Too many agencies combine contracts so they're too big for small businesses to bid on.

This "bundling" costs taxpayers more money and cheats small businesses out of government contracts.

An important way for a small business to grow is to have the government as a customer. The U.S. federal government is the single largest buyer of goods and services in the world, with more than $200 billion in purchases annually.

But while the dollar volume of federal procurement increased 7 percent in 2002, the actual number of contracts awarded to small businesses decreased 14 percent, according to the latest available statistics. This followed a drop of more than 50 percent in small business contracts during the 1990s. One of the major reasons for this ongoing decrease is a little-known practice called "contract bundling."

Contract bundling occurs when federal agencies combine contracts so they become too large for small businesses to bid on or participate in as prime contractors. These mega-contracts result in billions of dollars of lost revenue for small businesses. While the practice ostensibly is in the interest of streamlining, no federal agency has shown evidence of any savings due to bundling.

Furthermore, the government’s process to monitor contract bundling is flawed. When an agency combines contracts, the agency itself decides whether it meets or violates the regulations that cover bundling. The Small Business Administration can appeal the agency decision, but its appeal is reviewed by the originating agency. Thus, there is no third-party review of an appeal and little opportunity to rectify bad decisions.

When President George W. Bush unveiled his Small Business Agenda in 2002, he stated, "Wherever possible, we’re going to insist we break down large federal contracts so that small business owners have got a fair shot at federal contracting."

The American Small Business League is committed to bringing an end to contract bundling.