Obama plans to abolish incentives for minority-owned contractors

[Paslode]

I noticed this the other day.

Based on personal experience I have never been a fan of this program, it was far too easy to manipulate and more often than not the people it was supposed to assist got used. The other issue was that the end user generally paid 20-40% more for the goods to accommodate the law.

But I thought the program had more possibilities for positive results than Affirmative Action because the people involved were actually stake holders in the business.


Commentary: Don’t abolish incentives for minority-owned contractors
By Lloyd Chapman, Published: September 19, 2011

Less than 24 hours after addressing the nation with a new jobs bill titled the American Jobs Act, the Obama administration released plans to eliminate the oldest and most successful program to create jobs for minorities. This seems ill-timed and ill-advised, considering the jobless rate for African Americans alone is at 16.7 percent.

Current federal law requires that the Department of Defense, NASA and the U.S. Coast Guard award a minimum of 5 percent of all federal contract dollars to minority-owned small businesses. The proposed policy will abolish that requirement and prevent contracting officers from taking advantage of incentives that encourage contracting with minority-owned companies.

This is a major blow to the minority-owned business community and minorities nationwide. Approximately 35 percent of the U.S. population is made up of ethnic minorities, and nearly 6 million businesses are minority-owned. The American Small Business League estimates that minority-owned businesses will lose upward of $50 billion annually in federal contracts.

Undoubtedly, countless firms will close their doors and American workers will be laid off. It is difficult to understand why President Obama would, in the midst of one of the worst economic downturns in U.S. history, and less than two years before the next election, end programs designed to create jobs for minority groups.

In addition to the proposal to eliminate programs for minority-owned small businesses, the Obama administration has been widely criticized for diverting hundreds of billions of dollars in federal small business contracts to Fortune 500 companies and some of the largest firms worldwide. Large companies that have received small business contracts include Lockheed Martin, British Aerospace, Rolls-Royce and Italian defense giant Finmeccanica, among many others.

In Report 5-15, the Small Business Administration Office of Inspector General described the diversion of federal small business contracts to large businesses as, “one of the most important challenges facing the Small Business Administration and the entire federal government today.” The SBA Inspector General has named this abuse as a top management challenge for six consecutive years.

The American Small Business League is concerned that this new policy could lead to a domino effect that eventually would end all federal contracting programs for the nation’s 28 million small businesses, where most Americans work. Not only do federal small business contracting programs help minority groups, they create jobs nationwide. According to the U.S. Census Bureau, small businesses create 90 percent of all net new jobs.

In 2008, then-candidate Barack Obama issued a statement that President Obama seems to have forgotten. He said, “Small businesses are the backbone of our nation’s economy and we must protect this great resource. It is time to end the diversion of federal small business contracts to corporate giants.” Apparently he no longer views minority-owned and other small business as a “great resource” worth protecting.

Lloyd Chapman is president of the American Small Business League, based in Petaluma, Calif.

http://www.washingtonpost.com/business/capitalbusiness/commentary-dont-abolish-incentives-for-minority-owned-contractors/2011/09/16/gIQAaegDxK_print.html

[Pete]

"........Undoubtedly, countless firms will close their doors and American workers will be laid off.............."

WTF? Somebody explain that one to me. The item or service required will still be purchased. That requires a company to produce the item or service.

At what point to people stand or fail on their own product or service?

It appears the focus of this story is ON "small business". They are worried large companies will squeeze out the little ones on contracts.

But how many somewhat larger businesses have a "token" on the board to qualify as a minority business?

[Dozer523]

WTF? Somebody explain that one to me.
Maybe a reaction to news like this article. http://www.washingtonpost.com/local/fraud-in-corps-of-engineers-contracting-charged/2011/10/04/gIQAPtb7LL_story.html?hpid=z1

" take advantage of its status as an Alaska native-owned company to obtain contracts of unlimited size without competition. A 2010 investigation by The Washington Post found that some native corporations regularly served as pass-through companies, securing contracts and then turning to larger, more established firms to do the work.

[Slantwire]

But how many somewhat larger businesses have a "token" on the board to qualify as a minority business?

Fairly common, open and legal practice, and it's not "somewhat" larger business. A lot of small, minority-owned businesses make their money by being primes, while a Boeing or LockMart is the "subcontractor" providing 95% of the personnel / product.

Mini Minority Corp, with 10 employees, wins a contract to supply 50 analysts (or engineers, or HVAC installers, or whatever) to the government. Rather than hire their own employees to fill the slots, they subcontract the work out... to the Northrop Grumman or SAIC that told them about the contract in the first place. The contract proposal even explains as much, up front before contract award. Government contracting officers expect and encourage it.

Edited to add: The scenario is legal as I described it. Dozer's link is a wholly different story, but I doubt that the graft there was in any way due to company size.

[BOfH]

Maybe a reaction to news like this article. http://www.washingtonpost.com/local/fraud-in-corps-of-engineers-contracting-charged/2011/10/04/gIQAPtb7LL_story.html?hpid=z1

" take advantage of its status as an Alaska native-owned company to obtain contracts of unlimited size without competition. A 2010 investigation by The Washington Post found that some native corporations regularly served as pass-through companies, securing contracts and then turning to larger, more established firms to do the work.

Indeed, I have a family member that works at ARDEC and I remember discussing technical support responsiveness with regards to the contractors that were tasked with the job. He mentioned that the small Alaska based contractor that was originally responsible was very good, however, when the contract was up for renewal, another Alaska based contractor won the bid and responsiveness went down the rat hole, it took him 4 weeks just to get a junior engineer under him setup with a machine. The technicians were actually from Honeywell...

ETA: Isn't this(the minority) his voting block? I don't like it, chances are this is going to be replaced with something worse...

[The Reaper]

Shocked to hear that he would even consider it.

OTOH, it sees that every contractor truck on Bragg has some Eskimo name.

Must be Lumbee Eskimos from the looks of them.

TR