[Congressional Record (Bound Edition), Volume 151 (2005), Part 21]
[Senate]
[Pages 28498-28500]
[From the U.S. Government Publishing Office, www.gpo.gov]




                       DEFENSE AUTHORIZATION ACT

  Ms. SNOWE. Mr. President, as chair of the Senate Committee on Small 
Business and Entrepreneurship, I rise in support of amendment No. 2529 
which was unanimously adopted into S. 1042, the National Defense 
Authorization Act for fiscal year 2006. This amendment will restore 
much needed transparency in the small business contract goaling program 
administered by the Small Business Administration, promote 
international competitiveness of our Nation's small businesses, and 
ensure fair access of small businesses to Federal prime contracts and 
subcontracts for performance overseas.
  Currently, many small contractors play a critical role in maintaining 
a strong domestic defense industrial base and supporting the Global War 
on Terror. Yet many of these small firms face serious obstacles 
obtaining prime contracts and subcontracts to perform internationally 
the work they are already performing so ably domestically. Simply put, 
this amendment would clarify that the Small Business Act applies to 
Federal overseas contracts.
  In the 2001 report, ``Small Business: More Transparency Needed in 
Prime Contract Goaling Progam,'' the Government Accountability Office 
criticized the Small Business Administration, SBA, the Department of 
Defense, DOD, and other agencies for excluding contracts from the 
calculations of small business contracting achievements toward the 
statutory goals established in the Small Business Act based on tenuous 
rationales. On its face, the Small Business Act applies to all Federal 
procurements, including all overseas contracts. However, recently there 
has been some resistance to implementing the Small Business Act as 
written. Some agencies, like the Department of Defense, go as far as to 
exempt all overseas-related contracts from the act. Others, such as the 
Department of State, exempt contracts for performance abroad if they 
are also awarded abroad but not if they awarded domestically. As a 
result, prime contracting and subcontracting requirements of the Small 
Business Act are rendered unenforceable with regard to many military 
and reconstruction projects, and fair access for small businesses is 
seriously diminished.
  Based on fiscal year 2000 dollars, the GAO found that approximately 
$8.4 billion in overseas defense contracts were excluded from counting 
toward the Federal Government's small business performance. Under the 
Small Business Act, $1.93 billion of these contracts should have been 
awarded to small businesses. The SBA's and the DOD's rationale for 
excluding overseas contracts was that small firms have little chance of 
competing for these contracts in the first place.
  The excuse given by the SBA and other agencies to the GAO in 2001 did 
not hold then, and it surely does not hold now. With an expanded 
Federal presence in recent years, the dollar volume of overseas 
contracts has been steadily increasing, and small firms have been 
playing a substantial part in supporting Federal operations abroad. 
Indeed, every major contract for the reconstruction for the 
reconstruction of Iraq funded by the $18.4 billion in 2003 emergency 
supplemental appropriations has a minimum 10 percent requirement for 
small business subcontracting and a 23-percent subcontracting goal. Our 
experience with Iraq reconstruction proves that American small 
businesses are capable to perform overseas even in the most dire 
circumstances.
  Congress clearly meant what it said in the Small Business Act that 
procurement goals must be calculated against ``total purchases'' of the 
Federal Government. My amendment reaffirms congressional policy that 
the Small Business Act applies to all contracts and subcontracts 
regardless of geographic place of award or performance. This amendment 
directs Federal agency heads with jurisdiction over acquisitions to 
ensure that all contracts and subcontracts, regardless of geography, 
are covered by the Small Business Act. Under my amendment, agencies 
will be able to give due note and recognition to the specific 
requirements and procedures of any other Federal statute or treaty, 
such as the provisions governing foreign military sales, which may 
exempt any Federal prime contract or subcontract from the application 
of the Small Business Act in whole or in part.
  I urge my colleagues to help keep America's defense industrial base 
and America's global competitiveness strong by supporting fair access 
to prime contracts and subcontracts by our small businesses.
  Mr. President, as chair of the Senate Committee on Small Business and 
Entrepreneurship, I rise today in support of my amendment No. 2530 to 
S. 1042, the National Defense Authorization Act for fiscal year 2006, 
to promote fair access to multiple-award contracts. I am pleased that 
this amendment was adopted unanimously, and I urge my colleagues to 
support it in conference. Since the enactment of the Federal 
Acquisition Streamlining Act, FASA, in 1994, Federal agencies are 
increasingly relying on contracts and acquisition services offered by 
other agencies, specifically, the General Services Administration's 
Multiple Award Schedule/Federal Supply Schedule contracts, MAS/FSS, 
Government-wide acquisition contracts, GWACs, and multiagency 
contracts, MACs, to purchase goods and services. These contracting 
mechanisms were authorized by Congress in the belief that they would 
encourage the Government to buy commercially available products and 
services and would open the Federal contracting market to businesses, 
especially small businesses, which have previously focused only on the 
private, commercial markets. Essentially, these indefinite-delivery, 
indefinite-quantity contracts are framework agreements on prices and 
other terms for any future sales to the Government. In the procurement 
community, these contracts are popularly known as ``hunting licenses'' 
because they permit preapproved contract holders to secure Government 
work with very limited competition as a result of direct marketing to 
Federal agencies. Federal contracting officials can place task orders 
against these contracts with their preferred, preapproved vendors. This 
amendment is a modest response to numerous complaints from 
representatives of small businesses and small business trade 
associations that the actual process for receiving task orders

