Concerns over contract bundling cast shadow over 2013 small business successes

Friday - 4/25/2014, 4:16am EDT

For the first time in seven years, government leaders expect agencies to meet the goal of awarding at least 23 percent of all prime contracts to small businesses.

While the final fiscal 2013 data is not yet complete, Emily Murphy, a House Small Business Committee staff member, and others say all signs point to the fact that despite the government spending less overall money on acquisition last year, agencies met the statutory goal.

The government as a whole hasn't awarded 23 percent of all prime contracts to small firms since 2007.

But despite the expected success, some in the contracting community see warning signs that signal bigger problems for small firms than whether or not agencies meet statutory contracting goals.

Reduced spending means fewer opportunities for vendors, and with the shutdown, sequestration, hiring freezes and cuts to training funds, agencies are trying to address shortfalls in experienced acquisition workers.

Small firms and other observers say they are seeing a rise in contract bundling and consolidations. Additionally, agencies are not meeting the statutory requirements to justify taking these actions, which adds to the situation.

Not on the radar, yet

Rob Burton, a procurement attorney with Venable in Washington and a former deputy administrator at the Office of Federal Procurement Policy, said the issue of bundling and consolidation and the fact that agencies consistently are ignoring the requirements to justify their decisions isn't getting a lot of attention in the small business community, but could have a huge impact on small firms over the long run.

Murphy said contract bundling and consolidation are among House Small Business Committee Chairman Sam Graves' (R-Mo.) top concerns.

"The numbers [of bundled or consolidated contracts] in the database are wrong, and that's bad from a public policy standpoint. But it's even worse when you consider it means that neither the justification, the mitigation nor the data capture is taking place when it comes to bundling or consolidation," Murphy said during a panel discussion Thursday in Washington at the ACT-IAC Small Business Conference. "While you or I may catch a contract that's $10 billion, no one is looking at the $75 million contract."

Murphy said that's why Graves introduced the Contracting Data and Bundling Act of 2014 in February.

The legislation would "require the Small Business Administration to work with other agencies to create and implement a data quality improvement plan to promote greater accuracy, transparency and accountability in the reporting of contract bundling and consolidation. It then requires the Government Accountability Office to assess the agencies' success and offer suggestions for further improvement."

"I'm fairly confident that it will be included in this year's Defense authorization, which gives it a good chance of making it into law," she said.

Murphy added the new provision would be a step, but it wouldn't address the bigger concerns about strategic sourcing and bundling. She said the administration's goal of maintaining a certain percentage of dollars going to small firms doesn't take into account the long-term impact on the industrial base that these efforts are having on the companies in the private sector.

Ken Dodds, the Small Business Administration's director of policy, planning and liaison, said bundling has been a huge issue since the late 1990s.

"Let's be clear: agencies can bundle, and they can consolidate. They just have to justify it. There are thresholds they have to do. They have to analyze the data. They have to mitigate. There are things they have to do," he said. "Agencies often get into trouble when they try to ignore it and do not do the work they have to do. If agencies do it, they can do it."

Dodds said the problem there is little to no follow up with the agency that decided to bundle the requirements or contracts to see if they met their justification in terms of savings or efficiencies.

This issue came to light just recently when SBA ruled that GSA didn't justify its rationale for consolidating requirements under the office supplies 3 strategic sourcing solicitation.

The fact that agencies are not checking the box and following the rules because they don't want to do the justification is why Graves is pushing his legislation.

New approach to teaming

While some agencies are moving toward bundling or consolidations, vendors are looking for innovative ways to bid on these larger contracts.

One way is through the creation of contractor teaming arrangements (CTAs).

This is the concept where two or more GSA schedule contractors work together to meet ordering activity's needs, according to a recently posted set of FAQs by GSA.