Statement of A. Jo Baylor
July 15, 2003
Office of Small and Disadvantaged Business Utilization
United States House of Representatives
Subcommittee on Regulatory Reform and Oversight
Committee on Small Business
Good afternoon, Chairman Schrock, Ranking Member Gonzalez and distinguished
members of the Subcommittee on Regulatory Reform and Oversight of
the Committee on Small Business. On behalf of Secretary Mel Martinez
and Deputy Secretary Alphonso Jackson, thank you for inviting the
Department of Housing and Urban Development to testify about HUD's
plans to meet the President's goal of increasing small business
opportunities in federal procurements and HUD's policies regarding
the use of bundled contracts and the treatment of subcontractors
in large contracts. You have asked the Department to discuss specifically
its policies regarding the use of bundled contracts and the treatment
of subcontractors in large contracts.
The Department is especially appreciative of your concerns regarding
the number and size of bundled contracts that have reached record
levels and the corresponding effect this trend has on the diminishing
number of contract opportunities for small businesses.
On May 16, 2001, Secretary Martinez signed HUD's Small Business
Policy which sets high goals for contracting with small businesses
in all preference categories. It stated, " the ultimate goal of
the department, that at least fifty percent of contract dollars
be awarded to small businesses." I am proud to announce that as
of today, HUD has awarded 50 percent of its prime contracts to small
businesses for fiscal year 2003.
The implementation of this policy has required the close cooperation
of all facets of the Department. In response to the President's
initiatives, the Department has taken and is taking a number of
steps to improve small business programs including the following:
Forecast of Contracting Opportunities" was completely revamped
to be more small business friendly by including e-mail addresses
and phone numbers with extensions of contact persons for each
procurement. It also contains detailed information about each
procurements' time frames as well as a better description of each
procurement. Additionally, we update the forecast weekly rather
than yearly so that small businesses are aware of significant
changes to any procurement on a timely basis. These updates as
well as the major document are available electronically and in
hard copy. The "Forecast of Contracting Opportunities and its
readily availability are crucial to small businesses.
Outreach activities have been increased across the country so
that all small businesses, not just those within the beltway,
can take advantage of HUD's procurement opportunities.
makes maximum use of small business programs such as 8(a) awards
as set asides and non-competitive procurements as authorized by
Part 19 of the Federal Acquisition Regulation also known as FAR.
OSDBU, formally named the Office of Small and Disadvantaged Business
Utilization, as authorized under Public Law 95-507, and in accordance
with FAR Part 19, HUDAR 2419.20. Before any contracting action
is approved for processing, OSDBU receives the proposal and conducts
a review to ensure that small businesses have maximum access and
opportunity for prime contracts or subcontracting opportunities.
To ensure that large scale contracts are scrutinized for potential
division into smaller contracts that offer small business opportunities,
OSDBU conducts cost benefit analyses. If a major procurement is
determined to be one which small business can successfully perform,
then the affected program office is requested to reconsider the
OSDBU has also prepared a "Benefit Analysis Procedures for Consolidated
and Bundled Contracts, January 2003" to provide guidance to program
managers to determine whether a procurement is a consolidated
or bundled contract. OSDBU has requested the Integrated Procurement
Team to conduct a benefit analysis for pending award contracts
over $2 million, to determine if the resultant contract will be
identified as a consolidated or bundled contract. If the benefit
analysis does support the definition of a consolidated or bundled
contract, the integrated procurement team must submit a mitigation
plan that will outline the steps to be taken to increase small
business participation under the bundled contract.
important, we have also ensured that all bid solicitation
documents contain the required federal acquisition language for
subcontracting requirements along with HUD's increased policy
HUD's September 9, 2002 revised subcontracting policy also extends
that all possible contracting including Government- wide-agency
(GWAC) contracts to large businesses, GSA schedule awards, all
modifications, extensions and/or options. This policy informs
large businesses submitting a proposal of the agency's current
fiscal year subcontracting goals; however it also states HUD will
consider the contractor's plan for meeting the small business
participation goal as part of the evaluation for award. Criteria
value of the proposed level of small business subcontracting
participation as it relates to the total value of the prospective
contract; as well as
Contractor's historic performance in achieving stated small
business subcontracting objectives.
substantive nature of the work performed by small business
and specific goals for each type of small business.
small business policy also ensures accountability of senior
agency management for improving contracting opportunities for
During FY 2003, HUD has increased OSDBU staff resources by 140%
to facilitate increasing small business participation in HUD
small business contracting opportunities, monitor subcontracting
compliance and providing greater oversight towards mitigating
the impact of contract bundling.
