December 11, 2011, Testimony: Contracting Away Accountability – Reverse Auctions in Federal Agency Acquisitions

Testimony of Major L. Clark, III, Assistant Chief Counsel for Advocacy
U.S. Small Business Administration

United States House of Representatives Committee on Small Business
Subcommittee on Contracting and Workforce
and
United States House of Representatives
Committee on Veterans’ AffairsSubcommittee on Oversight and Investigations

Date: December 10, 2013
Time: 10:00 AM
Location: 334 Cannon House Office Building
Topic: Contracting Away Accountability – Reverse Auctions in Federal Agency Acquisitions

Chairman Hanna, Ranking Member Meng, Members of the Small Business Contracting and Workforce Subcommittee as well as Chairman Coffman and Ranking Member Kirkpatrick and Members of the Veterans’ Affairs Subcommittee on Oversight and Investigations, I am honored to be here today to present testimony to you on behalf of the Office of Advocacy of the U. S. Small Business Administration and more specifically, on behalf of Chief Counsel Dr. Winslow Sargeant.

Dr. Sargeant would like me to thank you for the support that you have provided this office, and he looks forward to a continued partnership with you as we mutually strive to improve the economic climate for our small business stakeholders.

The Office of Advocacy is not in opposition to reverse auctions in the federal marketplace.  Today, we are advocating for clear reverse auction guidance from the Office of Federal Procurement Policy.

My name is Major L. Clark, III, and I am the Assistant Chief Counsel for Procurement Policy for the Office of Advocacy.  While my professional career includes both public and private sector experience, I previously served as the Staff Director for the House Small Business Committee under the chairmanship of the Honorable Parren J. Mitchell of Maryland so thank you for having me back.

I ask that this written testimony and two attachments be included as part of the official transcript of this hearing.

In 1976, the Office of Advocacy was established pursuant to Public Law 94-305 to represent the views of small entities.  Advocacy advances the interests and concerns of small business before Congress, the White House, federal agencies, federal courts, and policymakers.  The Office of Advocacy is an independent office within the Small Business Administration, so the views expressed by this office do not necessarily reflect the views of SBA or the Administration.  We work with federal agencies in the rulemaking process to implement the requirements of the Regulatory Flexibility Act (RFA).  The RFA requires federal agencies to consider the effects of their proposed rules on small businesses and other small entities, including small governments and small nonprofits.

Pursuant to the above statutory authority, the Office of Advocacy has been involved in the monitoring of reverse auction activities at the federal level since around 2006.

On February 27, 2008, the Office of Advocacy sent a letter to Administrator Paul Denett of the Office of Federal Procurement Policy with a recommendation from small business stakeholders to better define the reverse auction process.  I have submitted this document as Attachment one.

Attachment two is a more recent letter to Acting Administrator Lesley Field of the Office of Federal Procurement Policy dated January 21, 2012 from Dr. Sargeant of the Office of Advocacy. This letter expresses additional concerns regarding the negative impact of reverse auctions on small businesses.

In the fall of 2012, we held a procurement roundtable in Seattle, Washington.  During this roundtable, we heard from a woman-owned small business.  The owner explained her recent experience with the reverse auction process where she lost an important contract.   Moreover, when she tried to understand why she lost the contract, she could not receive a clear explanation for losing her bid.  As a result, the inability of the contracting officer to explain clearly why she lost the auction was as frustrating to her as losing the bid.  After our listening session, Advocacy conveyed this experience to the Office of Federal Procurement Policy.

In response to Advocacy’s concerns, the Office of Federal Procurement Policy convened a small business stakeholder session in Washington, D.C. in which the attendees conveyed their concerns with the reverse auction process. Some of the concerns included a lack of clear guidance to agencies, conflicts with Federal Acquisition Regulation Part 19, the role and responsibilities of the third party providers, and finally, the fees required to participate in the reverse auction process.

More recently, small business associations that represent small architectural, engineering and surveying companies have reached out to the Office of Advocacy about reverse auctions with the same concerns as other small business stakeholders.  It would appear that some agencies are attempting to use reverse auctions for these types of services.

In conclusion, Chief Counsel Sargeant would like to make it perfectly clear that the Office of Advocacy is not in opposition to reverse auctions in the federal marketplace.  The intent of this office is to make sure that our small business stakeholders have a voice.  We are advocating for clear reverse auction guidance from the Office of Federal Procurement Policy.

Thank you and I look forward to your questions.