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.