This Is Legal—But It Still Seems Wrong

The Privilege of Being a GovCon

We are a nation of immigrants. My own spouse is from a family of first-generation immigrants. In the United States, many first and second-generation immigrants who are U.S. citizens are allowed to compete under small, disadvantaged business (SDB) categories in Government Contracting (GovCon). A SDB is a small business that is at least 51% owned and controlled by individuals who are considered both socially and economically disadvantaged. This means they have faced racial or ethnic prejudice and limited economic opportunities, according to Small Business Administration (SBA) standards. Essentially, it is a small business owned by individuals who may have historically faced barriers to competing in the market due to social and economic factors.

It is a privilege and not a right for small business of any type in the U.S. to be the beneficiary of SBA programs. In GovCon, there are many such companies that have eventually successfully grown to tens if not hundreds of millions of dollars and employ many. Likewise, competing in the GovCon marketspace is a privilege and not a right. It is a privilege to win a competitive procurement and serve the departments and agencies of the U.S. Government with their many and diverse missions to ensure the safety, security, prosperity, and overall welfare of U.S. citizens. It is a privilege to be given the increasingly scarce financial resources of the American taxpayer to help U.S. Government departments and agencies address their mission needs.

The Concern

There are a number of SDB-type GovCons led by first and second-generation immigrants who are sending their back-office operations, proposal development, and even client delivery back to their countries of origin. They use their contacts from their home country to get the use of labor at a fraction of the cost of U.S.-based labor categories and leverage time zone differences to their competitive advantage. WHAT IS CRAZY IS THAT THIS IS NOT ILLEGAL.

It appears that a U.S. GovCon company can outsource its back-office operations and proposal development support to certain non-US countries, but it must carefully consider and navigate several factors including data security, compliance with U.S. Government regulations, and potential security concerns related to sensitive information before doing so. In addition, it can potentially outsource some of its contract requirements too.

Congress Needs to Fix This Loophole

Four primary issues that arise from the above concern are:

1) The aforementioned types of companies are getting for themselves an efficiency and competitive price advantage over competing GovCons that are not able to do this.

2) Tax-paying U.S. citizens are losing employment opportunities to overseas workers while such companies are the beneficiaries of awarded U.S. Government contracts.

3) This seems to go against the purpose of the Cyber Maturity Model Certification (CMMC) that so many in GovCon need to comply with. It is even known that some of these companies are transmitting controlled unclassified information (CUI) and the personally identifiable information (PII) of their employees overseas on a regular basis. This easily opens up our Country to espionage and our citizens to fraud.

4) It just seems unpatriotic when the leaders of such companies have the privilege to being U.S. citizens and the privilege to serve the citizens of the U.S. as a government contractor.

Let us only hope that Congress does the right thing to address this loophole.