Small businesses could earn $2 billion more annually and taxpayers could save about $3 billion each year if the federal government stopped competing with private companies in supplying goods and services, according to a report to the Small Business Administration.
The report by a small business task force authorized by SBA said that the government engages in more than 21,000 commercial and industrial functions such as carpentry, electrical work, janitorial and guard services and printing that could be contracted out to the private sector.
The report also attacked the U.S. Postal Service for attempting to compete with private companies with its proposed express mail service.
The report said that the postal service rapid delivery plan would be "inefficient and superfluous" and that it would cost $1 million its first year while providing only $250,000 in revenues.
The task force said it was concerned with the implementation of administration policy, which urges government agencies to use private businesses but also consider who could provide the cheaper service: government or private firms. The report said that the government should lean more toward contracting with firms.
The report said that non-profit organizations often are given preference over profit-seeking small businesses.
"Government competition was found in such areas as retailing, printing, manufacturing, employment services, travel services, distribution, communications, wholesaling, audio-visual aids, warehousing research and development, laboratory testing services, day-care centers and a host of other activities," the report said. "The extent of government commercial and industrial activities is astounding."
The report didn't mention cost overruns on projects contracted to private firms or recent scandals involving firms posing as minority fronts or charging the government high prices for services.
Dale Nelson of Des Moines, Iowa, the task force chairman, said that such incidents are exceptions and that most small businesses would want corrupt firms weeded out.
The task force based the added business for small firms on estimates that the government's in-house commercial and industrial activities in 1977 cost about $10 billion. Another $30 billion in business is contracted out, the report said.
About $2 billion of business would go directly to small business if the $10 billion were contracted out in the same proportion as other activities that are contracted out, the report continued.
One of the examples of government competing with private firms in the study was the use of military post exchanges that compete with retail stores, but can provide goods at lower costs for current and sometimes retired military personnel and their dependents.
"The task group also heard specific complaints about the Quanico Marine Corps Exchange, which was selling business suits despite prohibition from the House Armed Services Committee," the report said.