The federal government's pushto put more contracts into the hands ofsmall businesses has been a headwind for large companies that haveeither lost work to the set-aside program or have seen big-dollar contractsbroken up.

And Science Applications InternationalCorp. CEO Tony Moraco told analysts ona second-quarter earnings call Thursday that his company is "working a lotwith the congressional leaders and the folks in the Pentagon and theadministrators to try and address that."

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SAIC CEO Tony Moraco toldanalysts on a second-quarter earnings call Thursday that his… more

Joanne S. Lawton

Moraco said the main remedythat his company and others in the industry are proposing is for federalagencies to score subcontracting dollars against agency goals of 23 percent.Currently, only prime dollars count toward that tally.

If we're successfulcollectively in the acquisition community to give the acquisition officialscredit for not just prime contract but the subcontract work, we think that willreduce some of the pressure to carve out small business set-asides and providea more full-and-open competitive landscape going forward," Moraco said.

The McLean-based governmentservices company has felt this small business pressure in two ways.

One instance includes "afull set-aside where incumbent work has been converted to a small businessprime set-aside," Moraco said — which forces SAIC (NYSE: SAIC) to be selectiveabout which small businesses it serves as subcontracting partner and almostalways has an impact on top line.

The other case is where a largecontract is broken up into smaller pieces when it is recompeted, with some ofthat going to small businesses — ultimately shrinking the size of the award forSAIC.

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