Over the

past quarter century, the Defense Department has been testing a contracting

program that was intended to help small businesses obtain a larger share of

federal work. However, Pentagon officials and small business leaders say the

initiative has not only failed to help small contractors, it's actually hurt

them.

In other

words, neither those running the program nor those it was supposedly intended

to help believe the program works. Thus, many expected the experiment to come

to an end when its most recent congressional approval expires on Wednesday.

But that's

not happening.

In what

critics are calling another victory for Washington's massive contracting

darlings at the expense of small businesses, Congress has approved

legislation extending the contracting initiative, called the Comprehensive

Subcontracting Plan Test Program (CSPTP), for another three years. It's the

eighth time the program has been revived.

Under the

rules of the test program, large contractors are permitted to submit

company-wide or division-wide small-business subcontracting doctrines that

apply to any of the firm's federal contract proposals. Outside the program,

prime contractors must submit a unique subcontracting plan for each bid,

including which small firms they intended to partner with and how much money will

flow through to the partners.

In the

legislation authorizing a two-year test back in 1989, lawmakers said CSPTP was

meant to "determine if comprehensive subcontracting plans on a corporate,

division or plant-wide basis would lead to increased opportunities for small

businesses."

By all

accounts, they have done precisely the opposite.

Maureen

Schumann, a Defense Department spokeswoman, said recently

that the program "has led to an erosion of [the agency's] small business

industrial base." And while the department has yet to publish any formal

reports on the program's results, she said the Pentagon's internal analysis

suggests that, while it has resulted in savings for the participating large

contractors — including local behemoths such as Lockheed Martin, Northrop

Grumman and General Dynamics — there is no evidence that the CSPTP has

benefited small companies.

During

negotiations over the program earlier this year, Schumann said the Defense

Department was in favor of letting the initiative expire. It's the first time

the agency has openly expressed its opposition to the program.

Many small

business groups have criticized the initiative, as well, and this month, the

Government Accountability Office published a report stating that the

comprehensive plans make it difficult and sometimes impossible to track subcontracting

dollars.

"From what

we heard, the small business community was not in favor of extending the

program," Jared Leopold, a spokesman for the Senate Small Business and

Entrepreneurship Committee, wrote in a recent e-mail.

So then

why did lawmakers extend it again?

The bill

authorizing a three-year extension of the program originated in the House Armed

Services Committee, which added some new reporting requirements intended to

shed additional light on the test program moving forward. In a report filed by

the committee about the proposed extension, lawmakers acknowledged "after

nearly 24 years since the original authorization of the program, the test

program has yet to provide evidence that it meets the original stated goal of

the program."

A

spokesperson for the committee declined to speak on the record about why the

program was tweaked and extended rather than simply allowed to expire. However,

a staff member of the House Armed Services Committee familiar with the

negotiations, who spoke on the condition of anonymity because the member was

not authorized to speak publicly, explained that the three-year revival was

meant to serve as an off ramp, so to speak, allowing large

contractors participating in the CSPTP to update their reporting

procedures to meet the subcontracting requirements that apply to contractors

outside the program.

The idea,

the staff member said, was to wind down the program gradually, rather than

bringing it to an abrupt halt at the end of this year.

One small

business lobbying group says the reauthorization was pushed through under a

veil of secrecy that should have already been removed.

Steven

Godfrey, a spokesman for the California-based American Small Business League,

echoed the Defense Department by saying that the lone benefactors of the

program appear to be large contractors; however, a simpler bidding process

isn't the only perk, he said. Under the law, CSPTP participants are exempt from

paying damages if they fall short of statutory small-business subcontracting

requirements.

To view

full Washington Post article, click here: http://www.washingtonpost.com/business/on-small-business/businesses-pentagon-agree-this-program-doesnt-work-congress-saved-it-anyway/2014/12/30/80d72aa0-9066-11e4-ba53-a477d66580ed_story.html

Over thepast quarter century, the Defense Department has been testing a contractingprogram that was intended to help small businesses obtain a larger share offederal work. However, Pentagon officials and small business leaders say theinitiative has not only failed to help small contractors, it's actually hurtthem.

In otherwords, neither those running the program nor those it was supposedly intendedto help believe the program works. Thus, many expected the experiment to cometo an end when its most recent congressional approval expires on Wednesday.

But that'snot happening.

In whatcritics are calling another victory for Washington's massive contractingdarlings at the expense of small businesses, Congress has approvedlegislation extending the contracting initiative, called the ComprehensiveSubcontracting Plan Test Program (CSPTP), for another three years. It's theeighth time the program has been revived.

Under therules of the test program, large contractors are permitted to submitcompany-wide or division-wide small-business subcontracting doctrines thatapply to any of the firm's federal contract proposals. Outside the program,prime contractors must submit a unique subcontracting plan for each bid,including which small firms they intended to partner with and how much money willflow through to the partners.

In thelegislation authorizing a two-year test back in 1989, lawmakers said CSPTP wasmeant to "determine if comprehensive subcontracting plans on a corporate,division or plant-wide basis would lead to increased opportunities for smallbusinesses."

By allaccounts, they have done precisely the opposite.

MaureenSchumann, a Defense Department spokeswoman, said recentlythat the program "has led to an erosion of [the agency's] small businessindustrial base." And while the department has yet to publish any formalreports on the program's results, she said the Pentagon's internal analysissuggests that, while it has resulted in savings for the participating largecontractors — including local behemoths such as Lockheed Martin, NorthropGrumman and General Dynamics — there is no evidence that the CSPTP hasbenefited small companies.

