The federal government has fallen further short of its goal of awarding nearly a quarter of its contracts to small businesses, according to data released Friday by the U.S. Small Business Administration.

Federal agencies awarded 21.5% of their contracts worth just over $93 billion to small businesses in fiscal 2008, which ran from Oct. 1, 2007 through Sept. 30, 2008, falling short of its 23% goal set by law.

The report also revealed that federal agencies missed the target by a wider margin than in the previous fiscal year, when 22% of contracts worth about $83 billion were awarded to small companies. Experts who track federal contracting trends attributed the slippage to big-ticket spending on defense contracts, an arena typically dominated by large firms.

The news come as the Obama Administration earlier this week announced a new government-wide push to increase outreach efforts by federal procurement officials and other agencies to connect small businesses with government contracting opportunities.

Hit by the recession, small-business owners are eager to win Uncle Sam as a new customer, and right now there are billions of dollars of extra dollars up from grabs as contracts start to flow from the $787 billion economic-stimulus package passed five months ago.

The SBA's third annual scorecard, drawn from data supplied by 24 federal agencies, showed that the agencies missed the overall target of awarding 5% of their contracts to women-owned businesses, an additional 3% to service-disabled veteran-owned companies and further 3% to small business located in historically underutilized business zones, known as HUBZones for short.

The shortfall for women-owned businesses remained unchanged from the previous fiscal year at 1.6%. However, federal agencies made progress toward meeting targets for service-disabled veteran-owned businesses and HUBZone companies with narrower contract shortfalls of 1.5% and 0.7%, respectively.

The most positive development was in contracting awards to small "disadvantaged" businesses. Federal agencies awarded 6.8% of their contracts to small firms in this category exceeding the 5% target, and up from 6.6% during the previous fiscal year.

Determined annually in consultation with the SBA, each federal agency has a different small business contracting goal, including for specific subcategories, which when combined meet the 23% target. According to the SBA's scoreboard, only one agency, the General Services Administration, met or surpassed its goals in all areas. In contrast, two agencies, the Office of Personnel Management and USAID, met none of them. Another laggard was the Department of Defense, which was among a group of five agencies that only met or surpassed one of its five targets.

On Tuesday, Commerce Secretary Gary Locke and SBA Administrator Karen Mills announced a government-wide plan that includes federal agency procurement officials holding or participating in more than 200 events over the next 90 days to share information on government contracting opportunities, including those available under the American Recovery and Reinvestment Act.

"We have already begun taking aggressive steps to connect small businesses with contracting opportunities, as well as increase our outreach to federal agency procurement officers to make sure they get the information and tools they need to help them connect with these good, innovative small companies," said Mills.

As of early August, federal agencies had awarded about $8.1 billion in stimulus contracts, of which about $1.9 billion, or 23.4%, went to small firms.

Paul Murphy, president of Eagle Eye Publishers Inc., a market research firm that analyzes federal government contracting trends, says the new initiatives are needed: "It's critical to ensure that small businesses gain access to contracting opportunities and aren't bypassed in favor of the speed and cost-saving measures associated with awarding contracts to larger incumbents."

Finding out about contracting opportunities can be a challenge for small businesses with no prior experience. First, a business must identify which government agencies are buying what they are selling, register with them and then network with key decision makers. This can put small businesses at a disadvantage compared to larger firms that have a staff well versed in the intricacies of government contracts and can devote more time and resources to pursuing leads and crafting bid proposals, according to government-contracting consultants.

Source: The Wall Street Journal

Press releases on the small business numbers released today are trickling in.

The American Small Business League, which has vehemently criticized the SBA's data for years, claiming agencies award small business contracts to large companies and the SBA intentionally fudges the numbers, sent a lengthy statement, which is no yet posted on their website but will likely be soon.

"Despite all of President Obama's pre- and post-campaign rhetoric regarding small businesses, the fact is that the Obama Administration is allowing approximately $400 million a day in federal small business contracts to be awarded to Fortune 500 firms and some of the largest corporations in the world," ASBL President Lloyd Chapman said. "The fact that the Obama Administration is awarding small business contracts to Fortune 500 corporations cannot be denied. It is irrefutable. I challenge anyone in the country to prove me wrong. In my mind, the Obama Administration is anti-small business, and we all need to stop listening to what they say, and start looking at what they do."

The SBA's scorecard causes controversy every year. The agency readily admits the numbers aren't perfect and have made a point to publicize efforts to improve the data. The scorecard -- like many stoplight-style rating systems -- has flaws and is based on federal contracting data, which in and of itself is often incomplete and or hard to digest. Nevertheless the agency seems to be putting forth a good faith effort to evaluate the government's progress in this area and make the results of those evaluations public.

