Small business is the beating heart of the American economy, and when the Senate next gets down to business on Nov. 12, no matter which party is in control, it has a rare chance to help entrepreneurs who have contracts with the U.S. government or work under federal contracting rules.
The House already has passed legislation sought by the construction industry that will make federal construction fairer, more cost-effective and less prone to fraud. Whether those measures make it into the Senate version of the 2015 Defense Authorization Act, where they have been proposed as amendments, isn't clear. Calling or emailing your senator is a good use of your time.
The first measure would prohibit the use of reverse auctions to procure design and construction services. Reverse auctions, in which contenders for a contract post their prices on a website and lower prices in successive rounds of "bidding," are being used successfully to procure commodities. But applying them to construction undermines quality and predictability after decades in which federal and state procurement reform has worked to make sure that construction-services bids are judged on quality as well as price.
Design-build, the project-delivery method that has been adopted most effectively by federal and state agencies to improve public-works construction, often involves long, arduous selection processes.
An American Institute of Architects survey in 2012 found that private-sector design-build contestants spend a median of $260,000 for the detailed plans, models and other materials needed. That amount makes such proposals price-prohibitive for smaller designers. To solve that problem, industry groups have put their weight behind—and the House already has passed—a measure that requires contracting agencies to use a two-step selection process, unless otherwise prohibited.
Narrowing the Field
This two-step process narrows the field so that smaller competitors don't have as much expense unless they reach the final selection stage. Under the measure, project officers must provide a written justification to the head of an agency for requiring more than five finalists.
The third measure would both help small contractors and put an end to a persistent fraud: It tightens up the rules for using individual sureties on federal projects by requiring the assets backing the bonds to be real and deposited into a safe account. If this measure were adopted, decades of fraudulent individual surety would end, and the charlatans who back bonds with illusory assets would have to prey on another industry.
The Senate can do much good to help smaller businesses by including these amendments in the 2015 defense authorization. Of the 230 proposed amendments to the act, these three demand everyone's support.