Newspaper article THE JOURNAL RECORD

Study Looks at Contract Bundling

Newspaper article THE JOURNAL RECORD

Study Looks at Contract Bundling

Article excerpt

In an effort to lower the government's operating costs, federal agencies are combining small contracts into large contracts. The government began doing this after the Federal Acquisition Streamlining Act was enacted in 1994. A new study, The Impact of Contract Bundling on Small Business: FY 1992-FY 1999, prepared under contract and released by the U.S. Small Business Administration's Office of Advocacy, attempts to clarify trends in contract bundling and whether small firms are being adversely affected.

According to Jere Glover, SBA's Chief Counsel for Advocacy, "Small businesses have made clear the negative impact of bundling on their businesses. Historically small businesses have been vital participants in all sectors of government procurement, but the process of bundling reduces the number of small business prime contractors.

This report documents that whenever contracts are bundled -- taken away from small businesses to create a super contract -- small business prime contractors are hurt."

Several highlights from this report include:

l The average bundled contract was valued at $8 million in fiscal 1999, representing a 21 percent increase in the value of the average contract award over the past eight years.

l In fiscal 1999, large businesses received 67 percent of all prime contract dollars and 74 percent of all bundled dollars. Small firms received 18.7 percent of all contract dollars and 15 percent of bundled contracts.

l The two areas fueling the growth of contract bundling are construction and non-research services, both sectors dominated by small businesses.

l For every increase of 100 bundled contracts, there was a decrease of more than 106 individual contracts awarded to small firms.

There is, however, some good news in the research and development sectors and in the manufacturing sectors. …

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