Here is a statement from Senate Small Business and Entrepreneurship Chairwoman Mary Landrieu, D-La.:

"While these numbers show seeing areas of improvement, there is still work to be done to ensure we meet our goal every year. The Obama Administration is working to improve the number of small businesses earning government contracts by increasing public knowledge over the next 90 days on federal contracting opportunities. The Small Business Committee will continue to monitor the number of small businesses receiving federal contracts over the next fiscal year as we fight to get small businesses their fair share of the billions of dollars in government contracts available. Small businesses, including minority-owned, women-owned and veteran-owned businesses, should be given the same opportunities as larger organizations because their employees work just as hard. While I am encouraged by these numbers, I still see room for improvement and I commit to working to improve these numbers for the next fiscal year and beyond."

Small businesses won a record $93.3 billion in federal prime contracts in the fiscal year ended Sept. 30, 2008, an increase of almost $10 billion from 2007, according to the U.S. Small Business Administration's third annual small business procurement scorecard, released today.

In addition, small disadvantaged businesses, women-owned businesses and service-disabled veteran-owned businesses increased their share of federal contracting dollars by at least $1 billion to $3 billion.

American Small Business League is challenging these latest statistics, alleging they've been inflated or falsified in several ways. For one, the government under-reported the total volume of the federal acquisition budget as a means of manipulating the final percentage reported as going to small businesses.

Secondly, the advocacy group cites more than a dozen federal investigations since 2003 that have found billions of dollars in federal small business contracts being awarded to Fortune 500 firms and some of the largest corporations in the United States and Europe.

"Despite all of President Obama's pre- and post-campaign rhetoric regarding small businesses, the fact is that the Obama Administration is allowing approximately $400 million a day in federal small business contracts to be awarded to Fortune 500 firms and some of the largest corporations in the world," ASBL President Lloyd Chapman said.

"President Obama has made a commitment to ensuring that small businesses have greater access to federal contracting opportunities and it is a commitment shared across this Administration," SBA Administrator Karen Mills said.

Again in 2008 as in previous years, federal tax dollars failed to flow to American small businesses as mandated by law, according to a report Friday from the Small Business Administration.

Just one federal agency out of 25 – the General Services Administration – met its small business contracting goal, the SBA says.

Two agencies that spend tax money didn’t make any of their goals: the Agency for International Development and the Office of Personnel Management.

Federal law says the 25 agencies must spend 23 percent of their purchasing budgets with small businesses. The figures in the past have been disputed with critics pointing out that billions of dollars meant for small businesses have gone instead to some of the nation’s largest firms.

Although goals were not met last year, the SBA contends at least it’s an improvement.

“Small businesses won a record $93.3 billion in federal prime contracts in Fiscal Year 2008 (Oct. 1, 2007-Sept. 30, 2008), an increase of almost $10 billion from 2007,” it says in a press release Friday.

“In addition, small disadvantaged businesses, women-owned businesses and service-disabled veteran-owned businesses increased their share of federal contracting dollars by at least $1 billion to $3 billion,” the SBA says.

In terms of dollars spent, the $93.3 billion represents 21.5 percent of some $434 billion in spending last year covered by the law. In 2007, the figure was 22.0 percent and in 2006 it was 22.8 percent.

But those earlier numbers were riddled with errors, critics have said. “Since 2003, over a dozen federal investigations have found that every year billions of dollars in federal small business contracts have been awarded to Fortune 500 firms and some of the largest corporations in the United States and Europe,” says the American Small Business League of Petaluma.

“This record $93.3 billion in contracts to small businesses is significant, however, across the federal government we are committed to ensuring that the 23 percent goal is met and even exceeded going forward,” says SBA Administrator Karen Mills. “Especially during these tough economic times, federal contracts for small businesses can be just the opportunity they need to continue to grow and create jobs.”

But the head of the ASBL believes the books are cooked.

"Despite all of President Obama's pre- and post-campaign rhetoric regarding small businesses, the fact is that the Obama Administration is allowing approximately $400 million a day in federal small business contracts to be awarded to Fortune 500 firms and some of the largest corporations in the world," ASBL President Lloyd Chapman says.

"The fact that the Obama Administration is awarding small business contracts to Fortune 500 corporations cannot be denied. It is irrefutable. I challenge anyone in the country to prove me wrong. In my mind, the Obama Administration is anti-small business, and we all need to stop listening to what they say, and start looking at what they do," Mr. Chapman says.

Source:  http://www.centralvalleybusinesstimes.com/stories/001/?ID=12872