The Rape of a Great Minority Business Program

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Beyond the Rhetoric

By Harry C. Alford

Alphonso Jackson, Secretary of HUD, “There has been no other federal program that has allowed the development of so many Black millionaires than the 8a program. We exploited that in our procurement sector and no other agency has been doing more in minority business than us.”

Joshua Smith, Chair, President’s Minority Business Taskforce, “There is a need to put the 8a program under the management of the Minority Business Development Agency. It would be better served there than at the SBA.”

Secretary Jackson was correct and Joshua Smith’s firm was doing very well. But the SBA resented their success and went after them. Secretary Jackson spent millions in defending himself from going to jail on trumped up charges. Joshua Smith, my friend, was immediately expelled from the 8a program and also spent millions fighting a phony fraud charge.

My point is this. The federal government isn’t too excited about Black firms succeeding in the federal procurement sector. More than a few of our members get set up by federal agencies as they try to succeed via the 8a program. Those who excel will have trouble being paid on time and being falsely accused of poor performance. The 8a program was established by the late Congressman Parren J. Mitchell. He caught hell for the program but he got it established as law.

It is here but “the wolves are of another mind.” One wicked scheme they came up with is the Alaskan Native Corporation program.

The ANC program is a misnomer. The owners of these corporations are not necessarily Alaskan natives – counter to the implication of the name. They simply have to give assistance to an Alaskan tribe. It is vague what that assistance might be. Some of these corporations are billion dollar firms posing as “small and disadvantaged.” Yet, they are put in the 8a program which is designed to develop small and disadvantaged businesses. Putting these big firms into a program with fledgling firms is like putting great white sharks in a tank with perch and groupers. It is absolutely predatory. Many of them are based in the DC area (close to federal procurement agents) and are represented by some of the top lobbying firms in existence. There are 344 ANC firms matched against a few thousand legitimate 8a firms. However they have achieved $4 billion in contracts on an annual basis. That is 25% of the total 8a volume. The numbers will get worse each year if Congress keeps allowing this to happen.

There have been many official reports from the General Accounting Office about this abuse. Allow me to quote a recent official report to illustrate just how far this has gone: “Federal agency obligations to ANC – owned firms participating in the 8(a) program represent a sizeable share of total obligations made to all firms participating in the program, with SBA contracts to 8(a) ANC-owned firms totaling about $4 billion and representing about a quarter of all 8(a) obligations made in the fiscal year of 2014. Given the magnitude of these obligations and because ANC-owned firms are exempt from some regulatory requirements in the 8(a) program, heightened attention is needed for firms participating in the program. Our prior reports on the program have detailed several long-standing deficiencies and many of these vulnerabilities and deficiencies still exist.”

“While SBA has taken some steps since 2011 to improve its oversight of ANC-owned firms in the 8(a)program, the agency’s ability to enforce regulations that prohibit the award of follow-on, sole-source contracts to subsidiaries of the same ANC is limited by its reliance on incomplete information from contracting agencies. Obtaining complete data on follow-on, sole source contracts, in addition to providing specific training and providing guidance to agencies on complying with the related policy, would improve SBA’s internal controls related to this regulation and limit the potential to award these set-aside contracts to firms that are ineligible to their oversight. However, because limitations in SBA’s processes for overseeing compliance with sole-source contract rules persist, additional actions would be beneficial.”

The criticism is just too nice? “To firms that are ineligible” – hell this is corruption at the expense of real small and disadvantaged firms such as our Black owned firms who this program was made for. They are being denied the opportunity that was intended for them because some greedy and manipulative white large firms are using their lobbying ability to “high-jack” a program intended for Black and other minority firms. CEO’s with their blonde hair and blue eyes are profiteering from a program intended for us. Enough already!!

Congress should step in and shut the ANC program down. At best reconstruct an honest program. This here is racketeering.

 

Mr. Alford is the co-founder, President/CEO of the National Black Chamber of Commerce. Website: www.nationalbcc.org Email: halford@nationalbcc.org

 

 

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