(20) U.S. SBA Issues Quota-Friendlier Rules
Editorial 07/31/00
Adversity.Net, Inc. for Victims of Reverse Discrimination
The Small Business Administration Does NOT Need to be More Quota-Friendly (07/31/00)

          Earlier this spring, the quota lobby trotted out some less than impressive statistics to convince Congress that -- gasp -- federal agencies were issuing contracts that were too large and complex for many SBA quota-firms to perform.  Even with generous quota points and greatly relaxed qualification requirements for minorities, it seemed that SBA's "disadvantaged" minority and women-owned quota-firms just couldn't measure up on these larger "bundled" government contracts.

          The solution to this dilemma?  With the arrogance typical of the Clinton minority-monarchy, SBA's Aida Alvarez this month proposed new quota rules that would make it more difficult for federal agencies to issue such large "bundled" contracts.

          SBA's Alvarez, a Clinton rainbow appointee, thus neatly side stepped the real issue of why we should be concerned at all about a group of contractors who cannot compete for contracts based on their qualifications.

          Under SBA's new "more quota friendly" rules, the agency proposes to force federal contracting agencies (a) to prove that their "bundled" mega-contracts do not have a "disparate" impact on minority contractors; and (b) to prove that their "bundled" contracts cannot be broken down into smaller, more quota-friendly contracts. 

          Lacking any real evidence that large, bundled government contracts constitute racist and sexist discrimination against minority and women-owned firms, the SBA and its lobbyists have been forced to rely on actual facts.  And the actual facts upon which they've been forced to rely are far less than compelling.

          For example, the SBA admits that minority and women-owned firms did just as well at the quota-trough in 1998 as they did in 1999.   Minority firms bagged a whopping $6.5 billion in set-aside contracts in 1998 vs. $6.3 billion in 1999.  Similarly, women-owned firms received set-asides of $4 billion in 1998 vs. $4.59 billion in 1999.   (SBA made a faint-hearted effort to portray these facts as "alarming".)

          For another example, the SBA also admits that in 1994 there were 98,694 minority contracts awarded at an average of $78,018 per set-aside.  The SBA claims to be alarmed by the fact that in 1999 only 81,399 minority contracts were awarded at an average of $77,397 per set-aside contract.  

          Countless "mini-contractors" owned by white males would give just about anything to be guaranteed an average of $77,397 in federal contracts during each of the past five years!   But such firms are considered "privileged", and therefore were not entitled to compete for any of these contracts.

          [Background and supporting data:  SBA cited 1994 set-aside data showing that $7.7 billion ($7,700 million) in set-aside contracts was spread over 98,694 contracts averaging $78,018 per set-aside contract.  SBA then cited 1999 set-aside data showing that $6.3 billion ($6,300 million) in set-aside contracts was spread over 81,399 contracts averaging $77,397 per set-aside contract.]  

          The U.S. Government Accounting Office (GAO) weighed in to this Kafka-esque debate with a report that of the 5,400 minority and women-owned firms feeding at SBA's quota trough last year, only 3.9% (209 firms) received 50% of these set-aside contract dollars!

          Stated another way, the GAO report says that 209 "disadvantaged" firms received a total of $3.15 billion in set-aside contracts, for an average of $15 million per "disadvantaged" firm in 1999.

          How can anyone consider any race- or gender-preferred recipient of $15 million in annual federal contracts to be disadvantaged in any sense of the term?

          SBA and Director Aida Alvarez are absolutely correct on one point only:  the SBA set-aside program is in trouble.   SBA's racial- and gender set-aside program is even more indefensible today than it was at the inception of this discriminatory program.

-- Tim Fay, Editor, Adversity.Net

News Links, Sources and Background:

Washington Post:

SBA Acts to Promote Bite-Sized Contracts (Washington Post 07/27/00 by Peter Behr, p. A21)
[link http://www.washingtonpost.com/wp-dyn/politics/fedpage/A51915-2000Jul26.html ]

Contract Woes for Small Firms (Washington Post 07/20/00 by Peter Behr, p. A23)
[link  http://www.washingtonpost.com/wp-dyn/articles/A10920-2000Jul19.html ]

Small Business Administration:

Final Regulation as published in the Federal Register 07/26/00
[Link - download in MS Word format http://www.sba.gov/GC/far.doc ]

Federal Acquisition Regulatory Council final procurement rule on contract bundling
[Link - download in MS Word format http://www.sba.gov/GC/sbarule.doc ]

Testimony of James Ballentine before the House Committee on Small Business on the Certficate of Competency Program
[link http://www.sba.gov/regulations/testimony/ballentine10-21-99.html ]


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