by Michael Marcell
A diverse group of Hispanic and other small business leaders assembled at Washington’s Capitol Hilton Hotel June 9 to sort out obstacles they are facing in winning lucrative and sustainable government contracts in fields ranging from information technology security to office cleaning services.
Thirty percent of the American Recovery and Reinvestment Act funds were dispended to small businesses, according to the Small Business Administration,.Of that figure, only 3.5 percent went to Hispanic-owned small businesses, amounting to $972 million as of June 4.
Hispanic small business owners face a substantial number of challenges in pursuit of procurement action, Stephen Denlinger, president of The Latin American Management Association and advisor the U.S. Hispanic Chamber of Commerce, told the assembled entrepreneurs. “For a small Hispanic firm starting out in the federal market,just to find out where your product or service is purchased is a daunting challenge. How large are they? Are they in a position to go after a prime contract? Do they have a track record that would enable them to qualify even to bid on requirements?”
In 2002, the Census Bureau reported there were more than 1.5 million Hispanic-owned businesses operating in the United States, and Hispanics constitute 6.6 percent of all U.S. business ownership.
Denlinger said that a lot of small Hispanic businesses start out by getting subcontracts to build their company’s reputation and capital to apply for prime contracts. “They’re forming businesses at four times the national norm. It’s just amazing, the contribution the Hispanics are making to the free enterprise system.”
Bernardo Cardenal, president of Rocamar Engineering Services in Delray Beach, Fla., agreed that government paperwork has been a constant obstacle.
“Usually the RFPs (requests for proposal) are so out of my reach that I have to team with other companies,and while trying to put the teams together and write everything up in a timely fashion, you usually run out of time.” Cardenal said, warning that when companies fail to fill out their proposals properly or on time, they are disqualified.
In addition to paperwork,a constant menace to small business owners trying to operate with the government is the government itself.
President Obama sent out a memo 15 months ago directing all federal agency heads to “clarify when governmental outsourcing is or is not appropriate.” Since its release, there has been a push to turn over “inherently governmental functions” to federal agencies.
Procurement attorney Robert Burton represents companies whose contracts are in jeopardy by what he calls “quota driven” restructuring.“The President has set a goal to reduce procurement spending by seven percent in the next two fiscal years. A dramatic percentage,” he called it.
Burton said procurement spending has gone up naturally because of the wars in Iraq and Afghanistan and recent natural disasters,all “unprecedented events that call for unprecedented spending.” To meet Obama’s seven-percent quota, federal agencies are primarily going after small businesses.
“Unfortunately, small businesses are easy targets, because some of the work they do can probably be performed by the government,but it’s not inherently governmental,” he said.“We are seeing functions such as janitorial services, maintenance services, food services and information technology services. These are not inherently governmental functions. “Burton said.
Burton said in addition to canceling contracts, the government recruits away small business employees because, in some instances, it does not have the expertise.
Burton said he plans to form a small business coalition to lobby Congress to draft legislation that would prevent the government from terminating contracts for convenience and to prevent competing against small business for employees.
Earl Hubbard, CEO of Orion Technology in Huntsville,Alabama, said his company lost $8.6 million in revenue this year from government in-sourcing. “We’re recommending we be exempt as small businesses by aggregate sales of $35 million or less with fewer than 1,000 employees,so we can prosper. “ Hubbard said.
Senator Robert Menéndez (D-NJ) spoke to the some of the small business people who attended the Minority Roundtable Luncheon during a separate reception held at the Russell Senate Office building.Menéndez serves on the Senate’s banking and finance committees, and he is the chairman of the Senate Democratic Hispanic Task Force.
Asked by Hispanic Link about in-sourcing and how it affects small businesses, he said it seemed “counter-intuitive to the President’s goal of creating opportunities in the federal contracting system for diversity.”
“We already have a much more limited universe than we should, and if that is being pursued, then it is only going to erode what exists,so it doesn’t make a lot of sense to me,” Menéndez said. Hispanic Link News Service.
(Michael Marcell is a reporter with Hispanic Link News Service in Washington, D.C. Email him at Michael.Marcell306@wku.edu.)
