On July 18, the Senate Small Business and Entrepreneurship Committee held a hearing on fairness in small business contracting. The House passed the Small Business Fairness in Contracting Act (H.R. 1873) on May 10 (see The Source, 5/11/07); the House Small Business Committee held a hearing on small business contracting on March 21 (see The Source, 3/23/07).
Chair John Kerry (D-MA) said, “Small businesses drive our economy, comprising over 99 percent of all firms and over half of our GDP [gross domestic product]. Two-thirds of all new American jobs are created by small business. Our small businesses are responsible for a stronger economy, high-paying jobs, new prospects for women and minorities, and innovative, cutting-edge products.” However, Sen. Kerry expressed concern over the lack of federal contracting dollars awarded to small businesses, saying, “As you know, 23 percent of federal contracting dollars are supposed to go to small businesses. Now, the administration claims they’ve met this goal. But it takes some creative math and selective contracts to get there. According to Eagle Eye Publishers, the federal government spent more than $412 billion in 2006. Only 20 percent of that went to small businesses. That means more than $12 billion didn’t go to small businesses that should have.”
Ranking Member Olympia Snowe (R-ME) said, “I am alarmed that only one federal small business contracting program the small disadvantaged business program has met its statutory goal, and that the three other small business ‘goaling’ programs have all fallen drastically short.” Sen. Snowe continued, “For example, in FY2005, women-owned small businesses achieved only 3.3 percent, failing to meet its five percent small business goal while the Historically Underserved Business Zone (HUBZone) program met only 1.9 percent of its three percent goal. Most troubling of all, our nation’s service-disabled, veteran-owned small businesses received a government-wide, paltry total of only 0.6 percent of its three percent small business goal! Shockingly, the Department of Defense granted an abysmal 0.49 percent to service-disabled, veteran-owned small businesses. This is no way to treat those who have given their all for this country and who seek to contribute even more through business!”
SBA Associate Administrator for Government Contracting and Business Development at the Small Business Administration (SBA) Paul Hsu said, “Along with the [goal of] ensuring more accurate and transparent data, SBA is focused on a number of other initiatives with the Government Contracting and Business Development arena. These include Administrator Preston’s initiative of expanding opportunities for small business, including underserved markets, such as women-owned small businesses, HUBZone certified firms, and service-disabled veteran-owned small businesses. SBA’s FY2008 budget includes a request for $500,000 to examine how best to serve the 8(a), HUBZone, and small disadvantaged business communities, as well as women-owned and service-disabled veteran-owned business. We recognize the need to improve the effectiveness of these important programs and will use these resources to determine how to best serve these communities.”
“The title of this hearing so adequately reflects our overall concerns on federal contracting ensuring fairness in small business contracting,” said Magdalah Silva on behalf of Women Impacting Public Policy (WIPP). Ms. Silva continued, “Although the FY2006 contracting numbers by SBA have not yet been released, the statistics for FY2005 showed that the small business goal of 23 percent was exceeded 25.4 percent but the government failed to meet its goal for women-owned businesses. In FY2005, only 3.3 percent of federal contracts were awarded to women-owned businesses. That represents billions of dollars left on the table, according to an annual report prepared by the House Small Business Committee majority staff.” She noted that WIPP supports the Small Business Fairness in Contracting Act (H.R. 1873), which would raise the contracting goals for small businesses overall from 23 to 30 percent and for women-owned small businesses from five to eight percent.
Ms. Silva added, “We have said for as long as WIPP has been in existence that P.L. 106-554, the law authorizing the Women-Owned Small Business Federal Contract Assistance Program, must be implemented in order to meet the five percent goal for women-owned businesses passed by Congress. This is a critical tool to helping women-owned businesses grow and diversify into the federal marketplace. For seven long years, women have waited for the SBA to implement this program. For seven long years, the SBA has studied and restudied this issue. We have waited long enough.”
Ms. Silva highlighted another concern with small business contracting: “Another issue for small business is the current size standards administered by the SBA. WIPP members tell us that as government contracts get larger, the small business size standards must be adjusted to reflect that trend. In some cases, the size standard limit restricts an award to very small companies instead of small companies. This inhibits the ability of our small businesses to compete in the federal market and had the counter effect of ensuring that women- and minority-owned companies remain small.”
Anthony Martoccia, director of the Office of Small Business Programs, Acquisition, Technology and Logistics at the Department of Defense; Todd McCracken, president of the National Small Business Association; Patricia Rice, director of the Maine Procurement Technical Assistance Center; and Ronald Newman, chairman of the HUBZone Contractors National Council, also testified.
