Defense Contracts a Big Lure for Minority-Owned Businesses

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Defense contractsMinority and women owned business enterprises (M/WBE’s) continue to benefit from the federal government’s ongoing shift of awarding single multi-million dollar service and product contracts to vendors opposed to multiple award contracts, according to a report released late last year by the Bloomberg Government Major Programs Procurement News Agency in New York.

The agency published a report in October that revealed the top 20 procurement contracts for fiscal year 2015 that are dominated by dozens of government related agencies?mostly defense contracts slated to award billions of dollars in contracts to vendors. One of the biggest defense procurement contracts is the Army’s Responsive Strategic Sourcing for Services and Information Technology Enterprises Solutions? Services?with more than $69 billion in contracts slated to be procured to vendors. The Air Force and Navy round out the list with about $7 billion in contract awards. Many of the contracts, or portions of them have already been awarded for the current fiscal year that ends on June 30, 2015.

The report, entitled, Bloomberg Government Major Programs Procurement Dashboard, highlighted the fact that government agencies?particularly the Department of Defense,? are continuing to shift single contract awards and setting aside separate awards for MWBE’s. This strategy, implemented under the administration of former president Bill Clinton and relaunched under President Obama, avoids the practice of contract bundling.

Contract bundling occurs when several smaller contracts are combined into one big package. The bundled contracts are usually awarded to one major contractor who then doles out contract to subcontractors. The practice often excludes M/WBE’s from becoming primary vendors on multimillion dollar projects. Experts in small business and industry contend the practices effectively shuts out capable M/WBE’s from significantly tapping in on the sizable and lucrative market of government contracts.?

Additionally, the Small Business Administration (SBA) has been accused of not doing an adequate job when it comes to ensuring and monitoring the federal procurement process. For example, U.S. House of Representatives former chairwoman Nydia Velazquez (D-NY) has long called the procurement process ?flawed.? She added, ?A two tiered approach to awarding government contracts is needed that will focus on a business stabilization and long term growth,? she said in a recent interview.?

Hosea Johnson, chairman of the African American Chamber of Commerce of New Jersey (AACCNJ) and president of Johnson Associates Systems?a technology company based in Turnersville, NJ, said the recent data clearly shows that the government is trying to increase prime contract opportunities for M/WBE’s.

?Government agencies, both locally and nationally are leaning toward replacing existing contracts with incumbent contractors and making the environment competitive for vendors to land government contracts,? he said. The AACCNJ and the National Black Chamber of Commerce frequently encourage minority business owners to pursue contracting opportunities with state and national government agencies. To review a complete list of the Top 20 Federal Contract Opportunities, visit the Bloomberg government data website.