SBA: Small business contracting picture improving

Small businesses benefited in 2004 from several measures that enhanced their ability to compete for federal contracts, according to a report released Thursday by the Small Business Administration's Office of Advocacy.

The report, titled "The Small Business Economy: A Report to the President," makes the case that the overall economic environment for small businesses improved markedly in 2004. Federal spending on contracts for small firms and procurement policy initiatives contributed to that improvement, the report stated.

Small businesses won $69 billion in federal prime contracts in fiscal 2004, or 23 percent of the total pot of almost $300 billion that was open to small companies, according to the document. This represented an increase of $3 billion over the previous year, although the percentage of contracts issued to small businesses dropped slightly from 23.6 percent in 2003 to 23.1 percent in 2004, according to the report.

Subcontracting figures were unavailable for 2004, but were estimated at nearly $50 billion based on projections from 2003 subcontracts valued at about $45.5 billion, according to the document.

The Office of Advocacy also highlighted key 2004 policy initiatives, including the publication of guidance to large businesses that contract with small ones, a reassessment of small business size standards that led to field hearings on the subject, issuance of regulations that address the treatment of small contractors acquired by larger ones, and introduction of a revamped Federal Procurement Data System to allow real-time access to federal small business procurement statistics.

The SBA Office of Advocacy is responsible for research on small business participation in the economy, and published several studies in 2004. Among these, the report highlights one published in June that examined the use of information technology and the Internet in federal procurement, another on federal contracting with veteran-owned firms that touches on those that are also small businesses, and a December report on small business contract coding that revealed problems in coding and counting of these awards.

Chad Moutray, chief economist for the Office of Advocacy, called 2004 a good year for small businesses. "The economic environment fostered entrepreneurial activity," he said in a statement. "The gross domestic product increased, the economy added jobs and new employer firms and the number of self-employed increased."

In a letter presenting the report to the president, Moutray and SBA Chief Counsel for Advocacy Thomas Sullivan affirmed their commitment to ensuring that "small business owners have a say in the regulatory process." The president's 2002 Small Business Agenda encouraged the opening of more government contracts to small businesses, asked that agencies avoid unnecessary contract bundling, which can set small competitors at a disadvantage, and called for a streamlining of the appeals process for small business contract awards.

The Office of Advocacy has published annual small business economic reports since 1982.