Contracting and Workforce Subcommittee Chairman Mick Mulvaney (R-SC) today held a hearing to examine the impediments that small businesses face when competing for federal government construction contracts. Costly and burdensome regulations often prohibit small businesses from successfully competing for construction contracts.
The federal sector is an extremely important portion of the construction market, accounting for 40 percent of the value of ongoing overall private and public sector construction activity in 2010, compared to about 20 percent in the prior decade. However, in this economic climate, the construction industry currently faces a 17 percent unemployment rate-- the highest of any industry-- and the lowest it has been for this industry in the last two years.
"Changes must be made so small businesses have just as much opportunity as their larger counterparts to successfully compete for federal construction contracts," said Mulvaney. "Right now there is not a level playing field and this should be corrected. Small firms stand ready to build buildings if the federal government would give them an equal chance to compete for construction projects.
"Small companies have proven time and again that they can do the work cheaper and more efficiently than larger entities. As a former home builder myself, I know this firsthand. With a national debt already exceeding $15 trillion, we should be taking every possible avenue to cut spending and save taxpayer dollars.
"Correcting and clarifying contracting requirements will open up greater participation by small firms-- our nation's best job creators. Taking steps such as this will open up business growth and help get the over 12 million unemployed Americans back to work."
Specifically, the Subcommittee addressed the following areas that often limit small businesses' ability to effectively compete for federal government construction projects: 1) the exclusion of construction from the contract bundling definition; 2) the effectiveness of SBA's surety bond program; and 3) the desirability of a locality preference for construction contracts.
To help protect small business contractors and bring more transparency and accountability to federal procurement, Mulvaney last week introduced the Subcontracting Transparency And Reliability (STAR) Act of 2012.
Notable Witness Quotes:
Rosie Privitera Biondo, President of Mark One Electric Co., Inc., in Kansas City, MO, said, "The SBA has a complicated economic formula for calculating its revenue based size standards and WCOE has neither the resources nor the Masters in Economics to defeat SBA's arcane mathematical formula. However, we do have on ground experience and we can tell you that the revenue‐based size standard severely restricts our ability to take advantage of programs Congress has put into place to assist us growing our businesses and creating jobs."
Dirk D. Haire, Partner at Fox Rothschild in Washington, D.C., said, "Reducing government contract bundling would increase competition on federal procurements and would enhance benefits to the government and provide added opportunities for small businesses to obtain government construction contracts."
Mark McCallum, Chief Executive Officer of the National Association of Surety Bond Producers in Washington, D.C., said, "NASBP urges that Congress [introduce] legislation that would amend the statutory definition of contract bundling to specifically include procurements for new construction, so that small construction businesses can more fully participate as prime contractors on federal construction projects. By undertaking this action, Congress would facilitate greater participation of small construction contractors at the prime level in the federal procurement arena; increase the likelihood that contracting agencies will meet or exceed their small business participation goals; and increase competition for federal procurements, thereby providing pricing benefits to the federal government."