Changing Goals and Laws

There has been a renewed interest in diversity business usage goals. And the federal government has been working on legislation that may improve the climate for SDMWVBE businesses in federal contracting. There’s a new bill in Congress, HR 2949, tentatively titled the Small Business Opportunity Expansion Act of 2011. Introduced on September 15th by Mr. Donnelly of Indiana, the bill is intended to amend the goals for small business contracting.  The bill, which was referred to the committee on Small Business,  suggests that:

• 23% of prime contracts for small business increase to 24%;
•  5% of prime and subcontracts for small disadvantaged business (minority) increase to 6%;
•  5% of prime and subcontracts for woman-owned business increase to 6%;
•  3% of prime contracts for HUBZone small businesses (SBA program) increase to 4%;
•  3% of prime and subcontracts for service-disabled veteran-owned businesses increase to 4%.

Yet, September 30th, Federal News Radio reported that “Small businesses received almost $98 billion in government contracts in 2010, but agencies still missed the governmentwide goal” for the last five years. Federal agencies came close, awarding 22.7 percent of their contracts to small firms, while 29 percent of all Recovery Act contract money was awarded to small businesses.

Another bill, S. 2989 Small Business Contracting Revitalization Act of 2010’’, wanted to address issues facing small business contracting: Contract bundling; Subcontracting, including require agencies to increase oversight of large businesses to make sure they are giving the work to the small firms they said they would in the contract, payment challenges and goaling; Size standards; and Contract awards. The bill calls for the Small Business Administration to establish a teaming center that will help small firms create joint ventures to bid on the larger bundled contracts that they might not have the time, money or expertise to pursue directly.

Another provision would require agencies to increase oversight of large businesses to make sure the small and diverse firms listed as participants actually get the work described by the teaming agreements and contract. This bill was placed on the Senate Legislative calendar but there was no further action taken.

Many of these issues were addressed in September 2010 when President Obama signed the Small Business Jobs and Credit Act (H.R. 5297) that requires prime contractors to provide a written explanation when they fail to use the subcontractors in the manner described in the subcontracting plan. And, if the contracting officer is dissatisfied with the explanation, it can have a negative impact on the prime’s performance evaluation. Contractors that continually fail risk having their non-compliance listed in the Federal Awardee Performance Integrity Information System. FAPIIS is a website that reports on vendors’ government contracts. It is intended to provide information to contracting officers during the evaluation of proposals. This database includes findings of vendor non-responsibility, terminations for default or cause, defective pricing, contractor suspension or debarment. It also lists reports of criminal convictions, civil liabilities and adverse administrative actions. The website debuted in April 2011 to mixed reviews.

Tracking actual use of small, minority, veteran, women-owned and disadvantaged firms can only be good for us. So often, it seemed that MWBEs were used to to win an award but did not get to actually perform the work. This renewed interest in diversity business usage and reporting may lead to increased opportunities for SDMWVBEs.