SBA contracting functions could be moving to Denver
April 23, 2010 by cs
Small Business Administration leaders have recommended moving internal acquisition functions from the agency’s Washington headquarters to its Denver Finance Center, Administrator Karen Mills announced on Wednesday.
Mills told the House Small Business Committee that as part of a reorganization of its purchasing operations, agency contracting would move from the Office of Mergers and Acquisitions to the Office of the Chief Financial Officer. The CFO, who is based in Washington, supervises the Denver office, which currently focuses on financial management, administrative and programmatic accounting, and financial reporting.
SBA’s CFO, chief operating officer, and associate administrator for mergers and acquisitions suggested the change to Mills. A final decision on the move has not been made.
Officials announced the proposal to staff in an internal memo on Monday, according to SBA spokeswoman Hayley Matz. The American Federation of Government Employees, the labor union representing the contracting officials, has been notified of the recommendation but has yet to be briefed on the plan, she said.
“The [CFO] currently utilizes automated financial management tools and processes that will enable a comprehensive review of acquisition practices and existing contracts,” Matz said. “Such a review will result in the development of more strategic acquisition approaches to leverage buying power and achieve best value, increase use of technology to improve contract management, reengineer business processes to reduce cost to spend, build the skills of the acquisition workforce and end contracts that are no longer needed.”
The reorganization would lead to the elimination of SBA’s Office of Business Operations, Matz said. The Office of Grants Management, meanwhile, would be established to administer, award and monitor grants programs.
The transition would affect about 10 SBA contracting officers, who would be offered positions in Denver. Those unwilling to move to the Mile High City would receive help finding positions at the same grade level either at SBA or at another federal agency, Matz said. SBA does not expect the move to result in a net change in the size of its procurement staff.
SBA is the 10th agency to align its contracting functions under the CFO’s office, Mills testified.
But a Senate source raised questions on how the transition would comply with the 2003 Services Acquisition Reform Act, which mandated the creation of agency chief acquisition officers. The bill requires that agency procurement functions be managed by a non-career official whose primary duty is acquisition management. SBA did not respond to questions about the statute.
Mills told the committee she has taken a number of other steps recently to improve the operations and management of SBA’s small business contracting programs.
In response to a pair of Government Accountability Office reports finding widespread fraud in the HUBZone Business Development program, SBA increased the number of site visits from less than 100 in 2008 to more than 900 in 2009, Mills said. The agency is on track to conduct 1,000 additional visits in 2010.
“We’re working to ensure that only legitimate and eligible firms are benefiting from HUBZone,” she said.
To prevent ineligible firms from winning small business contracts, Mills said the agency has beefed up front-end oversight of the certification process. And, when companies are found to be out-of-compliance or ineligible to win small business contracts, they will have 30 days to remove themselves from the Central Contracting Registry database or SBA will do it for them, Mills said.
But, the agency’s chief watchdog testified that SBA’s contracting data often is inaccurate and unreliable.
In February, the SBA Inspector General’s Office issued an audit examining SBA’s fiscal 2008 acquisition data in the governmentwide Federal Procurement Data System. The report found SBA certified to the accuracy of its contracting data, even though 92 percent of a random sample of contract actions the IG reviewed contained one or more inaccurate or incomplete data elements.
The most common mistakes related to the size of the business, the code used to determine the size standard, the type of award, the contractor’s Data Universal Number System identifier, or the location of the contract.
“Due to the volume of errors identified in FPDS, it appears that contracting personnel did not review FPDS data inputs to ensure they reflected accurate information, as required by the Federal Acquisition Regulation,” SBA IG Peggy Gustafson said.
Mills called the audit findings “extremely disturbing and unacceptable.” But issues remain. The IG sampled SBA’s fiscal 2009 contracting data and found an error rate of 97 percent. The 2009 data indicated fewer problems with each individual data element, however.
Two other IG reports issued this month also raised concerns about SBA’s procurement functions. An April 9 memorandum found SBA’s current procurement workforce was “insufficient to effectively award, administer and oversee Recovery Act contracts as well as other SBA contracts.”
The second audit found SBA failed to report all noncompetitive stimulus contract actions to Recovery.gov and mischaracterized some of the actions it did report. SBA agreed with the findings of both reports and has begun to implement many of the IG’s staffing and oversight recommendations.
By Robert Brodsky – April 21, 2010 – (C) 2010 BY NATIONAL JOURNAL GROUP, INC. ALL RIGHTS RESERVED.
SBA to Revise Format for Small Business Procurement Scorecard
April 12, 2010 by cs
The U.S. Small Business Administration (SBA) is revising the format of the annual Small Business Procurement Scorecard to provide more clarity and transparency on the federal government’s performance in meeting its small business contracting goals. The revised scorecard will be based on an A through F letter grade system, as opposed to the previous red, yellow, green ratings.
