House Small Business Committee :: Federal Contracting Opportunities for Small Businesses Remain Low According to Administration’s Own Data

News From the
Committee on Small Business
Nydia M. Velázquez, Chairwoman

For Immediate Release
August 17, 2007

CONTACT: Kate Gilman/ Erin Donar, (202) 225-4038

Federal Contracting Opportunities for Small Businesses Remain Low According to Administration’s Own Data
SBA Begins to Follow Recommendations of Small Business Committee to Correct Miscoded Contracts

WASHINGTON – Figures released today by the Small Business Administration (SBA) reveal that the federal marketplace still remains largely closed to this nation’s entrepreneurs. According to the data issued, the Bush administration failed to meet any of its small business contracting goals for the last year, including opportunities for women and minorities that fell well below the five percent objectives. These shortfalls amount to $5.4 billion in lost opportunities for the country’s small businesses. This picture would have been even worse, had the administration’s data included the almost $72 billion in contracts that were absent in the report. If these contracts had been factored in, the result would have shown that the federal government had achieved a small business goal of only 19 percent – well below the statutory goal of 23 percent.

“Year after year, the federal government has failed to reach their small business contracting goal and this year is no exception,” said Chairwoman Nydia M. Velázquez. “Once again, the government has neglected to take advantage of the innovations and quality products offered by small firms, resulting in billions of dollars that instead went to large government contractors.”

These failures are due to a number of institutional barriers including the agency practices of contract bundling and allowing large businesses to receive small business contracts. Last year alone, Democrats on the Small Business Committee uncovered $12 billion in contracts that agencies claimed went to small businesses that in fact went to some of the largest fortune 500 companies in the country including Rolls Royce, Lockheed Martin and other large mega-contractors. While a government-wide effort has been underway to correct this practice and Chairwoman Velázquez credits the current SBA Administrator Steven Preston for his work to pressure agencies to improve the reporting, more needs to be done. While SBA has initiated a grading process to hold these agencies accountable, Chairwoman Velázquez noted the fact that SBA has qualified this data as estimated, shows that the problem is a long way from being solved.

“While some efforts have been made to be more candid regarding the contracts small businesses are receiving, we need to move beyond this and address the heart of the problem – the lack of opportunity in the federal marketplace for small businesses,” Chairwoman Velázquez said. “There are federal agency practices that are unfairly shutting out small businesses from getting contracts and this has to stop.”

The House of Representatives under Democratic leadership has already taken action to address many of the problems facing small businesses, by passing H.R. 1873, the Small Business Fairness in Contracting Act, this past May. This bi-partisan measure increases small firm access to federal contracts by offering protections against contract bundling, increasing the small business contracting goal and preventing large businesses from receiving small business contracts. This legislation will level the playing field and help small firms utilize contracting opportunities meant specifically for them.

“These contracting numbers show the clear need for H.R. 1873, the Small Business Fairness in Contracting Act. This piece of legislation will ensure that small businesses are able to compete for billions of dollars in contracts that will help them expand and prosper within their communities,” Congresswoman Velázquez said. “These federal contracts help to create jobs, develop companies, and ensure a varied and competitive marketplace. This measure is not only good for the American entrepreneur, but will ensure that the federal government gets the best value for the tax payer dollar.”

The Small Business Committee will continue its review of that data and final numbers will be released in the fall.

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