ITAA Opposes Contract Bundling Rule Changes

The Information Technology Association of America (http://www.itaa.org) wants the Bush Administration to withdraw its proposed contract bundling rules, saying the plan will not accomplish its stated purpose of helping small businesses compete for government contracts.

Contract bundling, where agencies combine multiple projects into one deal, is a common practice in the federal government contracting world. Contractors who win the large deals then sub-contract parts of the deal to smaller contractors. Supporters of contract bundling say it streamlines the procurement process, but critics, including President Bush, claim it puts small contractors at a competitive disadvantage.

The Office of Management and Budget (OMB) issued proposed rules in January to limit contract bundling by requiring agencies to justify bundling and subjecting large contracts to further agency reviews.

According to ITAA President Harris Miller, the bundling review rules adds a layer of bureaucracy that undercuts the intended outcome, making the procurement process slower and more expensive while adding, at best, minimal benefits to small businesses. Miller said the Administration has yet to prove contract bundling reviews result in more contracts going to small businesses.

The ITAA also questioned whether federal agencies had enough small business experts on staff to properly review bundled contracts, a position strengthened by a March House hearing that revealed at least 10 federal agencies had missed a deadline to submit reports on their efforts to increase the percentage of small businesses winning government contracts.

The reports were part of a 12-point plan issued last October by OMB to reduce contract bundling.

Contract bundling has been a growing government practice over the last decade. the 28,916 bundled contracts in fiscal 2001 were an 8 percent increase from fiscal 2000 and a 19 percent rise since 1992. According to Fairfax, Va.-based Eagle Eye Publishing, which tracks federal contract spending, bundled contracts represented 16.4 percent of all prime contracts in 2001 and 51 percent of all reported contract spending.