Working To Expand Small Business Contracting

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Washington, March 1, 2007 | comments

Small businesses create 75 percent of all new employment opportunities and make up 99 percent of all employers.  They account for nearly half of all sales revenues nationwide.  Given the vast scope of the small business sector, improvements in it have ramifications throughout the State of Texas and across the nation. There is an avenue to improvement: the federal procurement market, as it holds the potential to grow our nation’s small businesses.

Recently I have held small business contracting workshops in my district.  These events educated representatives from local companies about the opportunities contracting with the federal government can provide.  They also gave me the opportunity to gain a greater knowledge of the challenges facing small companies and roadblocks to accessing the federal marketplace. 

The Federal government's purchases continue to grow at a phenomenal rate, expanding by more than 25 percent in the last two years. Today the federal marketplace accounts for nearly $295 billion in goods and services – making the U.S. government the largest buyer in the world.

Yet even with all this potential, small businesses struggle to receive their fair share of federal contracting dollars. The mandated small business contracting goal is set at 23 percent - however, over the years many agencies have failed to meet this requirement. The number of contract actions to small companies declined by more than 30 percent from FY 2003 to FY2004.  And during that same time, small companies lost nearly $1.7 billion in contracting opportunities due to the failure of federal agencies to meet their contracting goal. Small businesses are being left behind, and ultimately, it is the American taxpayer that pays the price.

As a Member of the House Committee on Small Business, I have taken an active role in the oversight of the Small Business Association’s (SBA) procurement programs.  These programs hold the potential to foster progress in American small businesses, including increased expansion and job growth.

One of the fastest growing areas of the sector is women-owned businesses, yet these companies remain under represented in the federal marketplace.  To help correct this inadequacy, the Women’s Procurement Program was created and signed into law in 2000.  Unfortunately, this bipartisan program has been stalled.  Forty percent of women-owned businesses sell goods and services the federal government buys, but they receive less than three percent of government contracts. By not implementing this program, women-owned businesses have suffered to the tune of nearly $30 billion in lost contracting opportunities.  I remain a strong advocate for this program and will fight for its implementation.

Another important program in need of help is the SBA’s 8(a) program.  This program is the government’s most effective tool to improving the economic outlook for minority-owned businesses.  Harnessing the buying power of the federal marketplace is a clear catalyst for growing minority-owned businesses. However, the program has not been updated in nearly two decades.  Due to outdated rules, participating businesses are not provided the tools needed to receive contracts and are simultaneously being stifled from growth. I will be working with the Small Business Committee to modernize this program and ensure that it benefits minority business owners in South Texas.

The procurement system as a whole is in need of many structural changes in order to bring greater equity to this process.  It must be overhauled so that small business contractors are accorded a voice in the process. Agencies need to be held accountable for failing to meet their mandated contracting goal and the SBA needs to aggressively engage in efforts to break up bundled contracts.  

On March 15, 2007, the House passed H.R. 1362, the “Accountability in Contracting Act," by a vote of 347-73. The legislation changes federal acquisition law to require agencies to limit the use of abuse-prone contracts, to increase transparency and accountability in federal contracting, and to protect the integrity of the acquisition workforce. While this legislation will not solve all of the problems with the Contracting system, it does make an important first step.  I am proud of have voted for this legislation. 

Small businesses are important suppliers to the federal marketplace, as they provide high quality products and cost savings to the taxpayers. Until significant efforts are made to improve the federal procurement process for small firms - both nationwide and in South Texas - entrepreneurs will continue to face significant barriers.  I remain committed to breaking down the barriers and making the federal contracting system more attainable for small businesses.

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