Federal government misses small business contract goal - again

News

Federal government misses small business contract goal - again

By Jose Pagliery
CNN Money
July 3, 2012

NEW YORK (CNNMoney) -- For the sixth year in a row, the government has missed its goal to award 23% of all federal contract dollars to small businesses.

On Tuesday, the Small Business Administration reported that federal agencies gave out 21.7% to small companies. That sounds close, but means that small businesses did not receive $3.8 billion set aside for them.

The contracts are awarded by all federal departments for a wide array of projects and jobs. They funnel hundreds of billions of dollars every year to the private sector.

The awarding goal, which was raised slightly to 23% in 1997, was part of the same 1953 law that established the SBA. It was created to support small companies and avoid having large ones, such as Boeing and Lockheed Martin, gobble up all the federal money.

But the government has missed the target consistently. Small businesses have missed out on at least $25.7 billion in contracts since 2006, the last year the government reached its goal.

The SBA did not provide comment about the failure of agencies to meet the goal. It pointed to a blog post that discussed its efforts to minimize fraud and increase participation of small companies.

The chairman of the House Small Business Committee, Rep. Sam Graves (R-MO), has pushed legislation that aims to increase transparency in contracting and punish the agencies that fail to meet the goal.

The legislation also provides for educating contracting officers who often mislabel contracts worth millions as "small business" contracts, even though they're directed to subsidiaries of major corporations.

A provision in the legislation also raises the goal from 23% to 25%, which sounds unrealistic given the track record.

But Graves insists even the higher target is achievable.

"Solutions to both of these problems can be accomplished at the same time. The goal hasn't been met, because there hasn't been an incentive for agency staff to do so," Graves said.

The government has reached its 23% target only three times in the past dozen years.

One group long critical of federal contracting procedures said the situation is worse than it appears.

The American Small Business League, which analyzes thousands of contracts every year, points to mistakes by federal contract officers and said they inflate the numbers.

"I endorsed Barack Obama for president, but I couldn't be more disappointed," said Lloyd Chapman, the group's president. "Ending the diversion of federal small business contracting to corporate giants around the world would create more jobs than anything President Obama has ever proposed." 

Small business share of contracts shrunk slightly in 2011, SBA reports

News

Small business share of contracts shrunk slightly in 2011, SBA reports

By Charles S. Clark
GovExec
July 3, 2012

The Small Business Administration on Tuesday released its annual score card on federal contract dollars won by small businesses, reporting that contractors meeting the eligibility criteria were awarded $91.5 billion in government work in fiscal 2011, or 21.65 percent of the total.

Current law requires agencies to reach for a goal of awarding 23 percent of contract dollars to qualified small businesses. In the Obama administration’s first three years, SBA reported, the 24 major agencies awarded a total of $286.2 billion in contracts to small businesses, or 22.07 percent, just short of the target. SBA said this represented a $32 billion increase over the three preceding years even as contract spending dropped governmentwide.

Some lawmakers have proposed raising the goal to 25 percent in a bid to help create jobs during the weak economy.

“Federal contracting with small businesses is a win-win,” John Shoraka, SBA’s associate administrator for government contracting and business development, wrote in a blog post. “Small businesses get the revenue they need to grow their revenues and create jobs. Meanwhile, the federal government gets the chance to work with some of the most responsive, innovative and nimble companies in the United States -- often with a direct line to their [chief executive officer].” But, Shoraka added, the fiscal 2011 score card “reflects the need for improvement in small business procurement across the federal government.”

The score card showed an overall drop in the share of small business awards since fiscal 2010, with an increase only in the category of small businesses owned by service-disabled veterans. Contract dollars as a percentage of overall spending dropped slightly in the categories of women-owned small businesses, small disadvantaged businesses and businesses in Historically Underutilized Business Zones.

The Petaluma, Calif.-based American Small Business League gave the score card a thumbs down. The group has long challenged the score card’s methodology and has argued that far fewer small businesses actually are winning contracts. “Since 2003, more than a dozen federal investigations have found billions of dollars in federal small business contracts flowing into the hands of corporate giants,” it said in a Tuesday statement.

“I endorsed Barack Obama for president, but I couldn’t be more disappointed,” said Lloyd Chapman, the league’s president and founder. “During his campaign, President Obama promised to end the diversion of federal small business contracts to corporate giants, but has done nothing since. President Obama must force the SBA to stop fabricating these numbers.”

