At the Albuquerque Convention Center last week, speakers included (left to right) Sen. Tom Udall: Master of Ceremonies, Mark Holecek, manager Kansas City NNSA Field Office: Frank Klotz, NNSA Administrator; Sen. Martin Heinrich; (hidden) Rep. Michelle Lujan-Grisham; Rep. Steve Pearce; and Scott Bisson, director, Supply Chain Management Center (Photo: Courtesy Ricard Quinto)
Local Small Businesses Pow-Wow with NNSA And Politicos In Albuquerque
On rare occasion New Mexico’s entire congressional delegation gets together in the same place all at once. Last week, the state’s two senators and three representatives were all on hand at the Albuquerque Convention Center, along with the head of the National Nuclear Security Administration, Frank Klotz, to support a small business networking conference to address concerns local small busineeses have raised regarding procurement policies that are affecting jobs in northern New Mexico. The meeting attracted hundreds of enterprises interested in new and better opportunities with the Department of Energy’s Supply Chain Management Center.
SCMC was established in 2006 to help extract some extra value out of roughly $4 billion worth of enterprise purchases annually by the managers and operators of the Department of Energy’s weapons laboratories, nuclear sites and environmental management programs. The center is a relatively small operation managed by Honeywell Federal Manufacturing and Technology out of NNSA’s Kansas City National Security Campus. Supply chain management tries to optimizing purchasing and procurement activities in large organizations. The acquisition strategies SCMC offers are meant to be procurement tools, and participation around the complex is described as voluntary.
Over time, some small businesses in New Mexico started complaining that the SCMC program was beginning to nibble away at their contracts, by pitting them against teams of prime contractors chosen behind the scenes by SCMC, with capacities and resources beyond the reach of a small local business. Bulk quantities can help lower prices, but may also lack the touch and responsiveness of a local supplier. LANL major subcontractors, for example, have economic development requirements as part of their subcontracts with the Laboratory, And what started out as reduced sales because of contracts targeted at supplies and commodities, broadened out to include services as well.
In his opening remarks at the conference, Sen. Martin Heinrich said he had responded to concerns by several stakeholder groups, including the LANL Major Subcontractors Consortium, the Regional Development Commission and the Regional Coalition of LANL Communities in Northern New Mexico, by hosting a listening session in Española.
“Based on that feedback, it was clear that we could do more to ensure that local businesses had the opportunity to compete for contracts on a level playing field,” Heinrich said. “We worked with Gen. Klotz to map out today’s events, which I believe is the first of its kind that SCMC has ever held.”
When the Regional Development Corporation submitted a proposal for a pilot project, “Preparing Small and Disadvantaged Business for Enterprise Systems,” that would help New Mexico businesses compete more fully, the response was far from encouraging. “After carefully studying the proposed concept, DOE has come to the conclusion that there is no programmatic interest at this time,” replied the DOE Unsolicited Proposal Manager at the National Energy Technology Laboratory, in a letter written earlier this year. “Based on current experiences, small business are ready to compete regionally or nationally without the need to expend additional taxpayer dollars,” he observed. “The concerns raised in this proposal have been or are already being addressed in a manner that is fair to all small business communities across the nation.”
“We have a whole list of recommendations,” said Liddy Martinez, attending the conference as the newly selected director of the Regional Development Corporation, having worked on this issue with the LANL Major Subcontractors Consortium. “We are asking for an open and fair process,” she said, noting that one unexamined aspect of the acquisition management value system was that “it was based on commercial practices but they are using government money,” without adequate regard for other social and economic impacts.
“Contracts that use federal public funding must be open, must be fair for the best value for our national labs and also for investments in our community,” Sen. Tom Udall said in his remarks.
If there are going to be radical changes that impact New Mexico small businesses, I want to know why, because I believe New Mexico small businesses are doing an excellent job.”
NNSA Administrator Klotz said the Supply Chain Management Center was set up “as part of NNSA’s commitment to be a responsible steward of tax dollars,” with a plan to combine purchasing power and award multisite commodity agreements for purchases like commercial software, travel, lab supplies, bulk fuel, safety glasses and so forth. “In the 10 years they have been around, more than $600 million in savings have been realized to date.”
Concerning small businesses and New Mexico, Klotz related two success stories from recent years including one national level deal by a Santa Fe company in 2014 for computer products with an estimated value of $200 million. In 2015, he said, an Albuquerque, woman-owned small business was awarded a regional agreement with SCMC for industrial supplies estimated at $35 million over five years.
“In New Mexico, small businesses are high on the list for both number and annual dollar value of the agreements awarded.” SCMC Director Scott Bisson said, emphasizing several areas of improvement, including holding more informational meetings, creating a web site and including community development clauses in requests for proposals. “We hope you see and hear other examples of where we have improved our transparency throughout the day,” he said.
After the introductory talks, which included remarks by Reps. Ben Ray Luan, Michelle Lujan Grisham and Steve Pearce, the attendees moved on to meetings with commodity manager, small group question and answer sessions and information booths and tables.
“It’s all about capacity, and if you don’t have the transparency in the process, you don’t know where to plug into the process,” said Heinrich. “It’s very important to meet our business leaders and realize the capacity that is here.”