SBA says GSA failed to assess negative impact of OS3 on small businesses

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The General Services Administration failed to assess the negative impact that the Office Supplies 3 strategic sourcing contract would have on small businesses, a Small Business Administration analysis says.

Under the Small Business Act, agencies must determine whether new consolidated contracts would negatively affect small businesses and the SBA is tasked with making sure the agencies execute the determination properly.

SBA undertook the analysis at the Government Accountability Office's request after several small businesses protested to the OS3 request for proposals, saying GSA failed to look into the economic consequences of the businesses who don't receive an OS3 award. FedNewsRadio posted a copy (pdf) April 7. 

In response to the protests, GSA argued that the OS3 contract is a follow-on contract to the OS2 and not a consolidated contract. GSA also said it's "contrary to law" to provide an economic analysis on the negative impacts a consolidate contract would have on small businesses.

SBA disagrees on both points.

Consolidation occurs when an agency combines two or more requirements for goods or services under two or more separate contracts that are lower in cost than the total cost of the contract for which the offers are solicited, the SBA analysis says.

GSA is doing exactly this with the OS3 contract, SBA says.

SBA also says the provisions in the Small Business Act clearly direct agencies to consider the negative impact the consolidation could have on small businesses.

GSA says it looked into the negative impact, but that the benefits gained would outweigh the negative impact.

"Another matter of interest is the impact of potential reduction in sales for small businesses not chosen as an OS3 contract line item number provider. GSA has considered this potential negative impact on small businesses but has determined the benefits to be gained through OS3 CLINs will outweigh the negative impact," GSA wrote in its analysis SBA says.

But that doesn't go far enough, SBA says.

"The above two sentences hardly seem like the thoughtful analysis Congress would have wanted on this important issue," SBA says.

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