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Break It Up!

Will Congress finally take a swing at contract bundling?

As 2001 wound down, the House and Senate wrestled with a provision to pin down the Defense Department on the issue of contract bundling. The Senate version of the fiscal 2002 Pentagon authorization bill would require a number of steps before contracts are combined in a package larger than $5 million.

The government's practice of bundling contracts has irked entrepreneurs for years, and the number of contract consolidations has shot up as the size of procurement offices has dwindled, leaving fewer acquisition officials to handle more contracts. Current law requires the Defense Department to give small businesses 23 percent of all prime contracts. But the figure in fiscal 2000 was 22.3 percent, down from 25.5 percent in fiscal 1996.

The Senate's provision states that before small contracts can be consolidated into one contract with a value of more than $5 million, the senior procurement official must identify alternative approaches involving less consolidation. After studying those, if the procurement official still feels consolidation is justified, the he or she must prove it. Reducing the burden on the procurement office does not count as a justification for consolidation unless the personnel savings are "substantial" in relation to the total cost of the procurement.

The House did not to include that provision in its version of the authorization bill, however. So its fate hinges on the contents of the final bill passed by a House-Senate conference committee. We should know before this session ends.


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 February 2002 print edition of Entrepreneur with the headline: Break It Up!.

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