Lost in the G.S.A. Scandal, Confusion About a Small-Business Contract

Abstract

After conducting a planned conference in Las Vegas in 2010, the Government Services Administration (G.S.A) is now being investigated for overuse of expenditures, and illegal contract solicitation and procurement. It was reveled through an Inspector General investigation that contract office misused the North American Industry Classification System (NAICS) to target Royal Productions as a 'small business.' It also led to conclusions that the procedures used to solicit the need for audio-visual services for the conference were not in accordance with federal regulations.

Government markets have a large part in our economic infrastructure stability that offers the opportunity to businesses to provide requested services to them. Although the process is very long and tedious in dealing with winning a contract offered to provide these services to the government, there are also regulations in place that the government must follow when offering these contracts to obtain services. One of these regulations or guidelines is the North American Industry Classification System (NAICS).

The NAICS is a system that is used by government procurement officers when they write a contract for a vendor. The contract officer identifies one or many of the 1,175 industrial codes within the system that sets guidelines that separate small businesses from large corporations. "Under these size standards, set by the Small Business Administration, a business can be considered small for one sector but not for another" (Mandelbaum, 2012). This is where a recent investigation into the General Services Administration (G.S.A.) outrageous spending, and targeting specific companies to award contracts to came under investigation by the Inspector General (IG).

Suspicion arose in 2010 after a five-day conference at a Las Vegas resort estimated a total of $823,000. One major concern that brought suspicion to the G.S.A IG's office initially was the large expenditures of extravaganzas of luxury hotel suites and over $7,000 worth of sushi purchased. This event led to investigating a specific contract company called Royal Productions (Mandelbaum, 2012).

General government practice for making purchases using contracts is through bids or negotiations. Many companies often are "reluctant to approach [the] government market because of the complicated bidding process," or lack of understanding the rules of the contract process (Pride & Ferrell, 2012). When a service is needed for the government, "it sends out a detailed description of the products [in services needed] to qualified bidders" to compete among each other for the opportunity to provide those services (Pride & Ferrell, 2012). Royal Productions