On September 19, the House Small Business Committee held a hearing on Small Business Administration (SBA) contracting programs. The Small Business Subcommittee on Contracting and Technology held a similar hearing on March 21 (see The Source, 3/23/07). The House passed the Small Business Fairness in Contracting Act (H.R. 1873) on May 10 (see The Source, 5/11/07).
“Today the committee continues its work toward opening the federal marketplace to small business,” said Chair Nydia Velázquez (D-NY). “Recently, the SBA announced that for the sixth year in a row, the federal government failed to meet its small business goal, costing entrepreneurs $4.5 billion in lost opportunities.” Rep. Velázquez added, “The committee took an important step in bringing equity to our procurement system when we passed [Rep. Bruce] Braley’s [D-IA] bill, H.R. 1873…We rely on these initiatives to spur the next generation of suppliers, providing diversity that allows the taxpayer to get the best value for [his or her] dollar. Unfortunately, many [of these initiatives] were created in the 1960s and have seen little change since then. As a result, they have fallen into complete disarray, largely due to mismanagement, under-funding, and neglect. Modernizing, and in some cases such as with the veterans’ and women’s procurement programs simply implementing them, would be a start. The way the government purchases services and products is constantly changing, and the bottom line is that these initiatives need to keep pace.”
Ranking Member Steve Chabot (R-OH) said, “Despite the growth in small businesses, the overall share of small business selling goods and services to the federal government does not reflect the growth of these businesses in the overall economy.” Rep. Chabot added, “The SBA oversees programs providing contracting assistance to socially and economically disadvantaged groups, more commonly called the 8(a) program; firms located in historically underutilized business zones, or HUBZones…service-disabled veterans; and a women’s procurement program that has yet to be implemented some seven years after congressional enactment and two years after a judicial decision finding the SBA unreasonably withheld action in not implementing the program.” He continued, “As the committee continues its work on these programs, I think it should seek legislation that meets the noble objectives of the various SBA contracting programs while reducing the friction that exists among these various groups of small businesses. In addition, the committee should ensure that these programs operate in the most cost-effective manner possible.”
Jovita Carranza, deputy administrator of the SBA, said, “Progress in the area of government contracting dollars going to small businesses has been significant since FY2000. There were $30.3 billion more in small business prime contracts in FY2005 than in FY2000, supporting an estimated 235,000 jobs.” She continued, “SBA recognizes the need for improving our government contracting programs and is taking the lead moving forward, along with the Office of Management and Budget’s Office of Federal Procurement Policy, to carry out a number of initiatives, including working with agencies to ensure their small business contracting number reporting is accurate.” Ms. Carranza noted, “Although the federal government was not successful in meeting the procurement goals for HUBZones, women-owned businesses, and veterans, the [Small Business Goaling Report for FY2006] shows that contracts with small disadvantaged businesses were up from $21 billion in FY2005 to $23 billion in FY2006, representing 6.76 percent of total contract dollars, well above the five percent goal…Contracts with women-owned businesses increased by $1.4 billion to $11.6 billion, which equates to 3.4 percent.”
Ms. Carranza also testified that the SBA has undertaken several initiatives to improve small business contracting, such as implementing a procurement scorecard that shows how each agency has fared in “making contracting opportunities available to small businesses,” increasing data transparency, and requesting “$500,000 to examine how to best serve the 8(a), HUBZone, and Small Disadvantaged Business Communities, as well as women-owned and service-disabled veteran-owned small businesses, while not restricting the success of any one program.”
“In 2000, Congress realized the gross under-representation of women businesses in federal contracting had to end and set a course to establish a set-aside program to reach women’s businesses in under-represented industries,” said Margot Dorfman, chief executive officer of the U.S. Women’s Chamber of Commerce. She continued, “Through a bipartisan effort, Congress passed the Equity in Contracting for Women Act [P.L. 106-554]…And now, 2,463 days after this legislation was signed into law, the SBA has still not implemented this important program.” Ms. Dorfman detailed the need for implementation of the legislation, saying, “We read endlessly about the huge growth in women-owned businesses from marketers seeking to sell to women. But, marketers pick and choose the numbers that make for nice stories to enhance their advertising sales or political position. One favorite hyped-up headline states, ‘Over the last decade, women-owned businesses grew 42.3 percent.’ The real story is that, while the number of women-owned businesses grew over 40 percent, their annual revenues grew only 4.4 percent. The important headline should be, ‘Over the last decade, the average women’s business revenue dropped 36 percent.’”
Ms. Dorfman also said, “Remarkably, even though women own nearly one-third of all businesses in America, we received only 3.4 percent of the 2006 total federal contracting dollars. The loss in revenues to women-owned businesses averages between five to six billion dollars annually. This is a travesty that Congress sought to address back in the year 2000 but SBA sabotaged your efforts. Even today…since the Equity in Contracting for Women Act was signed into law, the SBA still is not ready to implement a very, very narrow version of the program. We have heard from many confidential sources that the SBA plans to ignore the recommendations provided by the National Academies of Science and select only a very narrow set of industries to participate in this program. Clearly if the SBA takes this action, the intent of Congress will not be fulfilled and women business owners will not receive increased access to contracts.”
During questions, Rep. Velázquez noted that the SBA is sending the message that it is “not interested in doing business with women-owned businesses,” having “stall[ed]” the release of the Women’s Procurement Study and implementation of the Equity in Contracting for Women Act for the past seven years. However, prompted by Rep. Chabot, Ms. Carranza noted that the study is the first “federal, gender-based study” of its kind and, as a result, the SBA is obligated to ensure the integrity of its release and implementation.
Harry Alford, president of the National Black Chamber of Commerce; Ronald Chamrin, assistant director of the Economic Commission at the American Legion; P.J. Goel, president of Goel Services; Ron Newlan, director of the HUBZone Contractors National Council; and Dr. Trevor Brown, assistant professor at the John Glenn School of Public Affairs at the Ohio State University, also testified.
