American Contracting with the Federal Government - Essay Example

Bala Muhammad Makosa Academia-Research December 4, 2007 American Contracting with the Federal Government EXECUTIVE SUMMARY According to investigation, "There are an estimated 38.7 million U.S. residents who were either black or black and at least one other race, making up 13.3 % of the total U.S. population. The African American population is expected to grow by 30.6% by 2008, compared to a 24.8% increase for total U.S. population. Business Owners. There are 1 million African American owned businesses in the United States, which account for over $100 billion in annual sales. Traditionally, the most common form of African American-owned business has been in the service sector, (e.g., barber or beauty shops, transportation, etc.). Now the fastest growing sectors are business services, legal services, insurance and real estate". (Overview) Additionally, "Entrepreneurial Growth. Entrepreneurship in the African American community alive and well. African Americans are 50% more likely than whites to start their own businesses, and 86% of African American teens polled by Junior Achievement expressed interest in starting a business. Twenty-six percent of black men with some graduate school education are trying to start a business, vs. just 10% of white men 16% of black men making more than $76,000 a year are trying to start a business, vs. 10% of whites." (Overview) While in another development, African American Women are also participating immensely in business: "Two in five of all African American owned firms are owned by women. These firms employ 31.5% of the workers in African American owned firms and generate 20.4% of the sales. There are an estimated 414,472 firms owned by African American women in the U.S., employing nearly 254,000 people and generating $19.5 billion in sales. The number of African American women-owned firms has increased by 32.5%, employment has grown by 50.1, and sales have risen by 43.9%." (Overview) Law and Regulation of Minority Contracting with Federal Government: These consists of 8 (a) Program, SDB and others as well SECTION 8 (a) "Share of Prime Contracts. The U.S. Small Business Administration's "Section 8(a) businesses" are minority-owned businesses, as defined by the federal government. "Prime Contracts" means these minority businesses were given the main contract, without competition, because their owners are the correct race. Federal minority contract awards - without competition - totaled $6.67 billion." (Description) SDB: "SDB's are minority-owned businesses, as defined by the federal government. "Share of Subcontracts" means that the government dictated to the prime contractor that he/she must hire a certain number of minority subcontractors. In this category, federal minority subcontract guarantees - without competition - totaled $4.1 billion!." (Description) WBE: ""Share of Prime Contracts" means that these women-owned businesses were given the approved percentage of prime contracts without competition from white, male-owned businesses, because the recipients were the correct sex. In this category, federal women-owned business contract awards - without competition - totaled $3.86 billion!" (Description) Background Facts on Federal Government Contracting: There are certain facts and procedures on the above mentioned topic, which is basic before commencing business as Federal Government stated. "The execution of your contract (signing by both parties) is a key benchmark in government contracting. It triggers several events such as the start of the period of performance and the delivery schedule time period. Execution begins a billing period start date and contractual obligations by the government and the contractor". (Contract work Authorization) Moreover, "You should establish an internal document to your company that contains the pertinent data for the contract and assigns it a unique contract identifier in your business system. This is necessary for billing and cost collection purposes as well as government audits. Astute government contractors do not allow effort to proceed or cost to be incurred on a particular contract until such a document is generated, signed, approved and distributed by a company official assigned the duty of releasing the contract for performance. Such documents are commonly called "Work Authorizations", "Release Orders" "Production Release Orders" or a similar term to benchmark the new business and begin performance, accounting, and time and materials accumulation on the contract" (Contract work Authorization) Size of the Federal Government Contracting Market: On this aspect, "Federal purchasing rules require more competition (and documentation showing competition) as the size of procurements increase. Starting with micro-purchases (under $3,000) the rules allow sole source buys made directly by end users using a government credit card. The $3,000 limit can be increased to $15,000 or even larger under emergency or special circumstances. Credit card purchases do not have to go through the official contracting office so the market segment is identical to the commercial market". (Guidelines for Companies New to the Federal Government) Additionally, "All other federal purchases (besides credit card purchases) must be transacted by official contracting officers. Purchases up to $25,000 can be made with simplified purchasing procedures, e.g., three verbal, fax, or emails quotes. Purchases over $25,000 require a full and open competition (public bid) or use of a multi-vendor contract". (Guidelines for Companies New to the Federal Government) Share of Black Firms in Government Contracting Market "The Labor Department's Office of Federal Contract Compliance Programs (OFCCP) administers Executive Order 11246, which imposes nondiscrimination and affirmative action obligations on most firms that contract to do business with the Federal government. According to five academic studies, active enforcement by OFCCP during the 1970s caused government contractors to moderately increase their hiring of minority workers. According to one study, for example, the employment share of black males in contractor firms increased from 5.8 percent in 1974 to 6.7 percent in 1980. In non-contractor firms, the black male share increased more modestly, from 5.3 percent to 5.9 percent. For white males, the employment share fell from 58.3 percent to 53.3 percent in contractor firms, and from 44.8 percent to 41.3 percent in non-contractor firms." (Effect of Employment) Distribution of Black firms in Government Contracting by Sector: While making assessment on this, it can be stated that "Black businesses have always contributed to the composition of the black middle class. They have a larger impact on the middle class than the elite, a very small stratum of the black population, about 1 percent, compared with about 5 percent of the white population. Prior to the 1960s, black businesses primarily served the black community in beauty parlors, grocery stores, barbershops, funeral parlors, insurance agencies, small savings and loans, and beauty products. As in occupational distribution, black businesses have broadened their base and now include car dealerships, construction, beverage distributorship, and small manufacturing, technology, and fast food franchises. Automobile dealers and food and beverage distributors account for almost three-quarters of the sales of Black Enterprise magazine's 100 largest black-owned businesses in 1997". (Impact of Black Business) References Overview, African American Entrepreneur, http://www.esmalloffice.com/SBR_template.cfmDocNumber=PL27_0000.htm Description, Official Minority Set Aside Statistics, US Federal Minority Contract Guarantee, http://www.adversity.net/fed_stats/fed_stats_main.htm Contract work Authorization, Small Business Federal Government Contracting, December, 2007, http://www.smalltofeds.blogspot.com/ Guidelines for Companies New to the Federal Government, Richard White, Article: Federal Sales, http://www.fedmarket.com/articles/guidelines.shtml Effect of Employment, Empirical Research on Affirmative Action and Anti Discrimination, http://clinton2.nara.gov/WH/EOP/OP/html/aa/aa03.html Impact of Black Business, Robert L. Harris, The Rise of Black Middle Class, http://www.worldandi.com/public/1999/February/middle.cfm Read More