Industry group warns against mandates for small-biz opportunities

The Barack Obama administration is acting on a legislative provision that attempts to give more opportunities to small businesses in an area where regulations have been basically silent. However, industry groups worry that strict rules could stifle a dynamic environment.

Small companies with a contract in the General Services Administration’s Multiple Award Schedules program would suffer if regulators adopt guidance that replaces agencies’ flexibility with rigid set-aside mandates, said Roger Waldron, president of the Coalition for Government Procurement.

“The rules would divide the market in an unhealthy way,” Waldron said.

Regulators issued an interim rule in November telling contracting officers to set aside task and delivery orders made to multiple-award contracts, blanket purchase agreements, and the Schedules contracts. It also tells agencies to reserve some of those types of contracts for small businesses. There is no deadline for issuing a final rule.

However, the rule gives the officers discretion. The rule is based on a provision in Small Business Jobs Act, which was enacted in 2010. The law gives contracting officers the ability to reserve orders for small business on multiple-awards contracts, including the Schedules. Like the interim rule, the law gives the contracting officers discretion to decide when to set aside a contract.

Despite that, the Coalition has concerns that officials could overstep the intent of the law.

“Regulatory guidance that limits agency flexibility when using the [Schedules] program or otherwise applies rigid, mandatory set-aside rules would lead to reduction in opportunities for small businesses by dividing the market and adding unnecessary complexity,” the coalition wrote in comments Jan. 3 about the rule.

Officials could weaken the Schedules if they went too far, Waldron. New rules could lead to two separate regulatory frameworks under the Schedules program—one for small businesses and another for “other than small” companies.

Meanwhile, the Schedules are doing well in sales to small businesses. The Schedules had $38.6 billion in sales in fiscal 2011. Through the years, roughly a third of the business goes to small companies, which exceeds the governmentwide 23-percent annual goal for small-business contracting. Many Schedules contract-holders are small businesses.

In all though, Waldron said the outstanding question is whether regulators will make these set-aside rules mandatory or discretionary for contracting officers.