Background:

• AGC is working to foster a business climate that enhances opportunities for all businesses. The typical construction firm size is very small. Construction is an intensely competitive industry. To succeed, construction firms have to focus on safety, price, quality, and reliability. Our members recognize the benefits the Federal government provides to small and disadvantaged contractors, including the need to provide assistance to small firms that do not qualify for any assistance programs. AGC believes current Federal rules need to be updated to generate more collaboration, mentoring, and assistance for all small and disadvantaged firms.

AGC Message:

• Support Mentor-Protégé Programs. AGC encourages and supports mentor-protégé programs and other appropriate efforts to help minorities and women enter the mainstream of the construction industry. The program's immediate goals are two. The first is to increase the capacity of work that emerging business enterprises are capable of winning and to ensure they can profitably perform the work. The second is to broaden the base of their activity, increasing the number and long-term stability of such firms, and spreading their activity throughout the building, highway, heavy, industrial and utility sectors of the industry. The mission of the model program is to build a broad base of emerging business enterprises capable of performing high quality construction at competitive prices.
• Allow Prime Contractors to Include All Participating Subcontractors to Determine Goal Achievement. Current rules require set-asides for small business subcontractors, but prohibit prime contractors from truly accounting for the total amount of dollars flowing to small businesses. Under the current system, if an other-than-small business is included in first-tier subcontractors, a prime contractor is prevented from reporting further dollars going to small businesses. This happens regardless of whether small business subcontractors comprise other tiers or even the rest of the first tier. Allowing prime contractors to report small business subcontracting at all tiers would demonstrate true small business participation on a federal contract. Accurately accounting for small business participation helps federal agencies better meet set-aside goals established by the Small Business Act and helps prime contractors get credit for small business participation in government contracts.
• Revise Contract Bundling Definitions to Allow Review of Construction Contracts. The current contract bundling definition is overly limited. Agencies are able to avoid having to do any sort of economic impact analysis simply by adding a component that small businesses are not performing to a contract that would otherwise meet the bundling definition. A revision to the definition would clarify that contract bundling rules apply to construction procurements and that these procurements are reviewed for any impacts on small companies.
• Support Improvements to the HUBZone Program. The stated goal of the HUBZone program is to "increase employment opportunities, investment and economic development" in the low income and/or high unemployment areas that meet the federal definition of a "historically underutilized business zone." AGC recognizes the broad social objectives of the program but not how the Small Business Administration (SBA) currently applies the program to the construction industry. We are also greatly concerned about several recent reports issued by the Government Accountability Office (GAO) investigating the HUBZone program. These reports have found that this program is fraught with waste, fraud, and abuse. Given these concerns, we would prefer Congress suspend the program. Short of this action, we have developed several recommendations designed to improve this program, including the following:
  • Limit HUBZone awards to construction projects to a 150-mile radius of the HUBZone contractor's principal place of business;
  • Require SBA to routinely investigate alleged abuses of the program, and;
  • Change the 10 percent price preference to 5 percent.
• The Federal Government Must Better Track the Growth of Alaska Native Corporations. Alaska Native Corporations (ANCs) were established in order to settle many long- standing land claims and to foster economic growth for Alaska and Alaska Natives. In 1986, legislation was passed to allow ANCs to participate in the SBA's 8(a) program for socially and economically disadvantaged businesses. Under this legislation, ANCs have extraordinary and unique preferences over other 8(a) firms that have contributed to reduced Federal contracting opportunities for traditional small businesses. The Government Accountability Office has issued several important reports and recommendations on improving this program, including better compliance through monitoring performance, tightening controls on subcontracting, and ensuring that an ANC owns only one subsidiary that generates revenue within a primary industry. SBA must quickly work to implement these suggestions.