Energy Amendment Could "Undermine" Goals: Barreto The Senate has approved a policy change that would undermine the Energy Department’s effort to unbundled its large facility management contracts and could threaten small business procurement programs in other departments. The provision, section 6023 of the supplemental appropriations bill for Iraq and Afghanistan, would permit Energy to count subcontracts awarded by its large management and operations contractors as prime contracts. Its sponsor, Sen. Pete Domenici (R-NM), sided with the large primes that operate two DOE laboratories in his state and their small-business subcontractors, who oppose the unbundling initiative. (SAA, 5/28/04) Section 6023 also provides that the department’s small business goal can be set no higher than the governmentwide goal of 23%. In a letter to lawmakers, Women Impacting Public Policy said that “will eliminate the Department of Energy’s incentives to contract with small businesses.” “Section 6023 would set a precedent that could potentially undermine government-wide goals for awarding prime contracts to small businesses,” SBA Administrator Hector Barreto wrote to Senate Appropriations Committee Chairman Thad Cochran (R-MS). Hank Wilfong, president of the National Association of Small Disadvantaged Businesses, put it more bluntly: “The DOD and other large agencies are licking their chops, waiting to see if Sec. 6023 passes. Then it’ll be their bite at the apple. If DOE gets its way, they want to have theirs.” The Bush administration and bipartisan leaders of the Senate and House Small Business Committees opposed the provision. Several small business organizations mounted letter-writing campaigns trying to block it. The House version of the appropriations bill, H.R. 1268, contains no similar language; the final version will be settled in a conference committee of the two houses. Until 2000 the Energy Department was allowed to count management and operating subcontracts as prime contracts, but the Office of Management and Budget ordered the department to stop the practice. As a result, Energy has been the poorest performer among all departments in reaching small business goals. It awarded only 4.1% of prime contracts to small firms in fiscal 2003. The department says its major primes award about half of their subcontracts to small firms. About 90% of the department’s budget goes to management and operations contractors who run the national laboratories and other large facilities. Congress has ordered DOE to open those contracts to competition; some of them had not been competed in more than 50 years. In 2002 Energy Secretary Spencer Abraham, who has since resigned, ordered acquisition officials to look for opportunities to unbundle the large contracts so that small firms could get a share. That policy drew fire from the large primes and their subcontractors, including those at Los Alamos and Sandia National Laboratories in New Mexico. At a hearing before Domenici’s Senate Energy and Natural Resources Committee last year, representatives of local small businesses said they feared competition from small firms outside New Mexico. Wilfong of NASBD said the local firms “want to put a virtual fence around New Mexico.” The Senate passed the supplemental appropriations bill 99-0 on April 21, but did not take a separate vote on Section 6023. Domenici, a member of the Appropriations Committee, added the provision at the committee level. The senior Democrat on the Small Business Committee, Sen. John Kerry (D-MA), said he and the committee chair, Olympia Snowe (R-ME), still hope to work out a compromise with Domenici before the conference committee acts. Speaking on the Senate floor, Kerry said counting subcontracts as prime contracts “is faking it.” He cited a draft report by the Government Accountability Office on DOE’s small business contracting that contains “a number of disturbing findings including: the complete lack of oversight in (management and operating) subcontracting by the Department of Energy, falsified reporting data, and the mismanagement of subcontracts by large prime contractors.” (See separate story.) At Domenici’s 2004 hearing, Energy Department officials said they had come up with a 20-year plan to increase their small business prime contracting to 23% of the total.