By Jack Faris
Although technology has elevated game-playing to new heights, there’s still no substitute for traditional board games such as the longtime favorite, Monopoly, where friends and families match their wits, knowing they can achieve millionaire status or wind up penniless simply by tossing the dice.
But in the contest for government contracts, the nation’s small businesses face a monopoly that is no game. Rather, it is a government agency that not only blocks many of their attempts to compete, but uses its unfair advantage to ensure that small firms have little chance of winning.
Perhaps those small businesses that want to compete would find the lop-sided challenge more acceptable if they were going up against businesses more capable and better qualified to meet the specifications of the work. If they were compelled to go toe-to-toe against large companies with long histories of successfully fulfilling such contracts, losing a bid would be seen as the result of strong competition.
But many small firms are denied opportunities to provide the government with products and services at reasonable costs by an agency that was initially created to help rehabilitate federal prisoners. Federal Prison Industries, which exists within the oxymoronic category of a “government-owned corporation,” is a massive government outfit posing as a business under the innocent name Unicor. It monopolizes a huge share of government contracts, offering a host of goods and services that would be the envy of most Fortune 500 businesses.
This official arm of the government also exempts itself from regulatory mandates that legitimate businesses must accept, and Unicor is allowed to pay its labor force of prisoner-workers a sub-minimum wage of $1.23 an hour or less.
Unlike small firms, Unicor doesn’t even have to pay to expand its facilities when it grabs more government business; it just enlarges its prison work space with federal dollars, and then hauls in excess production equipment from other federal agencies at no cost. When it does find itself in need of cash, Unicor simply goes to the U.S. Treasury and exercises its authority to borrow up to $20 million at rates far below those available to even the largest commercial enterprise. No wonder small-business owners see Unicor as a deterrent to entrepreneurship and a violation of basic fairness.
But the dice may have begun rolling in favor of small business. According to the Philadelphia Inquirer, last month the U.S. Small Business Administration’s (SBA) Federal Contracting Office took Unicor down a notch, telling the Environmental Protection Agency (EPA) the company was not qualified to work on a computer recycling project because Unicor can only bid on small-business contracts supplying items, not services. EPA was forced to cancel the contract.
Unicor had already taken a hit in December when Congress banned the government company from using its preferential status to block small businesses from bidding on certain government contracts. The actions of Congress and the SBA don’t mark the end of the Unicor monopoly, but small-business owners are pleased that they have at least passed “go.”
–Jack Faris is president of NFIB (the National Federation of Independent Business), the nation’s largest small-business advocacy group. A non-profit, non-partisan organization founded in 1943, NFIB represents the consensus views of its 600,000 members in Washington, D.C., and all 50 state capitals. More information is available on-line at www.NFIB.com.
