In 2011, small federal contractors took it on the chin twice as hard

Tuesday - 7/3/2012, 1:34pm EDT

Jason Miller, executive editor, Federal News Radio

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For the sixth year in a row, agencies in fiscal 2011 failed to award at least 23 percent of their contracts to small businesses.

The Small Business Administration today released its annual small business scorecards showing agencies missed four of their five statutory goals. Departments only met the goal of awarding at least 5 percent of their contracts to small disadvantaged businesses. Last year, SDBs received 7.67 percent, or $32.4 billion.

In addition to missing the 23 percent goal as well as the goals for women-owned, service disabled-owned and Historically Underutilized Business Zone (HUBZone) programs, SBA reported the amount of overall contracting dollars going to small firms dropped by more than $6 billion in 2011 as compared to 2010. Agencies awarded $91.5 billion to small businesses last year, down from $97.95 billion the year before.

"The FY2011 Small Business Procurement Scorecard reflects the need for improvement in small business procurement across the federal government," wrote John Shoraka, SBA's associate administrator for government contracting and business development, in a blog post. "Over the last year, SBA has increased its efforts and collaboration with our federal agency partners to provide more opportunities for small business to compete for and win federal contracts, but we know more must be done to ensure that more contracts get into the hands of small businesses."

Despite SBA's efforts, and President Barack Obama's April 2010 executive order calling on agencies to increase their efforts around small business contracting, agencies saw the percentage of all contracts fall in 2011. SBA said 21.65 percent of all contracts went to small firms, down from 22.7 percent last year.

"It is extremely disappointing that the federal government has again failed to meet its small business contracting goals," said Rep. Sam Graves (R-Mo.), chairman of the Small Business Committee, in an emailed statement. "If the administration takes this priority seriously, these goals are very achievable. We are working hard to improve accountability from federal agencies and get moving in the right direction, by pursuing legislation that demands it. Contracting to small businesses creates jobs and saves money."

Graves is sponsoring the Government Efficiency Through Small Business Contracting Act of 2012 (H.R. 3850), which among the things it would do is raise the governmentwide small business contracting goal to 25 percent from 23 percent.

Graves said he attached the bill to the 2013 Defense Authorization bill.

"This demonstrates that President Obama is simply paying lip service to small businesses rather than delivering results. That's why I'm so disappointed that this administration is opposing our legislation included in the House version of NDAA," he said.

SBA said both dollars and percentages are down in four of five categories in 2011 as well.

2010 2011
% $ (in billions) % $ (in billions)
SDB 7.95% $34.4 7.67% $32.4
Women-owned 4.04% $17.5 3.98% $16.8
Service-disabled veteran-owned 2.5% $10.8 2.65% $11.2
HUBZone 2.77% $12 2.35% $9.9
Source: SBA

SBA also handed out letter grades to agencies.

In 2011:

  • 15 agencies received an "A" grade
  • 5 agencies received a "B" grade
  • 3 agencies received a "C" grade
  • No agencies received a "D" grade
  • 1 agency received a "F" grade

"We know that there are steps we need to implement," Shoraka said during a press conference Tuesday. "We are working closely with the White House and our sister agencies to make sure we encourage and we have small businesses participate in the federal government's procurement process more significantly and more efficiently and making it easier for small businesses to participate."

"Small businesses are the primary job creators in this country, responsible for more than two-thirds of all new jobs created," said Olympia J. Snowe (R-Maine), ranking member of the Senate Committee on Small Business and Entrepreneurship. "At a time when a seemingly intractable unemployment rate has remained over 8 percent for 40 straight months and our economy continues to stall with an anemic 1.9 percent growth rate in the first quarter of 2012, I remain dismayed that yet again the federal government has failed to meet its statutory government-wide goal, not just for small business overall, but for women, HUBZones, and service-disabled veteran-owned small businesses.

Part of the reason for the government as a whole falling short in meeting its goals could be three of the largest agencies received a B, the departments of Defense and Veterans Affairs and NASA, which accounted for more than $65 billion of the $91.5 billion spent with small businesses in 2011.

Energy received the only failing grade missing its goals in every category, falling under 1 percent of all contracts to women, service disabled-owned and HUBZone small businesses.