Editorial: Focusing on results

Small and midsize businesses are essential to the IT industry, often driving innovation

We cannot overstate the importance of small and midsize businesses to the government information technology community. They are important to the economy overall, and they are essential to the IT industry.

Such businesses have driven IT innovation. They have changed the way we conduct our daily business. Many of the companies that are household names today started out in a garage somewhere in Silicon Valley or on other tech-fertile grounds. Take, for example, Apple Computer, Google and Amazon.com. Those companies changed the way everyone works and lives and had a major influence on the IT industry.

In the government world, the importance of small and midsize businesses has been a major subject of debate. In recent years, officials have taken important steps to open the federal market to those businesses.

One of the most innovative changes has occurred through the CIA’s In-Q-Tel, a venture capital company. In-Q-Tel funds technologies in their early stages with the expectation of creating products that the CIA can buy. In-Q-Tel has worked so well that it has become a model for other agencies to bring smaller companies into the government market.

Specific contracts also make the government market more accessible to small and midsize businesses.

We have praised the Bush administration’s American Competitiveness Initiative, which seeks to double funding for basic research in the physical sciences, make the research and development tax credit permanent, and ensure that students have needed math and science skills. The initiative fosters small business and creates new legions of entrepreneurs.

Many of the big government integrators have done a good job of giving small businesses a foothold on larger government contracts. The Navy Marine Corps Intranet contract, for example, provides incentives if EDS does a certain percentage of the work using small and midsize businesses.

New leaders have taken the small-business issue as a primary concern. Lurita Doan, administrator of the General Services Administration and a former small-business owner, appears focused on the plight of small firms.

And yet, overall, there still seems to be a disconnect between the government IT market and those businesses. To a large extent, the government cannot report how much contract work goes to such businesses because of ongoing issues with the contract database that is supposed to track those awards.

Small- and midsize-business owners have many complaints. We have heard too many stories from those who waited for months to be paid after completing requested work. That is inexcusable under any circumstances, and for small businesses, which often don’t have generous cash reserves, it can be devastating.

And then there is the procurement system. Yes, the government has streamlined the process in the past decade, but it remains far more complex than in the private sector. Much of that complexity is necessary. But as pressure increases to roll back reforms instituted in the late 1990s, the government should consider the effect that greater regulation will have on small businesses: It will drive them away.

Without small and midsize businesses, the government would lose a critical source of innovation, which often comes from those businesses, particularly in the IT world. Agencies depend on those innovations to overcome ever-changing technology challenges.

This issue is complex and does not have a simple solution. Small and midsize businesses need to be competitive, and they should be competitive because of the innovations they offer, not because of a set-aside.

— Christopher J. Dorobek,
cdorobek@fcw.com

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