Federal Contracts and Small Business

Federal Agencies Slammed on Set-Asides
A new report from Democratic members of the House Small Business Committee is highly critical of Federal small business set-aside contracting practices. According to the study, nearly $12 billion in contacts have been mislabeled as small business set-asides. In reality, these contracts were awarded to large corporations, universities and non-profits. With this new data, the report claims that federal agencies provided only 21.5% of their contracts to small businesses, missing President Bush’s target of 25%. Overall, the report notes that Washington’s small business support efforts warrant a “D” grade. Twelve federal agencies also received failing grades for their poor performance in small business contracting, with the Departments of Education, Energy, and the US Agency for International ranking as especially poor performers. Rep. Nydia Velazquez (D-NY) has formally asked the Government Accountability Office to investigate these practices and to suggest ideas for improving the small business contracting process.

To learn more about the July 2006 House of Representatives Small Business Committee Democratic report on small business set-asides, Scorecard VII, Click here



The Impact of New Contracting Rules on Small Business
In last week’s NDE-news, we highlighted a study that criticized federal agencies for their poor performance in doing business with small business. New research sponsored by the Small Business Administration’s Office of Advocacy offers some potential good news on this score. The research examines the effects of government-wide acquisition contracts on smaller firms. These contracts were introduced in the 1990s with the intention of creating a more performance-based, streamlined process for government agencies seeking to procure technology (especially information technology services) from the private sector. The shift was needed. Prior to the changes, information technology contracts could take up to two years to complete. In the meantime, the purchased technology had become obsolete. However, some observers feared that the new process might make reduce the amount of small business contracting. Fortunately, it appears that the new process is working fairly well—at least in terms of providing opportunities to smaller firms. The use of government-wide acquisition contracts has grown rapidly, and the small business share of this market has also grown. In total, small business set asides account for 31% of all spending on these contracts, and that number has continued to grow. One take-away from this research is that it is possible to implement more effective business management practices while also meeting the government’s commitment to sharing business with small and medium-sized firms.

Access the August 2006 US Small Business Administration Office of Advocacy-sponsored report, The Impact of Government-Wide Acquisition Contracts on Small Business (No. 279), by clicking here