A new effort by the Senate is seeking to fix much of what’s wrong with federal small business contracting. And at the same time, hold agencies leadership more accountable for supporting an ever-shrinking industrial base.
Sen. Joni Ernst (R-Iowa), the ranking member of the Small Business Committee, wants to end what she calls too many “easy As” on the Small Business Administration’s annual scorecard by limiting the credit agencies can receive for awards to small firms and by revamping the goaling structure.
Ernst introduced the Accountability and Clarity in Contracts to Engage Small Suppliers and Small Businesses (ACCESS) Act today as the first step to make these and other major changes to federal small business contracting.
“Wacky government jargon, a lack of accountability and misplaced priorities in federal contracting continue to push our small businesses to the sidelines. The fact that fewer entrepreneurs are receiving federal contracts is nothing to celebrate and surely does not deserve an A!” said Ernst in an email to Federal News Network. “By reforming the contracting landscape and making it more accessible for small business owners, we can promote job creation, support local communities and ensure that our country’s national security industrial base is upheld by many American small businesses rather than dependent on a few.”
On the 2022 SBA scorecard, 20 agencies received an “A+” or “A+” as agencies spent a record $162.9 billion, or 26.5%, on small business contracts — an $8.7 billion increase from fiscal 2021.
Ernst said the data on the scorecard doesn’t accurately reflect the health or state of the small business industrial base.
She said between 2009 and 2021, the number of small businesses receiving government contracts fell from 121,181 to 65,455. In 2022, the number of prime small business contractors fell to 62,670, down more than 4% from the 65,455 reported in 2021.
Additionally, Ernst said the scorecard doesn’t take into account poorly performing subcontracting performances and agencies aren’t held accountable for falling short of goals.
The legislation would require SBA to revamp the scorecard by creating a new section focused on the composition of the industrial base.
“This new section requires the SBA to capture and report critical metrics measuring the health of the small business demographic within the industrial base. It also changes the calculation of the scorecard, lessening the importance of the dollar goals while also making this new section an essential factor in an agency’s score calculation,” stated a fact sheet about the bill. “The weight of the dollar value of prime contracts is decreased from 50% to not more than 40%, and the new section is given a weight of not less than 30% of the score. The remainder of the score consists of the other elements of the scorecard at the administrator’s discretion (i.e. subcontracting, OSDBU).”
Ernst bill would limit double counting
Additionally, the bill would take on a long-time complaint by small business advocates that agencies are receiving more credit for small business awards than they deserve. It would limit double counting by letting agencies count the total contract award value two times only instead of multiple times across socio-economic categories.
“First, the contract award may be counted toward the agency’s overall small business goal, and second, toward the applicable goal under which the contract was awarded (i.e. if the contract was awarded as a WOSB set-aside, the contract dollar value will go toward the WOSB goal),” the fact sheet stated. “If the agency did not award the contract through any of SBA’s small business contracting programs, the agency may choose, at its discretion, which socioeconomic goal to allocate the contract value long as that status is held by the small business awardee.”
The ACCESS Act is the third bill Ernst introduced this year to add more accountability to small business contracting. In May, she introduced the Accountability in Women-Owned Small Business Contracting Act and the Stop Stolen Valor for Service-Disabled Veteran-Owned Small Business Contractors Act, forcing agencies to only take credit for contract awards made to certified women-owned small businesses and service-disabled veteran-owned small businesses.
A big push by Ernst through the ACCESS Act is to make it easier for small businesses to enter the federal market.
To that end, two provisions in the bill attempt to simplify federal acquisition and push agencies to cast a wider net to find small firms.
The bill would require agencies to apply the “rule of two” to all procurements before an agency could use a multiple-award contract, including those under Federal Acquisition Regulations Part 15. The “rule of two” requires agencies to set aside contracts for small business if they find there are at least two firms that can competitively bid on the work.
Ernst is concerned that agencies are circumventing the “rule of two” by using multiple award contracts.
The confusion has grown over the years because Congress contradicted itself. The Government Accountability Office says in the past the “rule of two” is applicable to task and delivery orders, but in 2010 Congress amended the Small Business Act to let agencies set-aside orders on multiple-award contracts. Federal and small business acquisition regulations added to the confusion by saying agencies have discretion to set-aside contracts under multiple-award contracts.
Ernst said the bill’s intent is for Congress “to reaffirm this important statutory requirement.”
Holding officials more accountable
The other way the bill aims to expand the small business market is by requiring agencies to write solicitations in plain language and mandating they include key terms of the contract in the title and description and are searchable on SAM.gov.
“Small businesses, particularly new entrants, face many significant barriers to entry including the threshold issue of finding these opportunities in the first place. Finding the opportunities themselves are difficult when agencies fail to clearly state in their notices to the public their needs/requirements in searchable fields (i.e. the title and description),” the fact sheet stated. “Rather, agencies may be burying them in attachments to the notice. This wastes valuable time for small businesses seeking these opportunities. Additionally, federal notices are often written in ‘government-speak’ which can be complicated and laden with acronyms and government jargon. Because of the difficulty in understanding easily and simply what the government is seeking, many small businesses are deterred from entering the federal marketplace and those who are interested in relevant opportunities may be unable to find them.”
The impact of all of these changes will be limited if agency leaders are not held accountable for meeting their agency’s small business goals. So Ernst’s bill includes a provision that would require agencies not receiving an “A” grade or better on the new scorecard would submit to Congress a remediation plan for how it will improve its small business contracting efforts the next fiscal year. Those agencies also will have to send an official to testify before the House and Senate Small Business committees to further explain their remediation plans.
A Ernst spokesperson said while there is no House companion bill, there are some other bills that are similar to certain provisions.
There are several provisions in this bill and there is no House companion for this complete package, but the House may pull out some of these provisions and introduce them individually. Rep. Peter Stauber (R-Minn.) introduced a version of the subcontracting provision in the 117th Congress and Rep. Dan Meuser (R-Pa.) introduced a version of the double-counting provision last year.