Clinton order gives small biz federal boost

Executive Order on Opportunities for Disadvantaged Businesses

President Clinton issued an executive order this month to boost small and

disadvantaged businesses' share of the federal contracting market and to

emphasize agencies' individual responsibilities.

The order relies on the traditional method of funneling federal business

to small and disadvantaged companies by asking agencies to set goals for

the percentage of their contracting dollars that will go to small, woman-

and minority-owned businesses, including a new goal that 5 percent of prime

contractors must be small, disadvantaged businesses. But Clinton also set

requirements that include asking agencies to train contracting and program

personnel and that require agencies to submit certain types of contracts

for reviews.

Clinton's order also gives the Office of Management and Budget oversight

over the process in an effort to meet complaints from the small-business

community. Complaints include the fact that there is no way to prove that

agencies have met the percentage goals they have set and the perception

that the Small Business Administration cannot enforce its regulations.

"There is a perception that [SBA] needs some help," said Sally Katzen,

deputy director for management at OMB.

Perception is the name of the game when it comes to small-business contracts,

according to many observers. Federal and industry officials disagree about

whether small businesses have been helped or hurt by procurement reform,

whether the total federal contract dollars and percentage of federal business

awarded to small and minority-owned businesses is increasing or decreasing

(see box), and whether small- business subcontractors are getting their

share of the work and money that prime contractors report to agencies.

That last point has been so contentious that Clinton specifically made

a note of it in his executive order, including a reiteration of the penalties

for false reporting and the intent to use those penalties to persuade prime

contractors and agencies to report accurately, said Linda Williams, associate

administrator for policy planning and liaison in SBA's Office of Government

Contracting and Business Development.

Under the order, agencies must submit a long-term plan to the OMB director

within the next three months on how they will comply with the order's requirements.

Each agency also will annually assess its efforts to comply, submitting

a report to SBA that OMB will then review. Although Katzen would not say

whether OMB would start withholding budget dollars to agencies if the reviews

are negative, she did say the reviews would be a factor.

"OMB's involvement means that an agency will take this even more seriously

than if it were SBA alone," she said.

"It's nice to hear that people are finally listening to what we've been

saying out in the community, which is unless there is buy-in from the top,

this isn't going to happen," said Valerie Perlowitz, president and chief

executive officer of Reliable Integration Services Inc. and chairwoman

of the Industry Advisory Council's small, minority- and woman-owned business

committee.

SBA is encouraged by OMB's new role because the review of strategic

plans will help enforce the requirements, Williams said.

But other requirements in the order will require more day-to-day work

for federal contracting officers and vendors. Under the requirements, agencies

must initiate training for procurement and program officials on federal

and agency policies regarding the use of small and disadvantaged businesses

and designate a high-level administrator to oversee agency efforts.

Agencies also will have to submit to SBA any proposals for contract

bundling, combining several small contracts into a large contract that may

make it difficult for small businesses to bid on, Williams said. A study

by Demo—-crats on the House Small Business Committee that was released

in September noted that bundling caused the overall number of small-business

contracts to decrease at almost every agency.