SARA panel draft report critical of small-business acquisition strategies

By David Hubler

| January 2, 2007

The panel considered five general areas of small-business concern but chose to focus on only two and avoided an analysis of small-business subcontracting issues.

Procurement

The panel found that the contracting community does not properly apply and follow the governing contract bundling definition and requirements, suggesting that at least some contracts too large for small firms could be broken into smaller individual contracts.It also said the acquisition community needs more training on current small business contracting policies and programs, especially with respect to the distribution of awards. The panel cited recent Federal Procurement Data System statistics, which found that in fiscal 2004, for example, while most agencies met or exceeded their 8(a) goals, they made few awards to HUBZone and SDVO small businesses.The panel noted that the Defense Department in fiscal 2004 awarded 22 percent of its contracts to small businesses, but only 1.47 percent went to HUBZone and 0.33 percent went to SDVO small businesses.Among its recommendations, the panel urged legislative action to remove any statutory provisions in the Small Business Act, including those in the HUBZone Act, that appear to create the idea of a hierarchy within small-business contracting programs.It also recommended that GSA’s Office of Federal Procurement Policy create an interagency task force to develop best practices and strategies to unbundle contracts and mitigate the effects of contract bundling.The group, known as the SARA panel after the Services Acquisition Reform Act of 2003 that authorized it, said time and resource constraints precluded a more complete examination of small-business issues, notably size standards -- the rules that determine whether a business qualifies to participate in small-business programs.

The final draft of the Acquisition Advisory Panel report, released just before the New Year's holiday, devotes a lengthy chapter to its examination of small-business acquisition strategies. The panel considered five general areas of small-business concern but chose to focus on only two primary issues, both related to interagency contracting: commercial practices and workforce issues.

The panel did not probe small-business subcontracting because of a lack of accurate and reliable data, according to the report.

The use of small businesses as prime contractors is of concern because of a shrinking acquisition workforce coupled with a climate that encourages agencies to use strategic sourcing to spend their funds more efficiently. Strategic sourcing involves combining agency requirements into single contracts, lowering the overall cost for the government but possibly leading to procurements too large for small firms to compete for.

The panel also assessed the adequacy of current guidance on small business’ participation in multiple award task order contracts, including governmentwide acquisition contracts and General Services Administration schedules. It said the goal was to identify working policies and practices that could boost small businesses’ commercial purchases from the GSA Schedule.

For small businesses, the panel concluded:

Contracting officers need definitive guidance when assessing small business preferences, such as SBA 8(a), Historically Underutilized Business Zone, Service-Disabled Veteran Owned (SDVO) and Women-Owned businesses, for specific acquisitions.
Contracting officers should have explicit guidance to be flexible when selecting appropriate small-business contracting methods for procurements.
The contracting community needs to be better acquainted with the newer small-business and SBA programs.
Competition for small-business awards is limited by the use of cascading procurements – in which an agency might first issue an award to an 8(a) concern, but if the award cannot be made, it is then offered to a HUBZone company of other similarly designated company.

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The panel considered five general areas of small-business concern but chose to focus on only two and avoided an analysis of small-business subcontracting issues.