Hastings urges no changes in Hanford system of work for small businesses

By Annette Cary, Tri-City HeraldOctober 31, 2012 

A change to small business requirements may have unintended consequences, costing small businesses work at Hanford, according to Rep. Doc Hastings, R-Wash.

He has sent letters to key House committee leaders and the administrator of the Small Business Administration requesting that Hanford continue with its present system.

The Department of Energy contracts out environmental cleanup work at Hanford. Those prime contracts, or direct DOE contracts, have aggressive goals to subcontract with small businesses to do some of that work, depending on the type and complexity of the work.

The targets range from 49 percent to 65 percent of subcontracted work going to small businesses. Now all Hanford prime contractors are exceeding their targets, Hastings said.

But in the fiscal year that started Oct. 1, the Small Business Administration and the Department of Energy are requiring that 10 percent of Hanford money be spent directly with small businesses. That's up from 5 percent last year.

The work small businesses are getting from prime contractors is not expected to count toward that goal.

"I am concerned that this action will result in disruptions to ongoing nuclear waste cleanup, layoffs and lost opportunities for local small businesses at Hanford," Hastings wrote in the letters. "Notably, the small business community in the area shares my concerns."

Many of the local small businesses with Hanford subcontracts now would not be large enough to contract directly with DOE, according to the Tri-City Development Council. TRIDEC expects DOE to meet its new obligations by awarding large contracts to one or two businesses that still qualify as small but that may have a national presence already. Now the system spreads work to hundreds of small businesses, many of them local.

Opportunities for small businesses can be better if they are working under a subcontractor than as a Hanford prime subcontractor, Hastings agreed.

"The administrative and contracting systems a small business must put in place to deal with the Department of Energy directly is often not worth the time and expense," he wrote.

In addition, as soon as a small business is awarded a contract directly with DOE, the company may lose its small business designation, he said.

"I am concerned that implementing increased mandates at Hanford will result in bigger government; higher administrative costs that could take resources away from cleanup work; decreased efficiency; cleanup delays; a lengthier, more complex and costly application process for small businesses; layoffs; and ultimately fewer small business awards," he wrote.

Already DOE is taking steps to remove some work from a prime contract that now is subcontracted out to a local small business, Hastings said. The work would be shifted to another small business to receive credit toward the direct government contracting goal, he said.

DOE also is considering a shift of work at the vitrification plant that would have similar results, he said.

"I am not convinced that essentially shifting responsibility for small business contracting from the prime contractors at Hanford to the federal government" would increase opportunities for small businesses, particularly given the complex cleanup work and legal cleanup obligations of the site, he wrote.

Congress and the Small Business Administration should consider allowing Hanford to count small business subcontracts through its prime contractors toward the governmentwide small business contracting goals if prime contractors continue to meet their small business subcontracting goals, he said.

The letters were sent to Karen Gordon Mills, Small Business Administration administrator; Rodney Frelinghuysen, chairman of the House Energy and Water Development Appropriations Subcommittee and ranking member Pete Visclosky; Sam Graves, chairman of the House Small Business Committee and ranking member Nydia Velaquez; and Buck McKeon, chairman of the House Armed Services Committee and ranking member Adam Smith.

-- Annette Cary: 582-1533; acary@tricityherald.com

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