Bringing an End to Bundling
For those of you that do business with the federal government, you might be interested to know of a comprehensive effort put forth by the Bush administration to put the brakes on contract bundling. In recent years, small business has been systematically cheated out of its fair share of federal contracts. The culprit is "bundling," the discriminatory practice of combining several federal projects into one large package that is almost inevitably awarded to big business. By consolidating contracts, government agencies deny small business the right to participate, making it difficult for small businesses to compete for the $230 billion the federal government spends annually on contracts. The sheer size, complexity and capital to support large, multifunctional contracts are beyond the grasp of most small businesses.
Recently the White House ? through the Office of Management and Budget (OMB) and Office of Federal Procurement Policy ? unveiled a nine-point action plan to combat the practice within federal agencies of combining contract requirements. The OMB plan will increase accountability and leadership, close loopholes in current regulations, and ensure that prime contractors follow through on agreed upon subcontracting plans.
Under this plan, federal agencies must inform OMB of the steps they are taking to minimize the use of contract bundling. Also, prime contractors face penalties if they fail to use small businesses as subcontractors. In a report prepared by OMB, the agency found that substantially fewer small businesses receive federal contracts and that the government has a smaller supplier base, in part, due to contract bundling. According to the Administration, in the past ten years, the number of small businesses receiving contract awards has shrunk from a high of 26,506 in 1991 to a low of 11,651 in 2000. While contract bundling can reduce the administrative burden on federal agencies, when small businesses are excluded from federal opportunities through bundling, the agencies, small businesses and taxpayers lose.
The administration is committed to ensuring timely and accurate reporting on contract bundling information and will require contract bundling reviews for task and delivery orders under multiple award contract vehicles. Federal agencies will also be required to identify best practices for maximizing small business opportunities and dedicate agency small business office resources to carrying out the plan.
Proposed regulatory changes to require contract bundling reviews of proposed acquisitions above agency-specific dollar thresholds and individual agency review thresholds for acquisitions between $2 million and $7 million will be prepared by January 31, 2003. In addition, changes will be proposed to clarify the definition of contract bundling in the Federal Acquisition Regulation and Small Business Administration regulations and require contract bundling reviews by the Office of Small and Disadvantaged Business Utilization for task and delivery orders under multiple award contract vehicles.
For years, the federal procurement system has not been kind to small businesses and the MCAA will be watching developments with these regulatory changes very carefully. If you have any questions or need further information about the nine-point plan outlined herein, please don't hesitate to get in touch with Marian Marshall in the MCAA Government Affairs Office in Washington, D.C., at (202) 263-4612.
I would also be interested in hearing from those of you that do government contract work, so I can keep you up to speed on these proposed regulatory changes. If you'd be so kind to send me your name, company name, address, phone and e-mail, I'd be most grateful. You can e-mail the information to me at email@example.com.
About the Author
Marian J. Marshall was the Director of Government Affairs for the Mason Contractors Association of America.