Congress Blocks Energy Contracting Change A House-Senate conference committee blocked an attempt to allow the Energy Department to count subcontracts as prime contracts, but directed SBA and Energy to study the matter and adopted language designed to discourage other agencies from asking for the same treatment. Sen. Pete Domenici (R-NM) had sponsored an amendment allowing the change in an effort to protect his home-state contractors at Los Alamos and Sandia national laboratories. After the conference committee dropped his amendment to the $82 billion supplemental appropriations bill, the House approved the bill with new language on May 5 and the Senate followed suit May 10. President Bush is likely to sign it quickly because of the urgent need for money to fund military action in Iraq and Afghanistan. The conference committee crafted language ordering a study of whether the department should establish “a procurement agency relationship” with its large management and operating contractors, according to a joint statement by House Small Business Committee Chairman Donald Manzullo (R-IL) and Senate Small Business Committee Chair Olympia Snowe (R-ME). That would allow the management contractors’ subcontracts to be counted as prime contracts. The legislation directs the department and SBA to jointly study ways “to encourage new opportunities for small businesses to increase their role as prime contractors,” and report to Congress before making any changes. Energy is required to negotiate an agreement with SBA on how to report small-business prime contracts and subcontracts. SBA has opposed allowing subcontracts to be counted as primes. In their statement, Manzullo and Snowe said, “This replacement language does not change the Small Business Act’s clear distinction between prime contracts and subcontracts, does not amend the statutory small business prime contracting goal requirements which are binding on the Department of Energy, and does not obviate Congressional and regulatory policies against contract bundling.” The language appears designed to allay fears that other agencies would push to count subcontracts as well as prime contracts toward their small-business procurement goals. No other agency spends as much of its money on large management contracts as Energy does. Because about 90% of its budget goes to those management contracts, Energy has long been the government’s poorest performer in small-business contracting. It awarded only about 4% of its prime contract dollars to small firms in fiscal 2003, but it estimates that about half of its subcontracts go to small businesses. Energy had been allowed to count subcontracts as prime contracts until 2000, when the Office of Management and Budget ordered the department to abide by the same rules as everybody else. The bill directs the department to determine whether some of its large contracts can be unbundled to create opportunities for small businesses. It instructs the department to consider whether to require “a local presence for small business subcontractors,” providing some protection for Domenici’s constituents, who were afraid of outside competition.