The federal government made progress but again fell short of its small-business contracting goals last year, according to government data released Tuesday.
Just 22.25 percent of federal contracting dollars, or $89.9 billion, went to small businesses in fiscal 2012, according to the Small Business Administration (SBA). That’s higher than last year’s 21.65 percent but still shy of the goal of 23 percent set by Congress. It is the 12th consecutive year officials have missed the target.
The government also fell short of its goal for women-owned businesses and firms in economically disadvantaged areas.
The Obama administration has made it a priority to funnel more of the billions the government spends every year on contracts to small businesses, but it has struggled to move the needle significantly. The problem has been exacerbated by federal spending cuts related to the sequester, which economists say tend to hit small firms the hardest.
“Nothing has changed since last year, just another goal missed,” said Cris Young, president of the American Small Business Chamber of Commerce and executive vice president of a fasteners business in Canfield, Ohio. “It’s very disappointing.”
There were a few bright spots in the report. Officials met their goal for businesses owned by service-disabled veterans — 3 percent of all government contracts — for the first time since it was put in place in 1999, and a record number of agencies met their individual contracting goals.
But it would be “ridiculous” to celebrate that news, said Young, noting that an increase in returning veterans likely helped agencies meet that goal.
House Small Business Committee Chairman Rep. Sam Graves (R-Mo.) called the government’s continued failure to hit its overall small-business contracting target “simply unacceptable.”
“The administration must make meeting this goal a priority because it’s efficient governance, and not just a law that makes small businesses feel good,” Graves said in an e-mail to The Washington Post, arguing that “improving small business opportunities through federal contracts creates jobs and saves taxpayer money.”
Before the start of his second term, President Obama signed legislation to encourage agency leaders to take their goals for small businesses more seriously. The annual small-business contracting reports are now factored into the evaluations of senior agency officials and considered in bonus and promotion decisions. The White House also has backed legislation to raise the annual small-business contracting goals, despite the government’s continued failure to meet the current target.
“There’s a lot of focus at the most senior level to make sure . . . small businesses play the vital role we know they can plan in federal procurement,” John Shokora, SBA associate administrator for government contracting, said in a conference call.
Small-business contracting has long been a sore spot for the government, and the struggles are not limited to missed procurement goals. A number of government reports have suggested that a significant portion of the contracts officials claim are delivered to small firms actually end up in the hands of large corporations.
Last week, the chief executive of a large Arlington-based contractor was sentenced to four years in prison for creating what’s known as a “front” company to win more than $31 million in contracts reserved for small businesses.
A week earlier, another former chief executive of a security contractor, also based in Arlington, was sentenced to six years in prison for illegally winning more than $150 million in contracts that had been set aside for small, disadvantaged and minority-owned businesses.
“The agency faces a number of challenges in carrying out its mission, including fraudulent schemes affecting all SBA programs, significant losses from defaulted loans, procurement flaws that allow large firms to obtain small business awards, excessive improper payments, and outdated legacy information systems,” SBA Inspector General Peggy E. Gustafson wrote in her latest semiannual report to Congress.