Democrats join debate over small-biz goals

Federal agencies are not hiring small businesses in the numbers needed to meet government goals, a group of House Democrats claimed last week, though critics argue that the review is overly harsh.

Twelve agencies received grades of D or lower on a score card that the Democratic minority members of the House Small Business Committee released June 25 with a 330-page report titled "Federal Agencies: Closed to Small Business."

Contract bundling and the apathy of contracting officers are causing many agencies to miss goals, said Rep. Nydia Velazquez (D-N.Y.), the committee's ranking Democrat.

The score card shows that only 22.62 percent of contracting dollars overall went to small businesses last year, short of the governmentwide goal of 23 percent, costing small firms $900 million in lost contracting opportunities.

The Small Business Administration scored a D-minus overall. "The grades are the worst they've ever been," Velazquez said. "There were no As. Not one."

SBA actually signed 55.49 percent of its contracts in 2002 with small businesses, according to the report. But the agency missed its own goal of 60 percent, which would have been lower than what the agency had achieved in previous years, dropping its grade in that category to D.

SBA scored an F in contracting with small, disadvantaged businesses and an A for exceeding its goal for 8(a) businesses. The agency got a D in contracting with woman-owned businesses even though it more than doubled its goal of 7.64 percent, because the goal was "unreasonably low." And finally, the score card awarded SBA an F for contracting with Historically Underutilized Business Zone firms. The average of the five grades resulted in the D-minus.

Sue Hensley, SBA's spokeswoman, objected to both her agency's low grade and the report's overall methodology.

In its governmentwide efforts, SBA is "trying to recover from some of the unintended consequences of [procurement reform during] the late 1990s," she said. "We're trying to fix some of the changes that were made that hurt small businesses."

SBA is helping lead a small business matchmaking program, in which federal agencies meet with small companies at conventions around the country, Hensley added.

"We definitely are not satisfied with those [contracting] numbers, but they are at record levels," she said. The Bush administration and SBA Administrator Hector Barreto "have really made small-business matchmaking a priority. We want to see more procurement with small firms, particularly those outside the Beltway."

She also questioned the validity of some statistics in the Democrats' report. It showed that agencies spent 4.36 percent of their contracting dollars on small, disadvantaged businesses, falling short of the goal of 5 percent and costing small firms $1.5 billion. However, it counts 8(a) companies separately, even though by definition, they are small, disadvantaged businesses. If the two numbers had been added, the total would have been 6.75 percent, she said.

"There has been more dishonesty on government small-business numbers by the small-business lobby than any other area of government procurement," said Steve Kelman, a public management professor at Harvard University's Kennedy School of Government and former administrator of the Office of Federal Procurement Policy.

"It's a legitimate issue to maintain vigilance on," said Stan Soloway, president of the Professional Services Council. "I don't think this is a time for additional laws and so forth.... We don't have enough data to know how much of an issue this really is."

But the committee Democrats said the cost in missed opportunities totals $13.8 billion, which they see as a problem.

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Second grades

Democrats on the House Small Business Committee last week issued a report card on how agencies are meeting requirements for contracting with small businesses. Grades listed are for fiscal 2002 (compared to fiscal 2001).

Agency for International Development F (D)

Agriculture Department B (B-)

Commerce Department C (C)

Defense Department D (F)

Education Department F (D)

Energy Department F (D)

Environmental Protection Agency D- (D)

General Services Administration C- (C-)

Health and Human Services B- (D)

Housing and Urban Development C (D)

Interior Department B (A)

Justice Department D (D)

Labor Department C (B-)

NASA D- (C-)

Office of Personnel Management D (C)

Small Business Administration D- (D-)

Social Security Administration D (D)

State Department C (D)

Transportation Department D- (C)

Treasury Department D (D)

Veterans Affairs B- (C)