Difficult Times in the Federal Marketplace

The House Committee on Small Business recently held a hearing on “Small Business Participation in the Federal Procurement Marketplace.” While several industries testified at the hearing, one of the most interesting pieces of testimony came from a witness discussing how small businesses in the architecture and engineering (A/E) industry are uniquely affected by the federal procurement marketplace and how those small A/E firms are being hurt by a trend in federal procurement called bundling. The A/E industry includes surveying and mapping professionals.

Shortly after the hearing, a notice appeared in the Federal Register asking for comments on a proposed policy letter from President Obama defining “inherently governmental function,” which is used to determine what tasks must be done by federal employees and what can be done by federal contractors.

Both of these recent events add to the year-long trend of a decrease in federal outsourcing and an increase in doing more federal work in-house, a trend that is affecting the ability of small surveying and mapping firms to work on federal contracts.

Contract Bundling

House Small Business Committee chairwoman Nydia Velazquez (D-NY) noted in her opening statement at the hearing, “Overall, procurement has become increasingly complex for small companies. Misguided efforts to streamline the process have contributed to a surge in contract bundling and a culture of cutting corners.”

In the A/E industry, particularly the surveying and mapping segment, the majority of businesses are small, specialized firms. Like for others in the A/E industry, states require professional licenses for individuals performing surveying work. Licensed professional surveyors are bound by ethical codes to do work only that they are capable of doing based on education and experience. This is one reason why surveying services are unique in how they can be procured in the federal marketplace.

It was noted during the Small Business Committee hearing that contract bundling can have a detrimental effect on the procurement of surveying services and often is contrary to the longstanding Brooks Act (Public Law 92-582), the law that controls the federal procurement of A/E services, including surveying services.

COFPAES, the Council on Federal Procurement of Architectural and Engineering Services, noted that “contract bundling is most evident in contracts where the government consolidates two or more unrelated contract solicitations for supplies or services into a single solicitation. In such cases where A/E services are not the ’dominant extent,’ the government typically uses competitive low-bid procedures.” COFPAES opposes contract bundling by federal agencies because it creates a strong bias toward very large firms or management consultant entities.

Inherently Governmental Function

If the bundling issue alone was not causing a decrease in small surveying and mapping firms getting contracts, small firms may soon be forced to pass the “inherently governmental function” test as well.

By redefining the term “inherently governmental function” in a way that increases in-sourcing by the federal government (using federal employees to do work, instead of contractors), the federal government is taking away contracting opportunities from small businesses, including many surveying and mapping firms.

Currently, the definition of “inherently governmental function” is a function or job “that is so intimately related to the public interest as to mandate performance by federal employees” Federal Activities Inventory Reform Act (FAIR Act), Public Law 105-270. This is a very general definition and is open to a wide range of interpretations.

The proposed policy letter by President Obama lays out the determinations that must be documented by the agency head or contract official before a contract solicitation is issued, to show that contract-acquired functions are not “inherently governmental.” It would require agencies to determine (before issuing a solicitation) that they have sufficient internal capability to control their mission and operations.

Additionally, during contract performance, agencies would be required to (1) monitor how contractors are performing contracts, especially those involving work closely associated with inherently governmental functions or professional and technical services and (2) take appropriate action where the internal control of the missions and operations is at risk due to inappropriate or excessive reliance on contractors to perform critical functions.

A recent Bureau of Labor Statistics study showed that the economy in the United States shed over four million private sector jobs while adding over 109,000 federal jobs during President Obama’s first year in office. Those numbers are bound to increase if the definition of “inherently governmental function” is expanded.

Surveying and mapping professionals should pay very close attention to both of these issues because they affect a lot of work done with the federal government. If the bundling issue is not contained, small surveying and mapping firms (along with other small businesses) will be pushed out of big federal contracts because it will not be in their best interests to subcontract on them. Congress should consider adjusting the current contract bundling practices to ensure that prime contract opportunities are aligned better with small business capabilities. This will encourage more small businesses to compete for federal projects.

With the “inherently governmental function” issue, surveying and mapping firms face a bit more serious problem—losing prospective work to in-house federal employees. Surveyors and other A/E professionals are licensed because the work they do is technical and in the public interest. It would not be that far of a leap for Congress and the federal government to say that the reason for surveyors and A/E professionals to be licensed is the very reason why those jobs are an “inherently governmental function,” especially when looking at the FAIR Act definition, above.

A Federal Register Notice was issued on March 31, 2010 asking for public comment on the “inherently governmental function” issue. Click here to view the notice.
If this issue affects you, please take a look and make formal comments on the issue.


About the Author

  • Laurence Socci
    Laurence Socci
    Laurence Socci is the chief executive manager and senior lobbyist of The CLA Group, LLC, a government consulting, lobbying, and advocacy firm in Washington, D.C., specializing in representing businesses and associations. He is also the government affairs consultant for the American Congress on Surveying and Mapping (ACSM).

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