Law aims to help small businesses get federal contracts

2 minute read

Lawmakers are trying to do something about the fact that federal agencies have failed to meet small business contracting goals for six consecutive years. A new law requires senior agency employees to defend future failures in their performance reviews and bonus discussions. That and several others measures aimed at helping small businesses compete for federal contracts are included in the National Defense Authorization Act of 2013 that was signed into law by President Obama this week.

House Small Business Committee Chairman Sam Graves (R-MO) called the legislation “the culmination of a comprehensive effort to reform contracting policy so that small businesses can better compete in the federal procurement marketplace.” Graves said his 112th Congress committee had prioritized “the concerns of small contractors who want to seek business opportunities with the federal government” and had “uncovered various barriers that made it harder for small businesses to succeed.”

According to Graves, the small business provisions in the Defense Authorization Act “will help make sure existing small business goals are actually met, empower small business advocates, and crack down on fraud” while helping small businesses compete for federal contracts, saving taxpayer money, and creating jobs.

In addition to holding agency leaders accountable for meeting the federal government’s goal of awarding 23 percent of contracts to small businesses, other small-business-friendly measures contained in the Act include:

• A change in limitations on subcontracting from cost to price, designed to make it easier for small businesses to comply with procurement rules, while allowing them to team together to pursue larger contracts.
• Penalties for violating limitations on subcontracting, designed to make it easier to suspend and debar companies intentionally defrauding the government.
• Removal of “set-aside caps” on the women’s contracting program.
• A requirement that the Small Business Administration develop size standards that accurately define what is a small business for each of the more than 1,100 industries where small firms operate.
• A “safe harbor” for small businesses that violate a rule by mistake when acting on a written advisory opinion from either a Small Business Development Center or Procurement Technical Assistance Center.
• A requirement that OMB and agencies publish procedures, methodologies, and guidance documents associated with their decisions.
• A requirement for additional oversight and a report to determine when contract bundling—the practice of grouping several contracts together for bidding—to compete is justified.

The measures, all of which were introduced by the House Small Business Committee and subcommittees in the first quarter last year, are enacted just in time for sequestration measures that are expected to drastically reduce the Federal budget dollars available to all contractors.