SBA rules miss the mark for small businesses

Bob Welch

It's a perennial problem: Small businesses say they are losing market share to large businesses because of federal contract bundling. Once again, the Small Business Administration comes out with new regulations to halt this trend. And yet a General Accounting Office report states, 'There is very little data on the extent of contract bundling governmentwide and its effect on small businesses.'

I have three questions for SBA: Is bundling the main reason for a decline in federal dollars going to small businesses? Will your bundling regulations fix the problem? And is bundling really the issue affecting small businesses that you should focus on?

The answer is no to all three questions.

It is true that bundling'combining separate procurements into a large single one'has traditionally been a problem for small vendors working to win prime contracts in the federal market. It was a far more intractable problem back in the 1970s and '80s'the era of grand-design solicitations and big, single-award, indefinite-delivery, indefinite-quantity procurements. Those were certainly winner-take-all affairs.

But that's not the way most agencies buy today. Now, agencies with a large system in mind tend to take the buy-a-little, build-a-little, test-a-little approach. Plus, they use credit cards, simplified acquisitions, Federal Supply Service Multiple-Award Schedule orders, blanket purchasing agreements and governmentwide acquisition contracts.

Small businesses must learn to face three challenges other than bundling if they want to get a greater share of the federal market which, after all, is still growing:

•'Know where the business is.

•'Establish subcontracts on GWAC and multiagency awards.

•'Keep their feet on the street to conduct the relationship selling the federal market requires today.

Something's missing

SBA's new bundling regulations won't help small businesses because the regulations don't really address the challenges I've laid out. For example, nothing in the regulations details how agencies can provide procurement forecasts or other information that could help the small-business community. Nor do the regulations show how to compete for GWACs, multiagency contracts or FSS schedule contracts. And they don't offer any help on relationship selling.

So why should SBA regulations focus on bundling? They shouldn't, and here's why.

Agencies operate in an environment in which the focus is supposed to be on results. That means the result buyers and would-be contractors must pursue is not whether buys should be bundled, but whether agencies are meeting their small-business contracting goals.

When they don't, the parties must ask why and what they can do about it. The onus should be on agencies to meet their goals, with the pressure coming not from regulations but from timely and relevant measures of results vs. goals for small businesses' participation in agency contracts.

Keep in mind that agencies can use the same acquisition reform rules that may have hurt small businesses to help them. Clearly, SBA should expend more effort on the measures than on the methods.

In fact, if you view GAO reports as a barometer of congressional thinking, SBA has got it wrong.

Report agrees

Of particular interest is the following passage from a report about the Government Performance and Results Act, Managing For Results: Continuing Challenges to Effective GPRA Implementation. It states, 'The SBA's fiscal year 2000 performance plan goals and measures focus on outputs, rather than results. ' This is important information, but the plan does not show how the measures are related to increasing opportunities for small business to be successful'the key result SBA hopes to achieve.'

The pressure should be on SBA to support agencies in meeting their small-business goals by providing tools, processes and acquisition methodologies'not more regulations. The innovative buying techniques available today can be applied to help agencies meet small-business contracting goals as well as GPRA conformance.

It is time for SBA to be a player, not a regulator.

Bob Welch, vice president for operations at Acquisition Solutions Inc. of Chantilly, Va., was a senior procurement executive at the Commerce and Treasury departments.


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