Administration Releases Final Bundling Rule, But Critics Question its Effectiveness The Bush administration has issued a final rule to implement the president’s anti-bundling strategy, with no substantive changes from the proposal that was released in January. The rule requires agencies to justify their actions when they combine two or more existing contracts into a larger one, but it contains no enforcement mechanism beyond an appeal to the agency head. Critics charge that the administration has not provided adequate resources to back up its anti-bundling rhetoric. “The product looks good,” said Henry Wilfong Jr., president of the National Association of Small Disadvantaged Businesses, in an e-mail message. “But we anxiously await the implementation and the results of that implementation.” In conjunction with the bundling rule, the Small Business Administration released a proposed rule designed to increase small firms’ subcontracting opportunities. (See separate story.) The final bundling rule requires agencies to explore alternatives to bundling and to provide written justification of any bundled contract above specific thresholds: $7 million for the Defense Department; $5 million for NASA and the Energy Department; and $2 million for all other agencies. The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council rejected calls to change the thresholds. The councils said some public commenters wanted the thresholds higher and some wanted them lower. They said the thresholds were based on “a comparative analysis” of the size of different agencies’ contracts. The rule also requires bundling reviews and justifications for orders through GSA schedules and other multiple award contracts above the thresholds. However, a study by Eagle Eye Publishing found that provision would have affected only 0.1% of Defense Department task orders in fiscal 2002; DOD placed just 55 orders above the $7 million threshold. In a report last year, Eagle Eye said the growing use of schedules and governmentwide acquisition contracts was a primary factor driving the increase in contract bundling. The rule won applause from Sen. Susan Collins (R-ME), chair of the Senate Governmental Affairs Committee. Collins’s amendment, reducing the threshold to $5 million for the Defense Department, is part of the 2004 defense authorization bill, now awaiting action by a conference committee. But Rep. Nydia Velazquez (D-NY), ranking minority member of the House Small Business Committee, said the bundling restrictions “will do nothing to remove the current obstacles standing in the way of small businesses that want to perform federal contracts.” The councils said, “The proposed language is intended to require agencies to fully investigate all alternatives to bundling during the acquisition planning stage.” The rule gives agencies’ small business specialists the responsibility for making sure that directive is carried out. The specialist is required to notify the agency’s Office of Small and Disadvantaged Business Utilization if a proposed acquisition strategy includes unnecessary or unjustified bundling. The rule gives new responsibilities to SBA’s procurement center representatives, who are responsible for identifying bundled contracts and appealing to the agency head. There are only 47 PCRs covering 255 contracting offices. “By doling out more duties without providing more resources, the Bush administration is setting these individuals up for failure,” Rep. Velázquez said. The House Small Business Committee has proposed increasing the number of PCRs, but SBA has opposed that. SBA is working with the Office of Management and Budget to develop “an electronic PCR,” said Michael Barrera, SBA associate deputy administrator for government contracting and business development. He described it as “an online screening process…that will allow agencies to submit planned procurements electronically for PCR review during the acquisition process.” Testifying before a House Small Business subcommittee Oct. 21 he said, “SBA will be able to increase the number of procurements that can be reviewed since the work can be distributed electronically irrespective of PCR location.” He did not say when the system will be online. The House committee also proposed giving the Office of Management and Budget authority to break up bundled contracts. That provision is in the pending SBA reauthorization bill, H.R. 2802. In answer to complaints that agencies lack the resources to enforce the rule, the FAR councils acknowledged, “Agency reallocation of resources may be necessary.” They added that the rule would be enforced “by fully using the resources of the Small Business Administration and agency OSDBUs.” Administration officials have also emphasized President Bush’s personal commitment to combating unnecessary bundling. They say that makes the policy a high priority with agency heads. OMB has begun requiring departments and agencies to file quarterly reports on their performance in expanding opportunities for small businesses, but none of the reports has been made public. When a bundled contract is found to be justified, the contracting officer must explain why and must develop a plan to maximize small business participation in subcontracts. In its final rule, SBA recommended, but did not require, that a prime’s past-performance evaluation should give “’significant weight’ for achievements of subcontracting goals on previous contracts.” The rule does not address bundled requirements in new contracts, as opposed to existing ones that are being re-competed. The councils said “new work” is not included in the legal definition of bundling because “it was never part of a separate smaller contract, and so it is not bundled, by definition.” The councils said the rule will cover “accretive bundling,” when dissimilar tasks are added onto orders through GSA schedules or other multiple award contracts, because those orders are now subject to the same reviews as other contracts. The FAR rule is FR Doc 03-26463 and the SBA rule is FR Doc 03-26514 in the Oct. 20 Federal Register.