WASHINGTON, D.C.—Senate Governmental Affairs Committee Chairman Susan Collins (R-ME), whose committee oversees the federal contracting process, today commended the Small Business Administration for issuing new regulations that would make it easier for small businesses to bid on federal contracts. These regulations are similar to those proposed by Senator Collins and included in the Defense Authorization bill currently under consideration in a conference committee.
The new regulations that were published in today’s Federal Register would require federal agencies to perform a review of bundled contracts in excess of certain dollar amounts. In the case of the Defense Department, that amount is $7 million; it is $5 million for the General Services Administration, the National Aeronautics and Space Administration, and the Department of Energy; and $2 million for all other federal agencies. Previously, the amount had been set at $10 million for all federal agencies. Under Senator Collins’ proposal, rigorous analysis would be required for Defense Department bundled contracts in excess of $5 million.
Unlike contracts for major construction projects such as aircraft, ships or tanks, contract bundling combines requirements for goods and services that are not necessarily related. For example, an agency may bundle individual contracts for grounds maintenance, facilities cleaning and roof repair into one larger contract. This practice simplifies the workload of the contracting officer but often precludes small businesses from bidding on the larger, bundled contracts.
The new regulations also would require that alternatives to bundling be considered and that agencies conduct periodic reviews to determine whether small businesses are receiving their fair share of federal contracts.
“Bundling results in a dramatically reduced contractor base and the lost opportunity cost because the government must choose among fewer firms with fewer ideas and innovations to deliver products and services at lower prices,” said Collins. “This is a matter of making sure we have a healthy industrial base, that we have as many firms competing as vigorously as possible to do work for the federal government, and that our smaller companies have a fair shot at competing for federal contracts.”
Contract bundling has become increasingly prevalent in recent years. The practice has increased by 19 percent since 1992, which has precluded many small firms from doing business with the federal government.
“Contract bundling disadvantages smaller companies that cannot bid on a giant contract but would be perfectly able to responsibly perform the work if the contract were broken up into smaller segments,” said Senator Collins. “When contracts are bundled so that only a few large firms can bid on them, competition gets shortchanged, and the United States ends up paying the bill.”