Should the Feds Award More Contracts to Small Businesses? (H.R. 190)

What is H.R. 190?

(Updated July 13, 2019)

This bill would amend the Small Business Act to eliminate the inclusion of option years in the award price for sole source contracts. This would bring the dollar amount of sole-source awards in line with the size of current contracts.

This bill would raise the threshold amount that federal contracting officers may award in sole-source contracts to certain types of small business from $4 million for the life of the contract to up to $7 million per year. It’d additionally require the Small Business Administration (SBA) to individually certify small business’ eligibility to receive such contracts upon request from a federal contracting officer.

Eventually, the SBA would be responsible for developing a program to determine small business’ eligibility to receive sole-source contracts. Additionally, this bill would create an SBA check for women-owned small businesses (WOSBs) and service-disabled veteran owned small businesses (SDVOBs).

Further, the bill would require the Government Accountability Office (GAO) to evaluate federal policies and practices regarding classifying and awarding sole source contracts and to report to Congress on its findings.

Argument in favor

Small businesses, like any other business, have much to gain from federal contracts. Allowing small businesses to receive more federal contracts benefits them, their employees, the economy, and taxpayers who get better value in return for their hard-earned dollars.

Argument opposed

If the SBA is already developing its own program to check small business’ eligibility for sole-source contracts and the federal government already has a goal of allocating 23 percent of its funds to small businesses, there isn’t much need for this bill.

Impact

Small businesses; women-owned small businesses; service-disabled veteran owned small businesses; SBA; and the GAO.

Cost of H.R. 190

Using information from the SBA, the CBO estimates that developing the certification program would cost less than $500,000, as the agency is already developing a similar program. Based on the costs of similar tasks, the CBO estimates that it would cost GAO less than $500,000 to complete the required evaluation and report. Thus, the implementation of this bill would cost less than $1 million overall.

Additional Info

In-Depth: Rep. Roger Marshall (R-KS) reintroduced this bill from the 115th Congress to modernize sole source contracts to small businesses:

“Small businesses employ nearly 58 million Americans, that’s 48 percent of our labor force. This bill expands sole-source contracts available to service-disabled veteran owned small businesses, women-owned small businesses, and HUBZone-certified small businesses. It also contains important taxpayer protections by establishing a verification process to ensure only eligible businesses participate in these procurements.  By making these changes, we’re providing necessary oversight of taxpayer resources, and ensuring that qualified small businesses have opportunities to contract with the federal government.”

In a floor speech supporting this bill, Rep. Steve Chabot (R-OH) argued it’s needed to give agencies the means by which to achieve their small business goals:

“The Small Business Act currently allows Federal agencies to award sole-source contracts to women-owned; service-disabled veteran-owned; HUBZone; and socially and economically disadvantaged small businesses. However, these awards can only be made in the narrowest of circumstances, rightly protecting the ability of small businesses to compete against each other. Even though Federal contracting officers have this procurement tool in their toolbox, the reality is that small business sole-source contracting is rare and may be underutilized. This can, in part, be attributed to the fact that the maximum dollar threshold for Federal sole-source contracts designated in statute has fallen far behind the typical size of contract awards made today. As contracts increase in size and scope, the usefulness of small business sole-source contracts diminishes, to the detriment of small contractors eligible to receive such awards. [This bill] adjusts the dollar threshold to actually reflect the size of contracts that are commonly used across the government today. This modest change will provide agencies with an accessible pathway to achieving their small business goals in categories they have historically been unable to meet.”

In the 116th Congress, this bill has the support of one cosponsor, a Democrat. When it was previously introduced in the 115th Congress, it passed the House on a 392-5 vote with the support of two bipartisan cosponsors (one Democrat and one Republican), but never received a vote in the Senate.

Of Note: It’s already the federal government’s goal to allocate 23 percent of its annual $500 budget to small businesses.

Media:

• Sponsoring Rep. Roger Marshall (R-KS) Press Release

• CBO Cost Estimate

Summary by Lorelei Yang
(Photo Credit: iStockphoto.com / shapechange)