Senators, SBA dispute accuracy of small-business credit

Senators pressed a Small Business Administration official on July 26 about when an agency should stop getting credit towards its small-business contracting goals if a contracting company grows large.

Sen. Claire McCaskill (D-Mo.), chairwoman of the Homeland Security and Governmental Affairs Committee’s Contracting Oversight Subcommittee, and Sen. Rob Portman (R-Ohio), the pane's ranking member, said agencies should stop getting the credit when a company outgrows the small business size status; the credit should stop, even before the contract ends.

However that isn’t the way the credits are counted currently, and as a result, the senators said it makes the percentage of contracts going to small business misleading.

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“It is also an empty achievement,” McCaskill said about annual 23 percent small-business contracting goal. Get more information on the hearing.

SBA reported June 24 that the government awarded $97.95 billion in federal contracts to small businesses, or 22.7 percent of eligible contracting dollars in fiscal 2010, less than the 23 percent goal.

Disagreeing with the numbers, McCaskill said, “Clearly, we didn’t do 22.7 percent.”

Joe Jordan, associate administrator of government contracting and business development at SBA, said the numbers are accurate based on current rules and their intent.

Under the rules, a contract is recorded as a small-business set-aside contract, if the winning company was small at the time of the award. An agency gets credit toward its various small business contracting goals for the life of the contract, even if the company grows into a large company during the contract.

Current SBA rules and the Federal Acquisition Regulation require a firm to recertify as a small business before the sixth year of any long-term contract. In addition, a firm must now recertify in 30 days when it merges with another company or is acquired.

The rules, as they stand, are intended the persuade agencies to contract with small businesses and then help them grow successfully, Jordan said.

It would penalize a contracting officer and agency by not giving them credit throughout the contract, “because they did such a good job finding these small businesses that those small businesses grew and exceeded those size standards,” he said.

However, those rules don’t give a clear picture of what the government is doing with small businesses, McCaskill said.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

Reader Comments

Wed, Jul 27, 2011 Program Manager Fairfax, VA

You cannot criticize the outcome or processing of the small business program unless you become more explicit abut its goals. The Government has never done a good job of either qualifying or quantifying the purpose of the program. Would they be happy if 100% of work went to small business? We don't know. Fifty percent? Your guess. If they don't define the purpose, they can't be criticized for either the outcome or the process.

Wed, Jul 27, 2011

Senators you are looking at the wrong issue look at how the agencies double and triple count the small business awards. Example a small business that is 8a and WOSB is counted twice for every contract award and dollar so $1 is counted $1 8a and $1 WOSB. Contracting Officers tell me this is why they want twofers and threefers. Larger Primes do the same for their subcontracting.

Wed, Jul 27, 2011

All too many awards are won by small business just under the cap who immediately exceeed the small business size with the contract award or first task order award. While this doesn't appear fair, hopefully some day we will all get there. If the government couldn't get credit, they would award all contracts to the smallest firms, least capable of acomplishing the work, in the hope that they will remain small for the duration of the contract

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