Set-Aside for Mid-Tier Firms Is Questioned Democrats and Republicans on the House Small Business Committee expressed skepticism about a proposed pilot set-aside program for mid-sized companies. Two advocacy groups, the National Small Business Association and the U.S. Women’s Chamber of Commerce, opposed the idea at the committee’s Sept. 14 hearing. Democratic Rep. Gerry Connolly, who represents a contractor-heavy district in Northern Virginia, has proposed a pilot program in GSA that would set aside contracts for mid-sized firms in cases where two small businesses were not available to compete for the work. Connolly’s Small Business Growth Act, H.R. 1812, defines a mid-sized company as one that is not small, has no more than 1,500 employees and is a mentor to a small business in GSA’s mentor-protégé program. Alabama Republican Rep. Mike Rogers has proposed a set-aside in the Defense Department for companies with up to 2,500 employees. Both congressmen say mid-sized firms are being squeezed out of the federal market by large contractors on the one hand and the existence of small business set-asides on the other. Once a contractor exceeds small business size standards, Connolly said, “often they just get bought up or they go out of business.” Opponents of a mid-sized set-aside say that idea should wait until the government shows it can meet the 23% goal for small business contracting, something that has never happened. Committee Chairman Sam Graves, R-MO, asked, “Given that the current small business goals are not being met, how do we ensure that a new program for larger businesses will not make it harder for small businesses to compete?” Connolly said his proposal, to create a five-year pilot only for GSA contracts, would not hurt small contractors, because they would still be first in line for set-asides under the rule of two. A memo by Small Business Committee staff raised questions about how a mid-sized preference would work. First, as the differing approaches of Reps. Connolly and Rogers show, there is no accepted definition of a mid-sized business. If the definition includes companies with up to 1,500 employees, set-asides would be allowed for the government’s four largest apparel contractors, according to Michael Frisbey, owner of a small apparel manufacturer in Knoxville, TN. Testifying on behalf of the National Small Business Association, he said, “The small-business members of NSBA are unconvinced that businesses that are, at least, three times the size of the traditional definition of a small-business concern need a separate procurement set-aside.” The committee staff also warned that any new set-aside program would necessarily cost money for monitoring contracts and enforcing the rules. Connolly emphasized he is willing to work with the skeptics to design a program that will meet their objections while testing the idea of a mid-tier set-aside. Connolly’s bill appears to have little chance of passage in the remaining weeks of this year’s congressional session. It has been referred to the House Oversight and Government Reform Committee, which has not yet scheduled a hearing.