Merger would shift the balance to larger businesses

February 3, 2012

President Obama has elevated the Small Business Administration head to a cabinet level position and is proposing to merge the agency with other business and trade agencies into a single entity.

 I support his first move — it demonstrates without reservation that small business is important to the country.  Up to this point, I’ve heard a lot of rhetoric from Washington about the importance of small business, but there’s been very little substance.  Sure, this is government.  But this is also small business.  According to SBA’s Office of Advocacy, 99.7 percent of all employer firms are classified as “small businesses (less than 500 employees).”  We’re known for being nimble, lacking bureaucracy, and able to turn on a dime, especially when compared to large business. 

 SBA Administrator Karen Mills is doing an excellent job.  She has shown clearly that it’s not about rhetoric; it’s about action.  Mills has much to contribute and deserves to be contributing at the cabinet table.

 But to the second part — merging agencies — I say, “Wait a minute!”  The proposal is reminiscent of the Bush administration’s consolidation of agencies under the auspices of Department of Homeland Security.  The devil is in the details.  What’s the goal?  How will a merger affect each agency’s mission?

 Under its current structure, SBA serves small business.  Period.  Can the same be said of Commerce or Ex-Im Bank or the other agencies that would be merged?  How will those agencies’ customers — large and small — perceive the reorganization in terms of their needs? 

 I don’t have a firm opinion yea or nay on a merger.  I need more details.  But let me play devil’s advocate.  This is akin to asking a college freshman to start hanging out in the same room as kindergartners because they have learning in common and all students will benefit from a one-stop location.

The merger would combine services for small and large businesses alike under a single leadership.  This shifts the power structure in favor of large business.  The groups have different needs and priorities.  Is bureaucracy flexible and nimble enough to serve both groups equally under one master? 

 Will the merger save money?  Will it produce a leaner, quicker government?   Maybe.  The one-stop approach works in city and county governments.  But the range of city/county services is smaller and less diverse, and the population served is much more homogeneous.  

 To answer these and other pertinent questions, an in-depth analysis of the economics and customer satisfaction behind the Department of Homeland Security is a good place to start.  I’ve spoken with a number of small business owners who want to do business with DHS.  Their consensus is that it’s difficult to get anyone’s attention unless you’re a large contractor.  The perception seems to be that a small business can’t adequately meet the agency’s needs.  You have to work under a prime.  This is anecdotal evidence, of course, but it is cause for concern. 

 There are thousands of small businesses and only a relatively few large primes.  With the current shift toward task orders and individual agency-wide contracts, small business has much at stake in a merger.

 Evelyn J. Graham is founder and president of Presynct Technologies Inc., a software development and sales organization in San Francisco specializing in paperless documentation, business process management and third-party systems integration.

 

 

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