Consolidation and Bundling

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Consolidation and Bundling
What Are They?
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Agenda

• Business Case
• Define Consolidation Bundling
• Impact of Contract Bundling
• Cause N Effect
• Effects of Contract Bundling
• Failure of Act
• New Strategy
• Prime Contractors Actions
• Questions

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Business Case - Contract Spend

• Over 200 Billion in Federal Government Awards
  Per Year
• 2001 234.9B (lt 23 to SB)
• 2004 294.4B (lt 23 to SB)
• New Definitive Contracts (Over 25,000)
• ALL Companies Small Business
• 1991 86,243 26,506 (30.7)
• 2001 34,261 11,651 (34.0)

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Business Case - Contract Spend
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Business Case - Contract Spend
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Business Case - Contract Spend
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What is Consolidation Bundling ?

• Small Business Reauthorization Act of 1997
• Consolidating two or more procurement
  requirements for goods and services previously
  provided or performed under separate, smaller
  contracts into a solicitation of offers for a
  single contract that is unlikely suitable for
  award to a small business concern
• (Contract Bundling)

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Impact of Contract Bundling

• Reduction in federal supplier base by
  discouraging or eliminating small businesses
• Dollars for contracts under existing contracts
  continue to increase dramatically
• Reduction in competition

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Cause N Effect

• Decrease
• Funding
• Employees
• Time
• Training

• Increase
• Requirements
• Checks Balances
• Process Quicker/Less Complex

Innovation Streamlining
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Cause N Effect

• Unsuitable for Small Business
• The diversity, size or specialized nature of the
  elements of performance specified
• The aggregate dollar value of the anticipated
  award
• The geographical dispersion of the performance
  sites
• Risk and liability increased

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Effects of Contract Bundling

• For every 100 awarded under a bundled contract
• There is a 33 decrease to small businesses
• For every 100 bundled contracts
• 106 individual contracts are no longer available
  to small businesses
• Bundled contracts run longer and encompass a
  greater scope of work
• Competition is reduced in terms of frequency and
  the number of opportunities

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Act Fails!!

• Federal Department Agency Guidelines
• Maximize to the extent practicable
• Structure requirements to facilitate competition
  by among SB
• Eliminate obstacles
• Avoid unnecessary unjustifiable bundling
• FAR put responsibility on Agency Acquisition
  Planners

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Act Fails!!

• Prior to Bundling
• Conduct Market Research
• Justify Bundling by Demonstrating Measurably
  Substantial Benefits
• Cost Savings
• Quality Improvements
• Reduction in Acquisition Cycle Times
• Better Terms and Conditions
• FAR put responsibility on Contracting Officer

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Act Fails!!

• Why?
• No Third Party Oversight
• No reporting requirements
• Reauthorization Act had wiggle room
• Two or more requirements previously competed
  separately
• Added new scope to previous competed requirements

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New Strategy

• March 2002 Forces pull together
• President
• Office of Management Budget
• Public
• Objective
• Create dynamic environment where SB
  Entrepreneurs could flourish
• Improve SB access for Federal contracting
  opportunities

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New Strategy
The Presidents Strategy for Increasing Federal
Contracting Opportunities for Small
Businesses 2002
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Presidents Plan

• I.
• Ensure accountability of senior agency
  management for improving contracting
  opportunities for small business

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Presidents Plan

• II.
• Ensure timely and accurate reporting of contract
  bundling information through the Presidents
  Management Council

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Presidents Plan

• III.
• Require contract bundling
• reviews for task and delivery
• orders under multiple award
• contract vehicles

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Presidents Plan

• IV.
• Require agency review of proposed acquisitions
  above specified thresholds for unnecessary
  and unjustified contract bundling

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Presidents Plan

• V.
• Require alternative acquisition strategies for
  the proposed bundling of contracts above
  specified thresholds and written justification
  when alternatives involving less bundling are
  not used

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Presidents Plan

• VI.
• Mitigate the effects of contract bundling by
  strengthening compliance with subcontracting plans

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Presidents Plan

• VII.
• Mitigate the effects of contract bundling by
  facilitating the development of small business
  teams and joint ventures

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Presidents Plan

• VIII.
• Identify best practices for maximizing small
  business opportunities

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Presidents Plan

• IX.
• Dedicate agencys Offices of Small and
  Disadvantaged Business Utilization (OSDBUs)
  to the Presidents Small Business Agenda

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What About Prime Contractors?

• Contracts Procurement Departments need to be
  involved in acquisition planning
• Ensure compliance with subcontracting plans
• Mentoring SBs

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QUESTIONS