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Small Business Government Contracts: $93 Billion Too Little?

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By Neetal Parekh on August 24, 2009 12:50 PM

The Small Business Administration (SBA) released its latest scorecard showing that the federal government spent a record $93.3 billion in small business government contracts for the 2008 fiscal year, setting a new record.  It reflects a $10 billion increase from the previous fiscal year. 

The large figure, however, hasn't managed to impress all small business critics. 

Because while it means that though 21.5% of the government's $434 billion total contracts expenditure in 2008 was spent on contracts with small businesses, the spending does not meet Congress' requirement that agencies devote 23% of total contracts to small business government contracts.  And when the overall pool is hundreds of billions dollars deep, every fraction of a percent becomes all the more vital. 

Why weren't agencies able to meet the 23% goal?

The Small Business Administration (SBA) attributes the average 1.5% short to wartime and homeland security-related contracting.  With defense spending up in 2008 for military equipment, vehicle, transportation, and weapons, there were fewer contracts that could be signed with small businesses.  Additionally, the government spent increased funding for disease vaccine research. 

Did any agencies meet the goal?

Of 25 agencies that have to meet the SBA small business government contracts requirement in the 2008 fiscal year, 13 did. The General Services Administration (GSA) was the single agency to meet all contracting goals including specified allocations to contracts with HUBZone-certified businesses, women-owned small businesses, and veteran-owned small businesses.

The 13 agencies that did sign 23% of contracts to small business were: the Agriculture, Education, Energy, Health and Human Services, Homeland Security, Interior, Transportation, and Veterans Affairs departments; the Environmental Protection Agency, General Services Administration,  NASA, Nuclear Regulatory Commission, and SBA.


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