Meet small-biz goals or face consequences, officials say

With half of federal departments missing their small-business contracting goals in fiscal 2006, agency officials and legislators said the solution may be punishment.

“I’m troubled by the fact that there are no penalties here,” Rep. Edolphus Towns (D-N.Y.), chairman of the House Oversight and Government Reform Committee’s Government Management, Organization and Procurement Subcommittee, said Sept. 26.

Agencies say they are trying to reach those goals, but “then 10 years from now, you’re still trying," Towns said.

Twelve of 24 departments failed to meet their small-business goals, according to the Small Business Administration’s score card. Agencies are supposed to send 23 percent of contracting dollars to small businesses. They also are expected to send certain percentages to 8(a) businesses, firms in historically underutilized business zones and businesses owned by service-disabled veterans.

After the hearing, Towns said he hoped agency officials would fix the problem themselves. If they can’t take care of it, he may introduce legislation to address the problem.

“I am not against legislation,” he said.

He said administration officials admitted at Wednesday’s hearing that they struggle to send enough contracting dollars to minority-owned small businesses.

To get agencies to meet their small-business goals, officials who testified said attach consequences.

Preston Waite, deputy director of the Census Bureau, said the agency writes penalties for missing the goals into its contracts. In the contracts, the contractor's award fee is tied to meeting the small-business goals. If it becomes evident that a prime systems integrator is not actively working to meet those requirements, the agency could withhold as much as 33 percent of the award fee, Waite said.

“We expect them to meet those goals,” he said. “If they didn’t, they didn’t get as much profit.”

Calvin Jenkins, SBA’s deputy associate administrator for government contracting and business development, said the score card was a first step in correcting the problem. Also, he said the government needs accurate data for overseers.

According to SBA, a revision of 2005 data decreased the amount of contract dollars that went to small businesses by $4.6 billion.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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