[Congressional Record Volume 153, Number 76 (Wednesday, May 9, 2007)]
[House]
[Pages H4719-H4720]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                             GENERAL LEAVE

  Ms. VELAZQUEZ. Mr. Speaker, I ask unanimous consent that all Members 
have 5 legislative days to revise and extend their remarks and enter 
into the Record extraneous material on the bill under consideration and 
that the CBO cost estimates for H.R. 1873 as reported by the Small 
Business Committee be entered into the Record.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentlewoman from New York?
  There was no objection.
  The text of the Congressional Budget Office Cost Estimate is as 
follows
                                                      May 7, 2007.
     Hon. Nydia M. Velazquez,
     Chairwoman, Committee on Small Business, House of 
         Representatives, Washington, DC.
       Dear Madam Chairwoman: The Congressional Budget Office has 
     prepared the enclosed estimate for H.R. 1873, the Small 
     Business Fairness in Contracting Act.
       If you wish further details on this estimate, we will be 
     pleased to provide them. The CBO staff contact is Matthew 
     Pickford, who can be reached at 226-2860.
           Sincerely,
                                                  Peter R. Orszag.
       Enclosure.
     H.R. 1873--Small Business Fairness in Contracting Act
       Summary: H.R. 1873 would make several changes to the laws 
     that promote and encourage federal agencies to contract for 
     goods and services with small businesses. The legislation 
     would amend the definition of ``bundled contracts'' (the 
     practice of combining two or more contracts into a single 
     agreement) for the procurement of goods and services and 
     require agencies to better justify the need for such larger 
     contracts rather than smaller ones that could be available to 
     small businesses. The federal government currently has a goal 
     of acquiring 23 percent of most goods and services from small 
     business. The bill would increase that goal to 30 percent and 
     apply it to each agency individually, as well as to all 
     agencies collectively. H.R. 1873 also would require the Small 
     Business Administration (SBA) to develop new regulations and 
     new databases and to conduct other efforts to encourage and 
     promote the use of small businesses in government 
     contracting.
       CBO estimates that implementing H.R. 1873 would cost $83 
     million in fiscal year 2008 and $945 million over the 2008-
     2012 period, subject to the availability of appropriated 
     funds. We expect that most of those costs would fall on the 
     largest agencies the Department of Defense, the Department of 
     Energy, and the National Aeronautics and Space 
     Administration--that have not met the current goal for 
     contracting with small businesses. Enacting the bill would 
     have no effect on direct spending or revenues.
       The legislation contains no intergovernmental or private-
     sector mandates as defined in the Unfunded Mandates Reform 
     Act (UMRA) and would not affect the budgets of state, local, 
     or tribal governments.
       Estimated cost to the Federal Government: The estimated 
     budgetary impact of H.R. 1873 is shown in the following 
     table. The costs of this legislation fall within budget 
     function 370 (commerce and housing credit) and all other 
     budget functions that include spending to procure goods and 
     services.

 
----------------------------------------------------------------------------------------------------------------
                                                                       By fiscal year, in millions of dollars--
                                                                    --------------------------------------------
                                                                       2008     2009     2010     2011     2012
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION
 
Administration of Governmentwide Procurement:
    Estimated Authorization Level..................................      100      175      200      240      260
    Estimated Outlays..............................................       80      150      200      240      260
Small Business Administration:
    Estimated Authorization Level..................................        3        3        3        3        3
    Estimated Outlays..............................................        3        3        3        3        3
Total Changes:
    Estimated Authorization Level..................................      103      178      203      243      263
    Estimated Outlays..............................................       83      153      200      243      263
----------------------------------------------------------------------------------------------------------------

       Basis of estimate: For this estimate, CBO assumes that H.R. 
     1873 will be enacted near the end of fiscal year 2007, that 
     the necessary amounts will be appropriated over the 2008-2012 
     period, and that outlays will follow historical spending 
     patterns for contract administration spending. CBO estimates 
     that implementing H.R. 1873 would cost $83 million in 2008 
     and $945 million over the 2008-2012 period, assuming 
     appropriation of the necessary funds.
     Administration of governmentwide procurement
       H.R. 1873 would change the definition of bundled contracts 
     to include the procurement of new and existing goods or 
     services with a value of at least $1.5 million and 
     construction projects worth more than $65 million. Under the 
     bill, agencies would have to justify the use of bundled 
     contracts by evaluating whether or not such work could be 
     performed by small business. The SBA could appeal to the 
     Office of Federal Procurement Policy to determine whether the 
     use of bundled contracts by an agency is justified. In 
     addition, H.R. 1873 would amend current law to increase 
     the goal of using contracts with small businesses from the 
     current governmentwide goal of 23 percent of the value of 
     all contracts to 30 percent. In addition, the goal would 
     apply to each agency individually, as to well as all 
     agencies collectively.
       Based on information from agencies with the most 
     procurement spending and an analysis of SBA reports on 
     governmentwide and small business contracts, CBO expects that 
     implementing the bill would have a significant discretionary 
     cost to review and analyze the need for bundled contracts, 
     prepare additional market research to identify small business 
     concerns able to perform government contracts and provide 
     necessary products, and expand existing mentoring and 
     developmental programs to prepare small business to obtain 
     government procurement opportunities. Based on current 
     contract administration costs and the size and 
     characteristics of those contracts, CBO estimates that 
     complying with H.R. 1873 would increase costs by about $200 
     million annually--or about 7 percent of the roughly $2.5 
     billion that CBO estimates is spent each year to administer 
     the government's procurement contracting efforts. We expect 
     that this increase would occur over a 3-year period. Thus, 
     the estimated costs are phased in between 2008 and 2010. Most 
     of this cost would be incurred to administer additional 
     smaller contracts.
     Governmentwide procurement
       CBO expects that agencies would continue to encourage the 
     use of small business for the procurement of goods and 
     services and seek to meet the goal for such contracts in this 
     legislation. CBO expects, however, that agencies would 
     continue to purchase goods and services at the lowest price 
     available and that small business contracting goals would be 
     met to the extent that doing so would not significantly 
     increase the cost of procuring needed goods and services.
     Small Business Administration
       Several provisions of H.R. 1873 would increase the 
     responsibilities of the SBA to monitor and support small 
     business preferences in government contracting and 
     procurement. Such responsibilities would include reviewing 
     bundled contracts and auditing contractor databases. Based on 
     information from SBA, CBO estimates that implementing those 
     provisions would cost about $3 million per year, subject to 
     the availability of appropriated funds.
       Intergovernmental and Private-Sector Impact: H.R. 1873 
     contains no intergovernmental or private-sector mandates as 
     defined in UMRA and would not affect the budgets of state, 
     local, or tribal governments.
       Previous CBO estimate: On May 7, 2007, CBO also transmitted 
     a cost estimate for H.R. 1873 as ordered reported by the 
     House Committee on Oversight and Government Reform on May 3, 
     2007. The version of the bill ordered reported by the 
     Committee on Oversight and Government Reform would not 
     significantly change the current governmentwide goal for 
     contracting with small businesses, and thus, CBO expects it 
     would be less costly to implement.
       Estimate prepared by: Federal Costs: Matthew Pickford and 
     Susan Willie; Impact on State, Local, and Tribal Governments: 
     Elizabeth Cove; Impact on the Private Sector: Craig 
     Cammarata.

[[Page H4720]]

       Estimate approved by: Peter H. Fontaine, Deputy Assistant 
     Director for Budget Analysis.

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