NDIA is against replacing DOD set-asides with a 5% price preference

      The National Defense Industrial Association is opposing the Sect. 809 Panel’s recent recommendation to eliminate most small business set-asides at the Defense Dept. and to replace them with a 5% price preference.

      “This would disadvantage small businesses and has the potential to drive them out of the marketplace,” Corbin Evans, NDIA’s director of regulatory policy, told Set-Aside Alert.

      The 5% preference is likely to be ineffective, Evans added, judging by the experience of DOD’s 10% price preference for HUBZone firms, which has not been very successful.

      Contract bids are not rated solely on price, and even if they were, 5% is not that significant of a preference, he said.

      The congressionally-mandated Sect. 809 panel, in its Volume 3 report, advised that DOD small business contracting needs to be more strategic to support warfighters with new technology and innovation, rather than focusing on procurement goals by rote.

      To achieve that, the panel said most set-asides should be eliminated, with a 5% price preference for small firms applied instead.

      The recommendation has shaken the small business federal contracting community, which has relied on set-asides for several decades.

      Small business owners are “anxious and surprised about the recommendation,” Col. Wesley Hallman, NDIA senior vice president for strategy and policy, told Set-Aside Alert. “This is very significant for them.”

      Hallman added that the small business owners generally are less anxious after he informs them that he has not seen much interest at DOD or on Capitol Hill in approving the Sect. 809 recommendation on eliminating set-asides, especially not this year.

      “The bottom line is I don’t think this is going to go very far in the current cycle,” Hallman said.

      The NDIA has about 1,700 corporate members, most of whom are small businesses, and about 73,000 individual members.

      The group recently published a position paper on why it is opposing the Sect. 809 panel’s recommendation on set-asides. Its main points are:

• Set-asides provide early growth opportunities to small businesses and are key to attracting new entrants to the Defense Industrial Base;
• A 5% price preference is not equal to current set-asides;
• The proposal is adverse to the spirit of the Small Business Act.

      The NDIA supports many of the other recommendations by the panel, Evans said.

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