Congress joins the fray as protests mount over strategic sourcing

Tuesday - 6/3/2014, 1:29pm EDT

(Correction: An earlier version of this story misquoted GAO's Ralph White. Federal News Radio regrets the error.)

As bid protests mount against the Federal Strategic Sourcing Initiative, Congress is starting to pay more attention to the program's potential impact on small firms.

Rep. Grace Meng (D-N.Y.), ranking member of the Small Business Subcommittee on Contracting and the Workforce, and Rep. Tim Walberg (R-Mich.), co-authored an amendment included the 2015 Defense Authorization bill to require the Government Accountability Office issue a report within a year on the impact of FSSI on small businesses. The House passed the legislation May 22.

Under the Meng and Walberg amendment, GAO would review the number of small firms participating as prime contractors prior to award of a contract as part of the FSSI, the number of small business primes after the FSSI award and the effect of any changes between those two events on the health of the small business industrial base and the sustainability of any savings under the strategic sourcing initiative.

Additionally, the provision would require agencies to justify and publish the need to consolidate or bundle contracts under FSSI before they issue a solicitation under the program.

"Strategic sourcing has the potential to save the federal government money, but as a member of the Small Business Committee it's my job to balance potential savings with the impact on the economy, especially on small businesses," Meng said in a statement provided to Federal News Radio. "I have concerns that strategic sourcing will lock out small businesses from fairly competing for contracts, and drastically reduce the number of businesses who are already contracting with the government. It's estimated that GSA Schedule 73 Holders that supply Jan/San products and supplies could be reduced from an estimated 1,000 schedule holders to 31 blanket purchase agreement participants . If signed into law, the amendment that passed the House will create more transparency and give the Committee and schedule holders a better understanding about the total impact of strategic sourcing."

This issue of the consolidation justification is at the heart of one of several bid protests GAO is in the middle of considering around four major strategic sourcing initiatives.

Back in early April, the Small Business Administration found that the General Services Administration didn't justify its need to consolidate contracts under the Office Supplies 3 program.

GAO is reviewing five protests over Office Supplies 3.

Ralph White, managing associate general counsel for procurement law at GAO, said the agency will decide on the protests by June 9.

The OS3 protests have forced GSA to try to extend the OS2 contract for another six months to November. OS2 was set to expire on May 31.

An email to GSA seeking comment on whether the extension happened was not returned.

Still, 11 companies filed protests over the OS2 extension, saying such an increase would be out of the scope of the contract.

It's unclear whether the company's protests were timely enough to force a stay on the extension.

The Meng/Walberg amendment and these protests show the rising tensions over the Obama administration's plans for strategic sourcing.

But some observers say the amendment doesn't go far enough.

"On the surface, it would appear that this amendment is the answer to our prayers, but I am open to discuss whether what I see may not be as wonderful as it appears. If you find that my concerns have merit, somehow the GAO should be made aware of the weaknesses of this amendment and not accept it as a solution to the OS3 protest," said Sam Bornstein, a professor of accounting and taxation at Kean University's School of Business in Union, New Jersey, and a partner with Bornstein and Song, who has been an outspoken critic of the government's strategic sourcing initiative. "The GAO study will be issued too late for the federal contractors who will suffer in the next year while the FSSI is implemented in their categories. By that time, GSA will have implemented FSSIs for OS2, OS3, furniture, IT hardware, IT software, JanSan & MRO, building maintenance and operations. These FSSIs will have caused irreversible damage to these federal contracting communities."

Bornstein said the amendment misses a critical element of any study of FSSI, the number of jobs lost because of these decisions.

Along with the OS2 and OS3 protests, GAO also is considering five bid protests over the OASIS multiple award contract for complex professional services. Among the companies protesting are Smartronix, VSE Corp., American Systems Corp., Logistics Management Institute and Ajucar, Anvil-Incus and Company.