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The procurement process is a critical activity that all registered stakeholders from both the public and the private sector should and are required to undertake by the law. Part of the procurement process involves source selection to identify the best suitable suppliers to award the contract. However, some of the requirements that ought to be met for a company to be awarded the contract are merely justifiable on particular occasions. The context of this paper will discuss contract bundling, the concerns associated with bundling, why they are bundled, their impacts on Small and Medium-sized Enterprises (SMEs) and potential solutions in regards to bundling.
According to Small Business Reauthorization Act of 1997, contract bundling can be termed as a “consolidation of two or more procurement requirements for goods or services previously provided or performed under separate smaller contracts into a solicitation of offers for a single contract that is likely to be unsuitable for award to a small business”. Simply explained, company A and B were awarded the two varied contract on different terms with each contract valued at one million dollars and two million dollars respectively. After the initial contract has ended, the federal agency decides to merge the varied requirements and to award company B a unified single contract of three million dollars instead of the initial separated contract.
The unsuitability as stipulated by the act is categorically due to the nature, scope, and diversity of the performance element specified. Another barring factor is the dollar value set for the contract, geographical dispersion of contact sites and any other combined criteria.
Concerns Associated with Bundling
The Small Business Reauthorization Act also outlines the terms of engagement for contract bundling as highlighted above. Further, the act requires the state departments to take all necessary steps such as structuring contracts requirements in a manner that it accommodates small business and encourage competition. Additionally, by all means, they must avoid needless contract bundling that may preclude the SMEs from participating in the exercise. The Act also required the federal agencies to conduct a market research to establish whether their intentions for contract bundling is justifiable and by association, these benefits must be measurable.
Despite, these terms of engagement a report by the Small Business Administration (SBA) indicated that as of 2012, the 23 percent mark on all federal agencies to be awarded to small firms has not been achieved which is a clear indicator that rate of bundled contracts is still higher than anticipated (Miller, 2014).The facts behind the misplaced attention to the small business leading to increased contract bundling are because the government is ignorant in meeting the statutory obligations requiring them to justify their decision in bundling contracts. Further, the small business community is not keen in to promote accountability by the government in regards to bundled contract reporting.
Reasons for contracts bundling
While contract bundling is viewed negatively from a small business point of view, there is a silver-lining that make the government and its agencies to uphold this method as an acquisition strategy. Bundling of contracts makes the procurement process much quicker with and enables reduction in the administrative costs. The bundling approach reduces procurement time thus enabling the government to meet the needs of their customers. Additionally, the taxpayers’ money is saved and can be redirected to other meaningful projects.
Impact of Contract Bundling on Small Businesses
The government contracts to is set at twenty-three percent of the overall prime contracts annually. The number of the unmet contract awards and the alarmingly fewer prime contracts being offered to SMEs has impacted on them negatively. Firstly, bundling has seen some federal agencies impose restriction thus denying small businesses the opportunity from engaging in the competitive acquisition process. Secondly, the federal government expense amount closely to 500 billion dollars each year, likewise the small business employ more than half of the overall American workforce. Thus contracting denies this business the growth opportunity which is significant to expanding the available workforce (United States Congress House Committee, 2015).
Research Analysis of Results to Identify Potential Solutions
According to the contracting task force report by Small Business Administration et al. (2010), the federal government has not been able to meet the 23 percent contracting goal for small business since 2006.The analysis of the Small Business Administration (SBA) outreaches is a clear indicator that the barriers for SMEs to the federal contracts are greatly attributed to the lacking and weak outdated policies which prevent the effective use of contracting tools in sourcing for government contracts. Inadequate workforce training to assist SMEs’ advocates and contracting officers, understand how to successfully use contracting tools. Finally, the inaccessibility to contracting systems’ training agencies and seminars by small firms due to poor coordination.
In conclusion, to open-up the federal procurement opportunities I recommend strengthening the policies and proper guidance to fill the gap between the government agencies and the small firms. This will ensure rules are adjusted to allow contracts suitable to SMEs are reserved to them, even in situations where bundling is justified. The second recommendation is to improve outreach events, data access and use of technology which will require a simplified unified data system to ease the navigation and customer experience. Lastly, proper training will ensure the acquisition workforce are well informed and equipped with the necessary knowledge to meet small business procurement goals.
We can do it today.
- Miller, J. (2014). Concerns over contract bundling cast shadow over 2013 small business successes.
- Small Business Reauthorization Act (1997).
- Small Business Administration (2010). Interagency Task Force on Federal Contracting Opportunities for Small Businesses.
- United States Congress House Committee. (2015). Impact of Contract Bundling on Small Business Concerns: Receipt of Report From U.S. Small Business Administration on Contract Bundling: Hearing … the Committee on Small Business, House of Re. BiblioLife.