“This revision to the Scorecard will provide greater clarity and transparency on how well each agency is doing in meeting its small business prime contracting goals,” said SBA Administrator Karen Mills. “Federal contracts provide critical opportunities for small businesses to grow and create jobs. This revision builds on our ongoing efforts to strengthen the integrity of the overall process for small business contracting, while also expanding opportunities for small businesses to compete for and win federal contracts.”
The revisions will appear when SBA issues its report later this year for federal contracting in fiscal year 2009. Over the past year, SBA has worked collaboratively with contracting and small business officials to develop the new system. The new system better reflects the unique needs of individual agencies while maintaining a focus on achieving the statutory small business contracting goals.
The overall small business prime contracting goals have been established by Congress to ensure that small businesses get their fair share of federal contracts. The government-wide goal for prime contracts to small businesses is 23 percent of total qualified contract dollars, with additional goals of 5 percent for small disadvantaged businesses, 5 percent for women-owned businesses, 3 percent for HUBZone small businesses, and 3 percent for service- disabled veteran-owned small businesses.
SBA negotiates individual goals for each agency, while ensuring that when combined they meet the overall statutory goals for the federal government.
SBA’s small business procurement goal, for example, is 67.05 percent. While Scorecards will measure subcontracting activity, that information is not factored into the determination of whether the federal government meets the statutory small business prime contracting goals.
The new scorecard holistically assesses an agency’s entire small business procurement performance. An agency’s overall grade will be comprised of three quantitative measures: prime contracts (80 percent), subcontracts (10 percent) and its progress plan for meeting goals (10 percent).
The letter grades for prime contracting and subcontracting will show an A+ for agencies that meet or exceed 120 percent of their goals, an A for those between 100 percent and 119 percent, a B for 90 to 99 percent, a C for 80 to
89 percent, a D for 70 to 79 percent and an F for less than 70 percent.
In last year’s Scorecard rating performance for the FY 2008 contracting year, small businesses won 21.5 percent of contract dollars, or about $93.3 billion out of a small business-eligible base of about $434 billion. More than half of all agencies met their individual goals. The small business eligible base for FY2009 was about $437 billion.
An example of the new Scorecard format can be accessed at http://www.sba.gov/idc/groups/public/documents/sba_homepage/score_card mock_up.pdf.
Release Date: April 9, 2009 – Release Number: 10-13
Senators again try for small business parity
April 6, 2010 by cs
Senators are again attempting to remove some mandates related to the federal small-business programs.
On March 26, Sen. Mary Landrieu (D-La.), chairwoman of the Small Business and Entrepreneurship Committee, and Sen. Richard Durbin (D-Ill.) introduced the Small Business Parity Programs Act (S. 3190).
The measure would place three small business government contracting programs on equal footing when competing for small-business contracts. It would give federal contracting officers the authority to choose the program that best suits an agency’s need.
Currently, businesses in the Historically Underutilized Business Zone (HUBZone) program get first rights to set-aside procurements. Meanwhile, small firms in women-owned, 8(a), and service-disabled veteran-owned business programs get a chance at the procurement if a contracting officer can’t find two HUBZone companies to do the work.
In February, a Federal Claims Court judge ruled that the “shall” in the law regarding the HUBZone program is a mandate to contracting officers. Other small-business programs don’t have such a stern legal word regarding their use. Along with the court, the Government Accountability Office has ruled twice that contracting officers had to first consider companies in the HUBZone program, because of the “shall” in the statute.
“Because I, along with Sen. Durbin of Illinois, strongly disagree with this decision, we filed this legislation to create parity amongst the programs,” Landrieu said in a statement. “This simple, yet effective, bill is a good step toward opening those doors, fixing current law and having an immediate and positive impact on small businesses seeking equal access to federal contracts.” The bill would strike the “shall” in statute related to the HUBZone program and insert “may.”
Landrieu and her committee’s ranking member, Sen. Olympia Snowe (R-Maine), inserted the parity language into the Senate’s version of the fiscal 2009 National Defense Authorization Act. But it was removed from the legislation during a conference session when senators and House members were working out the differences in their versions of the bill.
Along with some members of Congress, officials at the Small Business Administration and the Obama administration disagreed with the GAO’s rulings. Peter Orszag, director of the Office of Management and Budget, in 2009 told agencies to ignore GAO’s decisions and consider all programs as the same.
“It is well past time to provide more equality and greater opportunities for the thousands of small-business owners who wish to do business with the federal government,” Landrieu said. The bill was referred to her committee for consideration.
Court puts HUBZone firms at top of small business pecking order
March 8, 2010 by llyons
By Robert Brodsky - March 8, 2010
The U.S. Court of Federal Claims has rearranged the small business contracting hierarchy with a ruling that firms in low-income neighborhoods take priority in federal awards.
