When a major newspaper took a close look at a small federal contractor in a big investigative series recently, the result was not exactly what you might expect.

The Washington Post’s recent investigation of small vendor MicroTechnologies of Vienna, VA generated a lot of buzz. But it also prompted some surprising reactions and raised more questions.

Starting on Nov. 12, the Post ran a series of articles detailing how MicroTech appeared to take advantage--possibly unfairly--of several federal set-aside programs for small vendors, as it grew its contracting revenues dramatically in recent years.

There were colorful details presented about MicroTech owner Anthony Jimenez, including the car he drives (a Mercedes-Benz SLS coupe) and his mansion in Virginia.

Almost immediately, there was a backlash and passionate defense of MicroTech--not only from the company’s owners, but also from major publications.

Several journalists with long experience in government acquisition, including Nick Wakeman, editor of Washington Technology, and Jill Aitoro, senior staff reporter for the Washington Business Journal, questioned publicly why the series was published at all.

“Why is the Post attacking Tony Jimenez and MicroTech?” Wakeman wrote on Nov. 13.

Aitoro made the point that while some of MicroTech’s activities might appear questionable on the surface and there were some discrepancies in statements made, the company basically acted within the law. And she noted that the Small Business Administration has agreed with that assessment. “For now, at least, the SBA has consistently provided its own interpretation, ruling repeatedly in protest decisions that MicroTech legally won its contracts,” Aitoro wrote on Nov. 13.

In my reading of the Post articles, a crucial question kept springing to mind: Did MicroTech stay within the rules, or cross the line? The Post series did not answer that question clearly.

MicroTech officials, in a statement in the Post story, said “MicroTech has not broken any laws and has conducted itself in an ethical manner.”

The Post reported that MicroTech has received $1.4 billion in federal contract awards since 2004, about a third of it under set-asides for small firms--including 8(a) and service-disabled veteran set-asides. Jimenez is a service-disabled veteran.

It’s certainly plausible that MicroTech worked within the rules for smalls. MicroTech’s Jimenez, a former military procurement specialist, presumably was very savvy about contracting rules and likely able to bob and weave as needed to avoid violations and win awards.

Did MicroTech play by the rules, or break them?
Is it too hard to tell?

“He knew the procurement rules cold, and was able to zig and zag,” is how one vendor explained it to me.

“MicroTech seems to have threaded a very lucrative needle,” Jonathan Messinger wrote in the Public Spending Forum blog.

Because the rules are so complex, with many exceptions and special cases, there can be appearances that are misleading.

That might have been the case when the Post criticized a $394 million Veterans Affairs Department contract with MicroTech, for which nearly all the revenues went to a large firm. “VA called it a small-business contract, but a big firm got 90% of the money,” the Post headline read.

But a contracting specialist told me that type of arrangement would be perfectly acceptable for certain product sales, such as for computer hardware. “The small business acts as a value-added reseller, but the bulk of the money goes to the manufacturer,” the specialist said.

It was not clear what rules applied in MicroTech’s VA contract.

There also are questions being raised about whether the government--specifically, the VA and Small Business Administration--missed the boat in their oversight. Five lawmakers, including House Small Business Committee Chair Sam Graves (R-MO) and House VA Committee Chair Jeff Miller (R-FL) issued a joint statement with three others saying they would be examining if there were violations of law. They dinged the VA and SBA on their oversight.

The ongoing controversy about whether rules were broken, or not, made me wonder: Are these small business rules so complex that they cannot be monitored effectively?

Some people are questioning the Post reports, but we also should ask whether government personnel are equipped to efficiently research all the ins and outs of contracts. It’s hard to believe the VA, SBA or Government Accountability Office, while faced with severe fiscal constraints, would be able to effectively apply all the rules needed to oversee MicroTech, along with thousands of other vendors.

One thing the Post series did achieve, if inadvertently, was to drive home the message that the rules for small business federal contracting are myriad and intricate. Despite laudable goals of strengthening diversity and small business, the labyrinth fosters frustration and higher costs, and perhaps fraud and abuse.

There are rules for each type of set-aside, contract, product or service, industry category, size of firm and certification; and for teaming agreements, joint ventures, non-affiliations and subcontracting; just to start. Put all those rules together and they begin to look like tall grass that has overgrown a once-productive garden.

--Alice Lipowicz, editor

More information:
Post series: http://goo.gl/ueDU1C
WT: http://goo.gl/81AAYC
WBJournal: http://goo.gl/LqwKjN