Are small-business set-asides helping?

The story of a small business begun in a garage or a spare bedroom growing into a global juggernaut is the stuff of legends — and policy.

The government wants to encourage the growth of small businesses because they create jobs and, when successful, help grow the economy. Congress, as it often does, dealt with that desire by passing a law requiring that a certain percentage of federal government spending be directed to small businesses in a variety of categories and flavors: minority owned, woman owned, Alaska native owned, to name only a few. In this issue, we look at how that plan has been working. It is a politically charged discussion with fervent supporters and detractors on each side. And, as usual, government executives are caught in the middle.

As a number of consultants have pointed out, whenever there is a bucket of money set aside, it will attract not only legitimate and qualified companies but also those that want to game the system for the reward.

From government, we hear of concerns about the capabilities of small companies to perform some of the work that has been set aside for them. And as the bar in contracting tilts back toward low price, we hear concerns about how small business can deliver those required low prices without the volume buys available to large companies.

There is no question that this is a delicate balance as government seeks to infuse capital into one market segment without damaging the other. Large businesses have spent millions in bid and proposal funds to secure a place on agency contracts only to find in this election year that most of the task orders are designated for small business.

None of this is to suggest that America’s entrepreneurs should not be a vital part of the federal technology ecosystem. But after nearly 35 years of small-business contracting goals, it’s worth asking how the set-asides are doing in delivering the intended results. FCW reporter Matthew Weigelt takes that on in our feature, "Do small-business preferences make the grade?"

About the Author

Anne Armstrong is president and chief content officer of 1105 Government Information Group.

Reader comments

Tue, Sep 11, 2012 Nate

The concept of small business set-asides seems to be half broken. The intention is to create quota requirements so small businesses can compete, grow, and build jobs. However, the majority of these awards are still gobbled up by large integrators and VAR's with various pass through agreements where the actual contract is placed with a small business reseller. This does not create manufacturing or long standing wealth. A real and innovative change would be to have some of these set asides be targeted at the actual manufacturer/technology developer so those companies can grow and develop new and innovative technologies to expand globally.

Tue, Sep 11, 2012 OccupyIT

Anne, where are you going with this? This is a little fluffy journalism. Sounds a bit too much like a condescending back-hand complement – which clearly it is intended to be. Got facts? Got conclusion? Burry the lead? You should frankly rewrite it or remove it.

Mon, Sep 10, 2012 Raul Espinosa

Is the Obama Administration supporting set-asides? His record demonstrates that he is NOT. The Obama outreach strategy - announced in 2009 to increase small businesses participation in government contracting - has been a failure, http://bit.ly/Lh3kfX. Under the Obama Administration, Agencies have NEVER met their 23% statutory goals and they have been caught lying about their results in contracting with small businesses. http://slidesha.re/q24aIC Under the Obama watch, Federal Agencies have excluded over $100 Billion in contracts from the set-aside provisions of the Small Business Act. Those exclusions could have been used to increase the share of set-aside to as much as 35%! Again, is Obama supporting small businesses? He is opposed to the House proposed increase in the set-aside ceiling from 23% to 25%, which passed the House with bi-partisan support. The Senate will be taking up the subject on the 2013 DoD appropriations Bill. Senators are being urged to support the 25% ceiling and their vote will be closely monitored.

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