President Carter has picked the Department of the Army for a two-year pilot program that will greatly open up lucrative Army procurement contracting to minority-owned businesses.
Amendments to the Small Busines Investment Act last year authorized the Small Business Administration to select any contract it wants for the 8(a) program -- under which business is set aside for "socially and economically disadvantaged" firms -- in a government agency picked by the president.SBA asked the White House to designate the mammouth Defense Department, but ehat request was refined to just the Army.
The Army had a procurement request of $6.6 billion for fiscal 1979 and did about $140 million in business with minority-owned firms that year, the largest minority procurement activity of any government agency. The SBA will begin negotiating the terms of the arrangement next week, an SBA spokesman said.
The pilot program allows the SBA to take any disagreements over awarding contracts to the head of the Army department, who has to settle the dispute -- in some cases by making counter contract offers -- in five days. The SBA has another five days to work out the price and terms. The process gives minority-owned firms greater leverage in dealling with procurement officers and allows the SBA to go after big dollar contracts, particularly in the area of manufacturing.
About 1,650 firms are designated as 8(a) contractors and are allowed to bid for contracts in a less-competitive fashion than other small businesses. The 8(a) program was suspended for a time when white-owned firms were found to be participating by using minority employes as "fronts," but the program later was reinstated.
Some white businesswomen -- as well as white businessmen who are veterans or handicapped -- have been designated 8(a) contractors under legitimate channels. The program was established to help disadvantaged business owners get a foothold in the economy by doing business with the federal government.