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Government Failing Small Business?

The U.S. Government awards a great deal of contracts each year worth a lot of money. One of its goals is to award twenty-five percent of these contracts to small businesses. Now that does not mean that they will be prime contractors but they may also team with bigger companies to share in a large contract. That is one of the more common ways to meet this goal. On all contracts the prime must submit small business subcontracting plans and report on their progress in meeting their goals. This data is then tabulated and compared to the twenty-five percent goal.

The Small Business Association (SBA) reported that in 2008 only twenty-one and a half percent of all contracts went to small businesses. While this is short of the goal the total amount of value of this work was at a record high of over $93 billion. In 2007 for example only $82 billion of contracts were awarded to these types of companies.

There has already been concerned expressed that the structure of the "Stimulus" bill will not facilitate small businesses winning those contracts. The idea of rapidly awarding them while seemingly fallen by the wayside helps companies with experienced contract teams and a working relationship with the Government. Many of the small businesses do not have either and the time it takes them to get up to speed may cause them to miss out on contracts.

The Fairness in Procurement Alliance (FPA) a small business group released a press release claiming that SBA scorecard is even worse then it seems as it miscounted "$3.1 billion in small business awards which had gone to 47 multi-billion dollar firms." considered too large. This group blames the "dysfunctional bureaucratic culture" as well as fraud and abuse of the small business designation as the reason that the government does such a bad job.

Not only did the Government fail to meet its small business goals for 2008 it also had issues with the other disadvantaged groups and areas. These include women and disabled veteran owned companies as well as historically underutilized business zones. These requirements do make it difficult sometimes to award contracts as the prime is forced to come up with the right mix of companies that meet the goals while still able to perform the work for the government often at a best value price.

It will be difficult for the various Departments and Agencies of the Federal Government to move towards meeting these goals. Spending has increased dramatically in 2009 as evidenced by the announcement yesterday that the deficit this year will be over $1.5 trillion as well as most likely in 2010. A the 2008 report illustrates despite large increases in spending the ratio of contracts going to the various groups is not being met. Honestly there are some products that small businesses cannot provide to the government and they are often big ticket items like large weapon programs.

This issue will be at the forefront for quite some time as the Obama Administration tries to contineut to stimulate the economy and reform procurement practices.