House Hearing Examines Procurement Reform Delays

July 16, 2014

pic-congress-hearingOn Tuesday, July 15, the House Small Business Subcommittee on Contracting and Workforce, held a hearing entitled, “Action Delayed, Small Business Opportunities Denied: Implementation of Contracting Reforms in the FY 2013 NDAA.” The National Defense Authorization Act (NDAA) for fiscal year 2013  was signed into law on Jan. 2, 2013, and a year and a half later little progress has been made on the implementation of numerous small-business procurement reforms included in the measure.

The hearing was led by Subcommittee Chairman Richard Hanna (R-N.Y.), and examined the status of the implementation at the U.S. Small Business Administration (SBA) and the effects of the delays on small businesses. Testifying on behalf of the SBA was Mr. John Shoraka, Associate Administrator for Government Contracting and Business Development. The other witnesses who testified included: Ms. Angela Styles, Partner, Crowell & Moring, LLP, Ms. Charlotte Baker, President of Digital Hands, Mr. Larry Allen, President of Allen Federal Business Partners and Mr. Damien Specht, Special Counsel of Jenner & Block, LLP.

The procurement reforms would make various changes that would aid small businesses competing for federal contracts. As reported by the committee, of the 54 identified discrete actions, ten have been fully implemented, four were partially implemented, and the remaining 40 items have not been implemented. Those 40 unimplemented reforms include, among other things, making small-business goals part of senior agency employee reviews and bonus discussions, preventing contracting fraud by penalizing companies that front for large businesses, and changing limitations on subcontracting to make it easier for small companies to team on larger contracts.

Meanwhile, on June 25, the SBA did in fact propose a new rule to implement provisions of the NDAA pertaining to small-business size standards. Specifically, the rule establishes a “safe harbor” from penalties for businesses that have fraudulently misrepresented themselves to receive federal small business contracts if they acted in good faith reliance on written advisory opinions from Small Business Development Centers (SBDCs) or Procurement Technical Assistance Centers (PTACs). Additionally, the rule defines what constitutes an adequate small-business status advisory opinion and updates the circumstances under which the SBA may initiate a formal size determination.

The deadline for comments is Aug. 25, 2014. For additional information on this proposed rule visit the Federal Register website.

According to the committee, given that most procurement regulations affecting small businesses must undergo a two-step regulatory process by the SBA and the Federal Acquisition Council, these delays make it unlikely that the reforms will be fully implemented before the next President takes office in 2017.

During the hearing, Hanna stated that, “the slow implementation of these critical small-business contracting reforms is extremely disappointing, not only to legislators but also to the small businesses that could benefit from better public policy.” The members of the Committee and witnesses urged the SBA to implement and issue the remaining reforms as soon as possible, emphasizing that the failure to act would continue to have detrimental consequences for small businesses.

For additional information, including witness testimony and a hearing memo, please visit the House Small Business Committee’s website.