Will Agencies Be Penalized for Missing Their Small Business Goals?

 By: Edward T. DeLisle

On January 18, 2012, Representative Bill Owens (D.-N.Y.) introduced a bill entitled, “The Small Business Growth and Federal Accountability Act” (H.R. 3779).  The Act is designed to “hold accountable Federal departments and agencies that fail to meet goals relating to the participation of small business concerns.” In order to achieve this goal, the Act goes on to state that “[if] a Federal department of agency does not meet a covered goal with respect to a fiscal year, that department or agency, in the succeeding fiscal year, may not expend for the procurement of goods or services an amount that is greater than 90 percent of the amount expended for the procurement of goods or services…”

If enacted, the bill would essentially penalize a federal department or agency by slashing its budget by 10% if that department or agency fails to hit its established small business procurement goals. As it currently stands, federal departments and agencies are required to expend 23% of their annual procurement dollars on small business awards. The problem, however, is that there is no penalty if an agency fails to meet this goal. If this bill becomes law that would certainly change. The question becomes: How would federal agencies react to it? The bill does state that “[t]o meet a covered goal, the head of a Federal department or agency may give preference to a small business concern when procuring goods or services.” While it does not define the type of preference that may be given, this concept opens the door to any number of possibilities that could impact the procurement process. For example, will a system emerge during the bill review process that is akin to the 10% price preference currently in existence for the HUBZone program?  We will simply have to wait and see.  The bill is currently being reviewed by the House Small Business Committee.

Edward T. DeLisle is a Partner in the firm and a member of the Federal Contracting Practice Group.

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Ready Mixed Concrete Essex - March 7, 2012 5:54 AM

Very interesting post, thanks for sharing.

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