In a case of little guys versus big guys, a collection of small businessmen and their agents yesterday complained to Congress that the Defense Department is playing favorites with major military contractors.
The focus of the complaint, aired in a day-long hearing before the Senate Banking Committee, was the procedure the Pentagon uses to order spare parts for military systems. In too many cases, it was charged, the government has been ordering spares only from large contractors, when it could just as easily - and more cheaply - obtain the needed parts from small firms.
Even when military contracts are open for competitive bids, certain qualification requirements have tended to exclude small firms. One Massachusetts businessman futher accused some military officials of leaking bids and revising contract specifications to guarantee favored companies would get the business.
"For us, as a small business, it's very frustrating," said Stanley A. Revzin, president of Bristol Electronics, a small firm in New Bedford, Mass., specializing in two-way radios. "There's nothing we can do except at a forum such as this to dramatize the problem."
In his written testimony, Revzin described how Army procurement officials changed contract specifications on two recent orders for combat radios and repeatedly asked for bids on those orders, until one company - E Systems, a large Dallas-based electronics firm which has several ex-Department of Defense and CIA officials on its board - got both contracts.
"Your testimony suggests a lack of security in the military procurement process," noted Sen. Edward Brooke (R-Mass.) who was openly sympathetic to Revzin's allegations. "It makes a mockery of any Army claim that they conduct a fair and open bidding procedure."
There are many instances in which the Pentagon decides not to take competitive bids at all. Under current regulations, the government can designate certain items as critical and not feasible for open bidding, either for reasons of narrow time constraints or overwhelming safety concerns.
But Harvey Neeley, a manufacturing representative for several small companies that frequently contract with the Air Force, claimed military officials misuse this sole-sourcing or restricted-sourcing procedure, effectively shutting out many small firms from doing business with the government.
"I know of a lot of items that have gone on sole-sourcing that small businessness are capable of making," said Neeley. "More items should be allowed to come up on a bid board. People should have an opportunity to see at least what's available and have a chance to bid on them."
Closed contracting for spare parts, Neeley added, is costing the taxpayers millions. He said small companies frequently can produce parts at considerably lower costs than large companies but have been denied the chance to bid.
Often, military officials simply don't want to be bothered with the longer and more involved process of open contracting, Neeley indicated. He described a set of techniques, from withholding technical drawings to stringent testing requirements, which procurements agents have used to discourage small companies from entering a bid.
Responding to these complaints, Dale Church, deputy undersecretary of defense for acquisition policy, defended the military's small business program as "the best of any agency in the government." Citing overall dollar figures, he noted that the value of both prime contracts and subcontracts awarded to small business has increased in the last five years.
But he conceded in his written testimony that the program still has room for improvement, particularly in breaking out more items for open bidding and in the training of military procurement personnel.