Federal Small Business Contract Goal Missed For 6th Straight Year

News

Federal Small Business Contract Goal Missed For 6th Straight Year

By Nate Hindman
Huffington Post
July 3, 2012

Main Street lost out on billions in 2011 because the U.S. government missed its goal of awarding 23 percent of all federal contract dollars to small businesses.

The Small Business Administration reported Tuesday that the federal government awarded $91.5 billion in contracts to small businesses last year, but missed its mark by $3.8 billion. Small businesses scored only 21.7 percent of the funds paid to contractors, down from 22.7 percent in 2010.

2011 marked the sixth straight year that the feds have fallen short of the target. Small businesses have missed out on at least $25.7 billion in contracts since 2006, netting the target 23 percent only three times in the last 12 years, according to CNN Money.

A recent analysis of procurement data by the White House found that a significant number of contracts are being awarded to large businesses, even in industries where small businesses are well-represented.

One group has even accused the government of "fabricating" its latest contracting data. The American Small Business League, a bipartisan small business advocacy group, said in a statement that the SBA’s latest report exaggerates the percentage of federal contracts awarded to “legitimate small businesses.”

“President Obama must force the SBA to stop fabricating these numbers,” wrote Lloyd Chapman, president of the ASBL, in a statement Tuesday. “Ending the diversion of federal small business contracting to corporate giants around the world would create more jobs than anything President Obama has ever proposed.”

Chapman has previously pointed to loopholes that allegedly allow companies as large as Lockheed Martin to “hijack" federal small business contracts by purchasing those companies that hold federal contracts.

U.S. May Miss Small-Business Contract Goal for 12th Year in Row

News

U.S. May Miss Small-Business Contract Goal for 12th Year in Row

By Danielle Ivory
Bloomberg
July 3, 2012

The U.S. government missed its small- business contracting goal in fiscal 2011 for at least the 11th straight year and may be on its way to the 12th.

The U.S. has a target of awarding 23 percent of eligible prime, or direct, contracts to small businesses. It awarded them 21.7 percent of more than $423 billion in such awards in the fiscal year that ended Sept. 30, down from 22.7 percent the previous year, according to data released by the Small Business Administration yesterday.

Federal agencies have awarded 17.8 percent of about $212 billion in eligible contract dollars to small business so far in fiscal 2012, according to the Small Business Dashboard, a government-run website.

The SBA released its report on the government’s 2011 performance yesterday, three months before the 2012 fiscal year ends, so it may be too late for agencies to substantially boost awards to small businesses, Michael Golden, who formerly led the Government Accountability Office’s procurement law unit, said in a phone interview.

“The question is whether agencies can change their contract strategy within a 90-day period,” Golden, a Washington-based partner for the law firm Pepper Hamilton LLP. “For agencies that haven’t made it, I think they will try, but it’ll be a challenge for them.”

Monthly contract spending generally almost doubles each September from the previous month as contracting officers rush to spend money before the end of the fiscal year, according to data compiled by Bloomberg.

‘Need to Improve’

“Releasing the numbers at this point really highlights where there are opportunities for improvement and really puts the attention on the agencies,” John Shoraka, associate administrator for government contracting at the SBA, said yesterday in a phone call with reporters. “This highlights the fact that we need to improve and highlights the agencies that need to focus on that improvement.”

Shoraka said the timing of the report would have a “good impact” on fourth-quarter activity, when spending tends to surge.

“Releasing the scorecard showing that the government missed its small business goal, yet again, this late in the fiscal year, and on a day before a national holiday is unfortunate,” D.J. Jordan, spokesman for the U.S. House Committee on Small Business, said in an e-mail. “Their hope was obviously that no one would pay attention to this embarrassing news.”

Both Parties

Small companies face barriers as they compete with larger rivals for federal work, including budget cuts, in-sourcing and the tapering off of stimulus contracts, Shoraka said.

The Pentagon, which represents more than two-thirds of all prime contract revenue, has also missed its small-business goal for 10 years.

The government’s shortfalls have spanned both Republican and Democratic administrations. President Barack Obama’s Office of Management and Budget told agencies in a February 2011 memo that their underachievement deprives taxpayers and “takes away opportunities for small businesses to create jobs and drive the economy forward.”

