Coalition of Small and Minority Businesses Claims the Government Unfairly Excludes Their Access to $64 Billion in Federal Contracts Through Outdated a

Saint Augustine, FL (PRWEB) May 14, 2007 -- The Fairness in Set Aside Procurement Coalition ("FSAPC") which represents the procurement priorities of 10 million small businesses, including but not limited to, businesses owned by minorities, women, veterans, Native Americans, and service-disabled veterans (8a and Hub Zones included) has charged that the Federal Acquisition Regulations (FAR) fails to implement the mandates of the Small Business Act, (Act) which governs all Federal procurements.

According to Raul Espinosa, Founder and Spokesperson for the Coalition, "The results of the regulations' misinterpretation of the Act is the deprivation of our access to more than $64 Billion in federal contracts each year (20 Billion in 'foreign' contracts and $44 Billion in Federal Supply Schedule (FSS) awards."

Roger Campos, President of the Minority Business Round Table (MBRT) said, "the impact of H.R. 1873 which increased the set-aside ceiling to 30% will mean nothing unless the exemptions are eliminated." Anthony Robinson, President of MBELDEF, added, "The set-aside exemptions in the regulations will continue to exclude our access to those contracts."

The Small Business Act mandates that small business concerns, owned and controlled by socially and economically disadvantaged individuals, veterans, service-disabled veterans, including women, shall have the maximum practicable opportunity to participate in the performance of contracts let by any Federal agency, including contracts and subcontracts for subsystems, assemblies, components, and related services for major systems. 15 USC 637(d)(1).

Further, the Small Business Act mandates that each contract for the purchase of goods and services that has an anticipated value greater than $2,500, but not greater than $100,000 shall be reserved exclusively for small business concerns unless the contracting officer is unable to obtain offers from two or more small business concerns that are competitive with market prices. 15 USC 644(j)(1).

Notwithstanding these clear statutory mandates, the FAR exempt 'foreign' purchases from the 'set-aside' mandate of the Act. FAR 19.000(b) - whose origins pre-dates the FAR - provides that Part 19 [which includes the regulations implementing the Act, including the 'set-aside mandates' apply only in the United States or its outlying areas.

According to Congressional sources, this exemption is outdated and has resulted in the exclusion of more than $20 Billion in yearly procurements - for over a decade - from small and minority businesses and the oversight of the SBA's Government Contracting Office and its Procurement Center Representatives (PCR). (See documents on this link for details on the charges

http://www.prweb.com/releases/2007sponsored/0/prweb510449.htm

Further, FAR 8.404, provides yet another example where the FAR fails to adhere to the mandates of the Act. FAR8.404 also exempts all Federal Supply Schedule (FSS) purchases (the bread and butter of the procurement system) from the mandates of the Act.

In direct contradiction of the Act's mandate, FAR 8.404(a) provides that the small business set-aside procedures and policies do not apply to Blanket Purchase Agreements (BPA) and orders placed against schedules using Part 8 procedures. FAR 8.405-5 goes even further to emphasize that the mandatory preference programs of Part 19 - also in a contradictory manner to the Act's mandate - do not apply to orders placed against schedule contracts and indicates only that agencies should consider (but are not required to do so) the socio-economic status when identifying contractor(s) for consideration or competition for award of an order or BPA. Espinosa claims, "This additional exemption deprives our constituency of more than $44 Billion dollars in contracts."

According to Sen. John Kerry and Sen. Olympia Snowe, Chairman and Ranking Member of the Senate Committee on Small Business and Entrepreneurship, " the unambiguous Congressional intent (is) that the Act govern all procurements... Executive departments do not have the discretion to interpret the law in a manner inconsistent with its plain language." (excerpt from a letter to Sec. of State Powell dated Jan. 12th 2005)

Espinosa said, "As spokesperson for a constituency of over 10 Million small businesses, I am requesting for Congress to amend the Small Business Act and specifically eliminate the 'set-aside exemptions' when it does so." He added, "Congress must bring clarity to an issue which even the SARA Panel, formed in 2005 to examine government procurement across the board, has agreed, needs clarification."

In an effort to bring pressure to the system, Espinosa has filed - as an interested party - two separate GAO protests (Case # 299717 and Case # 299759) challenging the 'set-aside exemptions. Additionally, he requested for the Senate Committee on Small Business and Entrepreneurship to send a letter to Comptroller General Walker, of the General Accountability Office advising GAO of Congress clear position regarding the Acts' set-aside provisions and the alleged unlawful exemptions. According to Espinosa, "These protests, if anything, will force the Government's Attorneys into citing the regulations that we must overcome to gain the access Congress intended for us to have." He added, "I am appealing to the Legal Community to assist us fight this battle, frankly, because we lack the resources and there are very powerful interests which do not want us to succeed."

Espinosa's own Congressman, John Mica, a member of the House Committee on Government Reform, when briefed about the situation wrote to him on March 14th and said, "I share your concern that federal procurement under the set-aside program should include "foreign" as well as domestic purchasing… I thank you for your update to insure that government purchasing agencies properly follow congressional intend with regards to the Act's Set-Aside provisions."

Espinosa points out that "such reform would not be complete without a complete overhaul of the 'size protest system,' which the results of SIZ-2005-05-09-22 'test case' clearly proved." He added, "that 'size protest' test case, which inspired the formation of the Coalition, demonstrated that small businesses do not receive justice when they win their cases." He added, "If the government provides for small businesses to challenge abusive contracting practices, then we must have a guarantee that, if we win, we can claim the contract we fought for or get 'future contracts' as an option. Otherwise, the 'protest' is not only worthless, but a waste of taxpayers dollars."

In his effort to inspire the cooperation of the Legal Community and the involvement of small businesses in demanding for Congress to Amend the Act, Espinosa cites the words of Ralph Waldo Emerson who once said, "what I need is for someone to make me do what I can." Espinosa urges small business owners to write to their elected officials and ask the business groups they belong, to make public statements on the subject." With such determination, Espinosa said, "we can all make a difference!"

Following are public references to the efforts of Espinosa and the Coalition he founded:

http://www.entrepreneur.com/magazine/entrepreneur/2007/may/177042.html
http://www.acquisition.gov/comp/aap/documents/Raul%20Espinosa%2005%2031%2006.pdf
http://jacksonville.bizjournals.com/jacksonville/stories/2006/07/03/editorial3.html
http://www.nytimes.com/2006/12/27/business/27sba.html?ex=1324875600&en=815609049da607c3&ei=5088&partner=rssnyt&emc=rss
http://www.dollarsandsense.org/archives/2006/0106moraff.html

The Fairness in Set-Aside Procurement Coalition (FSAPC) missions are to bring attention to contracting abuse on set-aside solicitations; to educate the procurement community about issues of concern and to make recommendations that strengthen 'set-aside programs' at all levels of the government (federal, state and local) so they can achieve their intended results.

###