Unemployment, oddly, can help Federal money flows to areas with high jobless rate.

September 30, 1991|By Michelle Singletary | Michelle Singletary,Evening Sun Staff

Companies in Baltimore can get preferential treatment when bidding on federal contracts because the city has been designated a high-unemployment area.

However, such contracts are not widely publicized by the federal government. And even when companies are awarded a "labor surplus" contract they often don't know it's due to a special mandated set-aside.

The city is among 1,565 locations in the United States and Puerto Rico that have been classified "labor-surplus areas" for the new fiscal year beginning tomorrow and running through Sept. 30, 1992.

The areas are designated as such so that federal procurement dollars can go to the local economies most in need of them, says William J. McGarrity, a labor economist with the U.S. Department of Labor.

McGarrity says the purpose of the set-aside is to encourage companies to hire people living in areas with high unemployment. About $1 billion to $1.5 billion in contracts is given each year to eligible companies.

Advanced-Care Ambulance won a labor surplus set-aside contract from the Department of Veterans Affairs for the Baltimore VA Medical Center. The contract could total more than $214,000 for the 1991 fiscal year.

"We just bid the contract as a small business and a Vietnam-era, veteran-owned business," says Joseph Dulany, vice president of Advance-Care.

Businesses in labor-surplus areas are eligible for preferential treatment when bidding on certain federal contracts that may include construction projects or supplying a federal agency with office materials such as ball point pens.

"It would give us the edge" if all other things are equal, Dulany says of the preferential treatment.

Advanced-Care is responsible for ambulance transportation for patients at the medical center. The contract enabled the company to hire six people, Dulany says.

"It allowed us to bring more people in. When you have business to put additional units on the road, you do," says Dulany, adding that 65 percent of the full-time employees are veterans.

At the Baltimore VA Medical Center there is a goal to award 3.2 percent of total procurement contracts to companies in labor surplus areas, according to Jacqueline Kallstrom, chief of acquisition and materiels management.

The Social Security Administration in Baltimore has awarded at least six labor surplus set-aside contracts amounting to $377,838 for the fiscal year ending today.

In order to qualify for the designation, an area had to have an unemployment rate 20 percent above the national average during a two-year period. The federal government reviews local unemployment rates around the country every year. Baltimore again qualified as a surplus labor area.

Between January 1989 and December 1990, Baltimore had an unemployment rate of at least 6.6 percent, qualifying for the program.

Baltimore has a much higher unemployment rate than do its suburbs or the state as a whole. The jobless rate in the Baltimore metropolitan area dropped in July to 6.2 percent, from 6.6 percent in June. The city's rate of 9 percent was down from 9.6 percent in June, but still was the highest in the metropolitan area.

In Maryland, the unemployment rate dropped to 5.5 percent in July, from 6 percent in June, the state reported earlier this month. The release of state figures always lags a month behind federal data.

The nation's unemployment rate remained at 6.8 percent in August as new hiring failed to post a large enough gain to make a marked improvement in the labor market, the government reported this month.

The number of Americans who are jobless stayed at 8.5 million -- about 1.7 million higher than when the recession started in July 1990.

McGarrity says the city has been designated a surplus area for the last two fiscal years. He has no figures on how many local companies have won contracts as a result.

It's one of the federal government's best keep secrets. Baltimore companies contacted because they had won contracts as a result of a labor surplus set-aside weren't aware they had received the preferential treatment.

Notice about contracts awarded by the federal government for more than $25,000 can be found in the Commerce Business Daily, which can be found in most public libraries. Contracts with special requirements such as set-asides for small businesses or NTC minority businesses are identified.

Preferential treatment for companies in a labor-surplus area works like this:

* In some cases, contracts will be set aside and only those companies in the designated areas can submit bids.

* In other cases, a bid is accepted from any company, but a bidder in a labor-surplus area will receive preferential treatment if its bid is equal in dollar amount to that of a firm somewhere else and it meets other criteria of the contract.

* A procurement officer might identify a number of companies in a labor surplus area, such as Baltimore, and if enough can be found that could competitively bid on a contract, that contract is given the labor surplus designation.

"In general, it helps alleviate some of the unemployment problems," McGarrity says of the preferential treatment.

He advises Baltimore employers to bring up preferential treatment when dealing with federal agencies that are letting contracts.

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