Construction Law Toolbox : Mississippi Construction Lawyer & Attorney : Robinson Biggs Ingram Solop & Farris Law Firm : MS & Southeast Construction Law Toolbox

In March, the United States General Accountability Office ("GAO") issued its finding and recommendations concerning fraud in the 8(a) Program. 8(a) Program Report. During its investigation, GAO discovered that at least 14 ineligible firms had received $325 million in sole-source and set-aside contracts. The GAO investigation discovered evidence of an entity fraudulently reporting adjusted net worth; an entity that was merely an extension of a graduated 8(a) firm; a top executive who was not disadvantage controlling the management and operation of the certified firm; an entity that was merely a shell company for a large construction firm managed by a non-disadvantaged individual; failure on the part of the president of an entity to report ownership in significant assets to the SBA; an entity that continued to receive 8(a) contract after it graduated from the 8(a) program by using other certified firms as pass-throughs; and a president who falsely reported his annual salary to the SBA.

The GAO report contains extensive details on the 14 entitles that were investigated and recommendations to the SBA for addressing the seemingly pervasive fraud in the SBA 8(a) Program. The report makes for interesting reading. More importantly, however, it should serve as a warning to individuals and entities "gaming" the SBA’s 8(a) Program that greater scrutiny of applicants and certified firms can be expected.

• Email This
• Print
• Comments
• Trackbacks

The Federal Times.com recently reported on proposed procurement "reforms" that will adversely impact business opportunities for small businesses. The term "procurement reform" suggests changes aimed at increasing contracting opportunities, improving fairness in the procurement system, or lowering the cost of goods and services. The Administration’s proposed changes do not aim to do any of these.

The Obama Administration is considering, among other things, converting services typically performed by small businesses from private performance to government performance. According to Federal Times.com, this change would impact service contractors that provide maintenance services, food services, and information technology services which are typically performed by small businesses. Contacting reforms anger small businesses. 

The Obama Administration is also looking at other changes that will burden small businesses. It is feared that "strategic sourcing", which combines government needs to achieve economy of scale, will limit those needs for goods or services that small businesses can meet. Stricter environmental requirements are likely to make it difficult for small businesses to compete effectively, too. 

Another change is the Administration’s "High Road" contracting policy which would favor the award of federal contacts to employers who pay higher salaries or provide better benefits. The Service Contract Act and Davis-Bacon Act already require service contractors to pay not less than prevailing, that is, market, wage rates. Why is an initiative that would increase costs to business and the government on the agenda?

Some critics claim the High Road initiative will inject more subjectivity into the procurement process while others say it is meant to reward union support for Obama. AFL-CIO union head opposes ‘High Road’ contracting policy. The FederalTimes.com points out that it is likely to damage small businesses. While small businesses do not have the financial resources to outpace the market for wages or benefits, larger companies aren’t likely to have them, either. Could it be that the High Road policy is not meant as a reform to reduce government contracting costs but meant to re-engineer American enterprise through government purchasing—at any cost?

• Email This
• Print
• Comments
• Trackbacks