But recent legal changes have resulted in a switch in contracting practice, from ethnically-based to geographically-based preferences, according to the draft environmental impact statement for the Guam military buildup.
With the change in the contract award practice, local companies get more opportunities to participate in bidding for federal projects.
Naval Facilities Engineering Command Pacific is creating a system of preferences worth $1 billion for small and local businesses specific to the military buildup, according to the draft study.
Also, the Defense Logistics Agency is providing $386,000 to establish the new Guam Procurement Technical Assistance Center at the University of Guam School of Business and Public Administration.
The Procurement Technical Assistance Center would help small businesses on Guam navigate the DoD’s procurement bureaucracy in hopes of increasing the share of contracts awarded, stated the impact statement.
Historically, the contracting process for the Department of Defense included the Small Disadvantaged Business program, which sets a goal of 5 percent of defense procurement and service contracts being awarded to businesses that fall into this category each year.
Section 8 of the Small Business Act defined small businesses as “disadvantaged” primarily based on the ethnicity of the business ownership. Contractors in Juneau and Anchorage were reportedly taking on American Indian and part-Indian, or Aleut, partners to take advantage of the program’s incentives, though the ownership and workforce was primarily non-Indian, according to the report.
In 2008, however, the U.S. Court of Appeals ruled against a provision in the law that it found to be an unconstitutional practice. The court ruling has resulted in the switch to an alternate program: Historically Underutilized Business Zones or HUBZones, administered by the Small Business Administration. A U.S. small business is eligible under the HUBZone definition if it, including at least 35 percent of its workforce, is located in a HUBZone.
Eligible HUBZone businesses are eligible for much the same terms of the former SDB program. This includes nonbid procurement and service contracts-under $5,000,000 for manufacturing businesses and under $3,000,000 for any other business-or a 10 percent price evaluation preference in open bidding.
Guam and the CNMI are geographically categorized as HUBZones. Because of this, more than 160 businesses should benefit in this shift from SDB to HUBZones, and will gain an advantage in comparison to competing contractors based in large mainland cities, according to the draft impact report.