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under multiple award contracts, such as the Federal Supply Schedules 
and multiagency contracts, tends to be biased in favor of large 
businesses and experienced Government contractors.
  Small business representatives testified before my committee that 
they invest time, effort, and resources to negotiate multiple award and 
multiagency contracts with the GSA or with another executive agent 
managing a Government-wide acquisition contract or a multiagency 
contract. Consultants have been known to charge small firms as much as 
$25,000 for guiding them through dense, time-consuming paperwork 
required to receive Government preapproval for one such contract. 
However, there are serious concerns that small firms do not reap 
commensurate benefits in the form of task orders. For instance, in 
recent proceedings before the White House Acquisition Advisory Panel, a 
representative of the General Services Administration, GSA, indicated 
that total Multiple Award Schedule/Federal Supply Schedule sales 
reached $31.1 billion in fiscal year 2004. GSA further indicated that 
small businesses hold 79.6 percent of total MAS/FSS contracts, but 
account only for 37.1 percent of sales dollars. At first glance, this 
level of small business participation is commendable. It exceeds the 
statutory Government-wide goal of awarding 23 percent of Federal 
contract dollars to small businesses. However, the significant 
disparity between these numbers confirms the complaints of small 
businesses about the barriers they have been facing in Federal 
indefinite-delivery, indefinite-quantity contracts. I look forward to 
working with the GSA, the Small Business Administration, and other 
agencies towards a greater parity between small business participation 
in the Schedule program itself and their share of contract dollars 
awarded through this program.
  In the acquisition world, there is a perception that contracting 
officers routinely persist in limiting upcoming task order 
opportunities to a maximum of three companies on any particular GSA 
Schedule instead of the three-company minimum as required by law. This 
situation is a recurring subject of bid protest decisions. In addition, 
many multiple-award contract holders do not receive a fair notice of 
upcoming task orders.
  Earlier this year, an article in the Veterans Business Journal asked 
``What Happened to Public Law 108-183?'' This law, codified in the 
Small Business Act, created the contracting preference for small 
businesses owned by service-disabled veterans. The article pointed out 
that many service-disabled veterans feel frustrated at the multiple-
award contract regulations which undermine the weight of the 
congressionally established preference and preclude disabled veterans 
from obtaining set-aside multiple-award acquisitions.
  The Senate Committee on Small Business and Entrepreneurship has 
attempted to mitigate many of these problems. Back in 1994, the Federal 
Acquisition Streamlining Act included a change to the Small Business 
Act that created an exclusive reservation for small businesses 
consisting of all contracts valued at more than $2,500 but not more 
than $100,000. Federal agencies attempted to exempt themselves from 
this provision by regulation. In response, I inserted corrective 
language in S. 1375, the 50th Anniversary Small Business Administration 
Reauthorization Act. This act, passed unanimously by the Senate during 
the 108th Congress, included a provision to ensure that task orders on 
multiple award schedules and multiagency contracts valued at more than 
$2,500 but not more than $100,000 are reserved for small businesses.
  This amendment builds on my prior efforts by establishing a 
congressional policy that each agency's orders placed under multiple 
awards contracts must meet statutory small business goals. To 
facilitate this policy, the amendment authorizes Federal agencies using 
defense contracting authorities to conduct small business set-aside 
competitions in the context of multiple-award contracts. My amendment 
also directs the SBA administrator to provide to my committee a 
comprehensive report on participation of small businesses in multiple-
award contracting.
  The measures adopted by the Senate through this amendment are only 
some of many steps and initiatives which my committee has been pursuing 
to increase the access of multiple-award contracts to small businesses. 
I hope that my colleagues will join me in supporting these efforts.
  Mr. President, as chair of Senate Committee on Small Business and 
Entrepreneurship, I rise today to address a bipartisan amendment to S. 
1042, the National Defense Authorization Act for fiscal year 2006 from 
the Senate Committee on Small Business and Entrepreneurship concerning 
much needed improvements to the Small Business Innovation Research, 
SBIR, Program and the Small Business Technology Transfer, STTR, 
Program. Amendment No. 2531 is based on my original amendments S.A. 
1536 and S.A. 1537 and builds on language reported by the Senate Armed 
Services Committee and on legislative initiatives proposed by the Small 
Business Committee's ranking member, Senator Kerry. I would like to 
commend Senator Kerry, as well as Senators Warner and Levin, the 
leaders of the Senate Armed Services Committee, for their bipartisan 
cooperation on the important subject of accelerating innovation and 
procurement of innovative technologies by the Federal Government. I 
also want to thank Dr. Charles Wessner and others at the National 
Academy of Sciences who have worked on a congressionally authorized 
study of the SBIR program, the Small Business Technology Council, the 
Association for Manufacturing Technology, and numerous representatives 
of Federal agencies, small businesses, and representatives of large 
prime contractors for the insights into the work of the SBIR and the 
STTR programs which they have provided to my committee over the years.
  Today, the Federal Government spends approximately $2.3 billion on 
phase I and phase II awards for the SBIR and the STTR programs, with 
$2.2 billion spent through the SBIR awards to small businesses. The 
Department of Defense is the major participant in this program, 
accounting for approximately $1.1 billion in SBIR spending and 
approximately $50 million in STTR spending. These funds provide a 
substantial stimulus to the American innovation system, and it is the 
task of this Congress to ensure that these funds are wisely spent. A 
key part of this effort is strengthening the existing science and 
research requirements for the small business research and development 
programs. This amendment directs the Department of Defense to base its 
SBIR and STTR research and development priorities on the Department's 
most current Joint Warfighting Science and Technology Plan, the Defense 
Technology Area Plan and the Basic Research Plan and to solicit input 
from program management officials.
  In addition to the phase I and phase II awards, the Department of 
Defense awarded over $456 million in phase III contracts in fiscal year 
2004. But the need for innovative technologies in our defense 
procurement is far greater. The SBIR and the STTR authorities enable 
contracting officers to quickly buy high-tech products and services for 
our warfighters. Unfortunately, the commercialization rate from 
research and development to product acquisition has been hampered by 
poor commercialization planning and increasing SBIR program 
administration costs. Since 1998, Congress and the Department of 
Defense have sought to increase commercialization but without much 
progress. To address this problem, my amendment authorizes a 
Commercialization Pilot Program at the Department of Defense and 
component military departments. Under this program, the Secretary of 
Defense and the military Secretaries would be required to identify SBIR 
programs with potential for accelerated transition into the acquisition 
process. The amendment authorizes the use of one percent of SBIR phase 
I and phase II funds for administrative expenses of this pilot. 
Congress will be kept abreast of this pilot through detailed evaluative 
reports.

