JACKSONVILLE, FL, -  “The 350,000 plus small businesses engaged in the $700 Billion Federal marketplace have been illegally excluded from contract opportunities (through illegal regulations); severally abused (by government barriers); lied to (through the results published on the SBA Report Card) and denied justice (protests don’t work) said Raul Espinosa whose latest GAO protest against the Army[1] – raised on behalf of all small businesses -  was dismissed by GAO[2] without addressing  the abusive procurement practices it had raised.   Espinosa is the Founder and CEO of The Fairness in Procurement Alliance (FPA)[3] and the Managing Partner of The Umbrella Initiative,” [4] whose mission is “to double the number of small businesses contracting with the government by the year 2020.”

Espinosa, a seasoned government contractor, who had just been named, by Diversity Business, as “One of the Nation’s Champions of Diversity for 2012,”[5] added, “I encourage everyone to fight back with the crying call made famous by the movie, Network:[6] ‘Small business are as mad as hell at the regulations, their barriers and the lack of justice and they are not going to take the abuse anymore’ “   

At a gathering of small businesses called by Jacksonville Mayor, Alvin Brown, attended by SBA Administrator Karen Mills, and flanked by Representatives of numerous small business organizations, Espinosa said, “The manner in which GAO had dismissed my protest, without addressing the ‘simplified acquisitions’ issue[7]’ and without addressing the abuses of the rules of reverse auctions – has convinced small businesses  that the GAO protest venue has become just as unfair as ‘size protests,’ a protest venue known for delivering only illusionary justice![8]   

Scott Amey, General Counsel for the Project on Government Oversight (POGO) - speaking for the small business community - said, “The GAO decision on B-406075 has awakened a sleeping giant.”  It is an election year in which both the economy and the creation of jobs will be key issues on the campaign trail!                    

SBA had submitted a legal brief[9] supporting Espinosa’s arguments and the U.S. Office of Advocacy had written a letter[10] confirming the abuses of the rules of reverse auctions to support the Espinosa’s allegations, yet GAO chose, instead, to defend  the GSA exemption, even though , according to Amey, “GSA has no statutory basis for exemptions on their Federal Supply Schedule (FSS) and its Contracting Teaming Arrangements (CTA) restricts small businesses and has never undergone regulatory approval.”    

GSA Regulators are in the midst of trying to promote ‘simplified acquisition’ on the GSA Schedule, but at the discretion of the Agencies through an interim rule.[11]  The Small Business Act (15 USC 644), on the other hand, states that simplified acquisitions (contracts between $3,000 - $150,000) "shall be reserved exclusively for small business concerns."  In other words, if Agencies are to have any discretion, it must be for contracts above $150,000. 

Numerous ‘amicus briefs’ were also filed[12] by attorneys and small business groups including one by the American Small Business League (ASBL) whose president, Lloyd Chapman had this to say, “Contrary to the GAO assertion on its B-406075 decision, Section 1331 of the Small Business Jobs Act of 2010 made no reference to ‘simplified acquisitions,’ but wished to end the original blunder, by Regulators, to incorporate exemptions on the FAR without the authority to do so.”  He added, “The ‘discretion’ referenced on Section 1331 referred to procurements above $150,000.”  

“It was inconceivable for GAO to have ruled that Espinosa did not have standing on a restricted reverse auction  when he regularly bids and uses complaint teaming arrangements to get  awards on that venue,” said Terry Lee, a POGO attorney.   John Klein, SBA Associate General Counsel for Procurement Law was dumbfounded since he had cited the fact that, on December 19^th, 2011, GAO had ruled on Kindomware Technologies B-405727 protest[13] by affirming that “Where, as here, the protester is challenging the terms of the solicitation, and the remedy sought is the opportunity to compete under a revised solicitation – the protester is an interested party, even if it did not submit a quotation or offer. “

Since GAO ignored the documentation and the proof that Espinosa had presented on his case, FPA has filed a complaint with the Army OIG[14] and is preparing similar ones against DHS, the Air Force and VA over those Agencies alleged abuses of the government reverse auctions rules, cited on the protest dismissed by GAO.

Roger Campos, President of the Minority Business RoundTable (MBRT), pledged “to encourage both Congressional Small Business Committees to hold hearings on the Agencies barriers, the fairness of the government protests and the need for penalties and consequences for the culprits.”

Fernando Galaviz, Chairman of the National Federal Contractors Association (NaFCA) on whose Board, Espinosa seats, said, “Small and disadvantaged businesses have suffered enough abuses in accessing contracts and subcontracts and we are going to fight back to  simplify  size standards and to bring penalties for Agencies and individuals  who restrict  our access to contracts and subcontracts.” [15]

Over the next several weeks, small business advocates and watchdogs, will be evaluating their legal options including lawsuits and injunctions, to assert their position in demanding justice and make sure SBA and OFPP establish a final rule on ‘set-asides on the GSA Schedule’ that would confirm that the discretionary set-asided referenced on  Section 1331 shall be applied to contracts above $150,000. The subject of penalties and consequences for Agencies which misrepresent their results in contracting or engage in abusive procurement practices will also be discussed.

FPA is recommending for small business contractors, facing  barriers on government contracts, to consider: 
 

·         Forgoing questioning any barrier faced and, instead, file a GAO protest.  Inundating the GAO protest process will send a clear message that small businesses are not going to put up with the abuses anymore!

·         Requesting  a ‘debriefing,’  if they suspect that there were any abusive procurement barriers involved. 

·    Filing a Freedom of Information Act (FOIA) request demanding documentation addressing small business coordination; market research and - if the solicitation involves reverse auction - the justification  used on the Authorized Target Price (ATP), which allegedly is being used to allow the government to have an unfair advantage in reverse auctions. (a violation of the Sherman Act.)

·         Reporting the Agency, the contracting unit and the individuals referenced on the solicitation to the Agency Inspector General (IG) requesting that a) the Agency be penalized and b) the individuals involved be held accountable for disciplinary action.  FPA is taking steps to create a database - in the private sector - to identify barriers and bring transparency and oversight to government contracting.

·        Reporting the barrier to the SBA Procurement Center Representative (PCR); the Agency Office of Small and Disadvantaged Business Utilization (OSDBU); the SBA government contracting office not to mention elected officials and the trade media.

·         Ignoring the government protest venues (GAO, Agency and/or Size Protest) if they have the required financial resources and file a lawsuit - through a contract attorney –  at the U.S. District Court.