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By Brian Robinson

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DOD blacklist authority could go too far, say small-biz advocates

Business advocates are charging the Defense Department with redlining the government contracting business to the extent that the 2011 Defense Authorization bill would allow DOD officials to secretly blacklist contractors and bar them from doing any business with the federal government.

In particular, they say this “blatant power grab” by agency heads could end up significantly harming small-business contracting because it could lead to the concentration of contracting dollars in the hands of just a small number of big companies.

The American Small Business League (ASBL) recently went public with its concerns in a dispatch from Communications Director Chris Gunn in The Exception magazine.

“Small-business advocates are concerned that DOD’s determination will be shared with each agency where the company competes as a prime contractor or subcontractor,” Gunn writes. “This could lead to the broad-based exclusion of contractors from federal contracting programs without due process.”

That could be a sensitive issue with the new Congress. Government agencies have specific small-business set-aside targets, but small-business advocates consistently complain that agencies are not doing enough to meet those goals. And last year, things came to a head in Congress over charges of fraud in the Small Business Administration’s set-aside programs, which allegedly cost small companies some $100 million worth of business.

According to Gunn, ASBL estimates that more than $100 billion in federal small-business contracts are diverted away from such companies every year, with many large companies — such as Boeing, Lockheed Martin and Northrop Grumman — receiving the contracts instead.

ASBL has legs when it comes to making its concerns known and paid attention to. Earlier in the year, it sued the government for muddling its small-business contracting data, thereby reducing the transparency of government contracting. Groups had used that data to uncover fraud in the past, ASBL said.

And in November, the group sued the Homeland Security Department for refusing to release subcontracting reports on contracts it had awarded to Boeing.

A big part of the beef ASBL and others have with the new Defense bill is that they say it will allow DOD to blacklist companies without notifying those companies. And it protects the blacklist from disclosure requirements that would be part of a Freedom of Information Act request, a protest to the Government Accountability Office or action in federal court.

Posted on Dec 14, 2010 at 10:11 AM

Reader Comments

Thu, Jan 6, 2011

As a Government acquisition manager, I actually don't think a secret black list, without notification to the business is appropriate. I have used another command's contract with a small business that performed really well, and delivered the product as required. Bottom line, problems ensued as we were transitioning to contract close-out phase (not caused by the contractor) and they received directions from two different Government reps that were completely opposite / mutually exclusive, landing them on a black list by one Government entity because they followed the directions of the other Government entity. Ultimately, it was resolved; but not until the company went through alot of hardship & legal battles.

Wed, Jan 5, 2011

Brian,How do we get our hands on this list? Is it possible?

Wed, Dec 15, 2010

I love small business rules, they spread the wealth. On one base I was on we had three companies in a one year period building a new chow hall. The first took his money, dug a foundation, and then declared bankruptcy. The second took his money, finished the foundation and started to lay in rebar, then declared bankruptcy, the third one took his money, poured the slab, got about half the framing done, then declared bankruptcy. Two months later I moved on, so I do not know what happened after that.

Hey, it is only taxpayer dollars going to support small "disadvantaged business", no never mind that we get nothing for it. In the gov it is easier to pay for bad companies than to fight the "unfair, not our fault" lawsuits the bad companies tend to drop on the gov when their low bid is passed over either due to lack of history, or lack of a good history.

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