The federal government spent a record $96.8 billion with U.S. small businesses in the 2009 fiscal year, according to an annual report from the U.S. Small Business Administration.

However, a major critic of federal small-business contracting calls the report "dramatically inflated."

However, the report is flawed in two ways, according to Lloyd Chapman, president of the American Small Business League in Petaluma. He claims:

    * It includes billions of dollars in contracts that actually went to large corporations.

    * The calculations are based on $500 billion in spending when the real federal acquisition budget is $1 trillion.

The SBA acknowledges that the federal government missed its goal for small-business spending in four of the five categories, but in each category the spending increased.

SBA Administrator Karen Mills said the report "represents real progress, but not enough. We must reaffirm our commitment to ensuring that the 23% goal is met and exceeded."

Chapman said that his organization had analyzed 2009 small-business contracting data and found "the actual percentage of contracts awarded to small businesses is closer to 5%...Of the top 100 recipients of federal small-0business contracts...60 large firms received 64.5% of the total dollars the government claimed to have awarded to small business.

"The ASBL also identified a series of Fortune 500 corporations and other large firms in the government's 2009 contracting data...including Lockheed Martin, Boeing, Raytheon, L-3 Communications, British Aerospace, Northrop Grumman, General Elect4ric, Booz Allen Hamilton, Thales Communications, General Dynamics and Dell Computer," Chapman added.

There’s no legal requirement to give contracts to small businesses, but since 1953, the federal government has encouraged its biggest agencies to spend some money with the little guys that account for half the nation’s gross domestic product, more than half the jobs and more than half the net NEW jobs.

Chapman has been insisting for years — through the administrations of both political parties — that these reports are at best mistaken and at worst fraudulent and involve “$100 billion a year.” He created the league to call public attention to the issue.

In the past, the SBA has attributed the issue to data-entry mistakes, to companies winning contracts while they were small but then outgrowing the limit and to multi-year contracts automatically renewed for as long a s 20 years if a business did a good job.

It’s not that the definition of a small business is so restrictive.  In some industry categories, a company can have 1,500 employees or $35.5 million in annual revenues.

Source: http://www.ocregister.com/articles/small-264417-business-report.html

Small businesses nationwide won a record $96.8 billion in federal contracts last year, an increase of more than $3 billion over fiscal 2008, according to the U.S. Small Business Administration's most recent scorecard. However, it still wasn't enough to reach a goal set by Congress.

Small business contracts accounted for 21.9 percent of federal spending last year – up from 21.5 percent the year before. Congress set a goal of 23 percent goal.

"There was an increase in both dollars and contracting share for every small-business category," SBA Administrator Karen Mills said in a statement. "This represents real progress, but not enough. We must reaffirm our commitment to ensuring that the 23 percent [of all federal spending] goal is met and exceeded."

The work small businesses did included scientific research, technological support -- and even janitorial services.

By law, the government must keep tabs on its efforts to offer contracts to businesses in five categories: small businesses overall, women-owned small businesses, small disadvantaged businesses, service-disabled veteran-owned small businesses, and HUB Zone businesses, or those in historically underutilized business zones (economically distressed areas).

Of those categories, only one – small disadvantaged businesses – exceeded its goal for fiscal year 2009. Its contracts made up 7.6 percent of all federal funding in 2009, or $33.5 billion. The category's goal was 5 percent. "Disadvantaged" companies are those owned by people who have had economic disadvantages and are members of certain ethnic and racial groups.

Last year, the government awarded $16.3 billion in contracts (3.4 percent of federal spending) to small companies owned by women. That's $1.6 billion more than in 2008 but still short of the 5 percent goal.

The scorecard grades the efforts of 24 agencies. The overall federal government received a B.

The Energy, Agriculture and Veterans Affairs department – and the SBA itself – received top marks. The Office of Personnel Management, Agency for International Development, and the National Science Foundation earned failing grades.

In comments attached to the scorecard, poorly ranked agencies justified their low marks. The General Services Administration, which received a C, noted that its goal for small business contracts was 35.7 percent, much higher than that for the entire federal government. (27 percent of GSA contracts went to small businesses.) Just 8 percent of USAID's contract dollars went to small businesses – earning the agency a failing grade – but that's because the President's Emergency Plan for AIDS Relief required it to buy a lot of drugs, the agency said.

The American Small Business League, a California-based advocacy group that has previously accused the government of misrepresentation, challenged the SBA figures. According to the league's June analysis of the top 100 recipients of federal business contracts in fiscal 2009, some 65 percent of the money went to large companies that in some cases were members of the Fortune 500. Based on that sample, the proportion of contract dollars going to small business is closer to 5 percent, the league said Monday.

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U.S. small businesses received a record $96.8 billion in federal prime contracts in the fiscal year ended Sept. 30, 2009, or 21.89 percent of federal contracts — falling short of the government’s goal to award 23 percent of its contracts to small business, according to the U.S. Small Business Administration.

The $3.6 billion increase for small business in 2009 “represents real progress, but not enough — we must reaffirm our commitment to ensuring that the 23 percent goal is met and exceeded,” said Karen Mills, SBA administrator. The percentage was up slightly from 21.5 percent in fiscal 2008.

The SBA also released its annual scorecard of how well individual federal agencies did toward meeting their small-business contracting goals. The federal government got a grade of B overall; on an individual basis, several agencies outdid others: Department of Defense, B; Energy, A; NASA, C; Interior, A; Justice, D; and the General Services Administration, C. The grade of A was awarded to Transportation, Agriculture, EPA, Education, Veterans Affairs, Homeland Security, SBA and Veterans Affairs. The following agencies got a B: Treasury, the Nuclear Regulatory Commission, State, and the Social Security Administration.

“The good news is that the percentage and the dollars went up,” said Jim Kocsi, SBA district director for New Jersey. He said  publicizing the scores of agencies “has shined a light a little more on individual agencies and gives them a bit more of a stimulus to do better — and Congress is watching this, too.”

Kocsi said total contract spending by federal agencies was $442.2 billion in fiscal 2009. Figures were not broken out by state.

Dolcey Chaplin, who heads the Procurement Technical Assistance Center at New Jersey Institute of Technology, in Newark, said there is a trend for the federal government to do more work in-house, which she said reduces the contract opportunities for small business to provide. In the 2009 fiscal year, she said the PTAC, which helps businesses statewide land government contracts, advised about 1,000 New Jersey businesses that received about $200 million in contracts.

From her dealings with the federal government, Chaplin said, “they really want to make their small-business contract goals, and they work very hard at it.” She said the government’s 21.89 percent of small-business contracting “is very good in this environment.”

Lidija Erazo, small-business specialist for the Joint Base McGuire-Dix-Lakehurt, said the base “buys anything and everything: construction, engineering, design, uniforms, products — everything we need to do our jobs.” She said the base is required to purchase from small businesses, and she encouraged small businesses to get into the online procurement system, at www.fbo.gov, to find opportunities to sell to the government.

The American Small Business League said its analysis shows the federal government continues to incorrectly identify large businesses as small-business contractors, thus inflating the small-business numbers.

“Every year, billions of dollars in federal contracts are diverted to Fortune 500 corporations and other large businesses,” said ASBL President Lloyd Chapman,

The government has said the miscoding of contracts is a significant problem that it is addressing.

E-mail Beth Fitzgerald at bfitzgerald@njbiz.com

Source:  http://www.njbiz.com/other-news/83402-sba-says-federal-agencies-fell-short-of-small-business-lending-goal