particularly one that can't provide the SBA additional resources to do the job. Still, a couple elements of the bill are noteworthy. First, the bill codifies into law the procedures for protesting a contract action -- practices that are now widely considered capricious and skewed against the protesters. And the legislation would require companies competing for small business contracts to recertify every year that they fall within the standards that define small. Until recently, a company could outgrow these size standards yet remain nominally "small" for up to 20 years. Last year, the SBA amended the rules to require recertification every five years, a compromise that dismayed small business advocates and even the agency's own Inspector General. The Kerry-Snowe bill would serve as a sharp rebuke to the SBA.
That is, if it passes. Reserving resources for the truly small has never served anyone in Washington -- not the sitting administration (be it Republican or Democrat) nor members of Congress, who prefer government largess to cut as wide a swath as possible in their districts. Indeed, this very bill raises the asset limitations for business owners participating in one specific contracting program -- in essence, it would force the SBA to better police federal contracting, but then let more businesses qualify for preferential treatment. How's that for having it both ways?
*A possible example of a large firm getting a small business contract surfaced just last month: the SBA apparently concluded that an affiliate of Blackwater USA, the controversial but indisputably large paramilitary corporation, was a small business eligible for setaside contracts. More details on that as -- or if -- they emerge.