How OMB will limit contract bundling

How OMB will limit contract bundling

Agencies that buy from multiple-award schedules will see their task orders undergo stricter reviews to make sure the procurements are not bundled and are open to small-business participation. The reviews are part of a new strategy the Office of Management and Budget announced today at a White House ceremony.

Contract bundling is defined in the 1997 Small Business Reauthorization Act as consolidating two or more requirements previously contracted for under separate, smaller arrangements. Bundled contracts are unlikely to go to small business based on diversity or size, total dollar value, geographic dispersion of sites or any combination of those criteria, OMB said.

'We want to hold agencies accountable, close the loopholes and mitigate the effects of bundling when appropriate,' said Angela Styles, administrator of the Office of Federal Procurement Policy. 'There is a cultural feeling among agencies that contracting with small businesses is hard. We want to change that culture.'

Over the past seven years, contract bundling has become a bigger problem, observers said. A study conducted for the Small Business Administration's Office of Advocacy by Eagle Eye Publishers Inc. of Fairfax, Va., found for every 100 bundled contracts, 106 individual contracts were no longer open to small businesses. For every $100 awarded under a bundled contract, $33 in revenue was lost to small business, Eagle Eye said.

The Federal Supply Service's multiple-award schedules and other governmentwide acquisition contracts have exacerbated the problem, the report said. About 31 percent of all contracts in fiscal 2001 used multiple-award vehicles and were worth about $72 billion'up from $21 billion in fiscal 1990.

Styles said OMB will hold agency executives to account for giving small business a fair shot at contracts just as it has for advancing the President's Management Agenda. OMB is requiring agency heads to create and implement action plans, develop agency-specific goals and submit quarterly reports of their progress in curtailing contract bundling.

OMB assigned an agency working group to develop the specifics of the action plan and will have guidelines ready by the end of November. Agencies must send OMB their first reports by the end of January, Styles said.

Also by Jan. 31, OMB will propose three changes to the Federal Acquisition Regulation. One will require agency small-business offices to review contracts worth $2 million to $7 million for potential bundling. Another will ask small-business offices to identify alternative acquisition strategies. The final change will strengthen oversight of subcontracting compliance by large businesses and will reward their compliance in future contract evaluations.

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