Small Business

Public or private nonprofit organizations for the handicapped--that is, nonprofit agencies employing persons with disabilities--have been authorized to compete for small business set-aside contracts awarded by federal agencies between 1989 and 1993. These nonprofit groups sponsor rehabilitation programs for the disabled or provide them with employment. The latest available data, however, show that these nonprofit groups received less than one percent of all such federal contracts set aside during a 2-1/2-year period. Furthermore, the total value of these contracts was lower than the ceilings set by law. The nonprofit agencies claim that they are not bidding more on set-aside contracts because (1) legislation prohibits nonprofit agencies from supplying a good or service on a permanent, noncompetitive basis once the product or service has been awarded under a competitive set-aside contract and (2) they are unaware that they may bid on set-aside contracts or do not know how to do so. Efforts to boost nonprofit agencies' participation in set-aside contracts have been limited. Congress may want to consider (1) designating a federal agency to counsel nonprofit groups about bidding on set-aside contracts and (2) allowing products and services provided under the set-aside contracts to be added to the list of items that nonprofit agencies provide to federal agencies on a permanent, noncompetitive basis.

GAO found that: (1) nonprofit agencies received only a very small portion of all small business set-aside contracts; (2) the total value of contracts awarded to nonprofit agencies has been far below the annual ceilings authorizing these contracts; (3) there was limited participation by nonprofit agencies in the small business set-aside program because legislation prohibited nonprofit agencies from supplying a product or service on a permanent, non-competitive basis once the product or service has been awarded under a competitive set-aside contract; and (4) the Small Business Administration has received only one appeal of proposed award and denied it because the for-profit business' bid was too high and would not have been accepted.