New Rule to Shed Light on Contractor Rates

According to the Washington Business Journal, a pilot program to be launched in July under the Federal Funding Accountability and Transparency Act of 2006 will force the winners of federal contracts valued at over $500 million and performed in the United States to disclose details of subcontracts worth more than $1 million, including the names and contact information for subcontractors, the date and amount of each award, a description of the work, and where the work was performed. Subcontractors will receive a unique identifier and will be searchable on a Web site accessible to the public.

By 2009, the program will be expanded to cover prime contracts valued at over $100,000 and subcontracts worth $25,000. Opponents of the measure say smaller businesses will have difficulty complying with associated reporting requirements due to a lack of staffing resources and that the model will promote a price war as contractors play subcontractors against one another.

Supporters say it could push prime contractors to award more work to small businesses owned by women and minorities and that smaller businesses as a whole could see more federal dollars, though perhaps profit margins from such contracts would narrow. The program may also pressure public officials to break huge bundled contracts into smaller pieces for multiple contractors to win.   EC

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