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Quick Fix

New procurement rules aim to level the playing field.

In keeping with his "mend it, don't end it" stance on affirmative action, President Clinton is implementing new federal procurement procedures designed to ensure that small, disadvantaged business (SDB) owners can compete for prime government contracts.

The changes take effect October 1 and are expected to impact 30,000 small firms the first year. SDBs currently do $10.8 billion in business with Uncle Sam. Only $4.4 billion of this total will be directly affected by the changes.

The new rules include three major changes. First, firms will no longer be allowed to certify themselves as economically or socially disadvantaged; this task will be assumed by the SBA and third-party contractors.

Second, people who are Asian-American, African-American, Latino or American Indian will automatically be considered socially disadvantaged. Others may submit an application to a regional SBA office describing their social disadvantage and showing a pattern of discriminatory actions against them.

Finally, certain SDB-certified firms may qualify for a price evaluation credit of up to 10 percent when bidding on federal contracts. This means that if another firm bids up to 10 percent lower on a contract, the SDB would still be considered the lower bidder.

These new rules pertain only to prime contracts; guidelines are being formulated for subcontracting and should be in place by January 1, 1999.

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This article was originally published in the September 1998 print edition of Entrepreneur with the headline: Quick Fix.

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