Washington Business Journal - Small Businesses Often Lose in GSA Schedule Contracts, Hill Investigation Finds

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By Jill Aitoro

An investigation from the House Small Business Committee found what a lot of contractors have said for years: The General Services Administration's Multiple Award Schedule program doesn't always pay off, and can actually leave companies in the hole.

Between fiscal 2008 and 2012, the GSA canceled 3,300 MAS contracts, which give businesses the ability to sell goods and services to agencies, because the companies didn't meet a requirement to make at least $25,000 in sales under the contract per year.

Those that had their contracts canceled in a lot of cases are worse off than when they started, having invested anywhere from $6,000 to $40,000 to win the contract, not to mention the time and money required to then bid on purchase orders.

"Competing for a federal contracting is not only time-consuming but very costly, especially for small businesses, who often don't have a large procurement team like larger corporations may have," the committee noted in a released statement.

The GSA guarantees that each business will receive at least $2,500 in sales and is required to pay out that amount should the company fall short and lose its contract. The committee found, however, that the GSA has failed to live up to that end of the bargain -- and had not paid the required termination costs to small businesses for at least five years.
Of the 3,300 companies that had their contracts canceled, 1,334 were eligible for a minimum guaranteed payment from the GSA, and 1,281 of the eligible firms were small businesses.

The GSA has agreed to pay $3.11 million owed to those companies, according to the committee. The remaining companies had not filed the necessary forms, so it is unclear if the GSA would have owed them the $2,500 payment, the committee announcement said.
According to a blog posted to the GSA website Thursday, the agency historically has required contractors to show that they had complied with their contract and formally request the $2,500 minimum.
"Under new leadership, GSA is changing its policy and will no longer require eligible businesses to request these payments," the blog noted. "Instead, GSA will proactively identify eligible businesses and issue payments automatically."

The agency will also issue payments to those eligible businesses who have not requested payments within the past six years.
"Contracting with small businesses is good for the economy and it's good for the taxpayer because small companies bring cost-savings to the federal government," said committee Chairman Sam Graves, R-Mo. "But when federal agencies don't live up to their end of the bargain, small businesses are discouraged from competing and taxpayers lose the benefits of government efficiency."

Of the MAS program's 19,000 contracts, about 80 percent are with small businesses, which make make up 35 percent of the $50 billion in annual sales that filter through the program.

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