Stan Soloway | Buy Lines: Narrow policy matters trip up small-business program

Many companies in recent months have gotten letters from Rep. Nydia Velazquez (D-N.Y.), the ranking democrat on the House Small Business Committee. The letters I have read contained lists of contracts the companies hold and that she asserts are inappropriately listed by the government as small-business awards.Velazquez asked each company to notify its contracting officers of the "mistake" to ensure greater accuracy in the government's records and data.She is right in wanting agencies to get credit for small-business awards when it is due. Mistakes in the system should be corrected. But from conversations with officials at many of the companies that received the letters, it seems clear that her lists are far from accurate.Most of the contracts listed involve small businesses that either have outgrown the size standard or that were acquired after the contracts were awarded. Under the law and regulations in place at the time, those contracts keep their identity as small-business awards over their duration.The new rules ? particularly those under which small-business credits cease when contracts are novated in a merger, or those requiring recertification ? are just now coming into effect. As such, it is not clear that many of the awards Velazquez identified are inappropriately coded.Perhaps more important, her letters again highlight the need for a much broader discussion of the purpose and effectiveness of the government's socio-economic programs.Member companies of the Professional Services Council funded a study by the Center for Strategic and International Studies of the government professional services industry, the first-ever analysis of the government services industrial base.The study documented a dynamic shift that many people have long sensed in the marketplace: the "squeeze" on midtier firms, particularly the smaller midtier firms.Across the services sector, the study found that the midtier market share loss has been 20 percent. In IT and communications services, it has been as much as 40 percent.For those companies with ambitions to grow beyond the small-business size standards, these findings are of deep concern and raise real questions as to whether the underlying policy ? let alone business opportunities ? exists to foster that growth.The more we focus our attention solely on narrow issues, such as annual recertifications ? which would be a nightmare for small businesses ? or arbitrarily raise size standards, the more we harm the companies these policies are designed to help. The net effect is to dilute their value in the marketplace and inhibit their ability to grow, raise capital and derive real benefit from a potential acquisition.These are important questions. They also are among the most critical questions being asked and discussed among PSC leadership, regardless of company size.The dynamics documented by the CSIS study, coupled with the overly narrow policy discussions now taking place, strongly suggest the need for a broader dialogue involving industry, the administration and Congress.It's time to recognize that the government services sector is an industrial base unto itself, to consider these issues from a more strategic perspective, and to reassess the goals and effectiveness of the programs. At times, it may be an uncomfortable discussion, but it is needed.