Contract Management: Impact of Strategy to Mitigate Effects of Contract Bundling on Small Business is Uncertain

GAO-04-454 Published: May 27, 2004. Publicly Released: Jun 28, 2004.
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To achieve efficiencies and respond to procurement reforms, agencies have consolidated their procurement contracts--that is, combined existing smaller contracts into fewer larger contracts. To ensure contract bundling--a subset of contract consolidation--does not unfairly disadvantage small businesses, the President tasked the Office of Management and Budget (OMB) to develop a strategy that would hold agencies accountable for contract bundling practices. In October 2002, the Office of Federal Procurement Policy (OFPP) within OMB issued its strategy. This report discusses the extent to which contracts were bundled in fiscal year 2002 and assesses the potential effectiveness of regulatory changes that have recently resulted from OFPP's strategy.

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Recommendations for Executive Action

Agency Affected Recommendation Status
Office of Management and Budget The Director, Office of Management and Budget, should ensure that planned FPDS reliability improvements include accurate agency reporting to provide uniform and reliable contract bundling information.
Closed – Implemented
In written comments on GAO's report, OMB concurred to this recommendation. On August 5, 2005, OMB responded to the requirements of 31 U.S.C. 720 by submitting a written statement of the actions taken on GAO's recommendation to the Senate Committee on Governmental Affairs and to the House Committee on Government Reform, which were due on August 27, 2004. The OMB response states that agencies are diligently working to improve the reporting of bundling statistics. Further, the response states that, since May 2003, agencies have worked with OMB staff to ensure that data entered into FPDS comes from a validated source and that appropriate checks are built into automated contract writing systems. The contract bundling statistics used in the GAO report are from fiscal year 2002.
Office of Management and Budget The Director, Office of Management and Budget, should direct the Administrator, OFPP, to establish metrics to measure contract bundling and the extent to which contract bundling impacts contracting opportunities for small businesses.
Closed – Not Implemented
In written comments on GAO's report, OMB did not concur with this recommendation. OMB is concerned that GAO's recommendation envisions the establishment of a new, government-wide reporting and record-keeping requirement outside of the Federal Procurement Data System.
Small Business Administration The Administrator, SBA, should expedite the dissemination of best practices to maximize small business contract opportunities for incorporation into agencies' training courses, as required by the OFPP strategy.
Closed – Implemented
In official oral comments, the Small Business Administration concurred with this recommendation. In August 2007, SBA issued the first Small Business Procurement Scorecard. The Scorecard rates agencies on their progress plans and actions to meet small business goals. One of the mandatory nine progress plans and action items that is required to be address is: "Demonstrates no unjustified bundling has taken place." The plans and best practices are published on SBA's website. There will be two Scorecards each fiscal year. The first Scorecard for FY2008 was published in June 2008. The second Scorecard is planned to be published in August 2008. According to SBA officials, the rationale for the Scorecard was developed as the best way to comply with GAO recommendations, OMB executive orders, SBA statutory requirements, as well as to provide transparency and accountability.

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