Did you know that Lowest Price Technically Acceptable (LPTA) and 8(a) contract bundling are having immediate negative impacts to Native 8(a) Businesses and small businesses across the country? These policies have resulted in the loss of contract opportunities and real revenue for small businesses, undermining the intention of the 8a program.
A recent NACA case study found three Native 8a Companies are at risk of losing major 8(a) contracts due to a project being bundled and consolidated out of the 8(a) program into one omnibus contract. The result is a total loss in revenue of over $100 million for 8(a) businesses according to the Federal Procurement Data Systems (FPDS). In the state of Alaska, it will cause a loss of $10 million in state revenues.
In the same case study, the contracts that are being bundled out of the 8(a) program are going to be competed via LPTA. If the Native Corporations could re-compete collaboratively and have a chance at success, the margins for profit under LPTA currently sit at 3% or less. Using Alaska Native Corporations as an example, they need a minimum of 3% profit to be able to effect the management and distribution of benefits to their shareholders. Therefore, they would be doing this work at zero net gain for their community.
Bundling, as executed here, dismantles the work small businesses have fought to establish and supports an industry dominated by large contracting firms. While bundling seems logical for improving government efficiency, it has extreme unintended consequences for small business contractors. Most importantly, loss of 8(a) contracts had direct impacts on Native communities, many of whom struggle to maintain basic services and infrastructure. Given the special relationship of the federal government and tribal nations, supporting 8(a) is a far more efficient method of maintaining federal obligations. Bundling takes opportunities from Native 8(a) program participants and other small business contractors and gives them to larger, already established firms.
While these issues are not making front-page news or seem like major threats to the 8(a) program, they are real threats that slowly erode the benefits this program brings to small businesses. NACA continues to educate Congress and Agency officials in order to bring awareness to the trends and issues that affect contracting across the Executive Branch.
NACA is paying attention to these issues so you can focus on your business. If you would like to have regular updates of information like this, consider becoming a NACA member. Our goal is to ensure the success of Native 8(a) corporations and the future of our Native Communities.