The Few, The Proud, The Small Business Contractors

A new report by the Pentagon’s watchdog found that Marine Corps Base Quantico is not doing enough to ensure that small businesses are getting their fair share of federal contracts.

Last week, the Department of Defense Inspector General (DoD IG) issued findings regarding a whistleblower hotline tip that the Marine Corps Regional Contracting Office-National Capital Region (RCO‑NCR) in Quantico, Virginia, was depriving small businesses of contracting opportunities. The tipster claimed that RCO-NCR was not providing small businesses a fair shot at winning prime contracts and was not holding prime contractors accountable for meeting small business subcontracting goals.

DoD IG determined that RCO-NCR “generally” provided small businesses an adequate opportunity to compete for prime contracts. However, it found the contracting office failed to ensure that large business prime contractors were providing small businesses with adequate subcontracting opportunities. On six out of seven prime contracts worth a total of $871 million, RCO-NCR could not ensure that small businesses received the subcontract work the large businesses were required to provide. Contracts lacked a small business subcontracting plan, or included a subcontracting plan that lacked small business goals, or included a plan with goals but contracting officials failed to monitor whether those goals were met.

DoD IG blames the lack of oversight on the “understaffed and overworked” contracting office and small business office at Quantico. The good news is the government might still be able to recover up to $153.5 million in damages from two prime contractors, J. Walter Thompson Company and Smartronix, for failing to submit required subcontracting status reports. Per DoD IG’s recommendation, RCO-NCR is assessing whether these two companies should pay damages.

The Project On Government Oversight occasionally highlights problems and abuses in federal small business contracting. Small businesses—the “backbone of our economy and the cornerstones of our communities,” according to President Obama—face many challenges when competing in the federal marketplace. For example, the practice of contract bundling creates high-cost, multi-requirement projects that often reduce competition by cutting smaller companies out of the bidding process.

The government also faces challenges, not the least of which is keeping accurate tabs on the number and dollar amount of contracts awarded to legitimate small businesses. The federal government is required to annually award 23 percent of all prime contract dollars to small businesses, but agencies sometimes play fast and loose with the numbers to reach that goal. There is the related longstanding problem of small business contracts ending up in the hands of very large companies.

The problems plaguing small business contracting won’t be fixed overnight. The best we can hope for is incremental change fostered by the diligence of watchdogs like DoD IG.