THE BOTTOM LINE

An ebbing tide of contracts leaves small businesses up the creek

Bob Little

I was perusing the Federal Register, as I'm wont to do from time to time, for news items relating to acquisition. Fortunately, I was not drinking milk when I stumbled onto this statement:

'The rule should have a positive economic impact on small businesses because it will make it easier for them to hire employees to work on information technology service contracts, as well as increase their business opportunities in obtaining federal contracts.'

Had I been drinking milk, it would have left my body through my nose from laughing so hard.

The rule is a wonderfully misbegotten piece of legislation'an interim amendment to the Federal Acquisition Regulation, dated May 2, dealing with the education and experience levels of people working for IT contractors. It prohibits setting minimum experience or educational requirements for contractor personnel in solicitations for IT services, unless one of two criteria is met.

The first is if the contracting officer determines that the needs of the agency cannot be met without setting the requirements. The second is that someone'maybe the contracting officer'determines that the agency requires the use of something other than a performance-based contract.

The rule itself is funny enough, but the putative small business implications are hysterical. Knowing there must be a story behind the story, and against better judgment, I dispatched King Oxnard, Procurement Detective, to delve into the matter. And delve he did, discovering heretofore unknown clips of the Congressional Record that were marked 'Destroy Before Speaking Lest It Fall into The Hands of an Unfriendly Delver.'

The colloquy between congresspersons X and Y'whose names have been deleted to protect the author'goes as follows:

X: I rise in support of the amendment to establish a preference for lack of experience and education in the acquisition of IT services. I for one still cannot program my VCR and I don't see why any government contractor should be held to a higher standard.

Y: Will the gentleperson yield? Thank you. Actually, this is not the reason we're establishing this new requirement. The large IT companies are complaining that they can't get away with devoting their less-experienced and -educated people to government contracts. They need leverage to cut the salaries and benefits of their best people.

X: Well, we normally create a myth. How about, 'A rising tide raises all boats'? Great slogan, even if it ignores the boats that have already sunk.

Y: That tends to focus attention on the benefits to the IT services industry and its profitability. No, to be a really good myth, it needs to focus on the very segment of the industry it will fool the most. Besides the federal agencies, that is.

X: You mean the small businesses? Of course! I see it now. We sell the idea on the mythical assertion that small businesses employ fewer educated and experienced people.

Y: And they'll think the rule will make them more competitive.

X: Couldn't that be true?

Y: No. In a best-value acquisition, agencies will still award contracts based on the most educated and experienced team being more valuable. The only thing the legislation prohibits is prescreening companies on the basis of prescribed levels of experience and education.

Small businesses can win only if they can offer a significantly lower price. But they can't. Big businesses will tell their highest paid employees they have to compete against people who are paid less. These highly experienced and educated people are forced to take pay cuts. So much for the price advantage of the small businesses.

X: New slogan: Ebbing tide lowers all boats.

Y: I think you've got it! It's a good thing this will never get published.

Bob Little, an attorney who has worked for the General Accounting Office and a Washington law firm, teaches federal contract law. E-mail him at rlittle13@aol.com.

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