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Thursday, April 19, 2001
Speaker: Bundling hurts small businesses
J.R. Gonzales urges government contracts be in smaller packages
By Tom Whitehurst Jr.
Caller-Times Business Editor
Government contracts should be parceled into smaller bid packages, to give small businesses more opportunity to gain experience as primary contractors, the keynote speaker at a conference on how to do business with the government said Wednesday.
   J.R. Gonzales, chairman of the Texas Association of Mexican American Chambers of Commerce, said the practice of bundling contracts - lumping them into one substantial project - discourages participation and competition, and therefore retards growth of small businesses.
   Gonzales, who spoke at the Government & Business Opportunities Conference at Omni Marina Hotel, said in an interview before his speech that breaking projects into smaller contracts would be especially important as the city prepares to expand its convention center and build a multipurpose arena. The projected costs are $35 million for the arena and $21 million for the convention center expansion.
   The city will design the bid requests for those two projects to gain maximum participation by locally owned small businesses, said Angel Escobar, the city's director of engineering services. City staff gave presentations Wednesday at the conference to show businesses how to make the city their customer.
   The mayor has appointed a committee, the City Major Construction Projects Advisory Panel, to achieve that goal in all city construction contracts. The committee is a response to issues raised last summer during the bidding for a new city airport terminal. Small contractors sought unsuccessfully to break the job into smaller contracts, complaining that they were being priced out of the competition because they weren't big enough to afford the insurance and bonding requirements. They also said the size of the project increased the risk that the contract winner would not be local. Fulton Construction Co./Coastcon Corp., a local firm, won the contract with a $16.4 million bid, $3 million under the project's estimate.
   Common argument
   The common argument in favor of bundling contracts is that it lowers costs, Gonzales said. That was the argument offered by city staff in favor of bundling the airport contract.
   "However, I've yet to see documentation that it is costing more money," Gonzales said, "because you're still going by the lowest bid."
   Smaller firms can subcontract with the winner of a large, bundled contract, but won't gain the experience and potential profit margins of being a primary contractor, he said.
   "I have seen requests for proposals that look like they're tailor-written for one or two companies. It's discouraging that RFPs are written in a way to exclude small businesses, and that's what happens often."
   Opportunities
   The city staff's efforts in the past several months have been directed at doing the opposite, Escobar said. In addition to designing the bid requests to achieve maximum local and small-business participation, he said, the city has asked the project manager for the convention center and arena projects to survey the availability of local contractors for various jobs related to the two projects.
   Government contracting opportunities aren't limited to construction, and should be expanded to include as many services as possible, Gonzales said. He is the operator of an Austin public relations firm that has done government contracting.
   Gonzales congratulated participants in the conference for taking the risk of going into business for themselves, when there are plenty of job opportunities that offer good pay at much less risk.
   "If business was easy," he said, "everybody would be doing it."
   Certification
   Gonzales also urged participants to seek certification as historically underutilized businesses, or HUBs, if they qualify.
   "Is it affirmative action? Yes, it is. But there are a lot of affirmative action programs that are not recognized," he said. An example would be college fraternities that award membership based on family legacy.
   The conference was sponsored by the Procurement Technical Assistance Center, Corpus Christi Hispanic Chamber of Commerce, Small Business Development Center, Minority Business Opportunity Committee, Corpus Christi Chamber of Commerce, Minority Business Development Center, Del Mar College, Corpus Christi Black Chamber of Commerce, and U.S. Rep. Solomon P. Ortiz.


Contact Business Editor Tom Whitehurst Jr. at 886-3619 or whitehurstt@caller.com

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