Congress says "Make Every Small Business Count" but who's keeping count?
Sunday, December 22, 2013
Posted by: Guy Timberlake (theasbc.org/visionary)
The Washington Post article "New military spending deal includes help for small business contractors" starts by paying kudos to Congress for their "...unusually speedy fashion..." in approving a new federal budget and military spending bill. Really?!? Unusually speedy fashion? Just think, if the Hill-folk could find a way to do their job in a way most people are required to, they would not have to resort to "unusually speedy" activities. Plan your work, work your plan. Novel concept, huh?
But that's not what this piece is about, it goes to a much, much more important subject, that is, getting revenue to hard-working small federal contractors. Congress, as per normal, is focused on legislating all of us to death by tweaking rules here, adding some words there and generally mucking up the works until everyone involved (namely agencies and small businesses) are so exasperated, no one knows what the heck is going on. My military friends tell me the applicable term is SNAFU. Tell me, better yet, show me I'm wrong.
So here we are with Congress' latest movement, the "Make Every Small Business Count Act of 2013" also known as HR 2232. I have not read the Act cover-to-cover but I did read the details of the legislation on the Committee's web page, plus I stayed at a Holiday Inn Express last night which means I am likely overly-qualified for the job of a Congressman, whether I stayed at the Holiday Inn Express or not!
Here's the gist of the bill (as posted on smallbusiness.house.gov):
- The bill increases availability of lower tier subcontracts to small businesses by counting every subcontracted dollar toward the negotiated small business contracting goal.
- Current law requires that any large business receiving a federal prime contract or a subcontract for more than $650,000 (or $1.5 million for construction contracts) must provide "maximum practicable opportunity” for small business participation as subcontractors.
- Agencies negotiate small business subcontracting goals with the prime contractors, and prime contractors pass down the requirement to use small businesses their own large subcontractors. The dollars reported are then applied to the government’s goal of awarding 35.9% of subcontracted dollars to small businesses.
- While the government receives credit for all tiers of subcontracting, prime contractors are currently only given credit for first tier subcontractors. Ironically, this ensures opportunities at the first tier for small businesses, but not for lower tier subcontracts – often the most suitable for developing businesses.
- Current law also prevents an agency from negotiating the subcontracting goals beyond the first tier. By basing the goal on all tiers, the bill allows for higher goals in that contract.
Here is my one and only issue. Don't we have enough challenges with entities that are not legit small businesses being awarded work directly (or indirectly) by federal agencies? Now we create an unmonitored means for organizations to boost their numbers. After all, a number of these organizations (some, not all) see small business subcontractingas a bothersome and punitive activity (at best). Just what are the metrics behind "maximum practicable opportunity" anyhow?
Let me state for the record there are several "other than small" organizations doing business with the Government who embrace partnerships with small businesses. However, there are more that do not and now these organizations have control (and influence) on the numbers they report to agencies. I'll come right out and say it. Since shedding employees to meet the new "lean and mean" look of today's "other than small" government contracting firm is in fashion, how many new "small business" organizations will sprout up to front for their former employers through cozy and convenient relationships. My belief is that affiliates and subsidiaries will reap the greatest benefit from this change, rather than true independently-owned small businesses.
Once again, Congress has missed an opportunity to apply a simple solution with far-reaching benefits. Since the start of FY2013, sixty-four federal agencies boards and commissions have exercised the Simplified Acquisition Procedures in the process of obligating $16.3 billion for the purchase of goods and services. According to FPDS-NG, $9.2B was awarded to small business concerns, meaning the rest went to "other than small business" concerns. From a competition standpoint, over $12.5Bhas been competitively awarded.
Agencies are advised to set-aside buys made using these streamlined acquisition rules, when they can identify at least two viable small business concerns. This is for buys whose value does not exceed the Simplified Acquisition Threshold. However, that "rule of two" is tossed out the window when agencies leverage a special exception which raises that threshold to$6.5M, still using those same streamlined rules.
So to Congress I say, keep all of the rhetoric and complicated rules to yourselves, and make the "reservation" for Simplified Acquisitions a "set-aside" and include it on buys made using FAR Subpart 13.5. Based on spending over the last four fiscal years, this will put $5B to $7B in the coffers of America's small businesses, quick, fast and in a hurry.
This would be change I could believe in.
The Chief Visionary
"The person who says it cannot be done should not interrupt the person doing it."