House Votes to Keep "Comp Demo" Program The House voted down a move to kill the Small Business Competitiveness Demonstration Program, as members disagreed on whether it helps or hurts small contractors. Rep. Nydia Velazquez’s amendment to the Defense Appropriations bill was rejected June 20 on a vote of 180-235. The Defense Department had proposed ending the “comp demo” program, which is designed to encourage agencies to award contracts to small businesses in a wider variety of industries. “The theory behind it was to give agencies direction in finding small business contracting opportunities in nontraditional industries,” Velazquez (D-NY) said during House debate. “However, this is not what the program has done. Instead, it has limited small business participation in the federal marketplace. The comp demo program diverts contracting opportunities to large firms, effectively limiting the ability of small companies to compete.” Under the law, agencies can eliminate set-asides in industries traditionally dominated by small firms – such as construction, trash collection and architect/engineering services – if small businesses receive at least 40% of the prime contract dollars in those industries. The idea was to use set-asides to give more work to small companies in other fields, such as information technology. Velazquez said small businesses once won 78% of the contracts in the designated industries, but their share has fallen to less than 40% since the comp demo program began in 1989. Her amendment was doomed by opposition from two key committee chairmen, Reps. Tom Davis (R-VA) of Government Reform and Donald Manzullo (R-IL) of the Small Business Committee. “Prior to the adoption of the Comp Demonstration program, small businesses were relegated to industries dominated by small businesses,” Manzullo told the House. “Federal agencies could say they met their overall small business goals while not doing much to provide more contracts to small businesses in more higher-end, higher-paying industries… The Comp Demo program requires that small businesses receive a ‘fair proportion’ of government contracts in each industry rather than just a few.” Velazquez’s fellow Democrat, Danny Davis (IL), also argued for continuing the program: “Comp Demo was set up to expand opportunities for small businesses across a broad and diverse set of NAICS codes, rather than in a few ‘easy-to-do’ categories. The repeal of the program has no real justification, would harm overall, broad-based small business participation in federal contracting, and harm the development of a diverse defense industrial base.” Chairman Tom Davis said he would work with Velazquez to look at which industries are being hurt by the program “rather than gutting the whole provision.” Elimination of the comp demo program was included in the Defense Department’s legislative wish list for 2006, but congressional staff sources said DOD did not push the issue during committee deliberations. Velazquez said DOD’s small business procurement has fallen below 40% in several of the designated industries, but the department has not reinstated set-asides, as the law requires. Velazquez said her amendment drew the support of several affected industry organizations, including Associated General Contractors, the American Nursery and Landscape Association, the National Small Business Association and the National Black Chamber of Commerce.