Mario Burgos

Clear thinking and straight talk from the top of a mountain.

Wednesday, March 24, 2010

Job Killing Legislation Needs Immediate Fix

Yesterday I had reason to communicate with our New Mexico Congressional delegation, or at least try to do so.  No, I wasn't sending a note about the recently signed 2,000 page Healthcare bill. Instead, my request had to do with the actual number one concern of the vast majority of Americans - the economy and jobs.

I was asking them to fix a flaw in Section 31(b)(2)(B) of the Small Business Act to clarify and confirm contracting officers’ discretion to treat SBA’s programs equally.  The problem has to do with replacing the word "shall" with the word "may" in the referenced legislation.

Seems relatively simple, right? Well, Congress has been failing to act on this relatively simple correction for nearly a year and half despite the fact that even HUBzone advocates have long been onboard with the fix:
Even some strong HUBZone advocates agree with the proposed change of wording. In July, Rep. Roscoe Bartlett (R-Md.), co-chairman of the HUBZone Caucus, said the small business categories should be treated equally. 
The lack of action on that one little word, or on the one line bill introduced by Rep. Wally Herger (R-Calif.), is at the center of a recent Federal Court decision that threatens to single-handedly do the following according to a recent communication from the SBA:

  • Potentially undermines program opportunities for socially and economically disadvantaged, SDVOSBs and WOSBs.
  • Substantial federal contracting dollars potentially will NOT go to non-HUBZone 8(a) (socially and economically disadvantaged small businesses), SDVOSBs, or WOSBs. 
  • Based on contracting data for FY2008, $29.3 BILLION went to SDBs (of which $16.2 BILLION went to 8(a) firms); $14.7 BILLION to WOSBs; and $6.5 BILLION to SDVOSBs.  
  • The Court’s reading of the Act, if applied to other procurements, could re-direct to HUBZone firms tens of BILLIONS in federal procurement dollars currently spread across small businesses, including HUBZone, 8(a), SDVOSBs, and WOSBs. 
  • An absolute HUBZone preference could have a devastating economic impact upon thousands of non-HUBZone 8(a), SDVOSB and WOSB firms that currently participate in government contracting, and the hundreds of thousands of jobs they provide. 
  • This could cause a flood of protests in any non-HUBZone procurement, paralyzing the procurement process and making litigation-avoidance a primary contracting objective.
    And, if you think this is an exaggeration on the part of the SBA, think again. Click here, and you'll see that the impact of this job crippling legislation is already having an effect with contracts worth millions being canceled or needlessly delayed. Now as a disclaimer, I have to acknowledge that I have a personal stake in this as I own a recently certified 8(a) firm that might be impacted by this lack of action by Congress.

    As such, I have a reasonably in-depth knowledge of the different set-aside programs.  My company is small enough that I could just move it into a HUBzone, make sure that 35% of my employees live in a HUBzone and seemingly call it a day.  But, it's not that simple.  It took over 14 months, hundreds of hours and nearly 500 pages of paperwork to get 8(a) certified.

    The HUBzone certification process is just as onerous. I have a friend who owns a one-man business which he operates from his house in a HUBzone here in New Mexico, and nearly a year into the process he has still not been certified. Worse yet, the HUBzone program was crippled because of widespread fraud uncovered by the GAO.

    Now, the timing of this court decision is critical. In about a week's time, we will enter into the last two quarters of the federal fiscal year. This is the time that agencies start getting a significant number of their contracts out the door. The impact of this court decision, and the failure of Congress to act to correct the parity issue, is going to cause wide-spread confusion and delay in the award of those contracts.  In other words, it is going to further devastate the small business sector and cause jobs to not be created or worse yet cause additional jobs to disappear.

    It's for this reason I tried to reach out to our congressional representatives yesterday via email.  Interestingly enough, you'll notice on their websites that if you try to email our congressional delegation via their House websites, your only option is to use an online form.  The problem is, if your address is out of their district, the form rejects your submission.

    Considering the fact, that I'm a small business owner who is currently bidding on projects in all three congressional districts as well as other states that could provide jobs for their constituents, you'd think they would want to hear from me regardless of where I live in New Mexico.

    As a final note, take a moment to think about how one word in legislation passed in 1997 can devastate thousands of businesses over a decade later.  Then, factor in how difficult it is to get that one word fixed, and you'll understand why 2,000 pages of life and death legislation pushed rapidly through Congress (i.e. the new healthcare laws) are so dang scary.

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