This post, written by Jonathan Messinger, originally appeared on Public Spend Forum.
Reading the Washington Post series on MicroTechnologies—a federal contractor that has benefited from its status as a “small business” despite raking in more than $300 million in contracts—it’s difficult not to just throw one’s hands in the air. As MicroTech said in a statement in the original Post story, “MicroTech has not broken any laws and has conducted itself in an ethical manner,” and it’s entirely reasonable to think that’s true. Assuming that the ownership questions the Post raises can be answered, MicroTech seems to have threaded a very lucrative needle, allowing it to take advantage of government programs for small businesses while far exceeding the definition of a small business.
The crux of the matter can be found in today’s follow-up story. MicroTech’s CEO Anthony Jimenez is a service-disabled veteran, and MicroTech was able to qualify as a small, disadvantaged contractor. In 2006, the Department of Veteran Affairs awarded the company a six-year deal worth $394 million, though to earn designation as a small business, a company’s revenues must not exceed $25 million annually.
I won’t recap all of the vagaries of this story, though as you’d expect, there is a lot of bobbing and weaving going on, on the part of both the company and the VA. Questions of how the money flowing to MicroTech was accounted for have led the GSA to announce it will further clarify the rules. But what I find so fascinating about this story is that it cuts to the heart of the issue when we talk about the social value procurement can bring. I think you’d be hard-pressed to find someone who thinks opening more avenues for small businesses to get federal work is a bad thing, and certainly there’s a need to support veteran- and minority-owned businesses. But do these programs unnecessarily open the government up to fraud? Furthermore, we can’t even call it fraud if the company is actually “playing by the rules.”
A key seems to be coordination between agencies with different priorities. The Small Business Association is tasked with enabling small businesses to enter the space, whereas the VA is highly focused on helping veteran-owned businesses—so much so that the question of how much of a contract’s money is actually going to that business instead of subcontractors isn’t even of concern.
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