The House has approved legislation to increase the small business contracting goal to 25%, from the present 23%, and create a pilot set-aside program for some mid-sized contractors.

Those provisions are included in the 2013 defense authorization bill. The house passed it May 18 on a 299-120 vote. However, the White House has threatened a presidential veto of the bill over several issues, including the small business provisions.

The Senate Armed Services Committee has approved its version of the authorization bill. The original draft did not include the small business provisions; the committee-approved bill has not yet been released.

The Obama administration opposes the 25% small business goal, calling it “overly ambitious.” The government has never reached the current 23% goal.

The administration also opposes new restrictions on contract bundling that are included in the House bill. In a statement, the Office of Management and Budget said the bundling provisions would interfere with agencies’ acquisition decisions.

The bill would create a pilot set-aside program in the Defense Department for companies that have outgrown their size standards, called “advanced small businesses.” To be eligible, a company must have less than three times the receipts or fewer than twice the number of employees in its size standard. Contracts worth more than $25 million could be set aside for advanced small businesses if no small firms were able to perform the work.

Many of the small business provisions had been recommended by the House Small Business Committee. The panel’s chairman, Rep. Sam Graves, R-MO, said, “Despite the White House’s shocking objection to this effort to expand opportunities for small businesses, these provisions have been supported by more than 20 business groups and many colleagues across the aisle.

"This is further proof that both parties can work together to pass legislation that will boost the economy through helping our nation’s small businesses, and I encourage the Senate to support it.”

While the text of the Senate bill are not yet available, leaders of the Armed Services Committee said it includes a $237,000 cap on contractor pay, according to published reports. The Obama administration has been pushing for a sharp reduction in the current $763,000 cap.

The committee’s ranking Republican, Arizona Sen. John McCain, said the bill calls for a 5% cut in spending on service contractors and civilian DOD employees over the next five years.