Sen. Ernst hopeful about fixes to small business contracting

CORRECTION: FNN incorrectly reported the contract that the court ruling forced GSA to rethink. GSA had to change the Polaris solicitation. This story has been updated to reflect that change on March 1. 

The fix is in for federal small business contracting. And this fix is actually a good one.

Sens. Gary Peters (D-Mich.), chairman of Homeland Security and Governmental Affairs Committee, and Joni Ernst (R-Iowa), ranking member of the Small Business and Entrepreneurship Committee, are trying to correct a misunderstanding of congressional intent when it comes to how and when agencies should consider price when reviewing proposals for contracts.

Ernst said she believes her bill, the Conforming Procedures for Federal Task and Delivery Order Contracts Act, will let agencies push reviews of cost back to the task order level where it belongs.

“This bill would allow small business owners to bid on valuable contract opportunities based on their actual skill and expertise, rather than forcing those small businesses to compete, using more of an arbitrary price competition model that could otherwise exclude qualified and capable small contractors,” Ernst said in an exclusive interview with Federal News Network. “There is a real hunger with our small businesses to see this opportunity. We are going to keep working on this. Hopefully, we’ll be able to get some hearings scheduled on it and bring small business owners in that can talk to this.”

Ernst said she’s confident the bill will get traction this session of Congress both because it’s bipartisan and because it’s beneficial for large and small businesses alike. There isn’t a version of this bill in the House.

The bill is a technical fix to what’s commonly known as the Section 876 authority. In the 2019 Defense authorization act, Congress passed the provision “Increasing Competition at the Task Order Level,” which aimed to enhance and increase competition and access to the commercial market by authorizing multiple award indefinite delivery, indefinite quantity (IDIQ) contracts for services to consider pricing at the task order level when evaluating bids and not at the main contract level when awarding the contract.

Small business hurt by court decision

The General Services Administration used the 876 authority for its ASTRO contract for services to support the operations, maintenance, readiness, research, development, systems integration and support for manned, unmanned and optionally manned platforms and robotics. But when GSA tried to apply the authority to its Polaris small business vehicle for IT services, a vendor protested and the Court of Federal Claims rules GSA’s interpretation of 876 went too far. The court’s ruling forced GSA to rethink the solicitation for both Polaris and its OASIS+ vehicles, and bring price back as an evaluation factor at the main contract level.

This led both Ernst and Peters to seek a permanent technical fix for the 876 authority.

Emily Murphy, the former GSA administrator, wrote in July that a congressional fix is necessary to achieve the goals of 876. She wrote the “goal was to make sure that contractors with the best technical ability win spots on these multiple award contracts, and to push for vigorous price competition at the task order level. This approach allows contracting officers to focus on getting the best solution for the government, but it also delivered savings — contractors wouldn’t have to prepare, nor contracting officers evaluate, thousands of lines of data that isn’t meaningful to the work performed or the prices actually paid.”

Along with this technical fix, Ernst said she’s focused on several other priorities to improve small business contracting in 2024.

Ernst to reauthorize SBIR

One big area is legislation to make the Small Business Innovation Research and Small Business Technology Transfer Programs (SBIR/STTR) programs more effective through reauthorization. Congress reauthorized SBIR/STTR in 2022 for only three years.

“I have seen the trend where there is a consolidation of contracts given to known or existing small businesses. What we have seen then is the movement of all of those contracts to those known providers. Many of these businesses are typically on our coasts. So they continue to get award after award after award. They are the ones that are on the east coast or the west coast,” Ernst said. “We have a large swath of middle America, like where I live in Iowa, where small businesses have just given up on trying to compete against those that have competed for years and years, and who have the system down and they know how to fill out these packets. They know how to get the contracts and they’re squeezing others out that have not been able to secure those contracts.”

Ernst said she is concerned about the issues raised previously about SBIR mills where vendors win funding, but never commercialize their technology, as required under the programs.

But at the same time, she wants the small business industrial base to stop shrinking and SBIR/STTR is a good avenue for those new small firms.

“We just really want to make sure that through this effort, we’re supporting opportunities for small business owners to participate. One of those avenues was my small business expo at Iowa State University last year, it was a huge success. And it opened up federal contracting to so many small businesses across the state,” she said. “We’ll continue to do those types of opportunities. But then the second point, the SBIR/STTR programs is part of our innovation ecosystem here in the United States, and it’s really our greatest strategic advantage when we’re trying to counter adversaries. We’re trying to transition small business research and development from labs and garages to innovate equipment in the field. And we have to remain focused and have that as the central focus of the SBIR/STTR programs.”

Holding agencies more accountable

Increasing the small business industrial base challenge also is a central focus of her Accountability and Clarity in Contracts to Engage Small Suppliers (ACCESS) for Small Businesses Act, which Ernst introduced in September.

She said that bill does several things, including requiring agencies to increase access to government contracts by making sure agencies write small business contracts in plain language.

“It also allows them to achieve an ‘A’ on their small business scorecard or testify before Congress on why they failed to do so. Then it also makes sure that the Small Business Administration’s contracting scorecard measures the health and variety of small businesses because sometimes we get in a very narrow lane of where we’re offering contracts,” Ernst said.

The ACCESS Act also is addressing an ongoing concern about the responsiveness of SBA to the committee. Ernst said she would like to see SBA engage more with the committee and lawmakers to improve these and other areas of small business contracting.

“We have to use our leverage as members of Congress to force the discussion sometimes through letters, through meetings and phone calls with officials over at the SBA. But also getting the information from our constituents, we can never forget that we represent our own states, we have the small businesses within our own communities,” she said. “We need to know from their perspective what is the right way to move forward? What are those obstacles that the federal government has thrown into your path, that maybe we can help you navigate whether you have to go around it, over it, below it, whatever it is, we need to figure out a way for those small businesses to be able to work with the federal government? Hearings are always very important. That is something that Chairwoman Jeanne Shaheen (D-N.H.) and I have been working on, I do have to say it’s been a little tough communicating with the SBA. When [Sen.] Ben Cardin (D-Md.) was the chairman, we ran into roadblocks at every opportunity. Even when we were acting in a bipartisan manner, we would have letters that were not responded to, or even acknowledged at the SBA.”

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