National Defense Authorization Act for Fiscal Year 2004

Mr. KERRY. Mr. President, I applaud the efforts of Senator SUSAN COLLINS, Senator JIM TALENT, and my colleague from the Small Business and Entrepreneurship Committee, Senator CARL LEVIN, for their efforts today on behalf of small businesses. Their amendment to S. 1050, the Department of Defense reauthorization bill, is a step in the right direction towards ending the deleterious effect contract bundling is having on small businesses.

Bundled contracts, while seemingly an efficient and cost-saving means for Federal agencies to conduct business, are anticompetitive and antismall business. Further, they will result in increased costs over time. When a Federal agency bundles contracts, it limits small businesses' ability to bid for the new bundled contract, thus limiting competition and the Government's ability to receive better and cheaper goods and services. Small businesses are consistently touted as more innovative, more flexible and responsive to an agency's needs than their larger counterparts. But when forced to bid for megacontracts, at times across large geographic areas, few, if any, small businesses can be expected to compete. This deprives the Federal Government of the benefits of competition and our economy of possible innovations brought about by small businesses.

This amendment attempts to close one of the loopholes used by agencies to pool like-kind contracts that were previously awarded to small businesses. The amendment requires the Department of Defense to conduct market research, identify alternative contracting approaches, and determine if the "consolidation" is necessary and justified for any "consolidated contract" above $5 million.

The amendment does not go far enough, however. It only applies to the Department of Defense, is only applicable for 1 year, and still allows a loophole that will allow bundling regardless of quantifiable dollar amounts.
I have introduced legislation, S. 633, that would take the necessary steps to further limit the practice of contract bundling. I look forward to obtaining its Senate passage in cooperation with the Senators who advocated on behalf of this amendment and all those who are determined to remove the barriers to small business development created by contract bundling.