Minority Contracting:

DOD's Reporting Does Not Address Legislative Goal

NSIAD-93-167: Published: Jul 27, 1993. Publicly Released: Jul 27, 1993.

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Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) implementation of statutory minority contracting provisions, focusing on DOD: (1) progress toward awarding 5 percent of its contract dollars to minority small businesses, historically black colleges and universities (HBCU), and minority institutions (MI); (2) use of certain contracting procedures to achieve the goal; and (3) progress in increasing participation by minority small businesses.

GAO found that: (1) DOD reports on minority contracting for fiscal years 1990 and 1991 did not clearly show DOD progress toward meeting the 5-percent goal because DOD reported separately on prime contracts with small disadvantaged businesses (SDB), HBCU, and MI; (2) in the aggregate, DOD exceeded the 5-percent goal in fiscal year (FY) 1992; (3) DOD set separate 5-percent goals for the three minority contracting areas to enhance visibility in each area, accommodate prior management practices, and achieve consistency with other federal minority contracting programs; (4) although DOD used small business set-asides and preferential pricing for some contracts, it would have achieved the 5-percent goal in FY 1992 without preferential contracting procedures; (5) DOD did not report the number of minority small businesses receiving contract obligations or the distribution of obligations among those firms, although it did increase SDB participation; and (6) DOD obligated significant portions of contract dollars to a small number of minority firms.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DOD changed its annual report on small and disadvantaged business participation in procurement process.

    Recommendation: The Secretary of Defense should direct the Under Secretary of Defense for Acquisition, in meeting the reporting requirements established by section 2323, to include in the report, along with the currently reported data on program management goals, data on: (1) SDB procurement performance that directly corresponds to the section 2323 goal; and (2) the extent of SDB participation in the program, including information on the overall number of companies receiving awards and the percent of dollars obligated to these companies.

    Agency Affected: Department of Defense

  2. Status: Closed - Not Implemented

    Comments: The major preference program was the SDB set-asides. DOD has suspended the SDB set-asides in response to the Supreme Court decision in Adarand Constructors, Inc. v. Pena, 115 S.Ct. 2097 (June 12, 1995).

    Recommendation: Since DOD achieved the 5-percent goal in FY 1992, the Secretary of Defense should evaluate the extent to which the preferential contracting procedures are needed to meet program goals.

    Agency Affected: Department of Defense


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