News From the
Committee on Small Business
Nydia M. Velázquez, Chairwoman

CONTACT: Erin Donar/ Jaime Zapata,  (202) 226-3636

New Federal Contracting Methods Shortchange Taxpayers and Entrepreneurs

WASHINGTON, D.C. — A level playing fields make for better results, and federal contracting procedures should not be treated as an exception to that rule.  Today, however, the House Committee on Small Business heard from entrepreneurs who say they are being pushed out of competitiveness by the government’s new contracting systems.  They argue that agencies are placing a premium on speed over value, and robbing taxpayers of the important benefits that come with innovation and commitment to excellence—both core standards for small firms.

“With less than 20% of federal contracts going to small business across the U.S., it is clear that this system isn’t working,” said Chairwoman Nydia M. Velázquez.  “A process that excludes entrepreneurs and fails to get the best value for taxpayers is unacceptable.”

The total dollar amount for government contracts has increased by nearly $200 billion over the past twenty-five years.  During that time, however, agencies have also reduced their procurement personnel by more than half.  The result is more work to be done with fewer people to take on the task.  To compensate, more responsibilities are being shifted to automated systems.  That makes things easier for contracting officers and the federal bureaucracy, but it shuts out small businesses and greatly compromise the quality of goods and services. As the Deputy Commanding General of the U.S. Army Corps of Engineers explained, these methods waste money and ultimately prolong the entire process.

“In the long run, a shoddy job always costs more.  Federal agencies should keep that in mind when it comes to contracting, or it will be the American taxpayer who gets swindled and saddled with the tab.” said Chairwoman Velázquez.

Witnesses also noted that the new procedures create considerable administrative burdens and a wide range of unnecessary costs for small firms.  They further argued that some of the contracting processes run counter to federal law, as they obstruct the participation of entrepreneurs and lead to a less diverse pool of suppliers. 

“Just as we do with federal regulations, every new contracting approach should be evaluated with an eye to its impact on both entrepreneurs and the public,” said Chairwoman Velázquez.  “These new practices must be modified to provide greater equity and fairness for small firms.  That’s the real way to give tax-payers a bigger bang for their buck.”

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Click here to view video clips of today’s hearing.
Click here to see a list of today’s witnesses and read their testimony.