How do you get legislation through a bitterly divided Congress? Here’s one idea: Attach it to one of a few bills lawmakers have virtually no choice but to pass each year.
This is what the House and Senate small-business committees do.
Drawing on a successful strategy from the past couple years, members of the committees have pushed through several pieces of legislation intended to help small businesses — particularly small government contractors — by squeezing them into Congress’s annual military spending bill, or National Defense Authorization Act. President Obama is expected to sign the bill, including the small-businesses provisions, into law sometime next week.
“The legislative process in Washington is such that people will attach some kind of bill, even though it’s totally unrelated, to a bill that they know will pass every year,” Rep. Judy Chu (D-Calif.), a member of the House Small Business Committee, said during an event last week in the District. “Indeed, that’s this National Defense Authorization Act.”
Under Chairman Sam Graves (R-Mo.), the committee has spent much of the past few years crafting legislation designed to funnel more government work to small businesses — an area in dire need of improvement, according to several federal investigations. Last December, the committee managed to attach to the NDAA a bill that holds agency leaders accountable for their small-business contracting goals, and another that discourages bundling multiple contracts together (which caters to larger contractors).
This past year, the government met its statutory goal of spending 23 percent of federal contracting dollars at small companies — the first time officials have hit the target since 2005. Graves said the new NDAA “will help this accomplishment become a regular occurrence.”
Here’s a look at what made it into the defense bill and how small businesses can benefit.
Contracting program extended to women-owned businesses
While the federal government reached its overall small-business contracting goal this year, it again missed its 5 percent goal for small companies owned by women. In fact, in the two decades since the goals were put in place, officials have never hit the women-owned business target — a source of frustration for many female lawmakers.
However, that may change. The NDAA includes an expansion of what’s known as the sole-source program, under which agencies can quickly and easily award contracts to certain small businesses owned by minorities, veterans or individuals in underserved areas without going through the formal bidding process. Now, small women-owned companies will be allowed to win contracts under that same bidding-free process.
“When it comes to federal procurement, women-owned companies too often face an uphill battle winning their fair share of contracts,” Rep. Nydia Velázquez (D-N.Y.), who originally introduced legislation expanding the program to women-owned companies, said in a statement. She noted that the change should result in “greater opportunity for female entrepreneurs and a fairer procurement process.”
Added Sen. Maria Cantwell (D-Wash.), head of the Senate Small Business and Entrepreneurship committee, who helped craft a similar piece of legislation in the upper chamber: “It opens up a market opportunity of $4 billion in U.S. government contracts for women entrepreneurs.”
Contract bidding process split in two
Under current rules, many construction projects known as “design-bid” projects are awarded under a one-step bidding process, involving complex and sometimes costly proposals submitted to the government. Often, the cost of the completing and submitting a bid, without knowing whether the bid would even be competitive, deters small companies from trying to compete for work and represents a barrier to entry for new firms.
Consequently, some departments have started experimenting with a two-step process, which narrows the field and allows businesses to cobble together less information (and sustain less costs) during the preliminary round. If they find out they haven’t been competitive, they didn’t waste nearly as much time and money submitting the bid.
The NDAA requires federal departments to adopt this two-step process across the board, and only require small businesses to submit a full contract proposal if they are among the five most competitive bidders.
“If the bid and proposal process can be streamlined to make it more efficient and cheaper for all involved, without sacrificing quality, we should do it,” Graves said when the bill was first introduced last summer.
Heightened transparency around subcontracting, bundling
The NDAA includes two provisions intended to shed more light on two of the government’s small-business contracting initiatives. The first concerns an obscure Pentagon program that allows some large contractors to avoid submitting a small-business subcontracting plan each time they bid on a prime contract; instead, they’re allowed to use a company-wide small-business subcontracting plan that applies to every proposal.
Started 25 years ago and still listed as a test program, the initiative has been a prime example of scant contracting oversight. Numerous reports intended to evaluate whether the program delivers more or less contracts to small companies have never been filed. So, while Congress in the NDAA extended the program for another three years, it tacked on new reporting requirements for participating contractors, including six-month updates on how many subcontracts and dollars are flowing to small businesses.
Directly following that provision are rules requiring the Small Business Administration and the General Services Administration to work together to cobble together better data on contract bundling — the process under which separate projects are often lumped together under one contract. Often meant to increase efficiency and cut costs, the strategy has been blasted by small-business advocates who argue the massive, multifaceted contracts lend themselves to competition only by large corporations.
Support for small business exporters
In the only small-business provision not specifically aimed at federal contractors, the military spending bill includes a couple of amendments added to help small businesses learn the ins and outs of exporting and importing — including navigating the Arms Export Control Act, which gives the government authority to regulate the flow of defense goods.
Specifically, the Small Business Administration and Defense Department are authorized under the NDAA to commit more resources to educating small-business owners about the arms-related importing and exporting rules, including through the former’s national network of Small Business Development Centers.