[[Page 28500]]

  As cochair of the Senate Task Force on Manufacturing, I have been 
concerned about the deteriorating manufacturing base of our Nation and 
especially the impact of this trend on the defense industrial base. To 
stem this decline, President George W. Bush signed Executive Order 
13329, Encouraging Innovation in Manufacturing, in February 2004. This 
order directs Federal agencies which participate in the Small Business 
Innovation Research Program and the Small Business Technology Transfer 
Program to give ``high priority'' to manufacturing-related research and 
development projects to the extent permitted by law. The amendment 
incorporates this Executive order into law and directs the Small 
Business Administration and all other relevant agencies to fully 
implement its tenets.
  Finally, the amendment will expand the ability of Federal agencies 
and prime contractors to use phase II and phase III awards under SBIR 
and STTR for testing and evaluation of innovative technologies 
developed by small businesses for use in technical or weapons systems. 
Insertion of SBIR or STTR technologies into large, integrated systems 
is often not possible without significant testing efforts. By 
clarifying that either phase II or phase III may be used for these 
purposes, the amendment will provide additional incentives to agency 
program managers and to large systems integrators to commercialize the 
fruits of the SBIR and the STTR research.
  Our Nation's small businesses are also our Nation's innovators. They 
secure approximately 13 times more patents than large businesses. I 
urge this Congress to support in conference my measure for keeping 
America secure in war and in competitive internationally.

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