Congress turns heat up on small-biz goals

Under a new bill, a department that misses a set goal to contract with small businesses could lose 10 percent of its budget as a penalty.

Rep. Bill Owens (D-N.Y.) introduced the Small Business Growth and Federal Accountability Act (H.R. 3779) Jan. 18, saying the government’s annual 23-percent small-business contracting goal is regularly ignored by agencies.

He said his bill would “ensure that Washington lives up to its promise to foster an environment of success for small businesses.”

Owens, a member of the Small Business Committee, said federal agencies typically fail to meet their small-business contracting goals and they currently face no penalties for the shortfalls.

Under his bill, if an agency misses the set small-business contracting goal, their budget would decrease by 10 percent in the following fiscal year, with that percentage of funds going to pay down national debt.

“It is critical that federal agencies be held accountable,” Owens said.

The bill also would offer agencies more authority to give “preference” to small companies when awarding contracts. The term “preference” is not defined in the bill.

The bill has been sent to the Small Business Committee for consideration.

It is true that the government struggles to meet its annual 23-percent contracting goal. In the most recent scorecard from the Small Business Administration, the government reached 22.7 percent in fiscal 2010.

That year, agencies awarded a total of nearly $100 billion in contracts to small businesses. However, it was an increase in prime contract dollars going to small businesses for the second year following four years of decline.

SBA gave the government a B on the scorecard for its efforts in contracting with specific types of small businesses, such as those owned by a service-disabled veteran or located in an economically depressed area.

Owens’ bill could have several repercussions though.

In a post on the Government Contracts Legal Forum blog, Tiffany Wynn, an associate at the Crowell and Moring law firm, said agencies may decide to reduce their contracting goals to avoid the 10-percent penalty.

As a result of the bill, officials would have to weigh the penalties for missing the small-business goal against awarding a contract to a large company if the agency could save money.

Wynn also questioned whether this legislation would lead to penalties on companies that don’t meet their own annual small business subcontracting goals.

About the Author

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

Reader Comments

Tue, Jan 31, 2012 skin anti aging

It's not like small or large will earn more. The dependency, quality and honesty makes a decision that who earn more.

Fri, Jan 27, 2012

Regarding the comment that a larges business will be lower cost. Please change your thinking on this. Small businesses are often less costly and more efficient than large businesses --- plus often more flexible and innovative. Even if billable rates are higher because the client is getting more senior-level experienced support, the overall cost will be lower because small firms are typically more efficient --- sending only 2 people to a meeting instead of 4, etc. Instead of focusing on rules, talk about the benefits of working with small businesses -- there are plenty of them.

Fri, Jan 27, 2012

Quite the contrare, most small businesses save the government money. Our overhead is lower than the big guys and our billable rates are much lower. If all things are equal in going after a full and open contract, we will win it over the big guys every time. Thank you Mr. Obama for mandating policies to correct this injustice! Things are getting better for us little guys out here.

Thu, Jan 26, 2012

Congress is clueless about what really happens in the contracting environment. And if you think the agencies or the primes getting the billions of dollars of federal money won't find a way to skirt around any requirements as they have done in the past then you are mistaken.

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