GAO: Procurement Rules Hurt Small Businesses

Small businesses continue to receive their mandated share of government purchases, but federal procurement policies may be causing an overall reduction in the percentage of federal contracts going to small businesses, according to a new General Accounting Office report.

GAO found that while federal agencies collectively met the legislative goal for procurement from small businesses between fiscal 1993 and 1999, there was a slight decrease in the percentage of expenditures going to small businesses in the last three years.

The report, "Small Business: Trends in Federal Procurement in the 1990s," is based on data from the Small Business Administration.

From fiscal 1993 to 1997, when the goal was 20 percent, small businesses received between 24 percent and 25 percent of federal contract dollars.

In fiscal 1998 and 1999, when the goal was 23 percent, small businesses received 23 percent of federal contract expenditures.

The SBA chief operating officer reported to GAO that preliminary data from fiscal 2000 show that federal agencies are having a harder time meeting the 23 percent target.

Among the reasons for the difficulties, GAO cited acquisition reforms made in the 1990s, a decline in the amount of government purchasing, shrinkage of the government acquisition work force, increased contract bundling, and a trend toward purchases under $2,500 that are not reserved for small businesses.

On the brighter side, looking at new contracts alone, the GAO found small businesses received between 25 percent and 28 percent of the value of new contract awards worth more than $25,000 over the seven-year period.

Despite an overall drop in total federal procurement, small businesses received a higher share in fiscal 1999 of new contract expenditures than they did in fiscal 1993.