Congressional Testimony: Small Business Needs Improved Guidance on Reverse Auctions

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Every year, the federal government spends hundreds of billions of dollars on products and services across the country, making it the largest goods purchaser in the United States. Although this is a great opportunity for small businesses, it is often times an unrealized one. Small businesses create 60 percent of the net new jobs in this country and employ half of the private-sector workforce. So if America provided more federal contracts to small businesses, it would grow the economy of the United States. The federal government is already working to encourage small business participation in the procurement sector.

For example, a new GSA program by the federal government will hopefully increase the availability of government contracts to small businesses. The reverse auction program puts a request of goods and services online and gives businesses the opportunity to bid on providing the goods and services. Through the auction process, federal agencies award contracts to the lowest bidder while increasing the savings to the American taxpayer.

Although the intention of the program is good, the results have had mixed reviews. Many believe it works for the purchase of goods or simple services. However, when entering into more complex agreements and services, some believe the program is flawed.

Last week, the Office of Advocacy’s Assistant Chief Counsel Major Clark testified on the subject during a joint hearing of two subcommittees, the House Small Business Subcommittee on Contracting and Workforce and the Veterans’ Affairs Committee’s Subcommittee on Oversight and Investigations. In his testimony, Clark stated that the Office of Advocacy is not in opposition to reverse auctions in the federal marketplace; however, the office is committed to making sure that small business stakeholders have full opportunity to participate.

Moving forward, Advocacy believes we can continue to encourage participation by small businesses in the federal procurement process. For this particular program, Advocacy believes it is necessary that the Office of Federal Procurement Policy give clear guidance for reverse auctions to small businesses. Once small businesses are able to fully understand how reverse auctions will be carried out, small businesses will be able to not only participate, but also, gain these lucrative contracts.