"Congressional Concerns" Hamper Energy Dept.'s Effort to Increase Opportunities for Small Businesses Congressional concerns forced the Energy Department to cancel an initiative to award more prime contracts to small businesses, the Government Accountability Office reported. GAO said the department is making progress in improving its small business procurement, but is still the government’s poorest performer. Energy estimated it awarded 4.15% of prime contract dollars to small firms in 2005, falling far short of its 5.5% goal. Although its goals are lower than those of other agencies, it has hit the mark only once in the past five years. The department lags behind other agencies because it spends 87% of its procurement budget on large facility management contracts. Energy is the biggest civilian contracting agency, spending nearly $23 billion last year. GAO found the outlook for increasing small business awards is not good, because those management contracts consume an increasing share of the department’s budget. Energy’s National Nuclear Security Administration launched an initiative to set aside more work for small businesses at the Sandia, Lawrence Livermore and Los Alamos national laboratories. The contracts could have been worth up to $300 million a year, but NNSA officials told GAO the initiative was canceled “primarily due to congressional concerns regarding the potential impact on the department’s ability to ensure that the laboratories’ projects are effectively accomplished, as well as concerns that some small businesses could lose existing laboratory subcontracts.” New Mexico’s senators, Republican Pete Domenici and Democrat Jeff Bingaman, have backed several legislative initiatives aimed at protecting local businesses around Los Alamos and Sandia. The department had moved to unbundle some of its facility management contracts and make more work available to small firms. But the large corporations and universities that manage Energy’s facilities opposed the plan. Sen. Domenici expressed doubts about it at a 2004 hearing. (SAA, 5/28/04) Last year Domenici sponsored an amendment that would have allowed DOE to count subcontracts as prime contracts, but it was killed in a House-Senate conference committee after leaders of the small business committees in both houses objected. GAO found that about 17.5% of the department’s subcontract dollars went to small businesses in 2005. GAO cited the department’s Office of Small and Disadvantage Business Utilization’s efforts to increase outreach to small firms and to identify potential set-asides. But the investigators said no data has been collected to learn whether the initiatives have succeeded. The department expanded its mentor-protégé program from five pairs of companies in 2002 to 48 pairs in 2005. However, only one of the protégés has been awarded a prime contract, a key goal of the program. GAO recommended that the department define concrete steps it will take to improve its small business performance and collect information to evaluate its performance. In its response, the department said GAO does not appreciate that it operates differently from other federal agencies because of its reliance on facility management contractors. Counting subcontracts as well as prime awards, DOE said it has directed more than $1.5 billion to small businesses over the past two years. OSDBU Director Theresa Speake wrote, “The significance of DOE’s contribution to the small business economic base of the Nation, when considered beyond the single data point of goal achievement, is impressive and noteworthy.” The report is GAO-06-501.