The Proof is in the Numbers

Small business owners and specifically women business owners can certainly relate to Chicken Little. The fairy tale character spent its time warning others that the sky was falling and, as we all know, its message fell on deaf ears until the sky actually did fall. For years now small business owners have shared their experiences of unfair and basically nonexistent competition that exists in government contracting. An Associated Press (AP) analysis of federal contracting records gives further credence to this message.

The AP analysis, released in early April, illustrates that the federal government bought more than half of its products and services last year without bidding or with practices that auditors say do not fully shop the marketplace. In all, the federal government bought $123 billion of its $230 billion in goods and services in 2001 without bids or with methods that auditors say are frequently used to bypass competition, the analysis found. These purchases included everything from computers and office supplies to background investigations of federal workers and education services.

The AP analysis traced 34 percent of all government purchases to contracts where no bids were solicited. An additional 19 percent was spent either on contracts awarded after only one bid, on credit card purchases that required no bid or on multiple-award contracts that lawmakers and auditors contend are being used increasingly by federal agencies to avoid competition.

On the issue of federal credit cards, also known as purchase cards, the current limit on purchases is $2,500. Rep. Thomas Davis III (R-VA) has recently introduced a bill that seeks to increase the limit to $25,000. Davis argues that the limit increase would streamline government buying, particularly for professional services. Davis seems to be unaware of a recent General Accounting Office investigation that uncovered more than 500 known fraud cases involving misuse of federal credit cards within the last two years. In fact, the AP report states that the U.S. Energy Department found that government credit cards had been misused to buy home improvement items, hunting equipment and accessories, electronics, lawn equipment and power tools. It just doesn’t make sense, or illustrate good business practice, to ask for a limit increase with this evident misuse. We would not tolerate such fraud in our own businesses or homes and we should not tolerate it from our government.

If you’re not a business owner then as a taxpayer you should be very alarmed by the situation described by AP because buying without competition often means the public treasury gets overcharged. The AP analysis of the Pentagon found the prices paid for commercially available spare parts bought without competition increased more than twice as fast between 1993 and 2000 as did prices for similar parts purchased competitively. Who in their right mind would pay twice the amount for an item? The answer, unfortunately, seems to be your federal government.

The government itself has made it easier to bypass bidding through contracting reforms of the 1990s coupled with a government-wide reduction of contracting officers and auditors, the report states. We could easily be heading toward another scandal similar to the Pentagon purchasing scandals of the 1980s.

If you’re a small business owner who has tried to get into the federal procurement game, the information contained in the AP analysis probably does not come as a surprise. Women and minority small business owners have faced unbelievable barriers in trying to grow their businesses through federal government contracting. So what do we do to correct this problem? We call, write and fax our Congressional delegations and tell them that we, as American business owners and taxpayers, are not going to take it anymore. Let’s just hope they start listening before the sky falls down on all of us.

The column is written by Terry Neese, entrepreneur, past national president of the National Association of Women Business Owners (NAWBO), and co-founder of Grassroots Impact. Terry founded Terry Neese Personnel Services, located in Oklahoma City, 25 years ago.

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