Government on pace to meet small-business contracting goal — but will the bar get higher?


Rep. Sam Graves (right) has introduced legislation that would require the federal government to award more contracts to small businesses. (JIM WATSON/AFP/Getty Images)

It appears the federal government has fulfilled its annual contracting promise to small businesses for the first time in seven years — and perhaps just in the nick of time, as lawmakers are looking to raise the bar going forward.

Government data available online currently show that federal agencies spent $83.2 billion at small companies last fiscal year, representing slightly more than 23 percent of the $355 billion in prime federal contracts officials consider viable for small firms. If so, it will mark the first time since 2006 that the government has met its statutory goal of spending at least 23 percent of all federal contracting dollars at small businesses.

More than a quarter of the contracts were awarded by the Defense Department, while the SBA, Federal Communications Commission and Interior Department each spent most of their contracting dollars at small businesses, according to the federal government’s online small business dashboard, which tracks government spending by agency.

SBA officials, who compile the data, declined to comment on the current numbers, saying they could change and the agency will issue an official tally later this year.

Some have questioned whether their data accurately represent the percentage of contracts funneled to small firms. Our own reporting last year revealed that some work labeled as small-business contracts actually went to very large companies, and that the SBA excludes from its calculations about a fifth of all federal contracts, many of which its own watchdog group has advised should be included when assessing small-business contracting participation.

In order to combat some of the problems, the agency has started running a computerized “anomaly” process to identify errors in the federal data system.

In a statement concerning the government’s performance last year (when only 22.25 percent of prime contracting dollars went to small firms), John Shokora, the SBA’s associate administrator for government contracting, said the department “continues to focus on a number of initiatives to help the government meet the 23 percent goal” — and it appears those efforts have paid off this year.

However, some lawmakers think the government should up the ante and commit even more of its contracting dollars to small businesses.

House Small Business Committee Chairman Sam Graves (R-Mo.) on Wednesday introduced legislation that would raise the federal government’s annual small-business contracting goal to 25 percent — a modest lift at first glance, but one that, if met, would deliver an additional $10 billion in revenue to the nation’s smallest firms every year.

In addition, agency officials would have to try to steer 40 percent of their prime’s contractors’ subcontracting dollars to small businesses, up from 35.9 percent.

“The federal government spends nearly half a trillion dollars on contracted goods and services,” Graves said in a statement, adding that “we must ensure that the money is being spent efficiently, and small businesses have proven that they can do quality work cheaper and often faster.”

Graves has also authored a second bill that would address some of the concerns with the way small-business contracting statistics are reported. Specifically, the proposal world required department heads to take steps to explain why and notify the contracting community when several projects have been bundled together or consolidated, which generally makes them harder for small firms to win.

It would also require the SBA to work with its fellow agencies to develop a data quality improvement plan to promote greater accuracy, transparency and accountability in contact reporting.

“These two pieces of legislation will go a long way towards increasing opportunities for small companies who want to grow and create jobs by doing business with the federal government,” Graves said.

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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