Five Small Business Contracting Reforms Ready to Become Law

Five Small Business Contracting Reforms Ready to Become Law

On November 17, the National Defense Authorization Act of 2016 was sent to the President to be signed into law. The bill includes several federal contracting reforms to help small businesses. We previewed some of these reforms after the House passed its version of the bill back in June (see blog:  A Fair Shake for Small Business:  Five Federal Contracting Reforms). Several provisions that made it into the final bill could help make small businesses more competitive in a lucrative federal procurement marketplace.

Help for Small Business: 5 Contracting Reforms

1.  Small Business Mentoring:  Federal mentor-protege programs are designed to help small firms compete for contracts more effectively with coaching from larger firms that have been successful. The bill would renew the program at the Department of Defense for one more year and address concerns that, too often, the small firms that are in the program aren’t the ones that really need help. The bill requires the Secretary of Defense to evaluate the program and make recommendations to better direct assistance to the most appropriate disadvantaged small businesses. In a year, the program will be audited to assess whether it’s operating effectively.

2.  Contract Bundling:  While sometimes it makes sense to bundle smaller contracts together into one large contract in the interest of efficiency and cost savings, that tactic can also leave small contractors on the sidelines.  If the practice is abused, competition is denied and the pool of federal contractors shrinks. That’s why federal agencies are supposed to justify bundling and make clear that it will result in true cost savings for taxpayers, not just convenience for contract officers. The bill puts pressure on agencies to ensure the certifications of bundled and consolidated contracts are legitimate.  It also requires that bundling decisions are announced in advance so concerns can be heard before the contracts are awarded.

3.  Training for Small Business Advocates:  The folks within agencies who are supposed to look out for small contractors to ensure they are getting a fair shake are important to ensuring true competition in federal procurement.  The bill updates the certification requirements for some of these advocates so more small businesses will get the help they need to navigate the process and succeed.

4.  Joint Ventures:  The bill would remove an obstacle facing some small firms that are seeking contracts as teams or through joint ventures by requiring agencies to give consideration to the past performance of individual small businesses versus that of the team as a whole (which may not have established a record yet). 

5.  Meeting Small Business Procurement Goals:  The government has set goals for the award of prime contracts and subcontracts to small businesses.  The view is that utilizing small businesses expands competition, fosters innovation, and reduces costs.  However, the scorecard used to demonstrate agencies’ success in meeting goals has been criticized as not reflective of the opportunities (or lack thereof) that small firms are offered.  For example, last year’s scorecard excluded 20% of contracts before making the calculations.  The bill will require an analysis of the current methodology in hopes of prodding agencies to do a better job of utilizing small businesses to meet their procurement needs.