Catch as Catch Can

Increased contracting opportunities for small businesses have yet to fully materialize.

French novelist Jean-Baptiste Alphonse Karr once opined, "The more things change, the more they remain the same." That observation rings true in small business contracting.

Last year, Democrats vowed to overhaul the procurement process to provide more opportunities for small firms. They introduced legislation and conducted oversight hearings. But more than a year later, the landscape appears virtually unchanged.

In fiscal 2006 federal agencies awarded 22.8 percent of prime contract dollars to small businesses, falling just short of the 23 percent governmentwide goal. Analysts say the government's figure is inflated, though, because it fails to include overseas contracts or purchases at agencies such as the U.S. Postal Service and Federal Aviation Administration, which receive funds that are independent of the congressional appropriations process.

When overseas and independently funded purchases are added to the total, the portion awarded to small businesses drops to 20 percent, according to Eagle Eye Inc., the Fairfax, Va., research firm that supplied the spending data contained in this issue. Eagle Eye came up with an almost identical figure for fiscal 2007, although the Small Business Administration has yet to release official data.

Languishing legislation has been a major disappointment for small business advocates. The Small Business Fairness in Contracting Act, which would raise the governmentwide small business goal to 30 percent, stalled in the Senate. Likewise, the Small Business Contracting Revitalization Act cleared the House but has yet to reach a vote in the Senate. That bill includes provisions that would separate large contracts into smaller chunks, enforce protections for subcontractors and hasten implementation of a women's procurement program that has been mired in a lengthy rule-making process.

The news, however, is not all bad for small businesses. Some have fared well on major procurement vehicles, including the General Services Administration's Alliant information technology contract, and some have taken advantage of subcontracting opportunities afforded by GSA's Networx telecommunications contract.

Renewed attention has been paid to the small disadvantaged business and 8(a) programs this year. Lawmakers and agency officials have discussed changing the eligibility criteria in response to inflation and other factors. They also debated further oversight of certifications after Miami-based weapons distributor AEY Inc., now under investigation for delivering faulty ammunition to Afghan security forces, was incorrectly labeled a small disadvantaged business.

SBA is tightening reporting requirements to reduce mislabeling. Small businesses with long-term contracts could have up to five years to grow before having to go through recertification. But firms will have to complete the process sooner if they are acquired by another company or if they receive a contract extension.

Finally, SBA issued a traffic-light-style score card last year to track agencies' efforts to do business with small firms. The grades confirmed, however, that there is much room for progress. Just seven of the 24 agencies evaluated met their small business contracting standards. Twelve received the lowest score possible.