Mr. Mark Gross
Assistant Attorney General
for Civil Rights
P.O. Box 65808
Washington, D.C. 20035-5808
Subject: Proposed Reforms to Affirmative Action in Federal Procurement
Dear Mr. Gross:
This concerns the public notice and invitation for reactions and views published in the Federal Register on May 23, 1996, entitled "Proposed Reforms to Affirmative Action in Federal Procurement." The Office of Advocacy is pleased to provide comments on this proposal.(1)
The proposal is designed to ensure compliance with the constitutional standards established by the Supreme Court in Adarand Contractors, Inc. v. Pena. It was developed by the Department of Justice (DoJ) to serve as a model for amending the Federal Acquisition Regulations (FAR) and the Defense Federal Acquisition Regulations Supplement.
BACKGROUND
The federal government -- over a period of years -- developed a number of specific affirmative action initiatives. These initiatives are intended to address the exclusion of individuals on the basis of their gender or race. Affirmative action is an effort to open the doors of education, employment and business development opportunities to qualified individuals who happen to be members of groups that have experienced longstanding and persistent discrimination.
The Office of Advocacy supports the finding that affirmative action has helped close gaps in economic opportunity in American society, thereby strengthening the entire economy.
IMPACT ON SMALL BUSINESS
Affirmative action in federal procurement has helped many small businesses owned by women and minorities obtain government contracts. Notwithstanding this result, the small business sector of the economy still only receives a disproportionately small share of the procurement pie as compared to its contribution to the overall economy. Any erosion of affirmative action initiatives could further reduce the number of federal contracts awarded to small disadvantaged and women-owned firms and, as a consequence, reduce even further the contracts awarded to small businesses. This is a matter of major concern, especially in light of the following.
In fiscal year 1995, the federal government spent $202.3 billion for the acquisition of goods and services. Small firms received approximately $43 billion of all government prime contracts. Of this amount, $11.2 billion, or about 6 percent, were awarded to small disadvantaged businesses and $3.6 billion, or about 2 percent, were awarded to women-owned small firms.
In contrast, eight of the government's largest prime contractors together received $45 billion. This amount represents more federal contract dollars in one year than was awarded to all small businesses combined in the same year. Further, Lockheed Martin, the government's largest prime vendor received $14.9 billion in contract actions, representing almost $4 billion more than was received by all small disadvantaged businesses for the same period. In addition, the federal receipts of Lockheed Martin are more than double what was received by the aggregate of all 8(a) contractors and better than 4 times as much as was received in contract dollars by all women-owned businesses in FY '95. Further, four of the government's eight largest vendors received more contract dollars in FY '95 than all women-owned businesses combined.
If affirmative action in procurement is about establishing equal opportunity and a "level playing field," these data suggest a need for more initiatives to open up federal contract markets to women and minorities. Ways need to be found to accomplish this.
WHITE HOUSE CONFERENCE ON SMALL BUSINESS
The 1995 White House Conference on Small Business, attended by almost 2,000 small business delegates examined the issues regarding affirmative action programs. Of the final 60 policy recommendations, four recommendations supported increased opportunities for small, economically disadvantaged, women- and minority-owned firms. In addition, the delegates called for maintaining set-aside programs, and championed equitable opportunity for all citizens. Each of these four recommendations were supported by well over half of the voting delegates.
ADDITIONAL COMMENTS
FAR Amendments
The DoJ proposal is intended to serve as a model for the preparation of procurement regulations that will be drafted to implement the government's amended affirmative action policy.
The Office of Advocacy asks that, in the development of proposed implementing rules, agencies perform the analyses required by the Regulatory Flexibility Act (RFA).
The RFA requires agencies to analyze the impact their rules may have on small firms and to consider alternatives that can achieve the intent of the regulations without adversely affecting small businesses. Advocacy believes the May 23 public notice and invitation for reactions and views will generate many valuable suggestions and alternatives that should be considered in the RFA process.
Race-Neutral Mechanisms
The proposal discusses the utilization of multiple outreach and technical assistance programs designed to assist small, small disadvantaged and women-owned businesses obtain federal contracts.
