Department of Defense Appropriations Act, 2006

DEPARTMENT OF DEFENSE APPROPRIATIONS ACT, 2006. -- (House of Representatives - June 20, 2005)

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AMENDMENT OFFERED BY MS. VELáZQUEZ

Ms. VELÁZQUEZ. Mr. Chairman, I offer an amendment.

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Ms. VELÁZQUEZ. Mr. Chairman, the Federal marketplace has experienced amazing growth over the past 4 years, increasing by $100 billion. Given this increase, it would only be logical that our Nation's small businesses would see similar growth in contracting opportunities. However, this has not been the case. The reality is that small firms continue to be shut out of the Federal marketplace. The Federal Government has failed to reach its small business goal of 23 percent for the past 4 years now, costing small businesses $15 billion in lost contracting opportunity in fiscal year 2003 alone.

The Department of Defense has been an agency that has had a significant amount of trouble with this. One of the main causes has been contract bundling, which is the practice of combining contracts previously performed by small businesses into one megacontract that is simply too large for small firms to bid on. But often overlooked is that a significant contribution to the inability of the Department of Defense to make its goal is the comp demo program.

The comp demo program was created in 1989, but was made permanent during the Clinton administration under the guise of increasing small business participation. The theory behind it was to give agencies direction in finding small business contracting opportunities in nontraditional industries. This would be done by capping the amount of contracts in those industries that have been historically dominated by small businesses.

However, this is not what the program has done. Instead, it has limited small business participation in the Federal marketplace. The comp demo program diverts contracting opportunities to large firms, effectively limiting the ability of small companies to compete. While DOD is required to meet a 23 percent small business goal, the comp demo program ties its hands and restricts awarding contracts in the industries where small businesses excel. At a time when agencies are already struggling to meet their small business goals, this simply makes no sense. For an agency that represents 70 percent of all government contracting, this is clearly having a negative impact on our Nation's entrepreneurs.

The reality is that this program simply does not work, and this program has been recognized by the administration and the Department of Defense themselves. They proposed to eliminate the comp demo program altogether in the DOD's legislative package for 2006.

My amendment acknowledges the problem and provides a viable solution to fix it by prohibiting the use of funds for fiscal year 2006 to implement the comp demo program. This is supported by the Associated General Contractors, the American Nursery and Landscape Association, the National Small Business Association, and the National Black Chamber of Commerce. This action alone would have the impact of awarding some $4.3 billion in additional contracts to small businesses.

In today's Federal marketplace, small businesses are losing traction, and they cannot afford to be deprived of these opportunities. The comp demo program is only making small business owners' struggle to break into the Federal marketplace all the more difficult. By adopting this amendment, we will be taking a step to fix this problem. When small businesses say the program does not work, DOD says it and the administration is saying it, clearly something needs to change.

My amendment will do this. It is not only good for small businesses but also for the taxpayer and our Nation's economy. If we want to get this economy back on track and create the jobs we need, then we must give small business the opportunity and tools to do so. The comp demo program is simply not doing that, and it needs to end.

I urge my colleagues to vote "yes" today on this amendment for better use of the taxpayers' dollars and to help our Nation's small businesses compete in the Federal marketplace.

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Ms. VELÁZQUEZ. Mr. Chairman, will the gentleman yield?

Mr. YOUNG of Florida. I yield to the gentlewoman from New York.

Ms. VELÁZQUEZ. Mr. Chairman, unfortunately, the authorizing committee was not able to come together for the small business authorization to report a bill out of our committee. And for those people and Members who are always talking about helping small businesses and providing opportunities in the Federal marketplace and when the Department of Defense is saying that this does not make sense, this is an opportunity to do it, and this is why I want a "yes" vote on this amendment.

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Ms. VELÁZQUEZ. Mr. Chairman, will the gentleman yield?

Mr. TOM DAVIS of Virginia. I yield to the gentlewoman from New York.

Ms. VELÁZQUEZ. Mr. Chairman, before the Comp Demo program, small businesses in those selective industries were making 78 percent of all the contracts. Right now they are doing only 38 percent, almost cut in half. And, besides, I thought that the gentleman represented the party where people are rewarding small businesses or businesses that are exceeding. So now if they are doing a little bit better, then we are going to punish them?

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Ms. VELÁZQUEZ. Mr. Chairman, will the gentleman yield?

Mr. TOM DAVIS of Virginia. I yield to the gentlewoman from New York.

Ms. VELÁZQUEZ. Mr. Chairman, this is about economic opportunity for small businesses. The fact of the matter is that the Federal marketplace is growing and that small businesses are losing out; that their number of dollars and contracts are shrinking, and the Federal Government is not achieving the 23 percent statutory goal set by Congress.

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Ms. VELÁZQUEZ. Mr. Chairman, will the gentleman yield?

Mr. TOM DAVIS of Virginia. I yield to the gentlewoman from New York.

Ms. VELÁZQUEZ. Mr. Chairman, the Department of Defense is saying that immediately small businesses will get $4.4 billion if this is fixed.

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Ms. VELÁZQUEZ. Mr. Chairman, I move to strike the requisite number of words.

The CHAIRMAN. Without objection, the Chair recognizes the gentlewoman from New York (Ms. Velázquez).
There was no objection.

Ms. VELÁZQUEZ. Mr. Chairman, there are some who said that capping small business opportunity in certain industries increases opportunities in other industries. That might have been the theory behind the program in 1988 when it was created, but that has not been the case. Different industries offer different opportunities; some are very favorable to small businesses.

The Department of Defense has not achieved its small business goal for the past 4 years. That is the reality. So, clearly, they are not making up the difference someplace else.

Under the comp demo program, small businesses are guaranteed 40 percent participation in the targeted industries. If the agency does not achieve 40 percent with small firms, it can reinstate small businesses' set-asides. One need look no further than the goal for architectural and engineering services, which has never been achieved. We have asked the Department of Defense. They do not reinstate set-asides when the achievement with small businesses is less than 40 percent.

Forty percent small business participation is a good thing. Normally, small businesses only get 23 percent. If a small business's participation decreases from 78 percent to 40 percent, that is the loss of 38 percent, and that is what is happening now.

The bottom line, Mr. Chairman, is, if you support small business opportunity in the Federal marketplace, you should support this amendment.

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