The court’s decision, which was unsealed on March 2, stated that agencies now must consider whether companies in a Historically Underutilized Business Zone can compete for a contract before awarding it under another small business program or on a sole-source basis. The ruling by Chief Judge Emily Hewitt supports an earlier Government Accountability Office decision and is a departure from recent Office of Management and Budget and Justice Department guidance.
The case boiled down to whether the HUBZone program took precedence over the 8(a) program — in which businesses are owned by socially or economically disadvantaged individuals. While the service-disabled veteran-owned small business program was not at issue, the court ruled it should be treated the same as the 8(a) program. All three categories are eligible for set-aside small business contracts.
The plaintiff in the case, Mission Critical Solutions of Tampa, Fla., protested the Army Office of the Judge Advocate General’s January 2009 award of a sole-source $10.5 million information technology pact to Copper River Information Technology, an 8(a) Alaska native contractor.
Mission Critical, which is an 8(a) and HUBZone business and was the incumbent contractor, complained that it should have been able to compete for the award. The Federal Acquisition Regulation requires agencies to open contracts to Historically Underutilized Business Zone companies if procurement officials have a reasonable expectation that two qualified HUBZone businesses will submit offers at a fair market price, Mission Critical argued.
Hewitt agreed, noting that set asides for 8(a) companies were optional. “The 8(a) statute explicitly affords discretion both to the [Small Business Administration] and to agency contracting officers in deciding whether to place a contract opportunity in the 8(a) program,” she said.
She added, “The plain meaning of the HUBZone statute requires a contract opportunity to be competed among qualified HUBZone small business concerns whenever the specified criteria are met, notwithstanding other provisions of law–including those found within the Small Business Act itself.” Hewitt said the HUBZone statute was “unambiguous and mandatory.”
Contracts still can be placed in the 8(a) program when the specified criteria in the HUBZone statute are not met, she said.
The decision also prevents the Army from awarding the IT contract to Copper River unless it first considers whether HUBZone firms can compete for the work. Mission Critical Solutions is operating under a bridge contract until the matter is resolved.
The court’s ruling is virtually identical to a decision GAO reached last May after Mission Critical Solutions and another small business contractor protested the Army’s contract award. GAO sustained the protests and later denied SBA’s request for reconsideration.
But, in a move that many legal experts considered unprecedented, OMB in July 2009 directed agencies to ignore GAO’s recommendations because they would “significantly limit the discretion contracting officers have historically possessed.”
The memorandum from OMB Director Peter R. Orszag stated that GAO’s decisions “are not binding on federal agencies and are contrary to regulations promulgated by the Small Business Administration that provide for ‘parity’ among the three small business programs.”
Last August, the Justice Department’s Office of Legal Counsel issued an opinion disagreeing with GAO’s interpretation of the HUBZone statute. The memo argued that its opinion — rather than GAO’s decision — was binding for executive branch agencies.
When the Army announced it intended to use the Justice memo as the basis for awarding the contract to Copper River, Mission Critical protested to the Court of Federal Claims.
OMB on Monday declined requests to discuss the court’s ruling or comment on whether the Obama administration would challenge the case with the U.S. Court of Appeals for the Federal Circuit.
Ralph White, acting managing associate general counsel in GAO’s procurement law division, said he was not surprised by the court’s ruling. “We based our view on the priorities set in the statute,” he said.
Although it previously disagreed with GAO’s decision, SBA said it was reviewing the ruling.
“SBA has consistently interpreted the Small Business Act to provide that federal contracting officers are to choose equally among all of SBA’s procurement and business development programs … without giving one preference over the others,” agency spokesman Jonathan Swain said. “This is the rule of ‘parity’ between the programs.”
Congress attempted to intervene in the dispute last July, as the Senate approved an amendment to the fiscal 2010 National Defense Authorization Act that would have placed the three small business programs on an equal footing when competing for contracts. But the amendment, introduced by Sens. Mary Landrieu, D-La., and Olympia Snowe, R-Maine, was stripped out during conference committee negotiations.
A source familiar with the negotiations said the Office of Legal Counsel told Congress the provision was unnecessary in light of its memo. The amendment also reportedly became entangled in a jurisdictional dispute between the House and Senate small business and armed services committees.
A spokeswoman said Landrieu plans to reintroduce the amendment as a stand-alone bill in the near future. Snowe’s office, meanwhile, urged the Senate to pass the Small Business Contracting Programs Parity Act, a stand-alone bill Snowe introduced in 2009 to make the programs equal.
The matter also could be resolved through a regulatory change. A proposed FAR rule, filed in March 2008, would have clarified that no order of award preference exists among small business programs. That rule remains under review.
(C) 2010 BY NATIONAL JOURNAL GROUP, INC. ALL RIGHTS RESERVED.