Duringnegotiations over the program earlier this year, Schumann said the DefenseDepartment was in favor of letting the initiative expire. It's the first timethe agency has openly expressed its opposition to the program.

Many smallbusiness groups have criticized the initiative, as well, and this month, theGovernment Accountability Office published a report stating that thecomprehensive plans make it difficult and sometimes impossible to track subcontractingdollars.

"From whatwe heard, the small business community was not in favor of extending theprogram," Jared Leopold, a spokesman for the Senate Small Business andEntrepreneurship Committee, wrote in a recent e-mail.

So thenwhy did lawmakers extend it again?

The billauthorizing a three-year extension of the program originated in the House ArmedServices Committee, which added some new reporting requirements intended toshed additional light on the test program moving forward. In a report filed bythe committee about the proposed extension, lawmakers acknowledged "afternearly 24 years since the original authorization of the program, the testprogram has yet to provide evidence that it meets the original stated goal ofthe program."

Aspokesperson for the committee declined to speak on the record about why theprogram was tweaked and extended rather than simply allowed to expire. However,a staff member of the House Armed Services Committee familiar with thenegotiations, who spoke on the condition of anonymity because the member wasnot authorized to speak publicly, explained that the three-year revival wasmeant to serve as an off ramp, so to speak, allowing largecontractors participating in the CSPTP to update their reportingprocedures to meet the subcontracting requirements that apply to contractorsoutside the program.

The idea,the staff member said, was to wind down the program gradually, rather thanbringing it to an abrupt halt at the end of this year.

One smallbusiness lobbying group says the reauthorization was pushed through under aveil of secrecy that should have already been removed.

StevenGodfrey, a spokesman for the California-based American Small Business League,echoed the Defense Department by saying that the lone benefactors of theprogram appear to be large contractors; however, a simpler bidding processisn't the only perk, he said. Under the law, CSPTP participants are exempt frompaying damages if they fall short of statutory small-business subcontractingrequirements.

To viewfull Washington Post article, click here: http://www.washingtonpost.com/business/on-small-business/businesses-pentagon-agree-this-program-doesnt-work-congress-saved-it-anyway/2014/12/30/80d72aa0-9066-11e4-ba53-a477d66580ed_story.html

The massive fiscal 2015 defenseauthorization bill that cleared Congress on Friday renews for three years anobscure small business program that some industry advocates and the Pentagonitself had argued should be terminated.

Known as the ComprehensiveSubcontracting Plan Test Program, it was set up in 1990 to "determine ifcomprehensive subcontracting plans on a corporate, division or plant-wide basis[instead of for individual contracts] would lead to increased opportunities forsmall businesses," according to its website.

But critics have noted that the programhas yet to publish a single report or data set from the major contractors suchas Lockheed Martin Corp. and Northrop Grumman Corp. And small businessadvocates have charged that its existence is actually costing themopportunities by allowing the major firms leeway to get around thegovernmentwide goal of awarding 23 percent of contract dollars to smallbusiness.

This summer, Rep. Sam Graves, R-Mo.,chairman of the Small Business Committee, pressed for provisions in theNational Defense Authorization Act to "increase transparency andaccountability" in the program. Senators on the Armed Services Committee wereless enthusiastic, calling for an end to the program barring a new endorsementfrom the Defense secretary.

The final bill, which President Obama isexpected to sign, extends the program for three years, to December 31, 2017,but it requires contractors to report greater detail on subcontracting morefrequently. A Pentagon spokeswoman in July had told Government Executive thatthe program, while well intended, "has not produced quantifiable results."

A longtime opponent of the program,Lloyd Chapman, president of the Petaluma, Calif.-based American Small BusinessLeague, is preparing to file suit for an injunction to halt the program. "Thisis the pinnacle of corruption in government," he told Government Executive,citing criticism of the program from outgoing House Armed Services CommitteeChairman Buck McKeon, R-Calif.

Chapman's group has gone to court seekingto force release of the program's results, which, he said, "consist of six toeight numbers on the company goals and progress that will show that thePentagon has lied to Congress and public for 25 years on how much contracts goto small business."

One of Graves' proposals that did notmake it in the final bill was his plan to raise the small business contractinggoals for each agency from the current 23 percent of contract dollars to 25percent.

Other notable contracting and managementprovisions in this year's NDAA highlighted by Graves and industry groupsinclude:

• A reiteration of Congress' intent not to accede to the Defense Department's request for another round of Base Closure and Realignment commission recommended cuts in domestic defense facilities;
• A reorganization of the Office of the Secretary of Defense  to combine the deputy chief management officer and the chief information officer into a new title for the third in command called "undersecretary of Defense for business management and information;"
• A requirement for a new report to Congress on the status of implementation of various information technology acquisition reforms to take better advantage of existing commercial products;
• A clarification of a ban on reverse auctions of single-bid contracts except under well-defined circumstances;
• An allowance for more sole-source contracts to go to women-owned small business;
• A prohibition on reimbursement of contractors for costs of complying with congressional investigations that eventually lead to a conviction or liability or suspension;
• A plan to improve data on bundled or consolidated contracts  by requiring the Small Business Administration, the Office of Federal Procurement Policy and the General Services Administration to recommend changes to mitigate ill-effects of such contracts;  and,
• Authority to provide small businesses with new education on export opportunities under the Arms Export Control Act.

To view full article, click here: http://www.govexec.com/defense/2014/12/defense-bill-extends-disputed-small-business-program/101304/