Small businesses are the primary job creators in this country, making up greater than two-thirds of all new jobs created.
In FY2011, the Federal Government awarded more than $91.5 billion in federal contracts to small businesses, representing 21.64 percent of small business eligible federal contract dollars. During the first three years of the Obama Administration, the federal government awarded $286.3 billion, or 22.07 percent in federal contracting dollars to small businesses. This is a $32 billion increase over the three preceding years even as contracting spending overall has declined across the federal government. Even with these increases, however, the government has still failed to meet the statutory goals it has set for small businesses.
According to the Small Business Administration, the dollars and percentages for four of the five statutory goals have actually declined between 2010 and 2011:
1. SDB - 2010: 7.95%, $34.4 billion; 2011: 7.67%, $32.4 billion
2. Women-owned - 2010: 4.04%, $17.5 billion; 2011: 3.98%, $16.8 billion
3. Service-disabled Veteran-Owned - 2010: 2.5%, $10.8 billion; 2011: 2.65%, $11.2 billion
4. HUBZone - 2010: 2.77%, $12 billion; 2011: 2.35%, $9.9 billion
There are three possible reasons for the decline in total dollar amounts.
1) The decline in funding due to a shrinking budget/ new austerity measures.
2) The expiration of many of the provisions of the American Recovery and Reinvestment Act, of which over 30 percent were allocated to small businesses.
3) The emerging trend of Contract Bundling - even if the resulting contract is a small business set aside, only large smaller firms or joint ventures can compete, instead of smaller firms going after the individual contracts.
Rep. Sam Graves (R-Mo.), chairman of the Small Business Committee, is sponsoring the Government Efficiency Through Small Business Contract Act of 2012 (H.R. 3850).
If this bill is approved, it will raise the small business contracting goal to 25 percent from the original 23 percent. It would also seek to make senior leadership in each agency accountable in attaining those goals. Rep. Graves has attached this bill to the 2013 Defense Authorization bill.
By: Ira Evangelista, GovPartners Market Analyst
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