At the beginning of FY 2003, OSDBU reviewed more than 599 contract
actions for HUD's Strategic Procurement Plan.
HUD has implemented several changes to ensure that we identify
HUD trained agency personnel on contract bundling. This training
included the definition of a bundled contract, procedures
to follow if HUD considers awarding a bundled contract (conduct
market research to determine whether consolidation of the
requirement is necessary and justified and procedures that
the Contracting Officer must follow if it is appropriate to
bundle a contract). That contracting officer is also required
to determine the benefits that would be derived from a bundled
Second, the OSDBU developed and implemented Small Business
Review Procedures for Request for Contract Services over $25,000
to ensure that small and small disadvantaged businesses are
given maximum practical opportunities to participate as prime
contractors and subcontractors. HUD has required a contract
bundling review for all task and delivery orders under multiple
award contract vehicles.
Third, HUD has also included OSDBU as a member of the Contract
Management Review Board, which has reviewed more than 2,000
acquisition requests as part of the contract bundling initiative
envisioned by the President. The Contract Management Review
Board is comprised of HUD principal staff and senior executives
and is chartered by the Deputy Secretary to ensure the efficiency,
effectiveness, and integrity of the Department's procurement
plans, operations and results. This underscores the Deputy
Secretary's expectation that the CMRB consider small business
participation during its review of strategic procurement plans
for all major HUD organizations.
Fourth, HUD began using new solicitation provisions to evaluate
the subcontracting proposed by offerors under new, competitive,
negotiated contracts and competitive task orders awarded
under the GSA Federal Supply Schedules. For solicitations
exceeding $500,000, HUD has established a subcontracting
goal of up to 40 percent of the total value of each contract
(including task orders and options) and subsequent modifications.
Also, prime contractors must include in their proposals
subcontracting goals and how they plan to assist HUD in
achieving its small business subcontracting participation
goal of up to 40%. Contractors that are unable to meet the
established goal due to practical considerations must provide
the rationale for the proposed level of subcontracting.
HUD considers the prime contractor's plan as part of the
evaluation for award.
is in the process of evaluating a subcontracting automated reporting/monitoring
system that would allow HUD to monitor prime contractor's compliance
with their subcontracting plans. Also, this system would allow
the agency to evaluate its progress towards meeting its subcontracting
goals in a more efficient manner.
agency plans to measure progress towards mitigating the effects
of any potential bundling of contracts by monitoring all primes
and their subcontracting plans to ensure compliance. At HUD our
subcontracting goal is up to 40% of the total value of each contract
not just whatever the prime contractor elects to include. We want
to ensure that small and small disadvantaged businesses are given
maximum opportunities to participate as prime contractors and
with any program HUD will continue to require identification of
alternative acquisition strategies for the proposed bundling of
contracts above our specified threshold of $ 2,000,000 and require
written justification for the bundling of contracts.
also requires a very stringent market research report on all contracts
above $500,000 in order to identify small businesses available
for contract awards.
Department is committed to increasing opportunities for small
businesses at HUD and strengthening compliance efforts to monitor
subcontracting plans already negotiated with prime contractors.
To further evidence our commitment, I am pleased to let you
know that HUD's Small Business numbers as of July 10, 2003 among
the designated preference groups are as follows:
Business overall - 50%
8(a) - 19%
Small Disadvantaged Business - 8%
Women Owned Small Business- 34%
Veteran Owned Business - 3%
HUB Zone Business - 7%
Commitment to the President's Small Business Agenda.
summary the staff at HUD are committed to the President's procurement
reform initiatives as outlined in the President's Small Business
Agenda. We are committed to ensuring that government contracts are
open to all small businesses that can supply the government's needs.
To accomplish this objective, all federal agencies must be charged
with developing procurement strategies that improve the access of
small businesses to government contracts and avoid unnecessary contract
are committed to working with you, the other federal agencies along
with the small business community to make sure that these necessary
procurement reforms are implemented. At HUD, we are very fortunate,
because we have the sincere commitment of both Secretary Mel Martinez
and Deputy Secretary Alphonso Jackson in this movement towards procurement
Department is committed to increasing opportunities for small businesses
at HUD and strengthening compliance efforts to monitor subcontracting
plans already negotiated with prime contractors. We think that we
can do better and provide greater access to small businesses across
this country to HUD's direct and indirect dollars.
concludes my statement, Mr. Chairman. Thank you again for the opportunity
to appear before this Subcommittee
Content Archived: June 29, 2010