Government Doesn’t Reach Small Business Contracting Goals

The federal government generally has goals in place related to the amount of money for which it is supposed to contract with small businesses, but it seems as though it failed to meet them in the 2012 fiscal year.

In all, federal agencies contracted with small businesses for approximately $89.9 billion last year, accounting for 22.25 percent of all the contracts it doled out during that period, according to a report from the Washington Business Journal. However, its stated contracting goals in this regard came to 23 percent, and thus it fell short once again. However, it should be noted that this was still an improvement from 2011, when just 21.65 percent of such funds went to small businesses.

"The fact that the federal government hasn't met this meager 23 percent small business contracting goal for seven years is simply unacceptable, and further proof that our government continues to give lip service to small companies," said Rep. Sam Graves, a Missouri Republican and chairman of the House Small Business Committee, told the news organization. "The Administration must make meeting this goal a priority because it's efficient governance, and not just a law that makes small businesses feel good. Improving small business opportunities through federal contracts creates jobs and saves taxpayer money because small businesses bring competition, innovation and lower prices."

On a more macro level, though, it's important to note that goals were actually exceeded in some specific types of small business contracting, the report said. For instance, funding to small disadvantaged businesses came to 8 percent, well above the 5 percent goal, while that to companies owned by service-disabled veterans amounted to 3.03 percent instead of the planned 3 percent. However, it fell short on funding for businesses owned by women (4 percent instead of 5 percent), as well as to enterprises located in historically underutilized business zones (2.01 percent instead of 3 percent).

Subcontracting falls even farther short
In addition to direct contracts with small businesses, the federal government also sets goals about subcontracting, and in this regard it fell well short of its own expectations, the report said. In all, 36 percent of subcontracted dollars are supposed to go to independent companies, but only 33.6 percent did. Among the worst actors in the government, for the second straight year, was the U.S. Department of Energy, which received a failing grade from the U.S. Small Business Administration. Meanwhile, the General Services Administration and Department of the Treasury both received A-plus ratings.

Through the end of the Obama administration's first term, though, it should be noted that $376.2 billion in government contracts were given directly to small businesses, up from $328.1 billion in the final four years of the George W. Bush administration, the report said. That marks an increase of nearly 15 percent. In addition, the government is now apparently trying to expand its small business contracting efforts once again, launching new initiatives to recruit HUBZone businesses and those owned by women.

Many small business owners nationwide may be in a position to receive government contracts and simply not know it, while others might only need to do a little bit of work to achieve those goals, and enrolling in government programs such as those now being launched might be a good way to start. Of course, many companies may also need to think about other ways to improve their bottom lines going forward, and one method for doing so may be to reduce small business insurance costs, including those for liability insurance, by shopping around for the best possible rates.