FOR IMMEDIATE RELEASE
Contact: Dr. Henry Thomas 904-294-7811
FOREIGN EXEMPTION TARGETED FOR REMOVAL
Need for Disparity Studies Cited After Obama Orders Contracting Overhaul
JACKSONVILLE, MARCH 6th, 2009.- At a press conference held in Jacksonville, local community leaders and advocacy leaders for small and disadvantaged groups acknowledged the SBA Office of Advocacy decision to target the ‘Foreign Exemption’ for removal and the President issuance of a memorandum ordering a contracting overhaul.1 These developments strengthen the resolve of small and disadvantaged businesses to demand new disparity studies to account for their past inability to access public contracts as Congress had intended. The ‘Foreign Exemption has been responsible for the alleged diversion of $20 Billion in annual contracts away from the statutory rights of small businesses.2 The Office of Advocacy decision was part of their 2009 r3 Initiative3 and the direct result of the efforts of the locally-based Fairness in Procurement Alliance (FPA) and its Founder, Raul Espinosa. The Office of Advocacy r3 Initiative publishes The Government 10 Most Wanted Rules to be reviewed or reformed and FPA has been responsible for the inclusion of two of their targeted priorities on the r3 List. FPA Founder and Spokesperson, Raul Espinosa, said, “Government Regulators established ‘exemptions’ on the Federal Acquisition Regulations (FAR) without having statutes to base their actions. The ‘Foreign Exemption’ along with the ‘GSA Exemption’, which GAO – through the Delex Case – has already declared illegal, had given the contracting community a latitude Congress never authorized.” Raul’s Congressman John Mica, an ardent supporter of FPA and its efforts concurred, "Federal procurement under the set-aside program should include "foreign" as well as domestic purchasing to insure that government purchasing agencies properly follow congressional intend with regards to the Act's Set-Aside provisions." Espinosa added, “The exemptions have permitted LARGE businesses to extend an unlawful monopoly over government contracting; have allowed Agencies to circumvent the statutory rights of small businesses and have prevented small businesses a fair chance to compete for contracts which – by statute – must be reserved for them. The Fairness in Procurement Alliance (FPA)4 was formed in 2005 as a major coalition to represent the procurement priorities of the groups for whom Congress – through P.L. 95-507 – had formally established the Small Disadvantaged (SDB) Program5 and thus assure that small and disadvantaged businesses receive ‘maximum practicable utilization’ (MPU) in government contracting. One of the FPA major objectives has been the elimination of the FAR Exemptions, comprised of FAR 8.404(a) [the GSA Exemption] and FAR 19.000(b) [the Foreign Exemption]. Both of these FAR Exemptions, have allegedly diverted, illegally, $640 Billion in contracts over the last decade away from the statutory rights of small businesses.6 For four years, FPA and Espinosa have been challenging the GSA Exemption. FPA secured a Legal Opinion from the SBA General Council’s Office, which declared the GSA Exemption illegal.7 This historic decision acknowledged, for the first time, that federal contracts were being diverted, illegally, from small businesses.8 Additionally, FPA filed a whistleblower petition with the OFPP Administrator9 requesting a ruling on “the consistency of the GSA Exemption with applicable laws.”
