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Interact Question # 20 - Medium-Sized Business (MSB) Contractors

GSA Blog submission by John Cavadias, Alliant 2 Procuring Contracting Officer (PCO)

QUESTION (Summarized from submitted questions to alliant2@gsa.gov):

Will GSA consider establishing a Medium-sized business (MSB) Alliant 2 GWAC, or will GSA consider easing or reducing the proposal and evaluation criteria factors on the Alliant 2 unrestricted solicitation?

COMMENTS (Summarized from submitted comments to alliant2@gsa.gov):

MSB contractors cannot compete with the few large IT contractors that dominate the federal market.  MSBs are getting squeezed out between small business set-asides and larger businesses.


Background: - The Alliant 2 Acquisition Team entirely understands that every federal contractor is seeking a competitive advantage to obtaining a federal contract.  MSBs, however, find themselves in a difficult position, too large to qualify as small businesses eligible for special government privileges and too small to be among the well-known major contractors.  Some of you may be familiar with the recent political history of industry and congressional representatives advocating set-aside MSBs for federal contracts.  But for those who are not familiar, I provide a concise synopsis below.

Rep. Gerry Connolly (D-Va.) originally worked and introduced the Small Business Growth Act (H.R. 1812) in 2011. The proposed policy was to provide small businesses with a growth path once they exceed the small business size standard for their industry where GSA would pilot the MSB program.  Although the House passed the language for the MSB pilot program in 2012, the provision was dropped in 2013.  Some of the strongest criticism noted against the Bill was the potential detriment to small business diverting contracting opportunities from them, i.e. “Small businesses may be inadvertently harmed by the creation of a mid-size business program,” Committee Chairman Rep. Sam Graves (R-Mo.). Other challenges included, (1) Finding an agreeable uniform definition of the term “mid-tier” in federal contracting; (2) Creating and enforcing a mechanism to structure Requests for Proposals (RFPs) in a manner that would allow mid-tier firms to effectively compete for them, e.g., subcontracting requirements (creating tensions with large businesses and SBA policy to subcontract with small business, joint venture issues, contract bundling), and the basis for a Contracting Officer choosing a Mid-tier over a small business (Rule of 2); and, (3) High taxpayer costs to implement a new MSB program. 

Of course, there were many arguments raised to support the MSB Program, including (1) Strengthening the MSB industrial base; (2) Increasing competition, thus, reducing cost/price of contracts; and, (3) Preservation of jobs (since the acquisition of MSBs to large businesses cuts jobs). 

Answer to Question: - As of today, the federal government cannot legally set-aside any procurements for MSBs, and as such, cannot make any special considerations for MSBs that would provide them with any special competitive advantage to winning a contract. This issue is not resolvable or addressable within any local federal agency, including GSA. The issue remains in the open public forum for MSBs to address with their appropriate legislative bodies and advocate for desired changes. Therefore, although the Alliant 2 Acquisition Team is empathetic over MSBs challenges in the federal marketplace, the current government position on offeror proposal requirements shall stand firm: Recently graduated small businesses and all Other than Small Business concerns will compete fairly and unequivocally under the same solicitation evaluation factors and criteria.



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