Government Failing Small Business?

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The U.S. Government awards a great deal of contracts each year worth a lot of money. One of its goals is to award twenty-five percent of these contracts to small businesses. Now that does not mean that they will be prime contractors but they may also team with bigger companies to share in a large contract. That is one of the more common ways to meet this goal. On all contracts the prime must submit small business subcontracting plans and report on their progress in meeting their goals. This data is then tabulated and compared to the twenty-five percent goal.

The Small Business Association (SBA) reported that in 2008 only twenty-one and a half percent of all contracts went to small businesses. While this is short of the goal the total amount of value of this work was at a record high of over $93 billion. In 2007 for example only $82 billion of contracts were awarded to these types of companies.

There has already been concerned expressed that the structure of the “Stimulus” bill will not facilitate small businesses winning those contracts. The idea of rapidly awarding them while seemingly fallen by the wayside helps companies with experienced contract teams and a working relationship with the Government. Many of the small businesses do not have either and the time it takes them to get up to speed may cause them to miss out on contracts.

The Fairness in Procurement Alliance (FPA) a small business group released a press release claiming that SBA scorecard is even worse then it seems as it miscounted “$3.1 billion in small business awards which had gone to 47 multi-billion dollar firms.” considered too large. This group blames the “dysfunctional bureaucratic culture” as well as fraud and abuse of the small business designation as the reason that the government does such a bad job.

Not only did the Government fail to meet its small business goals for 2008 it also had issues with the other disadvantaged groups and areas. These include women and disabled veteran owned companies as well as historically underutilized business zones. These requirements do make it difficult sometimes to award contracts as the prime is forced to come up with the right mix of companies that meet the goals while still able to perform the work for the government often at a best value price.

It will be difficult for the various Departments and Agencies of the Federal Government to move towards meeting these goals. Spending has increased dramatically in 2009 as evidenced by the announcement yesterday that the deficit this year will be over $1.5 trillion as well as most likely in 2010. A the 2008 report illustrates despite large increases in spending the ratio of contracts going to the various groups is not being met. Honestly there are some products that small businesses cannot provide to the government and they are often big ticket items like large weapon programs.

This issue will be at the forefront for quite some time as the Obama Administration tries to contineut to stimulate the economy and reform procurement practices.

Tags: Contract, Government, Small Business, Matthew Potter

Matthew Potter works supporting US Army aviation programs. He holds degrees in history as well as studying at the Defense Acquisition University. He has written for Seeking Alpha and at his own website, Defense Procurement News.

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1

NationalOfficeProductsAlliance

08/27/09 | Report as spam

New Jersey Transfers Office Supplies Business to Staples WITHOUT Competitio

Have you heard that New Jersey recently decided not to hold a competitive bid to renew its office supplies contracts ? now held and fulfilled by a dozen or more independent small dealers around the state? Instead, they?re ?piggy backing? on a national sole-source contract that the National Joint Power Alliance (NJPA) negotiated with Staples 4-5 years ago! No one really knows who the NJPA is or to whom they are accountable.

Without a competitive bid, how does the State know it?s getting the most competitive pricing and overall best value when buying office supplies all over the state? Aren?t some of these sole-source national monopoly contracts with Big Box companies under investigation by state attorneys general elsewhere around the country and even by several large federal agencies? And who will audit the new contract to make sure it really saves money?

It is especially galling that State officials ? including the State Treasurer ? ignored repeated requests from these dealers for information about what would occur after their contracts expire on 8/31/09. The State announced their new deal with Staples and the NJPA on 8/17, just two weeks before the current contracts expire. This step will cause layoffs throughout New Jersey, as tens of millions of dollars and dozens of local jobs are at stake.

On August 26 the New Jersey Department of the Treasury denied a petition filed by the National Office Products Alliance (NOPA) for a stay of the State?s award of a new office supplies contract to Staples and a stay of the expiration of existing contracts held by independent dealers throughout the State. Those contracts expire on August 31. The Acting Director of the Purchase and Property Division within Treasury, Alice Small, advised that she doubted that NOPA and New Jersey dealers even had standing to request a stay of the Staples award because they were not bidders on that contract. Her statement is disingenuous since there was only one bidder on the ?piggy back? National Joint Power Alliance (NJPA) through which the State has contracted with Staples starting on September 1.

Timing is everything and in this case the date of the denied stay request follows closely on the heels of the first official notice that current contract holders received from the State on August 25 advising that their contracts would not be extended. Hill Wallack, attorney for NOPA and affected dealers in New Jersey will of course appeal this matter to the Courts, where one can only hope that justice will prevail.

It?s time for independent small businesses and their supporters to stand up for themselves and challenge the widely held misconception of government and large private companies that sole-source contracts with the big guys will save money, when there?s so much evidence that they don?t. New Jersey dealers are fighting for a new competitive bid process ? I sure hope they get one!
2

Dagpotter

09/04/09 | Report as spam

RE: Government Failing Small Business?

Bundling like this is a frequent complaint of small businesses because it freezes them out. The argument for using these type of contracts is to save money but it also makes it harder to meet small business goals.

Thank you for reading.

MCP