The Office of Advocacy believes that helping certain sectors of the economy gain access to federal contract markets and to compete successfully are critically important elements in establishing a "level playing field" and in promoting parity among all stakeholders in federal procurement. The Office of Advocacy recommends that the following additional mechanisms be considered:
1. Require federal agencies to include in prime contract solicitations of more than $500,000 an evaluation factor that would measure a prospective bidder's past and planned utilization of small, minority and women-owned firms as subcontractors. Restrict firms that are not in compliance with subcontracting plans from future government contracts.
2. Provide easy and inexpensive small business access to the government's electronic commerce system, FACNET. Consideration should be given to establishing a certified VAN within a federal agency or government-sponsored entity, or letting an agency or government entity serve as a conduit for a certified VAN, that would provide access to FACNET, at no or minimal cost, to certain sectors of the small business community. In addition, all government procurement opportunities should be electronically listed on the Internet.
3. Increase overall small business utilization goals. Agencies should be encouraged to work with small firms and be creative in how they meet small business goals. Incentives (recognition, flexibility, policy relief, etc.) should be provided for federal agencies to exceed their small business procurement goals.
4. Facilitate þone-stop shoppingþ for government procurements. It should not be necessary for small firms (or any prospective vendor) to approach numerous different agencies to learn about procurement opportunities and agency-unique requirements. This information should be centralized. Internet access to procurement opportunities, as noted above, is a critical first step. In addition, a central federal contact entity should be designated such that small firms can:
a. Learn what agency procurement bulletin boards, Internet web sites and other electronic vehicles are available and how to access them.
b. File form (SF) 129, Solicitation Mailing List Application, once and have it electronically sent to appropriate designated agencies.
c. Learn about agency-unique requirements and how to comply, and/or the name and phone number of an agency contact person who can articulate compliance requirements.
d. Learn about all available agency procurement conferences, seminars, briefings and/or other training.
e. Learn the names and phone numbers of agency contracting officers.
f. Obtain information about subcontracting opportunities, i.e., names of agency prime contractors with product lines and a contact point, copies of all subcontracting directories, etc.
These functions could be electronically integrated and included in the mission of a specific federal agency or the Centralized Contractor Registry.
5. Agencies should develop progressive small business training models. Such additional training/materials would focus on:
a. How to take advantage of electronic markets.
b. How to link, partner or form a consortium with other firms to meet expanded or consolidated procurement requirements.
c. How to find and use federal procurement resources.
d. How to find subcontracting opportunities.
e. How to market to the government in a changing environment.
f. How to write winning procurement proposals.
g. How to use þservice excellenceþ in leveraging procurement opportunities.
6. The FAR Council should be expanded to include the U.S. Small Business Administration. This would be an important change because small business concerns have historically not been sufficiently considered in the development of procurement regulations.
These additional mechanisms are practical, efficient and market- based to stimulate real competition from small, small disadvantaged and women-owned businesses.
Certification and Eligibility
The Office of Advocacy believes that the certification of eligible small disadvantaged and women-owned firms should be standardized throughout the federal government. Further, Advocacy supports the creation of a national data base that would maintain a list of all certified small disadvantaged and women- owned firms.
Continuation of the 8(a) Program
Advocacy supports an SBA sponsored 8(a) program that helps minority owned firms acquire the skills and experiences they need to thrive in the mainstream economy. Advocacy believes in 8(a) development goals that seek to develop potential, stimulate growth, track realistic business cycles and ultimately prepare small disadvantaged firms to be competitive in a free market economy.
CONCLUSION
Small business has a major stake in what the Federal Government does regarding affirmative action. We need to ensure that whatever is put in place to comply with the Supreme Court decision does not abandon legal incentives to expand opportunities for small business and small disadvantaged women- and minority-owned businesses. Public policy needs to guarantee a level playing field and avoid erecting barriers to competition from small business.
Sincerely,
Jere W. Glover
Chief Counsel for Advocacy
END NOTES
1. The views expressed in this document are primarily those of the Chief Counsel for Advocacy and may not necessarily reflect the views of the U.S. Small Business Administration or the Administration.