[Congressional Record (Bound Edition), Volume 151 (2005), Part 15]
[Senate]
[Pages 19973-19974]
[From the U.S. Government Publishing Office, www.gpo.gov]




           SMALL BUSINESS CONTRACTING PROVISIONS IN H.R. 3673

  Ms. SNOWE. Mr. President, as chair of the Senate Committee on Small 
Business and Entrepreneurship, I rise today to bring to the attention 
of the Senate a proposal which was included in the hurricane 
supplemental bill at the request of the Office of Management and Budget 
and the Department of Defense. I wholeheartedly supported the 
supplemental bill and the funding it would provide to the individuals, 
families, and small businesses that experienced so much suffering in 
this terrible tragedy. Their plight should not be prolonged by delays 
in delivery of much-needed assistance funding. However, I believe that 
this particular provision would seriously harm small businesses in the 
Gulf Coast region and all across America--by excluding them from 
Government contracts and subcontracts for the relief and rescue 
projects. While I appreciate the need to get supplies and services 
quickly in order to save lives, the provision at issue is not tailored 
to lifesaving, and we need to exercise caution in working around laws 
aimed at helping small business, in the rush to pass emergency 
appropriations.
  The OMB's proposal extends to hurricane relief and rescue operations 
that the emergency procurement authority previously approved by 
Congress for military contingency operations in cases of attack by the 
weapons of mass destruction, war, or national emergency. Most 
importantly, the proposal raises the so-called ``micro-purchase 
threshold'' to $250,000. These measures would abolish Small Business 
Act set-asides for U.S. small businesses and the Buy American Act 
preferences for U.S. manufacturers on all rescue and relief contracts 
for years to come, potentially undermine the Stafford Act preference 
for local business, individuals, and organizations in contracts for 
recovery from major disasters contained

[[Page 19974]]

in the Stafford Act, and encourage waste, fraud, and abuse in Federal 
contracts and in the reconstruction efforts by drastically increasing 
the ability of low-level Government officials to make credit card 
charges.
  The micro-purchase threshold was created in the 1990s to enable 
Government officials to quickly make limited purchases with Government 
credit cards and without regards to competition, small business, or 
other preference requirements. Congress strictly limited the current 
micro-purchase threshold amounts to $2,500 for all acquisitions, except 
to $2,000 for certain construction projects and to $15,000 for U.S.-
based military contingency operations and WMD response and recovery 
efforts.
  This increase in the micro-purchase threshold was carefully adopted 
by Congress just 2 years ago, in November 2003, in response to the 9/11 
and the global war on terror. The 2003 increase was implemented subject 
to strict limitations to ensure that contracting accountability and 
small business requirements are not supplanted--limitations which are 
absent from the language in this bill.
  The OMB plan in this bill increases the micro-purchase threshold to 
$250,000, a hundredfold increase. Without appropriate protections, such 
a massive increase distorts Congressional intent for the micro-
purchases and opens doors to greater credit card contracting abuse. 
Government purchase card abuse has been the subject of investigative 
and legislative actions by the Senate Homeland Security and 
Governmental Affairs Committee and by the Senate Finance Committee. 
Indeed, the leadership of these Committees, including Chairmen Grassley 
and Collins as well as ranking member Lieberman, already made known 
their opposition to the OMB proposal. The Government Accountability 
Office estimates that the Federal Government could have saved $300 
million a year by imposing greater accountability on the use of 
Government purchase cards. These losses stand to balloon along with the 
huge increases in credit card spending called for in this proposal. A 
massive expansion of the micro-purchase threshold could overwhelm the 
fragile accountability mechanisms for this program.
  Most importantly, in addition to the high potential for waste and 
abuse, raising the micro-purchase threshold from its current levels to 
$250,000 obliterates small business contracting set-asides for 
contracts that by law and by tradition have been going to small firms. 
The statutory ``small business reserve'' in the Small Business Act sets 
aside for small business concerns all Federal contracts in the amounts 
below $100,000 and above the micro-purchase threshold, typically, 
$2,500. Contracts at $100,000 or less are uniquely suitable for 
performance by small firms. Excluding them now makes no sense.
  Further, the DoD/OMB proposal for extension of the emergency 
procurement authority to Hurricane Katrina improperly expands the scope 
of this authority to future ``relief'' contracts and to contracts with 
only distant relevance to Hurricane Katrina. As I already mentioned, 
the emergency procurement authority established a micro-purchase 
threshold increase to $15,000, provided the purchases are ``directly 
related'' to military contingency operations or WMD recovery. Extension 
of this authority would take contracts ranging from $15,000 to $2,500 
out of the statutory ``small business reserve'' under the Small 
Business Act. In addition, this authority would also allow large firms 
to exclude small businesses from subcontracts by treating all Katrina-
related contracts as purchases of commercial items. Taking work away 
from small businesses as part of disaster relief is not the message we 
want to send.
  Federal small business contracts are a vital source of business and 
jobs creation for small firms. Prior to Katrina, small business in 
disaster-affected States used to received a significant boost from 
Federal contracts. Retaining, renewing, and enhancing these small 
business contracts will be critical for successful reconstruction of 
the Gulf Coast region. For example, in Fiscal Year 2003, Alabama small 
businesses received $2.05 billion in Federal contracts, including $191 
million in construction contracts. Small businesses in the State of 
Mississippi received $419 million in Federal contracts, with over a 
quarter of that amount, $134 million, in construction contracts. 
Finally, Louisiana received $712 million in small business contracts, 
including $242 million in construction. Small business men and women in 
these States have the experience and the wherewithal to join hands in 
the relief and reconstruction of their communities. What they need is a 
chance to work and rebuild their businesses.
  We have an obligation to help the small business sector of the Gulf 
Coast. I am very concerned about the import of the OMB contracting 
provision, and I will work to ensure that this provision is limited and 
modified in future legislation to ensure that it provides the right 
balance between speed and fairness in Government contracts.

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