Minority-owned small businesses struggle to compete in federal contracting

Despite a number of set-aside programs designed to direct more government work their way, small businesses owned by blacks and Hispanics still struggle to compete in the federal contracting game.

Bloomberg took a closer look at the government’s repeated failure to meet its annual small business contracting goals, a streak that now spans seven years. In its analysis published on Thursday, the news service found that minority groups are punching far below their weight in terms of the amount of contracting dollars they are awarded each year.

An excerpt from the story:

Small businesses, called the “drivers and engines of growth” by President Barack Obama, attracted about $98.2 billion in government awards last year, according to data compiled by Bloomberg. Hispanic-owned companies won about 8.4 percent of that total, or $8.21 billion, while black-operated small businesses won about 7.2 percent, or $7.1 billion.

Those percentages are well below each group’s respective share of the U.S. population (17 percent is Hispanic, while 13 percent is black).

In addition, the story notes that contracts for black-owned small businesses dropped about 1 percent compared to the previous year, and though the share awarded to firms owned by Hispanics increased 1.5 percent in 2012, that was not enough to make up for an even steeper decline in 2011.

The shotcomings likely stem from a decline in government spending, which has increased competition for a shrinking number of contracts. In addition, officials note that while certain contracting programs reserve work for “economically and socially disadvantaged” small firms, the federal data system does not always allow contracting officers to see whether firms have black or Hispanic owners.

“Procurement officers cannot see the race/ethnicity of business owners when they select them for a contract award,” John Shoraka, an associate administrator of government contracting at the Small Business Administration, told Bloomberg.

The story is the latest in a series of reports that show small firms are struggling mightily to secure federal contracts. In July, the Small Business Administration reported that the government delivered only 22.25 percent of all contracts to small companies, below its mandated goal of 23 percent.

Meanwhile, even those numbers have been disputed by small business leaders, who point to exclusions in the calculations and reporting errors.

More recently, a poll of small contractors showed that they are bidding on fewer government projects and spending more to compete for the contracts they do go after. In addition, the survey was conducted prior to the onset of massive government spending cuts known as sequestration, meaning small contractors could be in for an even rockier road ahead.

Follow On Small Business and J.D. Harrison .

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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