A bill just introduced in the House of Representatives by Rep. Nick Mulvaney (R-S.C.), who chairs the House Small Business Subcommittee on Contracting and Workforce, has been termed an attempt to solve some problems in the federal government’s programs to increase opportunities for small businesses to participate in government contracts.
The bill, known as the Subcontracting Transparency and Reliability Act (STAR Act), would require for the first time that if a federal agency decides to bring work in house that had previously been done by a small business contractor, it would have to make public its reasons for reaching that decision. Furthermore, the small business would have standing to go to court and challenge the in-sourcing decision.
Under the bill, the “conversion of a function that is being performed by a private sector entity to performance by a Federal employee” can be protested by “any small business concern whose economic interest would be affected by the conversion.”
This idea holds a good deal of promise. After all, many agencies are trying to accomplish more with fewer resources, and one of the ways of doing that is to terminate their contracts and assign the work to in-house staff. When the incumbent contractor is a small business, the result is a decrease in small business participation just as if the work were transferred to a large business.
Another provision of the STAR Act would change the details of the existing requirement that small businesses actually perform a substantial amount of the work that they are assigned to do, rather than subcontract it out to larger businesses.
Under the Act, a small business would not be allowed to subcontract out to a larger business more than 50 percent of the amount it was paid under a service or supplies contract, or 85 percent of the amount it was paid for general construction, not including the cost of materials.
The current rules invoke the cost of performance, rather than the dollar amount paid by government to the small business. The idea of the new proposal is the same – to try to ensure that small businesses are doing the work to the extent possible, thus fulfilling congressional intent that they garner a significant piece of the pie.