Bush administration officials wax optimistic about the role of minority-owned businesses in the country’s economic security.
"Minorities own almost 15 percent of all U.S. businesses," Commerce Secretary Don Evans told participants at the 20th Minority Enterprise Development Week (MED Week) conference in September. "Minority-owned companies had more than $591 billion in revenues. They produced about $96 billion in annual payroll. And they created over four-and-a-half million jobs."
But homeland security, at least as far as some small-business advocates see, is a different issue. A Bush administration homeland security proposal would invoke U.S. Code 40, which exempts the new agency, for national security reasons, from most procurement regulations. Administration officials say they seek the waiver because the procurement regulations may "impede" the new agency’s mission, but critics charge instead that it would impede small companies’ already difficult chore of obtaining federal procurement dollars.
"If such a blanket exemption were provided for an entire department as large as the proposed Department of Homeland Security, we would, for the first time since procurement reform, be turning back the clock on important changes to federal procurement rules," reads a letter to the Government Reform Committee and signed by Senate Small Business Committee Chairman Tom Daschle, a Democrat from South Dakota, and his Republican counterpart on the committee, Senator Kit Bond of Missouri.
The waiver, according to the letter, was intended to cover a specific need, and not as a broad exemption for an entire agency. Rebuilding the Pentagon after the September 11 attacks, for example, was accomplished in record time, the letter adds, without a waiver and under current procurement and government contracting regulations that already allow for substantial flexibility – including no competitive bidding – in cases of emergency.
Congresswoman Nydia Velázquez of New York, the ranking Democrat on the House Small Business Committee, says the problem is compounded by lack of access to government contracting.
"When I speak to small businesses in general – and minority-owned businesses in particular – many times they share with me the obstacles they face when trying to break into the $220 billion federal marketplace. There is a 23 percent small-business [procurement] goal across the government, but large agencies with enormous purchasing power consistently fail to meet that goal," explains Ms. Velázquez. "Now we have this massive [Homeland Security] agency with a total projected workforce of 170,000 and a budget of $37 billion. Given the current track record of federal agencies in engaging this nation’s small businesses, I’m afraid small minority-owned businesses will be shut out once again."
Ms. Velázquez recently hosted a Minority Business Summit that brought together entrepreneurs to discuss establishing a national minority small-business agenda. Two key issues discussed were federal contracting and access to capital. The problem of contract bundling – the practice of combining bids into one large contract, virtually shutting out small businesses – continues to prevail, asserts Congressman Ruben Hinojosa, a Democrat from Texas.
"Until there are serious moves to stop contract bundling, opportunities for small businesses, especially minority-owned businesses, will continue to be less than they should be," he says.
At MED Week, "Hispanic Business" Editor and Publisher Jesús Chavarría made a policy recommendation to document the true state of minority federal contractors. The proposal entailed the preparation of a report showing the performance of federal agencies with respect to their procurement goals. The recommendation is currently under consideration by the Commerce Department’s Minority Business Development Agency (MBDA), the office that organizes MED Week.
Harriet Michel, president of the National Minority Supplier Development Council, comments that the climate has drastically changed for minority entrepreneurs.
"In the public sector, we are moving toward a war economy. We have been unable in public policy to focus on issues that are relevant to minority businesses in the last year. There isn’t a coherent voice or strategy in the public sector from this administration on where they intend to go vis-à-vis minority businesses," she says.
Some Democrats, including House Minority Leader Richard Gephardt of Missouri, contend that recent changes in the Small Business Administration’s 7(a) program work against small businesses by limiting their access to capital.
But one federal procurement official (who requested anonymity) offers another explanation: "Part of the problem is that there are a lot of Hispanic and other minority businesses that don’t know of the services we offer. We can help untangle the bureaucracy, and we can tell a business what the different outreach programs are, and it’s free of charge. But we just don’t get enough businesses of color coming to us."
MBDA National Director Ron Langston emphasizes that the Bush administration does indeed understand the importance of small, minority-owned businesses.
"I have said over and over again, as minority businesses go, in the long term so goes the American economy," he says. "Our goal this year is to make a case why there should be an investment [in minority-owned businesses] and why there will be a return on investment if you have an active minority business community."
One area the MBDA is seeking to expand is in the number of Minority Business Opportunity Committees. MBOCs help channel procurement dollars to minority entrepreneurs. The program provides federal assistance to state and local government entities, universities, and nonprofit and for-profit organizations. The MBDA currently has five MBOCs and is seeking to increase the number to 10 by early 2003.
Applications to operate an MBOC are available at the agency Web site (www.mbda.gov).
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