Matters Of Trust

A New Contract

Anti-bundling and HUBZone provisions give small businesses an edge in a recently signed bill.

By Stephen Barlas

For those of you hoping to sink your teeth into a federal contract, there's good news. A few key measures were included in the SBA Reauthorization Act of 1997 signed by President Clinton December 2.

Two provisions of note: one dealing with incentives to discourage federal contract "bundling" and another dealing with HUBZones (areas that are smaller than counties and have high poverty rates). The anti-bundling provision attempts to keep for small businesses federal contracts thathave historically gone to the small and medium guys. More and more, bite-sized federal contracts have been grouped together foradministrative reasons so that only a Fortune 1000 company could get its jaws around the bid.

For the first time, federal procurement officials will award extra "points" to a large contractor whose bid for a federal government contract, be it from the DOD, NASA or any other agency, includes small companies that would get some of the work, especially the portions of a "bundled" contract that had in the past gone to smaller companies.

The anti-bundling provision doesn't have very sharp teeth. It simply creates an incentive, which may or may not turn out to be worth anything. This uncertainty was reflected in a lukewarm endorsement from Jere Glover, chief counsel in the SBA Office of Advocacy, who calls the provision "a step toward addressing some small-businessconcerns."

But Felix Martinez, director of procurement programs for the American Consulting Engineers Council, 85 percent of whose members are small-business owners, calls the provision a "good compromise."

As for the HUBZone measure, call it a Gold Rush for entrepreneurs, who will be stampeding to HUBZones in the months to come. Starting October 1, 1 percent of all federal contracts will be reserved for small HUBZonebusinesses for a total of about $2 billion. The percentage increases bit by bit, but only until it hits 3 percent in 2003.

To bid for a part of that pot, a small business must be located in acensus tract where at least half the households have an income of less than 60 percent of the Area Median Gross Income. The business must also hireat least 35 percent of its employees from that or surrounding HUBZones.

Wondering if you'll qualify? You'll have to sit tight for now. While there are some estimates for certain states on the number of tracts that will qualify, there is no national count yet.

Stephen Barlas is a freelance business reporter who covers the Washington beat for 15 magazines.

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This article was originally published in the March 1998 print edition of Entrepreneur with the headline: Matters Of Trust.

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