DÉFENSE ZONE
In a report published at the end of June, the American NGO Project On Government Oversight (POGO) reveals that in a single year, several giants of the American defence industry obtained $300 million originally intended for small businesses.
In one year, companies such as Lockheed Martin, Raytheon and L3Harris shared at least $339 million intended for small businesses. This sum comes from a $33 billion fund that was supposed to support small businesses in the military sector, which have been struggling for several years. According to the NGO POGO, this use of the Defense Logistics Agency (DLA) programme risks driving small businesses into bankruptcy, thereby eliminating competition and allowing large groups to push prices up. According to lawyer Robert Burton, a former senior federal procurement official, it is the size of the programme that encourages dysfunction: “Generally, we don’t have $33 billion funds over 10 years”, he said. “This one is special because the US Department of Defense holds the entire sum intended for small businesses.”
This DLA TLS programme (Tailored Logistics Support) is subcontracted to 4 intermediaries who do not always turn to modest companies. The NGO POGO reports that one of them, Atlantic Diving Supply, most of whose revenue comes from the TLS programme, awarded at least €150 million in public contracts to L3Harris, which ranks 9th among American defence companies. These contracts with industry giants are possible thanks to waivers granted to the intermediaries by the Small Business Administration (SBA). In 2017, the American administration granted only half of waiver requests. In 2021, 93% of them were approved.
Credit: POGO (NGO)
“Waivers apply only to the items they cover, not to the whole contract”, the SBA argues, adding that the DLA is breaking its regulations with its overly broad interpretation of the waivers. Whether it is a misleading use of funds or a malfunction in the contract award process, this problem goes beyond the actions of one individual, according to Robert Burton: “Either the rules in force are being violated, or the system allows it”, he said. “Either one is bad.”