1 2
President Obama Orders Contracting Overhaul - http://www.govexec.com/pdfs/030409e1.pdf FPA Announcement. - http://jacksonville.bizjournals.com/jacksonville/stories/2007/04/09/story10.html?b=1176091200%5e1442466&surround=etf 3 Office of Advocacy 2009 Announcement - http://www.sba.gov/advo/press/09-07.html 4 What is FPA - http://www.fpaportal.org/FPA/PressDocs/What_is_FPA.pdf 5 The SDB Program.- http://www.fpaportal.org/FPA/PressDocs/The%20Small%20Disadvantaged%20Business%20Program.pdf 6 Framing the Impact of the FAR Exemptions.- http://www.prweb.com/releases/2007/05/prweb525536.htm 7 The SBA Historic Opinion on GSA Exemption.- http://www.fpaportal.org/FPA/PressDocs/SBA_Opinion.pdf 8 Advocates Speak up Against FAR Exemptions. - http://jacksonville.bizjournals.com/jacksonville/stories/2007/09/17/story4.html 9 Avoiding the Ruling. - http://www.fpaportal.org/FPA/PressDocs/FPA%2001-30-08%20PR%20Response%20to%20OFPP.pdf
Although the Administrator cleverly avoided addressing the request, prompting an uproar among advocates, GAO on their October 2008 Delex Decision,10 brought up by the law firm of Pillero Mazza, finally confirmed its illegality, strengthening FPA’s resolve to bring down its companion exemption on the FAR. The SBA General Counsel ‘Legal Opinion on the Foreign Exemption’ which had been prepared in 2008 in response to several challenges FPA had initiated, can now be used to transmit the Office of Advocacy request to the FAR Council. Dr. Henry Thomas, Director of the FPA Think Tank at UNF said, “The significance of the SBA Office of Advocacy decision to review the foreign exemption is a huge victory for FPA because it demonstrates the need for disparities studies to account for the continued inability of small and disadvantaged businesses to access contracts the way Congress intended. This decision will result in increased diversity and inclusion in government contracting, which will stimulate the economies of urban and rural poor communities.” Dr. Thomas added, “Raul’s approach to work through the system to fix the government’s crisis in contracting with small and disadvantaged businesses shows the wisdom and potential of working in partnership with the system – it’s a win-win all around.” “The FPA-UNF Umbrella Initiative, whose partnership focus permits innovation and accountability in the delivery of critical procurement services and the participation of community groups to help bring inclusion of small and disadvantaged businesses in the process is a superb model which deserves support,” said Al Piña, Chairman of the Florida Minority Community Reinvestment Coalition. ““The potential removal of both of the FAR Exemptions now would permit the Government to meet its 23% statutory mandate with ease and allow the Agencies to meet their disadvantaged business goals without having to count their contracts – as GAO has acknowledged - in two or three categories to appear as if they have. Raul’s efforts on behalf of the entire small business advocacy community are admirable. Bringing down the FAR Exemptions will be his legacy.” said Roger Campos, CEO of the Minority Business Round Table (MBRT). George Cloutier, Chairman of Partner America, which successfully partnered with the U.S. Conference of Mayors said, “I am very impressed with the efforts of Raul Espinosa and FPA to focus on inclusion of small and disadvantaged businesses.” He added, “Their Umbrella Initiative deserves serious attention as a model to help accomplish the Congressional objectives of numerous legislations.” Dozens of similar comments have poured in from elected officials and business leaders around the country praising the efforts of Raul Espinosa and FPA to eliminate the FAR exemptions and demand disparity studies to account for the continued inability of small and disadvantaged businesses to access public contracts.
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THE FOREIGN EXEMPTION IN REVIEW
Allows the contracting community to circumvent FAR 19 on procurements of commodities for U.S. Agencies, military installations and Diplomatic Mission overseas. When originally written, an erroneous assumption was made that foreign countries would require U.S. entities operating in their countries to purchase from local vendors which is not the case. Procurements of commodities by DoD and State between $3,000 and $100,000 will become eligible for the small business reservation. The SBA General Counsel Office Opinion on the Foreign Exemption, prepared, but not yet released can now be used to transmit the petition for removal to the FAR Council The Office of Advocacy can also petition the new OFPP Administrator to rule on the “the consistency of both FAR Exemptions with applicable laws” in light of the GAO Delex case declaring the GSA Exemption illegal. Over $20 Billion in annual procurements – previously exempted – would be made available to small and disadvantaged businesses.. The ‘foreign exemption” has never been subject to the regulatory review now required by the Regulatory Flexibility Act.
10
The GAO Delex Decision.- http://www.gao.gov/decisions/bidpro/400403.pdf