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Government Contracting Abuse in Florida Confirmed by Miami Herald

A New Dispute Resolution (DR) instrument called CARB surfaces as a potential solution to solve documented contracting abuse cases. The Governor and the Congressional Delegation challenged into taking action to protect 90 percent of the businesses in the State.

(PRWEB) January 25, 2006 -- The Miami Herald recently reported on a major front page feature (see link at the end of this release) mayor abuses of the government?s set-aside program. This program, created by Congress earmarks what amounts to $75+ billion worth of government contracts, annually (23 % of their total) for the country?s economic lifeblood: the small businesses.

In Florida, this group comprises 90 % of all the businesses in the State. A chart, featured on the Miami Herald story illustrates that more than half of the businesses which in 2005 received, the majority of these set-aside awards were not small and some were not even Florida ventures. Additionally, the government agencies issuing those awards were allowed to count these awards as having been made to small businesses when in fact they were not! The issue is so huge that the SBA Inspector General, on its 2005 Report to Congress on Government Contracting, said that the problem is ?the Most Serious Management Challenge Facing the SBA in Fiscal Year (FY) 2006.?

According to Raul Espinosa, CEO of FitNet Purchasing Alliance, the procurement regulations governing set-aside contracts have victimized his Florida-based company, more than a dozen times."I was so fed up with with both the barriers and the regulations I had encountered that I decided to take legal action simply to demonstrate how unfair ? to small businesses - the government?s own set-aside contracting regulations really are."

He went on, "I ended up winning the legal battle - at a great sacrifice of time, money and resources ?but regrettably, I could not claim any benefits from the spoils of my victory." Espinosa explains, "Size protests do not work as Congress intended. One might win the case, but by the time you try to collect, the contract has already been fulfilled and there are no options; no penalties and no enforcement to bring justice into the picture."

There?s currently a suit, in the District Court of Northern California (Case No. CO5-0489), calling for the SBA to release documents detailing all of the contracting protests filed against large firms falsely claiming to be small businesses. The suit is expected to provide conclusive evidence that justice is severely needed in the space.

There is also an innovative dispute resolution instrument called CARB (see attachment) which stands for Contracting Abuse Resolution Board which has been recommended by advocates to possibly replace and/or strengthen size protests.

According to Espinosa, "CARB would adopt fair DR techniques to bring fairness to set-aside disputes. On the one hand, it would reward contractors victimized through mistakes and errors, with future contracts for bona-fide requirements through an existing government contracting vehicle."

Additionally, he said, "CARB would eliminate legal fees, create fair and just settlements, save millions of taxpayers dollars and scare away large businesses from set-aside solicitations." Espinosa went on to say, "Violators would be banned from competing for government contracts for a minimum of three years for misrepresenting their small business status." Debarment is a penalty the Small Business Act calls for [15 USC 645(d)(2)(c)] but government regulators somehow never incorporated the clause into their own Federal Acquisition Regulations (FAR).

The Small Business Act, which created the ?size protest? and is supposed to protect small businesses, Espinosa believes, must be strengthened. Additionally, "many of the government?s programs and regulations which deal with small businesses would benefit greatly by a major re-evaluation based on their effectiveness." The facts will demonstrate that some programs need to be streamlined, restructured or eliminated altogether."

There?s an interesting proposal, making its way through government circles, which calls for transferring some of these programs to the private sector and making them self-sufficient by grouping them - with critical services - under one umbrella. The initiative, according to Espinosa, has been referred to as 'The Small Business Set-Aside Alliance (SBSAA)'.

Another barrier worth mentioning, Espinosa explains, involves internal abuse. "End users in the government - especially the military - are getting away with playing favoritism with contract justifications without been held accountable even if their recommendations are unethical and result in protests." He claims, "Enforceable measures must be put in place to deter both contracting officials on the one hand and large companies on the other from making decisions which result in protests."

Espinosa believes in making a difference. He does so, he says, by consulting with businesses facing abuse, advising advocacy groups lobbying for changes and by crafting solutions aimed at solving the type of abuses reported by the Miami Herald story.

His advocacy activities have resulted in the formation of a coalition which is now supporting procurement changes. Espinosa is now appealing to the entire Florida Congressional delegation and to Governor Bush to consider making recommendations to Washington to protect 90 % of the businesses in the state affected by the documented abuses reported by the Miami Herald.

Espinosa urges the media to get acquainted with the situation and with some of the solutions crafted with the help of several of his fellow advocates. A number of these solutions, including CARB are summarized in the attached documents. The attachments plus the link below will provide sufficient background to both write and bring further attention to the situation.

"For any small business to survive not only in Florida, but elsewhere, all barriers must be eliminated and, at all cost," Espinosa said. "Dealing with both the barriers and the potential solutions will require, among other things, amending existing regulations, issuing Agency directives; incorporating out-of-the-box solutions; making meaningful senior level appointments and, strengthening the Small Business Act through new legislation."

"Media coverage, advocacy support and legislative involvement will bring about the intended results," he said.

Espinosa suggest for government regulators to seek inspiration through the words of Ralph Waldo Emerson who once said, ?What I need is someone who will make me do what I can.?

Permission is granted to reproduce this article as long as the above resource paragraph is left in tact with active links.


Steven J. Williams, P.C.
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