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Rider on Emergency Military Spending Bill Would Strip Government Contracts from Small Businesses

Freshnews.com
April 20, 2005

The American Small Business League today denounced a move in Congress to use the emergency spending bill, intended for military costs in Iraq and Afghanistan, to strip billions of dollars in government contracts from small business owners. Sen. Pete V. Domenici (R-N.M.) has inserted a provision into the bill that would undermine the Small Business Act's mandate that nearly one-fourth of government contracts be awarded to small businesses.

"By burying this provision in the emergency military spending bill, Senator Domenici has undermined thousands of small business owners and employees across the country and in his own home state," said Lloyd Chapman, president of the American Small Business League. "Congress should be making it easier for small companies to do business with the government, not harder."

Under Sen. Domenici's proposal, the Department of Energy (DOE) would be able to drastically cut prime contracting work currently reserved for small businesses. The Small Business Act of 1953 directs that at least 23 percent of federal government prime contracts go to small business. Sen. Domenici's proposal would allow the DOE to circumvent this law by letting it count subcontracts toward this 23 percent goal. In addition, while the law currently sets a goal of 23 percent for prime contracts alone, Domenici's measure would set a cap of 23 percent for the total of prime and subcontracts combined.

As the DOE purchases about $19 billion in goods and services annually, it should be awarding more than $4 billion in prime contracts to small business. This provision would effectively cut DOE small business opportunities in half, according to the Senate and House small business committees.

"Unless Congress acts quickly to protect small businesses, Domenici's provision would set a dangerous precedent allowing other federal agencies to evade their legally-mandated small business prime contracting requirements," Mr. Chapman said. "Currently, 98 percent of all U.S. firms employ fewer than 100 people. Small businesses create more than two-thirds of new private-sector jobs in America and employ 51 percent of all American workers. The federal government awarded $247 billion in total prime contracts in FY 2003, setting a goal of $57 billion for small business."

Sen. Domenici's proposal is section 6023 of H.R. 1268, the Iraq/Afghanistan Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Tsunami Relief of 2005.

Bipartisan leaders of the Senate and House small business committees have strongly objected to the provision. In an April 15 letter to the Office of Management and Budget, they wrote that Domenici's proposal "would require the DOE to reduce its small business dollars by about half ... and would make the DOE unaccountable for compliance with the Small Business Act." They added, "Rushing such a drastic policy reversal through a provision buried in an emergency funding measure is highly improper."

 
 

 
 

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