Government hits small business contracting goal for first time since 2005, officials say

Small firms’ total haul still declines as federal spending slows


The Obama administration has made it a priority to steer more government contracts to small firms but had faced difficulty in recent years in the wake of massive budget cuts. (Win Mcnamee/Getty Images)

The federal government has met its obligation to steer contracts to small businesses for the first time in nearly a decade, even as the actual value of the deals declined, according to a report released Friday.

In total, federal agencies awarded $83.1 billion worth of what contracts to small companies last year, representing 23.39 percent of all government work, data compiled by the Small Business Administration shows. The total haul is down from $89.9 billion the previous year, but because the government spent less overall, the share of contracting dollars delivered to small businesses is up from 22.5 percent in 2012.

More importantly, officials say, this marks the first time since 2005 the government has delivered on its statutory small-business contracting goal of 23 percent.

U.S. Small Business Administrator Maria Contreras-Sweet, who made the announcement during an event at a NASA’s Goddard Space Flight Center in Maryland, credited “the president’s leadership and a team effort among all federal agencies.”

“When we hit our small business procurement target, it’s a win,” Contreras-Sweet said. “Small businesses get the revenue they need to grow and create jobs, and the federal government gets the chance to work with some of the most responsive, innovative and nimble companies in the U.S.”

However, there’s still room for improvement. The government again missed its target of awarding 5 percent of all contracts to women-owned small firms (4.32 percent went to businesses owned by women last year). It also fell just shy of its goals for small businesses in economically disadvantaged areas and for subcontracting dollars passed on from large contractors to small companies.

In addition, the Department of Energy earned a failing grade from the SBA for its small-business contracting efforts for the third straight year. The agency’s stated small-business goal — which the SBA works out with each department every two years to ensure the government has a collective target of 23 percent — was 7 percent, the lowest by far of any federal department. It awarded only 5.71 percent of its work to small firms last year.

No other office has earned a failing grade in the last two years.

On the other end of the spectrum, the Departments of Interior and Transportation as well as the Office of Personnel Management received top marks on their small-business scorecards, each blowing past its respective goal.

Meanwhile, the bar could get higher in the coming years, as lawmakers are currently considering legislation that would bump the annual small-business contracting goal to 25 percent and the small-business subcontracting target to 40 percent. In order to hit those higher marks, federal departments would have to award roughly an additional $10 billion to small contractors every year.

Follow J.D. Harrison and On Small Business on Twitter.

J.D. Harrison covers startups, small business and entrepreneurship, with a focus on public policy, and he manages the Post's On Small Business blog.
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