"By not meeting this [procurement] goal, the government sells all minorities short. If the federal government would meet or exceed its minority-owned business goal, this would open up contracting opportunities and bring benefits to all ethnic groups," she says. "That's exactly where our focus should be right now. If ethnicity data were gathered with regard to federal procurement, we already know what it would reveal: minority-owned companies are getting a very tiny piece of the contracting pie."
As a rough estimate, about 25 percent of the firms in the Small Business Administration's 8(a) Development Program are Hispanic-owned. These Hispanic firms get about a third of the contracts in the program, but those contracts account for less than 3 percent of all federal procurement dollars. Approximately 60 percent of all federal contracts awarded to minority firms come through the 8(a) program.
Assuming that 60 percent figure holds for Hispanic-owned contractors, it means Hispanic firms receive about 5 percent of the federal procurement budget. According to the Census Bureau, Hispanics account for more than 13 percent of the U.S. population.
A current example of the contracting shortfall, Ms. Velázquez points out, is the reconstruction in Iraq. She included a provision in the $87 billion Iraq Appropriations bill that calls for greater participation of small businesses in federal contracts for the project.
"This is meant to address the well-publicized fact that the Bush administration has awarded billions of dollars in mega-contracts to a handful of politically connected U.S. corporations on a no-bid basis," Ms. Velázquez says. "These contracts were not open to fair competition. They were doled out in secret backroom negotiations. This will give small businesses a chance."
The amendment requires that all large companies that receive contracts in Iraq have a subcontracting plan that explains how they will implement subcontracting opportunities for U.S. small businesses.
While current law requires that large prime contractors set aside a percentage for small business subcontracting in the United States, the law doesn't cover work performed abroad.
The Small Business Act sets a goal of 23 percent of all federal prime contracts going to small businesses – with at least 5 percent to small disadvantaged businesses. But the 8(a) program itself, the primary avenue for minority firms to enter the federal marketplace, has only non-statutory legislative goals, not specific goals that are enforceable by law.
"Small businesses – and especially Hispanic-owned firms – are the lifeblood of the [U.S.] economy," says Rep. Ciro Rodriguez (D-TX). "This is well recognized everywhere, except within the federal government procurement arena. There is no statutory government-wide goal for the 8(a) program. For the government to improve its ability to achieve its small-business goals, federal agencies must be held accountable by establishing a statutory goal."
A GAO survey of 8(a) participants found that 86 percent of them joined the program primarily to obtain contracts, although the program's primary focus is entrepreneurial training and development.
The same GAO report stated that no studies have been conducted to measure the 8(a) program's impact.
In the near future, the solution for gathering procurement data by ethnicity may come from increased efforts to boost the use of advanced technology, according to federal officials.
After a General Services Administration report found only a limited amount of data available for monitoring federal procurement, the GSA implemented a pilot program to replace the 30-year-old Federal Procurement Data System.
The old system was supposed to track procurement data, but faced broad criticism as a cumbersome, time-consuming, disorganized, and costly process.
The new program is the Federal Procurement Data System–Next Generation, or FPDS-NG. GSA has awarded a $24 million contract to Global Computer Enterprises to implement the program, which the company expects to be functioning soon. However, individual agencies still will determine how to connect to the program for data submission.
The system will provide Internet access to all data in real time. It also is designed to decrease the time required for data collection, reduce the cost of data collection, and streamline the entire process.
"The FPDS-NG re-engineering effort is a critical because the data that is collects will help Congress and the public understand how taxpayer funds are being spent every day by the government. It will allow snapshots of where and how," says David Drabkin, GSA deputy associate administrator for acquisition policy. "We look forward to the benefits of a real-time fully integrated FPDS-NG."
The FPDS-NG is scheduled to be the first system to operate government-wide as part of the Bush administration's e-government agenda, which is seeking to use more technology to increase efficiency.
When the FPDS-NG system is fully operational, officials say it is expected to give the public and federal agencies one of the fullest glimpses so far into the overall composition of the federal contractor marketplace.
© 2003 Hispanic Business Inc. Reprinting, copying, or transmitting all or part of this information requires written permission.
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