House Approves 30% Goal, Annual Recertification The House passed legislation that would increase the federal government’s small business procurement goal to 30%, from the present 23%, require businesses to recertify their size status annually and expand the definition of contract bundling. Small Business Committee Chair Nydia Velazquez said the Small Business Fairness in Contracting Act, H.R. 1873, is “the most comprehensive reform of the contracting system for entrepreneurs in over a decade.” The House approved it May 10 on a 409-13 vote, with overwhelming support from both Democrats and Republicans. The Bush administration opposes key elements of the bill, but the administration statement did not threaten a presidential veto. Senate Small Business Committee Chairman John Kerry said he intends to pass a contracting bill this year, but stopped short of endorsing the House legislation. The Bush administration said the 30% goal for small business procurement is “unrealistic.” Although official figures show federal agencies spent more than 23% of their prime contract dollars with small businesses over the past two years, an analysis by the Democratic staff of the House Small Business Committee found many errors in the data and asserted that awards to small firms actually fell below 23% in 2005. The bill also increases the current 5% goal for woman-owned businesses and small disadvantaged businesses to 8%. The administration opposed a provision requiring small companies to update their listings in the Central Contractor Registration annually to certify that they do not exceed the small business size standard. SBA has adopted a rule effective next month that requires recertification every five years. Lloyd Chapman, president of the American Small Business League, said the bill’s recertification requirements do not go far enough because they would allow large companies to continue to be counted as small on existing contracts. Other provisions of the bill: Contract bundling. The law now defines a bundled contract as one that consolidates two or more contracts, at least one of which was previously performed by a small business. The bill broadens the definition of bundling to cover new work, including construction contracts over $65 million. Chairwoman Velazquez, a New York Democrat, said the provision “closes a loophole in current law.” Agencies would be required to review and justify bundled contracts and task and delivery orders. “The number one reason the small business contracting goal is not being met is because of the bundling of contracts,” Velazquez said in House debate. The administration said the definition of bundling is “overly expansive” and the reviews would be “costly and time-consuming.” A leading contractor group, the Professional Services Council, also opposed the bundling provisions as “unreasonably” broad. Review of bundled contracts. The original bill, sponsored by Iowa Democratic Rep. Bruce Braley, allowed an agency’s decision to bundle a contract to be appealed to the Office of Federal Procurement Policy. The provision was dropped from the final bill after the administration objected. Under current law, the Procurement Policy Office has no jurisdiction over individual contract awards. The final bill only allows the SBA administrator to appeal a bundling decision to the head of the contracting agency. The Small Business Committee’s ranking Republican, Steve Chabot of Ohio, remarked, “Would anybody be surprised to learn that the administrator has never won an appeal on an agency head on a disputed bundled contract? Not once.” “Two-fers.” Currently a company that qualifies in more than one socio-economic category, such as a woman-owned 8(a) firm, is counted toward an agency’s goal in all eligible categories. The bill would allow a company to be counted toward goals in only one category. Alaska Native and Tribally Owned businesses. The bill would limit the size of sole-source awards to these companies; they may currently receive sole-source contracts in unlimited amounts. House Oversight Committee Chairman Henry Waxman, a California Democrat, indicated he intends to propose legislation setting limits. If Congress does not act by the end of this year, the bill directs the SBA administrator to “establish appropriate limits” after consulting with Alaska Native and tribally owned companies. Waxman said sole-source awards to Alaska Native corporations have nearly quadrupled in recent years, to more than $1 billion in 2005. Speaking May 14 at a forum sponsored by the Center for American Progress, he called the ANCs’ right to unlimited sole-source contracts “a major procurement loophole.” “Much of the work has been done by non-native companies working as subcontractors,” he said, according to the newspaper Federal Times. Overseas contracts. Currently contracts awarded outside the United States are not counted toward small business procurement goals. The bill would include those contracts. The House Small Business Committee originally voted to increase the governmentwide procurement goal to 30%, but the Oversight and Government Reform Committee reduced that to 25%. The House adopted an amendment by Illinois Democrat Melissa Bean restoring the 30% goal. However, the Oversight Committee rejected a provision that would have required each agency to set its small business goal no lower than the governmentwide goal. The Bush administration said it “strongly” opposed that provision.