The games in federal procurement

Beyond the Rhetoric

The games in federal procurement

By Harry C. Alford, NNPA Columnist

Our federal government is the biggest consumer of supplies and services in the world. Its procurement laws are immense and require a lot of policing and updating. Within that system, Congress has the responsibility of ensuring that these laws are just and enforced. However, our courts are filled with cases of abuse, collusion and bribery. Right now, in the telecom industry our Congress is investigating the possibility of such a case.

Spectrum is the electromagnetic system of sending airwaves through the air and into televisions and computer screens. This is the lifeblood of the industry. It is vital that each company in this industry has ample stock of Spectrum. As the outdated analog televisions are closing down, Spectrum becomes available for broadband use and the Federal Communications Commission (FCC) holds auctions to sell it to the highest bidders.

As a means to make way for small businesses, including minority and women-owned firms, the federal government will sometimes provide set-asides or preferences to such firms so that they can compete against much larger corporations. If properly administered, this can be successful and provide new jobs and re-venue in communities that are underserved and disadvantaged. But sometimes things go wrong via greedy “robber barons” activity and collusion.

Right now, the U.S. Senate Committee on Commerce, Science and Transportation is looking at activity that occurred during Spectrum Auction 97. There were two competing “Very Small Businesses” in the competition. Northstar Wireless and SNR were these two entities. It turns out that the majority of their ownership actually belongs to the DISH Network, a $32 billion giant in the telecom business. Thus, in reality these two aforementioned firms did not belong in this competition as very small businesses.

By being in that category they would receive a discounted cost of 25 percent on any bids they would win.

So here goes the alleged scheme. DISH would fiercely enter into each bid, all the while Northstar and SNR were also in it. As the bidding whittled down the competitors, there would be only three left – DISH, Northstar and SNR. At that time, DISH would suddenly withdraw and either of the other two would win the bid. In essence, DISH was steering who would win and there would also be a 25 percent discount. Besides getting the bids, DISH was getting a whopping $3.3 billion discount and 702 new licenses. Small African American firms can’t win in games like this.