Leaving Small Businesses Out of Government Contracts Makes Country Less Safe

Veterans: Leaving Small Businesses Out of Government Contracts Makes Country Less Safe

Issue Will Be Subject of Congressional Roundtable

(WASHINGTON, DC) “America’s veterans are heading to Capitol Hill to warn Congress that big business is keeping small business innovation out of military contracts, and it’s making our country less safe,” said Rick Weidman, Chair of VET-Force, who served as a medic in Vietnam.

Rep. Bob Filner, Chair of the House Veterans Affairs Committee, will convene a roundtable on July 9 at 9 a.m. in Room 345 of the Cannon House Office Building, to address the security issues raised in Breakdown, a National Security Crisis in a Small Business World, a report released last month by The Veterans Entrepreneurship Task Force.

Breakdown delineates how conflicting law and policy places our country at risk—economically and physically. Small business has long been the backbone of our country, but new U.S. trade policies and changes in how contracts are awarded have made it much more difficult for small companies to compete against and/or work with large defense contractors. In this tough economy, it is even more important to support our country’s small businesses.

“It has been U.S. policy for more than 70 years that the security of the United States is dependent on a strong and vibrant small business sector,” stated Weidman. “Since before World War II, Congress has clearly understood that small business was an indispensable element for the U.S. to have a competitive, innovative, and geographically diverse Federal procurement marketplace. When it comes to small business today, federal procurement is not competitive, innovative, or geographically diverse.”

According to Jim Wilfong, Chair of the VET-Force Small Business Policy Committee and a former US Marine, “Our research has shown a major conflict between professed small business goals of the Congress and the Executive branch with our trade policy, the so-called
‘streamlining’ of government work over the last 15 years, and the creation of tens of billions of dollars in contract bundling. Contract bundling of this magnitude effectively ‘submarines’ the benefits of small business participation and creates a defense monopoly in contradiction with US security policy.”

SPECIAL REPORT: BREAKDOWN: National Security Crisis in a Small Business World

According to Breakdown, in 1978, Congress mandated that 23 percent of all government contracts go to small businesses. “The Federal Government is not even minimally making this target. The small business sector accounts for more than 50 percent of the Gross Domestic Product, and they can’t even get 23 percent of the Government contracts,” noted Wilfong.

“As veterans and patriots, we could not sit quietly by; we had to report what we have found to the American people,” said Lisa Wolford, a veteran of the Marine Corps and president of a Nebraska small business, CSSS, who will also be at the roundtable. “When the country’s security is being compromised, it is our responsibility to speak up.”

VET-Force, with over 2,500 veteran-owned small businesses, plus affiliated veterans organizations representing hundreds of thousands of individual veterans, advocates for the support of America’s service-disabled and other veteran-owned entrepreneurial enterprises as one way for veterans to provide economic security and prosperity to their families and for the communities they live in. Breakdown, a National Security Crisis in a Small Business World is available at www.vet-force.org

FOR MORE INFO, CONTACT
Veterans’ Entrepreneurship Task Force
8605 Cameron Street, Suite 400, Silver Spring, MD 20910
Tel: 301.585.4000 Fax: 301.585.0519

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EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET

July 10, 2009

MEMORANDUM FOR THE HEADS OF EXECUTIVE DEPARTMENTS AND AGENCIES

FROM: Peter R. Orszag, Director

SUBJECT: Recent Government Accountability Office Decisions Concerning Small Business Programs

This memorandum provides guidance to Executive Branch agencies regarding two decisions by the Government Accountability Office (GAO) addressing the relationship among three small business programs: the 8(a) Business Development (BD) program, the Service Disabled Veteran Owned Small Business (SDVOSB) program, and the Historically Underutilized Business Zone (HUBZone) program. The GAO’s decisions in question are Mission Critical Solutions, of May 4, 2009 (B-401057, 2009 CPD ¶ 93), and International Program Group, Inc., of September 19, 2008 (B–400278, B–400308, 2008 CPD ¶ 172).

The GAO’s decisions are not binding on Federal agencies and are contrary to regulations promulgated by the Small Business Administration (SBA) that provide for “parity” among the three small business programs. An Executive Branch review of the legal basis underlying the GAO’s decisions has been initiated, and the results of that review are expected this month. Pending the results of the review, the applicable SBA “parity” regulations remain binding and in effect as validly-promulgated implementations of the governing statutes.

If agencies were to follow the GAO decisions, the Federal Government’s efforts to procure goods and services from 8(a) small businesses and from SDVOSB through the other statutory programs may be negatively impacted. In particular, the analysis the GAO offered in Mission Critical Solutions and International Program Group would, if followed, significantly limit the discretion contracting officers have historically possessed in deciding whether an agency will use 8(a) BD, SDVOSB, or HUBZone small business programs to satisfy an agency’s acquisition requirement. Under the GAO’s reading of the statutes governing these programs, a Federal agency must use a HUBZone small business for an acquisition if the agency’s contracting officer has a reasonable expectation that at least two qualified HUBZone small businesses will submit offers and that the award can be made at a fair market price. That is, an agency adhering to the GAO’s approach would, in such circumstances, be required to procure from a HUBZone small business even in a case where an 8(a) BD small business is currently providing the goods or services to the agency or where SBA has accepted the requirement for award through the 8(a) BD program.

Pending the completion of the legal review of the GAO’s decisions by the Executive Branch, the SBA’s “parity” regulations should not be disregar
ded by contracting officers, and Federal agencies should not, as a result of the GAO’s decisions, be compelled to prioritize HUBZone small businesses over 8(a) BD or SDVOSBs. Instead, until the legal review is completed, Federal agencies should continue to give active consideration to each small business program pursuant to their pre-existing contracting practices and “parity” policies.