Officials of small businesses,
asserting that the government has repeatedly failed to meet its obligation to
set aside work for them, are demanding that the Obama administration
dramatically increase federal contracts awarded to their firms.
Federal law requires that the
government set aside 23 percent of its contracts to small businesses. But small
businesses in fiscal 2008 received 21.5 percent of those contracts, the
shortfall representing a loss of $30 billion in work to the firms, according to
the National Association of Small Business Contractors.
Obama administration officials,
while pointing out that awards to small-business contractors set a record in
2008, say they are increasing their outreach efforts to them -- requiring
agency heads to participate in many more meet-and-greet events during the
remainder of the year in an attempt to reach their goal.
But small-business advocates argue
that is not enough. The association, comprising 300,000 small-business
contractors, is pressing the administration for several changes, including
imposing penalties on agencies that fail to meet the requirement and enforcing
fines on large companies that misrepresent themselves as small or
minority-owned businesses or misstate their connection with small-business subcontractors.
They also are asking President Obama to make the top spot at the Small Business
Administration a Cabinet position.
Though the government has failed to
meet the contracting requirement for five years, officials said, the economy is
prompting the association to push harder for reforms now. Small businesses,
while employing the majority of U.S. workers, have been stung harder than big
companies by tight credit and many other recession-related problems, the
association said.
"As president, Mr. Obama has
focused on economic recovery. But he has not worked hard enough on small
business," said Margot Dorfman, vice president of policy at the
association and chief executive of the U.S. Women's Chamber of Commerce.
"The president said he is
relying on small businesses to grow so the economy can grow," Dorfman
said. But with small businesses "we're seeing a contraction rather than an
expansion."
Timothy J. Crawley, principal of
Gemini Tech Services in Potomac, estimates the defense and professional
services contracting firm, which has a staff of 25 full- and part-time
employees, lost about $30 million in work over three years to larger companies.
"There are contracts that the
government places a small-business requirement on, but not all agencies enforce
it," Crawley said. This is "limiting small businesses' ability to
gain access to government work and limiting government's ability to gain
innovative and cost-effective ways to get the work done."
The government has not taken into
account how smaller firms often are at a financial disadvantage in merely
preparing a proposal. Many, he said, simply can't afford to invest the $50,000
to $500,000 to put together an extensive proposal for the government, staff
costs that are difficult to absorb if they don't get the contract. As a result,
many small firms opt not to compete.
Moreover, the small-business
set-aside doesn't apply to some of the more lucrative contracts awarded for
work done outside the country, Crawley said. "On overseas work, there is
no requirement for large businesses to include small businesses," he said,
adding that a small business can't get in on that type of deal "unless you
know somebody."
The federal government has
guidelines on maximum revenue and staffing levels for nearly 1,000 industries
for what constitutes a small business in terms of federal contracting. For
instance, annual revenue can be no more than $750,000 for soybean farmers and
$33.5 million for construction firms. Staffing levels can be no more than 500
for food and apparel manufacturing companies and 1,000 for computer
manufacturing firms.
The government awarded $93.3 billion
in contracts to small businesses in fiscal 2008, an increase of nearly $10
billion from the previous year, SBA officials said. The SBA also boosted its
awards to businesses operated by women, disadvantaged minorities and
service-disabled veterans to $3 billion from $2 billion for that year,
officials said.
"We do want to acknowledge that
a record $93 billion in spending went to small business. But I'm not going to
be happy until the 23 percent goal is met and exceeded," said Joseph G.
Jordan, the SBA's associate administrator for government contracting and
business development.
One reason for the disparity, Jordan
said, is that the Defense Department represents 75 percent of federal contracts
and small businesses have been unable to provide the costly materials and
services needed to support the wars in Iraq and Afghanistan.
Jordan said the SBA is ramping up
outreach to small-business owners about opportunities to work with the federal
government and revamping its Web site to provide more information to them on
the contracting process. At the same time, Jordan said, the SBA is beefing up
training at the agencies. "We need to increase training and outreach to
contracting officers so they'll know how to find small businesses," he
said.
The SBA's "scorecard"
shows that numerous agencies partially met award goals for five categories of
businesses targeted by the program -- small firms, and those owned by women,
disadvantaged minorities and service-disabled veterans and ones operating in
economically depressed areas. For instance, five agencies -- the departments of
Defense, Justice and State, the Social Security Administration and the National
Science Foundation -- met one of five goals.
But two agencies -- the Office of Personnel
Management and U.S. Agency for International Development -- met none of the
five goals.