Congress Can Help By Keeping It 'Simplified!'
The folks in Congress keep coming up with very complicated approaches to 'helping small business' when it comes to federal contracting.Most often these attempts never go anywhere and when they do, they tend to make the process and life for buyers and sellers more convoluted. For these reasons I've decided to offer a solution based on an approach I've discussed and blogged about for many years. In my opinion, it's much less labor intensive than most previous attempts and some currently underway. In full disclosure, a bill was recently introduced by Congresswoman Eshoo that addresses my approach, but only in a very small way. Hopefully she and Congressman Connolly who co-sponsored the bill read this and refresh RFP-IT.
The Federal Acquisition Regulations describe an acquisition method that provides benefits for both Government and Industry, and accounts for billions of dollars in purchases each fiscal year for supplies, services, construction, research and development and commercial items. The impact this acquisition method has on small business concerns is substantive. In fact, last fiscal year (FY2013), small federal contractors captured nearly sixty percent of $17B in total obligations made by sixty-two agencies using this method. Not all of those were set-aside. The method I'm referring to is the Simplified Acquisition Procedures referenced in Part 13 of the FAR and it is described this way:
The purpose of this part is to prescribe simplified acquisition procedures in order to—
(a) Reduce administrative costs;
(b) Improve opportunities for small, small disadvantaged, women-owned, veteran-owned, HUBZone, and service-disabled veteran-owned small business concerns to obtain a fair proportion of Government contracts;
(c) Promote efficiency and economy in contracting; and
(d) Avoid unnecessary burdens for agencies and contractors.
A key benefit to small businesses is the fact most of these buys don't require them to have an established contract vehicle since $12B of the $17B obligated in FY13 were awarded via purchase order and definitive contract. Purchase orders accounted for nearly $10B of FY13 simplified acquisitions. Then there is the inherent preference to contract with small business concerns described this way:
'Acquisitions of supplies or services that have an anticipated dollar value exceeding $3,000 but not exceeding $150,000 are reserved exclusively for small business concerns and shall be set aside.'
The way this 'reservation' works is described in what's known as the 'Rule of Two.' In summary this rule states:
'Unless the contracting officer determines there is not a reasonable expectation of obtaining offers from two or more responsible small business concerns that are competitive in terms of market prices, quality and delivery, purchases above the micro-purchase threshold and below the simplified acquisition threshold shall be set-aside.'
The basis of this rule is why, in a recent blog, I described the competitive simplified acquisition buys made to large companies during FY2013 as a $5B 'no show' penalty. Because small businesses apparently did not make themselves known at more than twenty agencies, these buyers had no expectation they would receive two offers from viable small business concerns.
So here's my idea for creating immediate and sustainable economic impact for the small business community. Let's make a few minor changes to the Simplified Acquisition Procedures, specifically tied to the threshold so it looks like this:
''Acquisitions of supplies or services that have an anticipated dollar value exceeding $3,000 but not exceeding $150,000 are set-aside exclusively for small business concerns.'
What this change could mean based on spending under Simplified Acquisitions staying consistent, is roughly $5B in growth and jobs. If we go a step further and make the change look like this:
''Acquisitions of supplies or services that have an anticipated dollar value exceeding $3,000 but not exceeding $250,000 are set-aside exclusively for small business concerns.'
The impact potentially increases to $8B for small businesses due to additional requirements captured because of the threshold increase. If we go with a blended approach, mine and the one described by Congresswoman Eshoo in her RFP-IT bill (with the exception of applying it to all segments of government contracting and not just information technology), it would look like this:
''Acquisitions of supplies or services that have an anticipated dollar value exceeding $3,000 but not exceeding $500,000 are set-aside exclusively for small business concerns.'
I'm still calculating the possible positive impact to small business based on that change, but I'm not at all opposed to the results I anticipate happening.The Chief Visionary
In the end, this would be an easier way to help a great number of small businesses, and far less complicated than some of the other initiatives I've seen and continue to see. Those elected officials could think of it as a way to truly endear themselves to their small business constituents. At least those small business constituents pursuing government contracts!
Hey, is this thing on?
"The person who says it cannot be done should not interrupt the person doing it."