The House-approved provision to create a new set-aside for mid-tier firms is having some problems winning broader support.

The House-passed defense authorization bill for fiscal 2013, H.R. 4310, contains language to establish a pilot program for “advanced small businesses,” defined as companies that have less than three times the receipts or fewer than twice the number of employees in their size standard. The Defense Department could set aside contracts worth more than $25 million for advanced small businesses if no small firm was likely to receive the award.

The prognosis for the new set-aside is mixed. The Senate version of the bill, to date, does not include the provision. The final language will be hashed out in a House-Senate conference committee.

In addition, while many lawmakers believe mid-sized firms need help, especially after losing qualification for small business set-asides, at the same time, ambiguities in the legislation make it hard to know how such a set-aside would work, said Stan Soloway, president of the Professional Services Council.The council has not decided whether to support the mid-tier set-aside.

The council has sponsored studies showing that mid-sized contractors are losing market share. The impact is most severe on companies that outgrow their size standards and no longer qualify for small business set-asides.

Several small business groups opposed the mid-tier set-aside at a hearing of the House Small Business Committee in September. They expressed fears that the mid-tier program would steal contracts from small firms.

In an effort to allay those concerns, the House bill specifies that SBA and its procurement center representatives would not be allowed to advocate for a contract to be set aside for advanced small businesses. No contract could be set aside under the new program unless the PCR determined that it was otherwise likely to be awarded to a large business. And small firms would be permitted to bid on set-asides for advanced small businesses.

If enacted, the program would be a three-year pilot at the DOD.

If made into a permanent program government-wide, the proposed set-aside program for mid-tier defense contractors could have “a huge impact on the market,” Soloway said.

The council opposes a provision in the House-passed bill that would increase the small business prime contracting goal to 25%, from the present 23%. Leaders of the group suggested Congress should look beyond prime and first-tier subcontracts to get a true picture of small firms’ market share.

In a conference call with reporters, Soloway said the group’s members are less concerned about goals than about compliance with contracting rules and the plight of companies that outgrow small business eligibility.

The council also opposes new restrictions on contract bundling in the House bill. Although small contractors have long identified bundling as one of the biggest problems they face, Soloway said the bundling restrictions are “tying the hands” of contracting officers.

The council opposes the Senate bill’s cap on allowable contractor compensation. The bill would set the cap equal to the vice president’s salary, $230,700 a year. Soloway said the comparison is inappropriate because the vice president receives free housing and other perks in addition to his salary.

In backing the lower cap, the Senate Armed Services Committee said the current limit on allowable contractor pay, $763,029, is “insupportable.”