Friday, October 21, 2016

Are you a small business with a federal government contract? Not for long…
There is no question that the current environment in the federal market for small businesses is challenging, to say the least. However, the environment for small business may soon need to be declared a full on disaster zone.

Two recent developments are moving forward to continue making being a prime contractor and a small business more difficult, if not impossible.

First is the recent decision by a federal judge to rule against the small business community. One of the leading voices fighting for small business federal government contractors is Lloyd Chapman, President of the American Small Business League (ASBL). Mr. Chapman had hoped to bring to light the state of the small business federal government contracting market, and the way that small businesses get cheated out of billions of dollars in potential contracts.

In the wake of the decision, Mr. Chapman stated:

"This case would uncover billions in fraud in federal small business contracting programs. If the Federal courts cannot stop fraud in federal small contracting, where do you go?"

According to a Government Accountability Office report, the Small Business Administration had included billions of dollars in federal small business contracts to over 5,300 Fortune 500 firms and other large businesses. Therefore, the government's compliance with the goal of awarding 23% of government contracts to small business continues to be in question.

Even government contract experts agree that the small business community is seeing a large share of lost contracting opportunities:

Professor Charles Tiefer, one of the nation's leading experts in federal contracting law and former Commissioner of Wartime Contracting in Iraq and Afghanistan, submitted a declaration in support of the ASBL case. "If the lawsuit had been allowed to get its rightful day in court on the merits, the lawsuit would have required the SBA to give all small businesses -- and doubly so for minority, women-owned, and disabled veteran businesses -- a larger and proper share of federal procurement."

The ASBL plans to appeal the ruling to the 9th Circuit Court of Appeals.
Second, and more pernicious, is the unthinkable actions by Congress, who are supposed to be fixing this problem.

With no surprises behind the impetus, Section 838 of the 2017 National Defense Authorization ActCounting of major defense acquisition program subcontracts toward small business goals, is nothing short of a small business killer.
The impact would be catastrophic on the small business community, since the Pentagon spends the most. This provision allows the Department of Defense to count first tier and second tier subcontract dollars towards the current goal established for competitive and noncompetitive set-aside awards to small business. Subcontract dollars would therefore replace dollars being awarded to small contractors today.

To see the potential impact, and the potential disaster awaiting small businesses, Guy Timberlake, the Chief Visionary Officer of the American Small Business Coalition, has an excellent analysis on the situation.

In three separate events in Washington D.C. this week where this issue was mentioned, all three representatives of the small business office for agencies at the individual events were excited at the prospect. They falsely believe this will help meet their numbers, but correctly believe this will be much less work for them. It was clear where the priorities are for these, and other, small business offices across federal government.
All small businesses should be up in arms over these developments, as the powers that be are aligned to punch down and cheat small businesses out of billions of dollars in federal contracts. Small businesses need to be aware of what is happening, and contact their members of Congress.

If this gets adopted across the federal government, small business government contracting can be a thing of the past. 

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