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STATEMENT OF ANGELA B. STYLES
ADMINISTRATOR FOR FEDERAL PROCUREMENT POLICY
BEFORE THE
SUBCOMMITTEE ON BENEFITS
COMMITTEE ON VETERANS AFFAIRS
UNITED STATES HOUSE OF REPRESENTATIVES
APRIL
30, 2003
Chairman
Brown and Members of the Subcommittee, I am pleased to be here today to
discuss H.R. 1460, the Veterans Entrepreneurship Act of 2003, and H.R.
1712 the Veterans Federal Procurement Opportunity Act of 2003. I welcome
the opportunity to collaborate with you on these very important issues.
The bills contain a variety of provisions related to small business programs
but today I would like to focus my comments on veterans in the federal
procurement process.
Both bills
would establish mechanisms for creating opportunities for participation
by veterans in federal contracting. H.R. 1460 would authorize sole source
awards to service- disabled veteran-owned small businesses up to $5 million
for manufacturing contracts and $3 million for non-manufacturing contracts.
The legislation would also establish a set-aside for competition limited
to just these businesses. H.R. 1460 focuses on setting-aside contracts
for small businesses owned and controlled by service-disabled veterans,
whereas H.R. 1712 would be broad reaching in its effect on all federal
small business procurement programs. For example, H.R. 1712 would increase
the overall small business procurement goal from 23 percent to 28 percent
and require every agency to have agency-specific goals at least equal
to the cumulative, government-wide small business procurement goals prescribed
in the Small Business Act. H.R. 1712 would also alter the manner in which
achievements against these goals are measured and impose inflexible contracting
restrictions on agencies if they don’t meet any of these goals.
We support the procurement provisions of H.R. 1460. We oppose H.R. 1712.
The federal
government has done an abysmal job of providing federal contracting opportunities
for our veterans. On February 5, 2003, I testified before the Committee
on agency implementation of section 502 of Public Law 106-50, the Veterans
Entrepreneurship and Small Business Development Act of 1999. That law
sets a 3 percent government-wide goal for participation by small businesses
owned and controlled by service-disabled veterans in federal contracting
and subcontracting. As I testified then, the statistics from the Federal
Procurement Data System reflected that agencies were not doing a good
job of meeting veterans procurement goals.
As an the
initial step to rectify this situation, I issued a memorandum to all agencies
reminding them of their goals and asking them to focus their attention
on this segment of the commercial market. To assist in locating veteran-owned
small businesses, agencies were informed that the Department of Veterans
Affairs is creating the VETBIZ Vendor Information Pages which will identify
about five thousand veteran-owned businesses. Attached to my testimony
is a copy of that memo. We hope this memo is an effective first step in
solving the problem. I would also like to emphasize that this is just
a first step.
Friday of
last week, I talked to Frank Ramos, the Director of the Small and Disadvantaged
Business Utilization Office of the Defense Department. We agreed to establish
an interagency working group to address several issues that may be directly
impacting veteran-owned small business participation in the federal procurement
system. Although we have not yet identified members, we plan on addressing
a wide-range of issues, including proper identification of veteran-owned
small businesses already participating in the federal procurement system.
There are a host of other issues this group can identify and address.
This interagency group will work under the leadership of my office and
the newly established Federal Acquisition Council. In the near term, we
will be establishing short-term and long-term plans for the veteran-owned
small business community and the small business community. On Monday of
this week, I also addressed these issues with the newly established Small
Business Procurement Advisory Council.
I believe
we have the recognition and understanding from small business offices
within agencies that these numbers must improve. I also believe that two
ongoing initiatives will have a significant impact on contracting opportunities
available for veteran-owned small business in the executive branch: contract
bundling and competitive sourcing. We are increasing federal contracting
opportunities for small businesses by eliminating unnecessary contract
bundling. Substantially fewer small businesses are receiving federal contracts,
and as a result, the federal government is suffering from a smaller supplier
base. To aggressively resolve this problem, the Administration has unveiled
a strategy to address contract bundling. With successful implementation
of this strategy, we will have reduced a significant barrier to entry
and, in doing so, allowed veteran-owned and other small businesses to
bring their innovation, creativity, and lower costs to the federal marketplace.
We are also in the process of revising the rules governing competition
for commercial activities between public and private sources. This would
help small businesses which, on average, receive more than 60 percent
of the awards made to private sector firms through the OMB Circular A-76
public-private competition process.
The contract
bundling and competitive sourcing initiatives promote access to the federal
marketplace through competition and provide the framework for delivery
of better value for agencies and the taxpayer. I have encouraged restructuring
of the current system to allow for greater participation for small and
first-time contractors to the federal marketplace. In this context, the
Administration strongly supports open competition among qualified firms
in the awarding of government contracts. Open competition for government
contracts under our free market system ensures that American taxpayers
receive the best possible value at the lowest possible price.
Unfortunately,
the statutes, judicial interpretations, and regulations have in the small
business arena become so confusing and difficult for our procurement people
that I am concerned about the ramifications of creating new statutory
preference programs. Given the confusing state of small business requirements,
and the difficulty in reconciling each program, our contracting people
have become overburdened. I sense an increasingly negative culture toward
small business that could be exacerbated by additional statutory requirements.
I am also concerned that the procurement preferences that would be created
by H.R. 1460 might not achieve the long-term increase in contract awards
to firms owned by service-disabled veterans that both the Committee and
the Administration would like to see. Statutory changes could provide
a quick short-term fix without consideration of long-term ramifications.
However, recognizing the need to provide agencies with additional tools
for contracting with service-disabled veteran-owned small businesses,
we support section 4 of H.R. 1460.
I would
also like to point out the extraordinary nature of this proposed preference
program for service-disabled veteran-owned small businesses. It is only
with extreme caution and reservation that this Administration would support
the creation of a new procurement preference program. However, in recognition
of the extraordinary sacrifice that service-disabled veterans have made
for their country, we support the creation of this preference program.
In every other conceivable instance, the Administration’s preference
will be to err towards open competition among qualified firms. Only through
open competition using our free market system can we ensure that we are
receiving the highest quality goods and services at the lowest price.
The addition
of statutory tools must go hand-in-hand with significant implementation
efforts. We need to encourage and train our contracting people to recognize
the positive benefits and value of actively including small businesses
and particularly veteran-owned small businesses in our procurement process.
Often forgotten in the rush to fill agency needs are the small businesses
that can provide many of our agency needs for goods and services. Often
times, it is these small businesses alone that bring innovation, creativity
and a new perspective to the federal marketplace. It is these businesses
that often bring the best value solution to our federal agencies.
There is
no question that this Administration is committed to ensuring that veterans
are provided every opportunity to fully integrate themselves in their
communities upon return from service, and I am personally committed to
ensuring that we continue to focus agency performance on improving contracting
opportunities for veterans. We must demonstrate to our service personnel
that we support them in all that they do and appreciate the sacrifices
they have made on our behalf. I look forward to our continued collaboration
on veterans issues. |
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