CONTEXT: The below letter was sent by 8vsb to the Congressional Black Caucus (CBC) on September 26th, 2007. On April 3, 2009, Hank Wilfong, President of the National Association of Small Disadvantaged Business (NASDB), in his “ISSUE STATEMENT NO. 4008: GET IT DONE ..”
called for re-dress of the issue given it’s increased relevance today.
In response to Mr. Wilfong, Mr. Raul Espinosa, Founder of the Fairness in Procurement Alliance (FPA), put forth the following:
In addressing FAR 8.4… FAR 8.4 is the ‘illegal GSA Exemption’ (or one of the two ‘FAR Exemptions’) which GAO has already declared ‘illegal’ through the Delex Case.’ This ‘GSA Exemption’ has been responsible for diverting $44 Billion in contracts away from the statutory rights of small businesses. (The Foreign Exemption exempts $20 Billion.)
All GSA Schedule contracts had been excluded, illegally, from the ‘set-aside provisions of the Small Business Act’ and pressure must be maintained on the FAR Council – now that both of the FAR Exemptions have been targeted for removal so that it actually happens.
Note: Congressman Wynn is no longer a member of Congress.
In regards to: SBA 8(a) Program
The Honorable Albert Wynn
Congressman 4th District of Maryland
Chair, CBC Minority Business Task Force
2470 Rayburn House Office Building
Washington, D.C. 20515-2004
c/o Mr. Ed Hubbard
Dear Congressman Wynn:
SUBJECT: APPEAL TO CONGRESSIONAL BLACK CAUCUS ON BEHALF OF 8(A) PROGRAM
The below outlines an issue of extreme importance to the long-term viability of minority owned small firms doing business with the Federal Government; and one which we hope is just as important to the membership of the CBC Minority Business Task Force.
The intended benefits of the 8(a) program, as outlined in the Federal Acquisition Regulation, (FAR) – Subpart 19.8—Contracting with the Small Business Administration (The 8(a) Program), and the fundamental tools it has historically provided to assist Blacks and other minority owned businesses in competing for government contracts, is being systemically eliminated by the use of GSA Federal Supply Schedules (FSS) as outlined in (FAR) Subpart 8.4—Federal Supply Schedules. Of specific note is 8.405-5(a) and (b) Small business, which reads:
[ (a) Although the MANDATORY preference programs of Part 19 do not apply, orders placed against schedule contracts may be credited toward the ordering activity’s small business goals. For purposes of reporting an order placed with a small business schedule contractor, an ordering agency may only take credit if the awardee meets a size standard that corresponds to the work performed. Ordering activities should rely on the small business representations made by schedule contractors at the contract level.
(b) Ordering activities MAY consider socio-economic status when identifying contractor(s) for consideration or competition for award of an order or BPA. At a minimum, ordering activities should consider, if available, at least one small business, veteran-owned small business, service disabled veteran-owned small business, HUBZone small business, women-owned small business, or small disadvantaged business schedule contractor(s). GSA Advantage! and Schedules e-Library at http://www.gsa.gov/fss contain information on the small business representations of Schedule contractors. ]
ALJUCAR, and the 8vsb political action committee (8-PAC), made up of 8(a) and veteran owned businesses, is seeking the assistance of the CBC Minority Small Business Task-force to investigate through the congressional hearing process the current and historical impact of (FAR) Subpart 8.4—Federal Supply Schedules on (FAR) – Subpart 19.8—Contracting with the Small Business Administration (The 8(a) Program). A detailed explanation of this request follows.
GSA Federal Supply Schedules, as defined in (FAR) Subpart 8.4—Federal Supply Schedules:
• Allows government agencies to issue contracts, without open solicitation; to any company they choose that is listed on the schedule
• Allows government agencies to circumvent the mandatory preference programs of FAR Part 19; which is the portion of the FAR that the 8(a) program operates under (ref: FAR 8.405-5 Small business).
As you may know, the objective of the “8(a)” Program is to help eligible small firms become independently competitive.
Thus, the 8(a) program, and the fundamental tools it has historically provided to assist African American businesses in competing for government contracts, is being systemically eliminated by the use of GSA Federal Supply Schedules (FSS) as defined in (FAR) Subpart 8.4—Federal Supply Schedules. Further, my research, and interviews of GSA subject matter experts, indicates that because of the massive amount of paperwork involved, FSS serve as a barrier to entry to most 8(a) firms.
In addition, statistical analysis shows that incumbent large White-owned businesses dominate the acquisition process, with only a token amount of contracts given to Black and minority firms. This is because, as stated above, FSS Allows government agency contracting officers to subjectively issue contracts, without open solicitation; to any company they choose that is listed on the schedule. As well, because government agencies are not required to post solicitations when using GSA Federal Supply Schedules, which normally provides rich detail regarding purchasing requirements and patterns, small businesses must file a FOIA request just to understand what agencies are purchasing. And even then, they cannot compete effectively, because no solicitations are ever issued.
In short, (FAR) Subpart 8.4—Federal Supply Schedules, as currently written, serves as an exacting means of government agency contracting officers controlling who gets government contracts. This takes away the “free market dynamic” spirit intended by Title III of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 251, et seq.) and Title 40 U.S.C. 501, Services for Executive Agencies, which are the primary statutory authorities for the FSS program.
Moreover, subpart 8.405-5(a) and (b) Small business nullifies the depth, mandatory nature, and spirit of “level playing” intended by FAR) – Subpart 19 —Small Business Programs; particularly that of Subpart 19.8—Contracting with the Small Business Administration (The 8(a) Program.
Finally, as more and more government agencies begin to use of GSA Federal Supply Schedules, all of the effort given to developing Section 8(a) of the Small Business Act will be for naught. Indeed, Blacks will have suffered yet another legal and regulatory setback due to our lack of diligence in monitoring the fundamental rules by which we do business with the federal government, and the impact of changes and modifications over time. In conclusion, the 8(a) program is a commercial legacy to our civil rights victories some 30 years ago, and should not be allowed to wallow in demise without a fight.
As the Chairman of the 8vsb Political Action Committee, and owner of an 8(a) certified business, I appeal to you for action. We have members in every state of the Union, including Guam; all of whom who stand ready for mobilization at your behest.
I look forward to your response.
Question posed on November 1, 2007: What are your thoughts in regards to the SBA 8(a) program? Is it a non-effective program that has simply become a bureaucratic haven; or does it serve a purpose that warrants it’s survival?