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Small Businesses See Mixed Outreach
by Greta Wodele
Shortly after Homeland Security began operations last year, officials vowed to honor President Bush's agenda to provide small businesses with opportunities to win contracts at the new department. While some executives have found success with new initiatives, others say challenges remain for small firms to score big.
"In support of the president's small business agenda, [Homeland] will provide maximum practicable opportunities in our acquisitions to small business" as well as disadvantaged, minority and woman-owned businesses, according to a June 2003 pledge signed by Janet Hale, Homeland's undersecretary for management.
Since signing the pledge, the department has created several small business programs.
"We anticipate their roadmap will work," said Tim May, CEO of Advanced Interactive Systems (AIS), adding his firm has experienced "good cooperation" from the department's small business office. AIS has secured "a number of subcontracts" with the department, according to May.
But others are frustrated by what they say is infighting and disorganization at the department.
"Nobody is awarding contracts," said Patricia Driscoll, CEO of Frontline Defense Systems, adding that some of the 22 agencies that were transferred to the department last March are fighting over money. "Projects aren't moving," she said.
Dave McCurdy, president of the Electronic Industries Alliance, said "a lot of money is being directed toward homeland security, but I'm not sure it's getting to the company level." He added that a few larger firms may be getting contracts, but most of the spending is related to borders and ports, not other areas of interest to the tech industry like transferring the rights to government-funded research to the private sector.
President Bush has requested a 4.6 percent increase in funding for the Homeland Security Department in his fiscal 2005 budget request. It is not clear how much of those funds would be allocated toward small business programs at this time.
Driscoll also said officials are slow to return phone calls and over the last year when agencies have changed locations, contacts get new phone numbers and companies have to "start from zero."
May believes that the challenges facing the new department eventually will dissolve.
"Obviously there's still confusion and challenges," he said. "That's going to take time to go away."
Outreach Programs At Homeland
To help facilitate the process for small firms, officials last summer created the Small and Disadvantaged Business Utilization office.
"We embarked on a plan to put a sign in the front yard that said 'open for business' to small firms," said Kevin Boshears, director of the liaison office.
In an interview with National Journal's Technology Daily, Boshears said the office has a "multi-faceted" approach for reaching out to small businesses.
On the Homeland Security Web site, the department provides businesses with a link to "forecasted contracts" for each agency. It has posted three editions since October.
"We've received good compliments on that" from small firms, said Boshears.
Last summer, officials also started a Washington and national outreach program to meet with small business executives every month for one-on-one, pre-arranged 15-minute interviews with the small business specialists from each agency. Nationally, the officials have met requests from members of Congress to speak at trade fairs in their districts and partnered with the Small Business Administration for its national "matchmaking tour."
Boshears said he has kept a running track of evaluations from the Washington events, and 98 percent of participants have rated the program as "excellent."
He also acknowledged that some executives might feel frustrated that "contracts aren't signed that day," but he said the program provides an introduction and information about opportunities.
In December, the office also created a mentor-protégé program to encourage large businesses that win prime contracts to join with small businesses to provide developmental assistance. Businesses participating in the program would receive "extra points" when competing for contracts.
In December, Secretary Tom Ridge said the program is a way for small firms to build a track record of success.
However, Driscoll questioned the incentive for smaller firms.
"If we could ride their [qualifications], that would be great. But we can't," she said.
An independent office within the Small Business Administration also expressed concern with the program.
"Large business prime contractors' good faith efforts to provide subcontracting opportunities to small businesses ... should be based on actual subcontract awards and not credits or incentives earned" by participating in the program," said SBA's Office of Advocacy in a letter to Homeland Security. "Advocacy is concerned that the incentives provided ... artificially inflate the mentor's small business subcontracting performance."
Boshears countered that the program is "just one part" of the agenda and that successful small businesses emphasize the importance of "teaming" with larger firms.
Another program for small firms is offered through the Homeland Security Advanced Research Projects Agency (HSARPA). The agency earlier this month awarded 66 small businesses from 23 states for a total of $6.5 million in grants under its Small Business Innovation Research program. Each firm received up to $100,000 for six months of concept research into information technology, chemical and biological defense and marine security.
Ridge has encouraged small firms to pursue projects with HSARPA, which he said would "generate millions and millions of dollars."
Different Views On Progress
Despite the different avenues for small firms, Driscoll said "not much" has changed since she, along with May and other executives, testified before Congress last October about doing business with the department.
The executives told lawmakers on the House Small Business Rural Enterprises, Agriculture and Technology Subcommittee then that large corporations controlled a majority of the contracts, which left small businesses feeling neglected.
"Small business is being forgotten," said Marian Sabety, president of a small security-consulting firm, in October.
One executive this week questioned how many guaranteed contract dollars have been awarded to small businesses to date.
Boshears said the department is in the process of verifying its small business statistics, and predicted it would exceed a federal regulation that requires 23 percent of all prime contracts go to small firms.
"Other categories look promising too," he said.
Boshears had a similar message for lawmakers when he testified in October.
"As of today, we're slightly exceeding the overall goal of 23 percent," he said on Oct. 21.
But a small-business executive refuted those claims. She said Boshears was remiss in not mentioning that the estimation included a billion-dollar contract to an Alaskan native corporation and excluded prime contracts by the Transportation Security Administration (TSA). She said the department should have estimated "more like 6 percent" because it included in its estimate contracts that were not guaranteed.
The department declined to provide an up-to-date figure because it is currently confirming the numbers.
Unisys, which last year won a major contract with TSA to create the infrastructure for the department, provided its small business statistics. Of the more than 200 subcontracts it has awarded, around 100 have been awarded to small firms, according to the project manager of the TSA contract.
And although TSA is exempt from federal regulations for small businesses, Boshears said the agency has expressed interest in participating in its small business program.
Lawmakers Plan To Tackle The Issue
Lawmakers plan to address the issue of small business contracting at TSA and the department again this session.
"I am pleased that most of the Department of Homeland Security has guidelines in place that include goals for contracting work to small businesses," said Missouri Republican Sam Graves, chairman of the Small Business subcommittee that heard testimony from executives last year. "The issue of small business contracting for the [TSA] will come up this year and I look forward to the debate."
Graves also said he would follow up on last year's hearing: "I will have to see where the next step takes us but it is a priority of mine."
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