Small businesses win smaller share of federal contracts in fiscal 2008

Small businesses received a record $93.3 billion in federal prime contracts in fiscal 2008, but the government still fell short in the percentage of contracts awarded to them, according to new data from the Small Business Administration.

Federal agencies awarded $10 billion more in prime contracts to small businesses in fiscal 2008 than in fiscal 2007, but the percentage of those dollars going to small businesses actually decreased from 22 percent to 21.5 percent during that timeframe, according to SBA's third annual procurement scorecard. By law, the government must award 23 percent of its contract dollars annually to small businesses.

"This record $93.3 billion in contracts to small businesses is significant, however, across the federal government we are committed to ensuring that the 23 percent goal is met and even exceeded going forward," SBA Administrator Karen Mills said in a statement. "Especially during these tough economic times, federal contracts for small businesses can be just the opportunity they need to continue to grow and create jobs. At the same time, the federal government gets access to some of the most innovative and best products and services."

Guy Timberlake, chief executive officer of the American Small Business Coalition, said that he has no doubt the government increased the amount of money spent on prime contracts with small businesses, but the analysis is more complicated than the numbers suggest.

"It's a matter of peeling back the onion to see what the numbers say," Timberlake said "You've got the issues that have been out there of awards going to companies that are not actually small businesses. Not so much large companies posing as small businesses, but those that have exceeded small business-size standards or otherwise aren't really qualified."

SBA also touted the government's progress in contracting with small disadvantaged, women-owned and service-disabled, veteran-owned businesses. With the exception of women-owned businesses, which received .01 percent less in prime contracts from the government in fiscal 2008 than in fiscal 2007, these disadvantaged groups received a slightly larger piece of the federal procurement pie.

Of the 24 agencies that SBA rates, 13 met small business contracting goals, 22 achieved small disadvantaged business goals, 14 met women-owned business targets, nine accomplished HUBZone goals and four met service-disabled veteran business benchmarks.

Only one agency, the General Services Administration, met or surpassed its goals in all five areas. Eight other agencies met or surpassed their goals in four of the five areas. Mary Parks, acting associate administrator of GSA's Office of Small Business Utilization, credited GSA's contracting officers, small business specialists and program officials with the success.

"We're proud of these accomplishments, as it is the first time GSA has exceeded all of the small business goals," Parks said. "Now our focus is on maintaining these great results and building on them for the future."

The government as a whole met only one of the five goals: It exceeded the 5 percent goal for awards to small disadvantaged businesses with 6.76 percent. The SBA's governmentwide rating for small business contracting was yellow, which indicates that the government has achieved 90 to 99 percent of the goal. The government was rated red -- with less than 90 percent of the goal achieved -- on women-owned, HUBZone and service-disabled, veteran-owned contracting.

Mills said the administration has dedicated itself to ensuring small businesses have greater access to federal contracting opportunities. Earlier this week, President Obama, Mills, and Commerce Secretary Gary Locke announced a small and minority-owned business outreach program.

"We have already begun taking aggressive steps to connect small businesses with contracting opportunities, as well as increase our outreach to federal agency procurement officers to make sure they get the information and tools they need to help them connect with these good, innovative small companies," Mills said.

Timberlake said he has seen SBA working hard to strengthen small business contracting and to ensure accurate data, but like other segments of the federal acquisition workforce, they don't have enough staff.

"SBA is doing a lot of work and … wants to do a good job as an agency," Timberlake said. "Again hopefully the new administrator, Mills, is going to toughen up on some of the rules, but they've got depleted resources as well."