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Saturday, January 28, 2012

Leveling the Playing Field: Contracting Set-Asides

Army Combat Uniform Coat
In a Bloomberg article released Thursday, it was reported that one-third of all uniform manufacturing contracts are awarded to AbilityOne which is a company that employs a workforce that consists of the blind and people with disabilities.

The remaining contracts were split between the government owned Federal Prison Industries and private manufacturers. Essentially you have just a third going toward business that must competitively bid for uniform production contracts.

If times are tight due to the economic downturn, and defense budgets among other local organizations are being slashed for military and other tactical uniforms. Given these conditions you can certainly see a fight or flight response enacted by those private organizations that must fend for their own.

This could me layoffs, plant closures, moving manufacturing to areas where labor costs are more tenable, or writing the local representative to see what they need to do to get a bigger piece of the pie. 

In the article Propper International and American Apparel Inc. who are companies that must compete for their handsome reward take aim at the set-asides that give an unfair advantage though politically correct means of manufacturing. We have touched on the use of prison labor for defense contracts in the past and it is fraught with inefficiencies. 

One would think that paying inmates slave wages would equate to cost savings, but it simply does not work that way. The end result is a higher cost product that could have been made by a private corporation for less. This assumes that they get it right in the first place. In several instances, inferior products have been provided to fill the contract ending in a scrapped protective equipment for our troops. 

Photo by US Army
Uniforms may not be in the same category of product perfect that is required for keeping military personnel safe, however is the job does not get done right, then you can certainly have a lot of complaints about the needs to fix clothing out in the field.

This aspect is not up for argument, but when you have a guaranteed income source, it doesn't necessarily give you much impetus to make sure you get things to 100% quality. Plus the moral issue of prison labor over hard working law abiding citizens begs the question, "What law do I need to break to get a job around here." 

You may laugh at this exaggeration, but Bloomberg notes that not less than a month ago American Apparel will be closing a plant and 175 workers were sent off to a tough job search environment. Would it have been a great injustice for 300 inmates or whatever equitable labor cost were sent packing on a permanent vacation to their cell? 

Propper International has made strides in picking up contracts outside of their uniform lines in order to compete in the drudgery that is the dog eat dog industries built on military contracting. Have you bought one of the latest packs designed by Propper? Well, no one has besides the department of defense. 

The Family of Improved Load Bearing Equipment including packs, hydration systems, and more gear to be utilized by the US Marine Corps is one instance where Propper is stepping outside their normal product line to fill a contract that will provide their workforce with another reason to stay around. They also were recently awarded a multi-million dollar contract for Fuel Handler Coveralls, which are not as big of a leap from their normal uniform production line. 

There are plenty of set-asides out there for many groups including Service-Disabled Veteran Owned business. Propper International and similar many military contractors offering similar manufacturing have their own arrangements in order to contribute to specialty group work forces, which in turn also helps them gain an upper hand in landing big contracts. You can certainly see correlations in these company's emphasis on giving preferential treatment in hiring practices or partnering with small businesses to what is being done by non-profit programs like AbilityOne with their efforts in hiring the blind and disabled. 

We are sure it is hard for private companies to debate why they should get business over such worthy programs that benefit those that may not otherwise find employment. However, if we are going to be honest about military budgets and what causes them to inflate beyond reason, there must be consideration to allowing free markets reign. 

Competition through low costs along with other quality control factors can  deliver the good at the best value. Private industry can contribute by providing preferential hiring practices, but with automatic set-asides already given, they may find it less reasonable to do so in maintaining a competitive advantage on cost. They may even consider the benefit of access to hiring inmates if the government will provide an in to their monopoly on below minimum wage labor solutions. However, we then move full circle to not providing a means of lowering overall unemployment. Clearly a moral decision that benefits taxpayers not serving our time on the block seems logical to us. 

Read Full Bloomberg Article Referenced: U.S. Deals Aiding Blind Draw Scrutiny as Rivals Struggle

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