On Wednesday, Congressman Bill Owens (D-NY) introduced the Small Business Growth and Federal Accountability Act of 2012 (H.R. 3779). The bill is designed to ensure that government agencies provide more work for small business concern by authorizing blanket preferences and providing for monetary sanctions for the failure to meet annual goals. Owens is the bill’s lone sponsor.
A congressionally mandated goal requires that federal government agencies award at least twenty-three percent of all prime contracts to small businesses annually and establishes additional goals for other categories of small business concerns, and each federal agency is allowed to set individual small business contracting goals in consultation with the Small Business Administration (SBA). As it stands, however, there are no existing penalties for agencies that do not meet their annual goals.
Under H.R. 3779, this would change. The bill would authorize agencies to give “preference” to small business concerns when procuring goods or services to help reach each agency’s small business contracting goals. Although the term “preference” is not defined, arguably it is intended to include the application of status-based evaluation preferences in full and open competitions in addition to the issuance of small business set asides. The bill would also decrease an agency’s procurement budget by ten percent each year it failed to meet its annual goals. By rule the Appropriations Committee is responsible for rescissions of appropriations and unspent balances from federal agencies, and in a statement Owens called on the Committee to use any such lost funding towards paying down the national debt.
Several questions and implications of the bill are (1) how agencies will weigh cost savings from awarding contracts to large business versus any potential penalties for shortcomings on small business goals; (2) since the penalty is a one-size-fits-all approach, will agencies further decrease efforts at awarding small business contracts if they know they will not be able to achieve one of the applicable goals; and (3) will this lead to the imposition of similar monetary penalties for prime contractors who fail to meet their own annual small business subcontracting goals.