Page 40 - FCW, August 2021

Acquisition
“LET’S SAY YOU’RE A WHITE-OWNED COMPANY AND YOU SEE AN UP-AND- COMING BLACK-OWNED COMPANY, SO YOU BUY A STAKE IN IT AND ENRICH YOURSELF. NOW YOU’RE GETTING RICHER, AND THE BLACK-OWNED
COMPANY ISN’T NECESS”
ARILY GAINING THE BENEFITS.
— Former NASA CIO Linda Cureton
The plan would earmark $100 billion in federal contracting opportunities for SDBs over the next five years, according to a White House fact sheet, in addition to $31 billion for mentoring and other forms of technical assistance. However, experts warn that without proper over- sight, the initiative could pave the way for large corporations to take advantage of set-asides for those historically mar- ginalized firms. Those experts say the Biden administration must expand its focus on regulations to avoid the fraud and mismanagement that have hap- pened with similar programs in the past.
“This is one of those things that look good on paper and in practice can also bring some positive things,” said Larry Allen, former president of the Coali- tion for Government Procurement and now president of Allen Federal Busi- ness Partners. “But in practice, history has shown it can also bring unintended consequences.”
Former NASA CIO Linda Cureton said government funds don’t always end up in the right hands, and it remains unclear how the Biden administration plans to oversee the robust, govern- mentwide call-to-action. Some large companies have taken advantage of SDBs through other government initia- tives, such as mentor-protégé programs, added Cureton, who is now CEO and founder of Muse Technologies.
According to the Small Business Administration’s website, one or more disadvantaged people must own and control at least 51% of a company for it
to qualify as an SDB, and the disadvan- taged person or people must be socially and economically disadvantaged. The company must also meet SBA’s size standards. However, the agency allows companies to self-represent their status as SDBs, with no application process required.
During the Trump administration, Congress changed the law to allow larger companies to hold up to a 40 percent stake in SDBs in exchange for technical and management guidance, training, and networking opportunities. Those firms can then form a joint part- nership to secure contracting oppor- tunities meant for SDBs. Some large companies have faced criminal charg- es and multimillion-dollar lawsuits for abusing such programs and using small businesses to collect set-asides.
“Let’s say you’re a white-owned com- pany and you see an up-and-coming Black-owned company, so you buy a stake in it and enrich yourself,” Cureton said. “Now you’re getting richer, and the Black-owned company isn’t necessarily gaining the benefits.”
She added that the problem “needs to be looked at in a more holistic way.”
Keeping large companies
from finding a workaround
Federal agencies’ spending with SDBs has remained flat at about 10% for the past four years. Meanwhile, the number of active participants in SBA’s mentor- protégé program jumped from 1,185 to 1,242 between June and July of this year.
Antonio Doss, deputy associate administrator of SBA’s Office of Gov- ernment Contracting and Business Development, said the small-business contracting market has seen continued growth in the past decade, and applica- tions are increasing for SBA initiatives that target small firms. Nevertheless, he acknowledged that opportunities are not as widespread as they have been in previous years. He attributed the change to an increase in consolidation and bun- dling and a governmentwide movement toward centralizing procurement func- tions in certain departments “and with a small group of preferred contractors.”
“SBA and other agencies will need to redouble our efforts to reach small disadvantaged businesses, particularly those that are not currently participating in government contracting,” he added.
As the government expands its investments in SDBs, experts say it must simultaneously ensure that marginalized firms won’t be used for pass-through work — a term used to describe how big businesses have at times misused mentor-protégé programs.
When Air Force officials decided nearly a decade ago that they wanted to partner with service-disabled veteran- owned businesses, Allen said he “saw a whole raft of companies calling them- selves service-disabled veteran-owned businesses that popped up overnight. These were companies that weren’t even companies at all.”
Although the goal of expanding fed- eral spending for SDBs is laudable, it
38 August 2021 FCW.COM