Leveling the Playing Field: Fostering Opportunities for Small Business Contractors

Contracting and Technology

2025-09-10

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Source: Congress.gov

Summary

This hearing addresses the challenges small businesses face when competing for federal contracts, including overly complex solicitations, excessive compliance costs, and practices like contract bundling that exclude small firms. Witnesses emphasize how the federal procurement system often favors large firms due to onerous regulations and technical jargon, with fewer than 3% of Department of Defense contracts written in plain language. The panel discusses critical policy issues such as the erosion of the rule of two, the impact of SBA cuts, and the role of socioeconomic set-aside programs in leveling the playing field. They advocate for reforms like the bipartisan Plain Language Contracting Act, which would simplify contract language to increase access and competition. The hearing underscores that small businesses drive innovation, economic strength, and local job creation, and calls for the government to adopt policies that ensure fair, transparent, and accessible contracting that benefits both taxpayers and the defense industrial base.

Participants

Transcript

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Unknown (SPEAKER_02)
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Unknown (SPEAKER_02)
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Good morning, everyone.  I now call the Committee on Small Business to order.  Without objection, the chair is authorized to declare recess of the committee at any time.  I now recognize myself for an opening statement.   Small businesses are the economic engine of America.  They make up 99% in this country and provide over half of all jobs.  Yet, when it comes to contracting with the federal government, small businesses are too often shut out.  The facts speak for themselves.  Less than 30% of federal contractors are small businesses.  And while the total dollar value of federal contracts going to small business firms has gone up, the number of small businesses winning those contracts has gone down.   meaning fewer local employers, fewer innovative solutions, and less competition for taxpayer dollars.  The reasons are not hard for us to see.  The federal procurement system is riddled with barriers, including onerous compliance costs, agency rules that favor the biggest firms, and solicitations written in dense legal and technical jargon that all discourage small businesses from even applying.   Compliance alone is crushing over the past four years Washington piled on nearly $2 trillion in new regulatory costs and 359 million new hours in paperwork.  For small businesses that translates to at $15,000 per employee per year over 20% more than what the larger firms pay.   For small businesses working with the government, the burden has doubled.  Not only do they have to comply with 100,000 pages of federal regulations, they also have to navigate more than 2,000 pages of the federal acquisition regulations and the defense supplement.  These rules and requirements add up, and some of the small firms decide it's simply not worth their time or money to bid on federal contracts.   This means America continues to lose out on the innovative, cost-effective solutions small businesses are known for, and taxpayers pay the price.
On top of that, practices like contract bundling that combine multiple smaller contracts into one larger solicitation effectively sidelines small businesses that could have delivered those services directly.  Instead of competing as prime contractors, they're pushed into subcontractor roles.  That is not leveling the playing field.   One of the most common complaints I hear from small business owners is about the language itself.  Federal contracts are written in a way that is nearly impossible to understand without a lawyer or consultant.  In fact, a Naval postgraduate school study reviewed more than 1 million Department of Defense solicitations and found that fewer than 3% were written in plain English.  Most required at least a college education to understand.   Even seasoned small business contractors told researchers they couldn't tell what the government was really asking for.  I think that's totally unacceptable.   If a business owner can't even figure out what product or service the government wants to buy, how can they fairly compete to provide it?  That's why I introduced the Bipartisan Plain Language Contracting Act.  This bill requires federal agencies to write solicitations clearly and concisely.  The best part is it doesn't cost taxpayers a single dime, but lowers the barriers to entry and increases competition.   When contracts are written in plain language, small businesses can make faster and more informed decisions.  They don't need to hire expensive lawyers just to submit a bid.  And more competition means better value for the government and for the taxpayer.  The House has already passed this bill with strong bipartisan support, and now I call on my colleagues in the Senate to take up this common sense legislation.   Together with the Trump administration's deregulatory agenda of cutting red tape, reducing paperwork, and simplifying the federal acquisition regulations, this legislation will make federal contracting accessible again to America's small businesses.  The bottom line is simple.   Government contracts should be written so that everyone can understand them.
If we remove unnecessary barriers and insist on fairness and transparency, we can unleash the full potential of America's small businesses, strengthen our industrial base, and deliver better results for taxpayers.  I look forward to hearing from our witnesses today about their experiences and their ideas on how we can keep leveling the playing field for small business contractors.   I now recognize my good friend, Ranking Member Siniseros, for his opening remarks.
Thank you, Mr. Chairman, and I want to thank our witnesses for being here with us today.

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