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STATEMENT

Of the Honorable Grace Meng, Ranking Member

Committee on Small Business Subcommittee on Contracting and Workforce

Contract Bundling and Small Business

October 10, 2013

Today, small businesses are looking for opportunities to expand and grow stronger.  As the catalyst for nearly two-thirds of employment gains, small business expansion is essential for the economy.  One way Congress can increase the job creating-power of small firms is through the federal procurement marketplace.  In fact, during the last decade, the government has doubled its contracting efforts to more than $500 billion per year.  This makes the U.S. government one of the largest single buyers of goods and services in the world.

In order to ensure that small firms can successfully compete for these federal contracts, several tools and resources have been put in place.  This includes a 23 percent small business procurement goal, as well as protections that help level the playing field for smaller enterprises. 

Programs at the Small Business Administration provide a foundation for many entrepreneurs to enter the federal marketplace and provide a springboard for growth.  Together, these goals, policies, and programs have encouraged agencies to recognize that small businesses can provide high-quality goods and services at a competitive price to the taxpayer.

For many small firms, however, these resources are simply not enough to overcome one of the biggest hurdles they face – contract bundling.  Although we must be cognizant of the costs to federal agencies, we must ensure that bundling does not limit the accessibility of small businesses to federal contracts; especially while the government is falling short of its 23 percent goal. Last year, more than $50 billion, or 10 percent of total contracting dollars, was awarded through bundled or consolidated contracts.

As a result of bundling, small businesses missed out on contracting opportunities worth more than $15 billion.  By bundling large contracts such as these, the government effectively shuts out many smaller companies from competing for work that they have the skills and expertise to perform. 

Splitting these mega-contracts into smaller pieces would enable more small companies to compete for federal agency work.  By doing so, the government would be able to increase competition, accessing qualified companies and the high quality service they bring to the table.

At the forefront of this battle are Procurement Center Representatives, Small Business Specialists, and Procurement Technical Assistance Centers –whose already depleted ranks have been further reduced by sequestration.  Unfortunately, they are fighting are an uphill battle.

Last year, SBA’s PCRs challenged just 28 bundled contracts – out of more than 17 million contracting actions –and only 6 were actually unbundled.  This is simply not enough oversight to make a difference. Ensuring that these bundled and consolidated contracts are more thoroughly examined is critical to giving small businesses an equal opportunity in this marketplace.

These challenges, while significant, pale in comparison to the impact that the shutdown is having on small business contractors.  With the government typically spending $1.4 billion on contracts per day, the shutdown is causing severe disruption and confusion for small businesses.   For many firms, it is unclear when they will be paid for their work, which in turn is causing uncertainty for their employees.  In 2012, my district received an average of $117,000 a day, or $2 million a month, in loans from the SBA. Those loans are not being processed. As a result, small businesses are left without access to the opportunities and resources they have come to depend on for their livelihood.

Given the shutdown, I am not only looking forward to testimony about contract bundling today, but also concerning the impact that the government’s closure is having on small firms. I am hopeful that we can reopen the government and in the future take steps to reduce the prevalence of bundling across federal agencies.

With that said, I would like to thank all of the witnesses in advance of their testimony for their time today and their input on these important issues. 

Thank you Mr. Chairman and I yield back the balance of my time.

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