The
Administration00 Small Business Agenda
Contract Bundling: A Strategy for Increasing Federal Contracting Opportunities for Small Business.
00nd so one
of the things we're going to do is we're going to examine the federal
government's contracting policies, to make sure that they encourage
competition as opposed to exclude competition; to make sure that the
process is open; to make sure the process helps achieve a noble objective,
which is more ownership in our country. And wherever possible, we're
going to insist we break down large federal contracts so that small
business owners have got a fair shot at federal contracting.00/font>
President George W. Bush
On March 19,
2002, the President unveiled his Small Business Agenda. (See http://www.whitehouse.gov/news/releases/2002/03/20020319-2.html (Also see www.sba.gov/news/smallbusinessagenda.html.) As part of the Agenda, the President called
upon the Office of Management and Budget (OMB) to prepare a strategy
for unbundling federal contracts.
What
is Contract Bundling?
The Small Business Reauthorization Act of 1997 defines contract bundling as 00onsolidating two or more procurement requirements for goods or services previously provided or performed under separate, smaller contracts into a solicitation of offers for a single contract that is unlikely to be suitable for award to a small business concern.00
The Act lists
several factors that might cause unsuitability for award to a small
business. These are - -
The Act requires each federal department and agency, to the maximum extent practicable, to: (1) structure contracting requirements to facilitate competition by and among small business concerns, taking all reasonable steps to eliminate obstacles to their participation; and (2) avoid unnecessary and unjustified bundling of contract requirements that may preclude small business participation in procurements as prime contractors.
Prior to bundling
any contracts, agencies are required to conduct market research to determine
whether contract bundling is necessary and justified. To justify contract
bundling, agencies must demonstrate "measurably substantial benefits,"
such as cost savings, quality improvements, reduction in acquisition
cycle times, or better terms and conditions. The Small Business Administration00
implementing regulations further define "measurably substantial
benefits" by requiring agencies to demonstrate - -
for contracts over $75 million - - benefits equivalent to 5 percent of contract value (including options) or $7.5 million, whichever is greater.
In October, 2002, OMB submitted a report to the President entitled 00ontract Bundling: A Strategy for Increasing Federal Contracting Opportunities for Small Business.00 The strategy outlines nine specific actions the Administration is taking to eliminate unnecessary bundling and mitigate the effects of bundling that agencies find to be necessary and justified. (For a copy of the strategy, see www.acqnet.gov/Notes/contractbundlingreport.pdf)
Contract
Bundling: A Strategy for Increasing
Federal Contracting Opportunities
for Small Business
Executive Summary
A strategy for unbundling contracts must recognize
the combined challenges and benefits of a reduced acquisition workforce
and the need to maintain an overall acquisition system that is fair,
efficient, and transparent. We cannot afford to revert back to the
paperwork and labor-intensive system of the past. Nor can we pursue
operational efficiencies at the expense of reducing small business opportunities.
The challenge is to strike an appropriate balance between operational
efficiency, opportunity, and fairness.
To address contract bundling in the executive
branch, the following actions will be
taken:
1. Ensure accountability
of senior agency management for improving contracting opportunities
for small business.
2. Ensure timely
and accurate reporting of contract bundling information through the
President00 Management Council.
3. Require contract
bundling reviews for task and delivery orders under multiple award contract
vehicles.
4. Require agency
review of proposed acquisitions above specified thresholds for unnecessary
and unjustified contract bundling.
5. Require identification
of alternative acquisition strategies for the proposed bundling of contracts
above specified thresholds and written justification when alternatives
involving less bundling are not used.
6. Mitigate the
effects of contract bundling by strengthening compliance with subcontracting
plans.
7. Mitigate the
effects of contract bundling by facilitating the development of small
business teams and joint ventures.
8. Identify best
practices for maximizing small business opportunities.
9. Dedicate agency Offices of Small and Disadvantaged Business Utilization (OSDBUs) to the President00 Small Business Agenda.
