Small Business Fairness In Contracting Act
Floor Speech
SMALL BUSINESS FAIRNESS IN CONTRACTING ACT -- (House of Representatives - May 09, 2007)
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Ms. VELÁZQUEZ. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, there is no question that the Federal marketplace continues to grow at record rates. Just last year, the Federal Government spent $417 billion on goods and services. While the government's buying power is increasing, small businesses' opportunities and access to this market is decreasing. With unfair competition and the combining of government projects, entrepreneurs are being shut out of the Federal market. Currently, the state of procurement for small businesses is one that does more to create barriers than it does to encourage participation.
What we have heard time and time again is that access to government projects is out of the reach of small firms. The barriers in the way of accessing this work is clear, among them, the bundling of contracts, the lack of a strongly enforced small business contracting goal and large firms receiving contracts intended for small firms.
For the past 6 years, the government has failed to meet its 23 percent small business contracting goal, costing entrepreneurs last year alone as much as $4.5 billion in lost contracting opportunities. With small businesses creating three out of every four new jobs in this country, they deserve to compete on a level playing field for government work. Small firms do not deserve to be left out of the Federal marketplace but, instead, to be given every tool needed to continue to spur economic growth.
The number one reason the small business contracting goal is not being met is because of the bundling of contracts. Individual contracts being combined works to exclude small firms from bidding on them and often results in higher costs to taxpayers and decreased value for the government. For every $1,800 awarded in a bundled contract, there is a $33 decrease to small businesses. When contracts are bundled together creating ``super-contracts,'' they become too large for entrepreneurs to compete.
In 2002, the President pledged during the administration's announcement of their small business agenda that, ``We're going to insist we break down large Federal contracts so that small business owners have got a fair shot at Federal contracting.'' This legislation finally puts his words into action.
To create the illusion that the goal is being met, agencies are using contracts awarded to large companies and including them toward their small business contracting goal. In 2005, approximately $12 billion in contracts were falsely counted. This gives the impression that agencies are doing more work with small firms than they actually are.
Access to the Federal marketplace is an important mechanism for growth for small businesses. If competition for government projects is not fair, there is no way we can expect entrepreneurs to grow and expand their ventures. This not only benefits entrepreneurs, but also puts taxpayers' dollars to good use. For every dollar in contracts, $7 in revenue is generated for the Federal Government.
Clearly, large businesses have more resources than small firms. Oftentimes they have access to more capital, can hire more staff and have fewer barriers in the way of marketing and expanding their companies. The last thing they need to be doing is taking contracts intended for small businesses.
H.R. 1873 is a bipartisan effort introduced by Mr. Braley. I want to commend Mr. Braley for his work on addressing small business procurement issues and bringing this bill up for consideration.
This legislation will help open the marketplace for small business contracts. It ensures that fair competition is enforced and that small firms are given the opportunities they deserve to work with the Federal Government.
With the government being the largest buyer of services and goods and small businesses being the largest job creators, increased partnership between these two is the best value for the taxpayer dollar, and not only benefits entrepreneurs, but communities all across the country.
I strongly urge my colleagues to vote for the Small Business Fairness in Contracting Act.
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Ms. VELÁZQUEZ. Mr. Chairman, I would like to close by saying that it has been over a decade since a small business contracting bill has come to the floor. Clearly, addressing the concerns of entrepreneurs in regards to procurement is long overdue and much needed.
I just want to take this opportunity to thank Ranking Member Chabot for all of his hard work and his collaboration in working on this legislation. I also want to thank Mr. Braley and to take this opportunity to thank the staff that worked on this bill.
From the minority staff, Barry Pineles; from Mr. Braley's staff, Tom Wolf and Mike Goodman; from Mr. Waxman's staff, Mark Stevens and Phil Barnett; and from the majority staff, LeAnn Delaney and Melody Reis and Russ Orban.
I strongly urge my colleagues to vote for the Small Business Fairness in Contracting Act
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Ms. VELÁZQUEZ. Mr. Chairman, contract bundling has been a major issue for years, and it is increasing. When contracts are combined together into mega-contracts, small businesses are unable to compete. In fact, some contracts are so large that only a handful of companies would be able to perform them. This can create a virtual monopoly, which is problematic for taxpayers concerned with getting the best value for their money.
This amendment would save taxpayers money and benefit the economy. It will increase competition, providing the government with more options to purchase goods and services from. This will ultimately lower prices for Federal agencies. Unbundling contracts will create new opportunities for entrepreneurs, leading to new jobs and more local tax revenue.
The amendment closes a loophole in current law. This amendment adds new work and construction, which previously were not subject to bundling analyses. Current law only required contracts that have been previously performed to be reviewed for bundling. This amendment closes this gap and gives Federal agencies the tools it needs to save the taxpayers money.
The expanded bundling definition will not be overly burdensome. Contracts that are not suitable for small businesses will not require a bundling analysis. Bundled construction contracts under $65 million will not require an analysis. By creating more competition in the Federal marketplace, this amendment will save taxpayers money.
