Businesses, Pentagon agree this program doesn't work. Congress saved it anyway.


Businesses, Pentagon agree this program doesn't work. Congress saved it anyway.

Small business group says shady tactics were used to conceil program's flaws

By J.D. Harrison

The Washington Post

December 30, 2014

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


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

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


By all

accounts, they have done precisely the opposite.


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.


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


"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."


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

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.


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


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