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What SBA Can Do to Support Local Companies in the Recovery

As published in News Is My Business

Recently a local paper, and this publication, highlighted an event hosted by the Small Business Administration (SBA), which sought to foster homegrown business participation in the recovery. Marlene Cintrón, the regional administrator of the SBA, asserted that the Puerto Rico government should open opportunities through reconstruction projects with federal funds instead of encouraging more imported firms into the Island.

She stated that “with a Puerto Rican business, every dollar spent is still active in the community about six times before it leaves. If one continues giving all these (reconstruction) contracts to companies, not from Puerto Rico, that money does not even enter the Island, it leaves and does not return. So, we want to ensure that our companies in Puerto Rico are prepared to take on more opportunities than have become available.”

Interestingly, a federal official would make such a comment, especially if the entity she leads has precisely all the tools to support local companies to reach better recovery pastures.

Logically, SBA wants to increase the number of Puerto Rico based-firms that may win future contracts with the federal government and that more women, minority, and veteran-owned companies gather the track record to become prime federal contractors. Becoming subcontractors in these recovery projects is a common-sense approach to reach such a lofty goal. Also, they are furthering a compromise set for by the Biden Administration.

While firms like mine have become an SBA certified Women Owned Small Business (WOSB), such an accomplishment, and our expertise, enabled us to be subcontracted by several large recovery prime contractors. Nonetheless, we have yet to reach any prime contract, or any set-asides as established by federal policy. Furthermore, our kickoff and the subsequent journey has been filled with unnecessary roadblocks that synopsize how little the instrumentalities of the Government of Puerto Rico know about federal grants and contracting.

Back in 2016, a report by the General Accounting Office (GAO) recognized challenges small businesses in Puerto Rico faced in obtaining federal contracting opportunities, particularly, lack of knowledge about the federal contracting process, difficulty meeting procurement requirements, and troubles accessing bonding, financing, and capital.

Considering the slow progress SBA commissioned a study that found that WOSB were underrepresented in the federal marketplace. As a consequence they expanded its program requirements.

Fast forward to 2023, from the perspective of an WOSB operating in Puerto Rico, the later challenges persist, coupled with others like absurdly expensive insurance, slow permitting, repeated bureaucratic document collection, and inconsistent procurement requirements. Most of these hurdles are placed by the recovery grantees in Puerto Rico, who have limited institutional knowledge and capacity on the programs they manage, having the unintended consequence of taking out local firms from competing from recovery prime contracts.

I am taking this opportunity afforded by the wonderful publication to propose activities that SBA could implement with federal grantors, state grantees, and prime contractors to achieve increased local participation.

1) Increase outreach for SBA's Mentor-Protégé programs – This program assists qualified small businesses (protégés) gain capacity and win government contracts through partnerships with more experienced companies (mentors). As part of the agreement both parties can enter a joint venture as a small business for any small business contract, provided the protégé individually qualifies. They may also pursue any type of set-aside contract for which the protégé qualifies, including contracts set aside for 8(a), service-disabled veteran-owned, women-owned, and HUBZone businesses. SBA could expand its outreach to current recovery prime contractors and try to promote this program with their subcontractors. This is something I even have proposed to my business partners.

2) Organize an SBA led Matchmaking event – Many local small business might not have the network to reach big prime contractors. These events are few and dispersed. Multiple stakeholders and advocates for small business can organize various matchmaking events throughout a year as a force multiplier that takes advantage of its collective network. Major prime contractors in such fields as aerospace, defense, and disaster management can be part of the effort. The more the merrier.

3) Collaborate with other federal agencies on grantee training and technical assistance – Investing in grants management training within the Commonwealth of Puerto Rico is something I have championed in this publication in the past. If state and local grantees continue to perform below par and make the same compliance mistakes, this witlessness translates to the avoidable challenges revealed earlier.

These recommendations are not hard to implement. It takes a bit of effort and wherewithal to create an environment conducive for small business to grow and succeed.

But if the hurdle to be leapt continues to be higher, and the playing field is not somewhat leveled, many small businesses in Puerto Rico will continue to fall in the journey. And the money will continue to leave.

Author Gloria Fernández- Estébanez is the president of The Consulting Lead Inc., a San Juan based certified Woman Owned Small Business. She is a Certified Research Administrator with more than 25 years of experience in grant management.



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