STATEMENT
of the
The Honorable Nydia Velázquez, Chairwoman
Committee on Small Business
“Emerging Procurement Methods”
Thursday, March 6, 2008

This morning the Committee will continue its examination of small businesses’ role in the federal marketplace.  Today, we will review the effect of emerging contracting methods, which are being driven by the decline in the federal acquisition workforce.

Just 25 years ago, there were more than 135,000 contracting personnel.  Now it has shrunk to only 85,000 staff – a decline of more than half.  This has occurred while the dollar amount of contracts has increased by nearly $200 billion.

Clearly something has to give – and unfortunately, it is small businesses that are left to suffer the most.  The result of these dramatic shifts has been more pressure on agencies to consolidate contracts and employ automated IT-driven procurement systems.  People keep saying that this is easier – but for who? Not easier for small business, not easier for the taxpayer.  It is just easier for the bureaucrat.  And that should not be driving federal procurement policy.

The truth is that we hear a lot about the problems of contract bundling – but, the increased reliance on these new approaches is just as significant for small businesses.  Many can’t even gain access to these systems.  And when they do – they are forced to compete with larger firms.  Similar to the big box retailers putting the local hardware stores out of business, these new methods are creating an uneven playing field for small businesses.

Three of the major methods that have been growing in significance are GSA schedules, reverse auctions, and the e-Travel initiative.   Some of them are unproven – and may only be suitable for certain types of purchases.  Others create administrative nightmares that cause small businesses to incur unnecessary costs.   And, some of these approaches may run counter to federal law – and may be providing taxpayers with a bad deal.

Taken together, these new processes are creating roadblocks for small firms as they try to navigate the federal procurement system.   If left unchanged, this could lead to a marketplace without the contributions of small business – ingenuity and innovation.  This will result in a less diverse supplier base – leaving taxpayers paying more for less.
It is important that those small businesses are not being put at a competitive disadvantage simply because of the adoption of new systems. These practices must be modified to provide greater equity and fairness for small firms.  This would help ensure that the government is getting the best value.

After all, what good is a one-dollar hammer that falls apart after its first use – and then you have to purchase another one?  That is not the lowest cost and it is not the best deal for the taxpayer.

With this hearing, these new procurement methods will be examined in a more systematic manner than has been done before. Each new approach should be evaluated as is done with federal regulations.  What is its impact on small businesses? How will their ability to compete be affected?  Going forward, these questions must be asked, and the pros and cons weighed, before any new procurement method is implemented.

Small businesses are the bedrock of the economy and must be given the opportunity to compete in the federal procurement marketplace.  Methods that obstruct their participation will only serve to reduce the government’s access to innovative goods and services.  I thank the witnesses for being here today and look forward to all of your testimony.