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Given the broad language of the pertinent sections of the

procurement regulations which implement the Small Business Act it 15 not surprising that such a high percent of contracts are set aside for small businesses. For example, the Defense Acquisition Regulations, in addition to automatically setting aside all construction contracts of $2 million or less, also requires that all other contracts be set aside if there is a reasonable expectation that offers will be received from at least two responsible small businesses and that the award will be made at a "reasonable" price. In today's market, it is not unusual for 25 or more contractors to bid on available construction contracts, and not unusual for even the highest of the 25 bids to be below the government's estimate. Given current economic conditions, these regulations could literally require that 100 percent of available contracts be set aside for small businesses. Limiting open competition in such a manner undermines the responsibility of federal agencies as fiduciary of the public funds placed in their trust. Whenever open competition is restricted there is no assurance that the taxpayer will be receiving the highest quality product for the lowest possible price.

A more glaring example of the affect of limiting competition is the 8(a) program. In this program the entire competitive procurement process is circumvented and competition is totally eliminated since contracts are awarded on a sole source negotiated basis. There is no question that this program increases costs to the government and, of course, the taxpaying public. Although there is rarely a comparison made of the negotiated 8 (a) price and a competitively bid price, AGC has been able to develop some comparisons. The following four projects were negotiated with 8(a)

firms and for one reason or another were eventually competitively

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The total savings to the government by awarding these projects to the low bidder after open competition compared to awarding them on a sole source negotiated basis was $1.4 billion. There is no doubt that these increased costs are indicative of the overall costs of the 8(a) program.

Not only does this program increase costs to the government and the tax-paying public, but it undermines the normal process by which firms enter the industry and remain in business. Providing a protected market for a small firm does not help it to become a competitive business but rather ensures that it will remain indefinitely in a non-competitive federal cacoon. AGC believes that the recent action by SBA to remove 23 large businesses from the 8(a) program underscores this point. The reaction of these 23 firms to the move were protests that they were poorly prepared to enter the

open competitive market. Most of these firms had been in the program for years and some since its inception and yet they were still unprepared for competition. AGC applauds this move by SBA and the recently promulgated Fixed Program Participation Terms but we feel that the entire concept as it applies to construction needs be reexamined.

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AGC believes that there is no need for any type of special preference programs in the construction industry and AGC recommends the elimination of these programs in the construction industry. The recent trend in the Congress has been to require "sunset reviews" of federal programs to determine if these programs are necessary and if they should be continued. AGC calls on this Committee to institute a "sunset review" of the use of the small business set aside and 8(a) programs in the construction industry. Such review should be instituted by a one year moratorium on the use of these programs in construction. gathering mechanisms would remain in place during this period and would provide the basis for a meaningful comparison between awards to small businesses in the open competitive arena as compared to awards to small businesses in a market restricted by these special preference programs. We are convinced that such a test will show that there is no need for these programs in the construction industry.

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SUGGESTIONS FOR LEGISLATIVE AGENDA

NATIONAL SMALL BUSINESS GOVERNMENT CONTRACTORS ASSOCIATION

1. Rulemaking.

The first issue of concern to our members regards pro-
Presently, procuring agencies are exempt

curement rulemaking.

under the Administrative Procedure Act, 5 U.S.C. §553, from the requirement to publish proposed regulations in the Federal Register. Procuring agencies contend that since this exemption exists, they are not required to comply with the requirements of the Regulatory Flexibility Act. This Act was intended to require agencies to consider the impact on small business of their rulemaking efforts and to increase small business participation in these efforts.

We support an amendment to the Small Business Act which would require procuring agencies, notwithstanding any other law, to publish a general notice of proposed rulemaking relating to Government contracts or subcontracts. Such amendment would provide essential advance notice to small business organizations, such as NSBGCA, which would be able to review these proposed regulations, assess their impact on its constituents and provide meaningful comments to the procuring agency. Small businesses would then have the opportunity to contribute the benefit of their experience as a vital part of the entire Federal procurement pro

cess.

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The second issue of concern to NSBGCA members regards

the publication of proposed procurement actions in the Commerce Business Daily. NSBGCA was pleased to see S.272, which amends the Small Business Act, voted favorably out of this Committee and passed, with some amendments, by the full Senate. It is vital to small businesses who engage in federal government contracting that this bill become law. Too often small businesses have neither received sufficient notice of the availability of procurements nor sufficient time for bid preparation. Small businesses cannot be meaningfully involved in the procurement process if they do not have notice of the proposed procurement and the time to bid. NSBGCA therefore urges that steps be taken to ensure that S.272 becomes law.

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The Association hears a rising crescendo of complaints from small businesses that they are unable to participate in Government procurements because of problems obtaining technical data. The problem is particularly pronounced among contractors with the Department of Defense.

Our investigation shows that this is a complex issue,

with many parts. Accordingly, rather than propose specific legislation at this time, we suggest that the Committee consider holding oversight hearings into the area. Such hearings should delve into the questions of what technical data and data rights the Government has in stock now and how they are accounted for; current and proposed technical dissemination policies and their impact on small businesses; technical data acquisition policies

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