Tuesday, July 17, 2012

Recommended Article: Why Small Businesses are Losing Out on ...

Federal agencies awarded a total of $91.5 billion to small companies in fiscal 2011, down 7 percent from $97.9 billion in fiscal 2010, according to?data?released this week by the?Small Business Administration. The contracts given to small firms in 2011 amounts to 21.7 percent of all government ones available?down from 22.7 percent in fiscal 2010 and even further short of the 23 percent annual goal Congress has set. (Missing out on 1.3 percent of contracts in fiscal 2011 meant small business was deprived of $3.8 billion.)

The government also failed to meet its procurement goals for women-owned small businesses (the goal was for 5 percent; the government hit 4 percent) and service-disabled veteran-owned businesses (the goal was for 3 percent; 2.7 percent awarded), plus those located in low-income areas known as HUBZones. That goal was 3 percent, but just 2.4 percent of government contracts went there in fiscal 2011?below the 2.8 percent the year before.

A Positive Spin

?Releasing the numbers at this point really highlights where there are opportunities for improvement,? John Shoraka, the SBA?s associate administrator for government contracting, told the media. ?This highlights the fact that we need to improve and highlights the agencies that need to focus on that improvement.?

Shoraka tried to put a positive spin on the news, pointing out that during the first three years of President Obama?s administration, small businesses received $32 billion more in contracts than they did the previous three years.

He blamed some of the shortfall on Congress's failure to approve agency spending bills on time, which meant procurement officers struggled to plan.

"When contracting officers don't plan, small businesses have headwinds in participating in the contracting process," Shoraka says.

Some agencies did much better by small businesses than others. The Department of Energy, the second-largest government buyer, received an F from the SBA, meaning it fell at least 30 percent short of its procurement goal. But the Department of Health and Human Services, the third-largest government buyer, earned an ?A? for awarding 24 percent of its contracting dollars to small businesses. The General Services Administration and the Treasury Department were the only agencies to receive A pluses, although the GSA awarded 2.3 percent instead of 3 percent of awards to service-disabled veteran-owned small businesses, while Treasury awarded 2.6 percent instead of 3 percent of awards to HUBZone firms.

Sticking to the Goals

Currently, there are no penalties for agencies that do not meet their small-business contracting goals. But recently-introduced bills in both the House and Senate would either eliminate bonuses for department heads or reduce budgets for agencies that miss their goals. A bill introduced in May by Rep. Sam Graves, R-Mo., who chairs the House Small Business Committee, also would raise the government?s goal to 25 percent. That extra two percent could mean up to $11 billion in new small business contracts, Graves contends.

The White House has opposed the bill, saying 25 percent is ?overly ambitious." Graves thinks the higher target is within reach.

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

What has been your experience with the government contracting process?

Photo credit: Thinkstock

Source: https://community.dynamics.com/product/rms/rmsnontechnical/b/ricksegel/archive/2012/07/16/recommended-article-why-small-businesses-are-losing-out-on-billions-of-dollars.aspx

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