“It is extremely disappointing that the federal government has again failed to meet its small business contracting goals,” U.S. Representative Sam Graves, a Missouri Republican who is chairman of the House Committee on Small Business, said in an e- mailed statement. “If the administration takes this priority seriously, these goals are very achievable.”

Agency Grades

Each year, the SBA calculates scorecards that measure how well the government and each federal agency did in awarding contracts to small businesses, defined generally as those with $7 million or less in annual revenue or fewer than 500 employees in most industries.

The scorecards include total spending with small companies and with specific groups, such as those owned by women, service- disabled veterans and minorities.

The reports, which include prime contract dollars and subcontracts to small business, also feature a letter grade from A to F. Agencies that received an A+ met at least 120 percent of their goals, while those given an F achieved 70 percent or less of their goals, according to the SBA.

The Department of Energy, the second-largest government buyer, received an F grade. The department missed its goal of 6 percent last year, awarding $1.3 billion, or 5.3 percent, to small businesses.

Women-Owned Businesses

The Department of Health and Human Services, the third- largest buyer, received an A, exceeding its goal of 19.5 percent and awarding $4.5 billion, or 24 percent, to small firms. The Defense Department earned a B.

The federal government received a B grade overall. It missed goals for women-owned small firms, service-disabled veterans and businesses based in areas that historically have had high unemployment and low incomes.

Even as 2011 marked the first year of a set-aside program for small businesses owned by women, contracts to the firms declined last year for the first time in more than a decade.

Women-owned small businesses received $16.8 billion, or 4 percent, of eligible contract dollars, according to the SBA. The government set a goal in 1994 of awarding at least 5 percent of the total value of eligible contracts to women-owned businesses. It has never met it.

Contracts to black-owned firms dropped 8 percent to $7.12 billion from fiscal 2010 to 2011. Awards to Hispanic-owned businesses decreased 7 percent to $7.89 billion. Contracts to the two minority groups fell at a faster pace than all contracts, which dipped 1 percent as the U.S. government slowed spending to help reduce the federal deficit.

To contact the reporter on this story: Danielle Ivory in Washington at divory@bloomberg.net

To contact the editor responsible for this story: Stephanie Stoughton at sstoughton@bloomberg.net

Source: http://www.bloomberg.com/news/2012-07-04/u-s-may-miss-small-business-contract-goal-for-12th-year-in-row.html

Corporate Giants Receive Billions in Small Business Contracts in Latest Obama Administration Report

Press Release

Corporate Giants Receive Billions in Small Business Contracts in Latest Obama Administration Report

By American Small Business League
July 3, 2012

The Obama administration has released its most recent report on the percentage of federal contracts that were awarded to small businesses.
 
As happens every year, the federal government reported having narrowly missed the congressionally mandated goal of awarding 23% of federal contracts to small businesses, claiming to have awarded 21.65% of federal contracting dollars to small businesses in fiscal year (FY) 2011.
 
However, watchdog organizations and small business advocates such as the American Small Business League (ASBL) maintain that the true percentage of federal contracts awarded to legitimate small businesses is a tiny fraction of what the government claims.
 
Since 2003, more than a dozen federal investigations have found billions of dollars in federal small business contracts flowing into the hands of corporate giants. In the beginning of FY 2012, the SBA Office of Inspector General named the diversion of federal small business contracts to large companies as the SBA’s top management challenge for the seventh consecutive year. The latest federal contracting data shows that 72 of the top 100 federal “small” business contractors in FY 2011 were actually large companies, and also includes companies such as Lockheed Martin, Boeing, General Electric, Chevron and Russian arms trading company Rosoboronexport in small business data.
 
Last month, the ASBL led a coalition of small business advocates, trade organizations, businesses and non-profit organizations in sending formal letters to the Obama administration, requesting that the Small Business Procurement Scorecard accurately represent the percentage of federal contracts awarded to legitimate small businesses. Despite our concerns, this most recent scorecard continues to dramatically overstate the federal government’s compliance with the 23% procurement goal.
 
“I endorsed Barack Obama for President but I couldn’t be more disappointed,” said Lloyd Chapman, President and founder of the ASBL. “During his campaign, President Obama promised to end the diversion of federal small business contracts to corporate giants, but has done nothing since. President Obama must force the SBA to stop fabricating these numbers. Ending the diversion of federal small business contracting to corporate giants around the world would create more jobs than anything President Obama has ever proposed.”