Expanding the definition of bundling will require more contracts to be reviewed, and possibly unbundled, than the current statute permits. This will create more opportunities for small firms, give the government more options and lower costs and increase quality for taxpayers.
I thank both the gentleman from Pennsylvania for his work on this issue and Mr. Chabot for all the work that he has done on the underlying bill and on this amendment.
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Ms. VELÁZQUEZ. Mr. Chairman, we are prepared to accept this amendment.
One of the areas in which small businesses could participate much more than they currently are is in the area of subcontracting. Subcontracting provides a great entry point to the Federal marketplace for small businesses.
The gentleman's amendment would expand the amount of information collected on subcontracting in the government-wide database. It also reinforces the notion that when prime contractors don't achieve their small business goals these should be reflected in their evaluation for subsequent contracts.
I am pleased to support the gentleman's amendment, and I thank the gentleman from Texas for his work on this legislation.
I ask adoption of this amendment.
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Ms. VELÁZQUEZ. Mr. Chairman, it is important that the small business goals apply to contracts performed overseas. For too long there has been an exclusive club of contractors for overseas work. This needs to change. Extending the small business goals to apply to these contracts will expand the pool of contractors available to the government. This amendment will help bring overseas opportunity to small businesses.
A recent study of $6 billion in overseas contracts showed only $122 million was awarded to small businesses, just 2 percent. This amendment gives agencies an incentive to award overseas contracts to small businesses. Agencies that do use small businesses for overseas contracts will now be able to get credit.
The Federal Government should be looking to small businesses for overseas work. Ninety-seven percent of all exporters are small businesses; 30 percent of all goods made for export are made by small businesses. Technological improvements give small businesses much greater access to worldwide markets than in the past.
It is important to help small businesses gain access to overseas contracting opportunities they have been locked out of. This amendment will accomplish this by helping encourage agencies to look to American small businesses for this work.
I thank both gentlemen, Mr. Shuler and Mr. Chabot, for their work on this legislation. I urge adoption of this amendment.
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Ms. VELÁZQUEZ. Mr. Chairman, since 1977, the minimum goal for small businesses in the Federal marketplace has been 23 percent of the total value of goods and services acquired. Each year, the administration boasts of how it almost made its target. Unfortunately, in 2005 alone, at least $12 billion, almost 15 percent of the small business accomplishments, as reported by the Small Business Administration, were actually awarded to large businesses. Agencies have become so single-minded about achieving the minimum goal that they have lost sight of the intent.
The goal is a measurement of commitment to small businesses; and when the goal isn't achieved, small businesses pay the price. Because the minimum has not been met over the past 6 years, small businesses have lost almost $10 billion in contracting opportunities. This represents nearly 200,000 jobs that could have been created across the country.
Many people have asked me, if the small business contracting goal hasn't been met, why do you support increasing it? As I said, the goal is simply a measurement. There are no penalties to an agency for not achieving it.
It is already the policy of the United States, as set forth in the statute, that small firms shall have the maximum practical opportunity to participate in the performance of contracts let by any Federal agency.
It doesn't say minimum; it says maximum. This is why the Bean-Chabot amendment is so important. It gets us away from the small business goal as ceiling mentality. It ensures that small business participation is maximized, not minimized.
I congratulate Ms. Bean and Mr. Chabot for this amendment. It was included when the Committee on Small Business unanimously reported this legislation, and I was disheartened to see that it was diluted as the bill progressed. I am pleased to support this amendment, and I look forward to working with my colleagues to ensure that this amendment creates new opportunity for small businesses in the Federal marketplace. I thank Ms. Bean and Mr. Chabot on their work on this amendment, and I urge adoption of this amendment.
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Ms. VELÁZQUEZ. Mr. Chairman, we accept this amendment by Mr. Welch, which proposes a 5 percent goal for Federal contracting with green small businesses. I look forward to working with my colleague on this amendment, which encourages the government to reward small businesses that meet higher environmental standards.
I thank the gentleman from Vermont for his work on this legislation, and I urge adoption of the amendment.
Mr. Chairman, I yield to the ranking member, Mr. Chabot, for any comments that he might have.
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Ms. VELÁZQUEZ. Mr. Chairman, I thank the gentleman for yielding.
We are prepared to accept this amendment. Many times the proposed solution to a problem, particularly in the Federal procurement environment, is the assessment of penalties. Sometimes this works. Sometimes it doesn't. I have found that when it works best, it is also accompanied by incentives for good performance.
The gentleman from Maryland begins this process. It is a worthy endeavor, and I am pleased to support the gentleman's amendment. I want to thank him for the work that he is doing on this legislation, and I urge adoption of the amendment.
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Ms. VELÁZQUEZ. I thank the gentlelady for yielding.
We accept this amendment which will require the Administrator of SBA to make public the actions taken on behalf of small businesses or trade associations with regard to bundled contracts. More importantly, it will publicize the results of their actions.
I look forward to working with my colleague on this amendment which will add transparency to the bundling appeals process.
I, again, want to thank the gentlewoman from Texas for her work. I urge adoption of the amendment, and I yield to Ranking Member Chabot.
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