Department of Defense Program to Help Minority-Run Businesses Get Subcontracts Not Working Well

PSAD-77-76: Published: Feb 28, 1977. Publicly Released: Feb 28, 1977.

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Implementation of the Department of Defense's (DOD) Minority Business Enterprise Subcontracting Program (MBE) was reviewed; the review focused on the way DOD and four prime contractors implemented the program. The program calls for contracts over $500,000 to have a clause stipulating that contractors identify and solicit minority businesses to perform subcontracting.

DOD implementation of MBE is inadequate in three respects: (1) the contract clause overlooks certain key aspects and requirements necessary to ensure program success; (2) the program is not adequately monitored and has inadequate standards to judge contractors' efforts; and (3) DOD contracting officers have not been given guidance on when the subcontracting clause should be inserted in prime contracts. Inadequate contract requirements and poorly planned programs are the primary reasons the subcontracting program is not effective. None of the prime contractors adequately complied with regulations for maintaining records related to minority business subcontracting. The contractors have not established a regular practice of soliciting bids from minority firms. About half of the minority businessess contacted were dissatisfied with the program.

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