FOR IMMEDIATE RELEASE
Contact: FPA Media Center: 904.347.4726
WHY UNCLE SAM HAS FAILED AT CONTRACTING WITH SMALL BIZ
Fraud and Abuse Including a Dysfunctional Bureaucratic Culture Cited as Main Culprits SAINT AUGUSTINE, FL., AUGUST 24th, 2009 . - President Obama’s timely statement that "It is
essential that we provide our Nation's small businesses with maximum practicable opportunity to participate in Federal Government contracting” was welcomed news. And so was Sen. Landrieu’s comment, “I intend to move forward from this announcement with vigorous oversight to demand that all small businesses including minority, women and veteran-owned firms - are on equal footing to receive their fair share of these contracts.” What was unacceptable, however, were the padded figures Federal Agencies gave SBA about their achievements in meeting their statutory goals. Federal Agencies have continued their established practice to unfairly take credit for small business contracts awarded to large businesses or to ‘fronts’ for large businesses, a fact the SBA IG acknowledged as far back as 2005.1 Regardless, the SBA FY08 Goaling Report is off, by at least $3.1B in small business awards, which had gone to 47 multi-billion dollar firms.2 The revised new total reduces the SBA figures to 20.7% and this amount does not even take into account billions in fraud and abuse that went uninvestigated and unreported. “There is a dysfunctional bureaucratic culture that abuses the statutory rights of small businesses and restricts their ability to compete,” said Raul Espinosa, Founder of The Fairness in Procurement Alliance (FPA) and President of FitNet, a minority-owned business which he claims has lost in excess of $3M in small business contracts due to alleged fraud and unfair procurement practices. Espinosa has published his experiences in White Papers which detail Contracting Abuse by the Air Force,3 Why the Size Protest System does not Work 4 and How to End the Abusive Contracting Practices. 5 He recently filed petitions with several OIGs and with the Senate Small Business Committee for fraud and abuse investigations. 6 In 2007, Espinosa also established a Think Tank at The University of North Florida (UNF) to work with academician on what has become The Umbrella Initiative.7 “The solution to the Uncle Sam dilemma lies at creating partnerships with bureaucrats, which is a concept The Umbrella Initiative spouses,” said Dr. Henry Thomas, Director of the FPA Think Tank at UNF. “The Umbrella Initiative’s goals are to double the number of minority and women-owned businesses doing business with the government by 2020 and to establish a Minority Procurement Center at UNF – to work on solutions for leveling the playing field,” Dr. Thomas said.
1 2 3 4 5 6 7
SBA OIG Report 5-15. - http://www.sba.gov/idc/groups/public/documents/sba/oig_gcbd_05-15.pdf Disputed small biz awards. http://www.docstoc.com/docs/9438670/Multi-Billion-Dollar-Firms-which-Took-31B-in-Reserved--Contracts-in-FY08
Contracting Abuse by the Air Force. - http://www.acquisition.gov/comp/aap/documents/Raul%20Espinosa%20102605.pdf Size Protest Do Not Work. - https://console.prweb.com/prfiles/2008/10/03/162468/TheSizeProtestSystemMustbeFixed.pdf How to End Contracting Abuse. - http://www.prweb.com/prfiles/2008/08/31/162468/FPAHowtoEndUnfairProcPractice.pdf Request for investigations.- http://www.docstoc.com/docs/9438762/Congress-Asked-to-Investigate-Fraud-and-Abuse The FPA-UNF Umbrella Initiative. - http://www.docstoc.com/docs/3683947/The-FPA-UNF-Umbrella-Initiative
Below is a sampling of the solutions the FPA-UNF Umbrella Initiative has proposed as a way to help Uncle Sam level the playing field in government contracting: 1. Bring clarity – through legislation - to the statutory small businesses priority over ALL federal programs. This is just as critical as creating ‘parity’ among all disadvantaged programs as Congress has finally proposed. 2. Remove the ‘illegal exemptions’ (i.e., GSA and Foreign) from the FAR. They have been responsible for excluding $640B in contracts – over the last decade – away from the statutory rights of small and disadvantaged businesses. 3. Revamp and Strengthen the Size Protest System to make sure it can offer justice and compensation for the abuses of a proven unfair procurement system. 4. Eradicate the abusive procurement practice referred to as ‘unfair end-user justifications.’ Agency heads can end the practice by holding end-users accountable for disciplinary action when caught limiting competition or offering preferential treatment to brands or suppliers. 5. Enforce the existing penalties - especially with large fines - for ‘size misrepresentation.’ 6. Use those large fines - assessed to the violators - to fund a ‘legal center’ in the private sector to protect the statutory rights of small and disadvantaged businesses. We can and desire to protect our OWN territory! 7. Prevent Agencies from taking credit for restricted contracts awarded to LARGE businesses. In this current fiscal year alone, FPA uncovered $3.1B in contracts awarded to 47 large businesses. 8. Investigate and eradicate the fraud and abuse affecting the 23% statutory reservations. FPA has turned over to the SBA OIG over a dozen cases which, although small – in dollar size - demonstrate the bureaucratic ‘culture’ FPA has identified as the main culprit. 9. Isolate and protect all restricted solicitations as The Umbrella Initiative has cleverly conceived. The FPA Think Tank at UNF has a plan in place, but bureaucrats have been unwilling to listen. 10. Fund disparity studies and research to determine the real state of affairs of minorities & women in accessing contract not solely at the Federal level, but at the State and municipal level as well. 11. Rely on existing outreach networks such as the Small Business Development Centers (SDBC) to implement many of the entrepreneurial solutions that have been proposed. FPA is pursuing, for example, a partnership with the Florida SBDC network to help roll out some of the projects The Umbrella Initiative has proposed. 12. Encourage the Commerce Department (through MBDA) and SBA (through the Office of Advocacy and Business Development) to fund efforts which focus on eliminating barriers and opening-up state and local contracting opportunities (besides Federal) to help disadvantaged businesses contract with the government. You, too, can contribute to the President’s commitment to ‘level the playing field in government contracting.’ Simply go to the Google Moderator website listed below, and post your recommendation or simply vote for your favorite ones. It can make a difference: http://moderator.appspot.com/#e=a9ccb