Senators, SBA dispute accuracy of small-business credit

Senators pressed a Small Business Administration official on July 26 about when an agency should stop getting credit towards its small-business contracting goals if a contracting company grows large.

Sen. Claire McCaskill (D-Mo.), chairwoman of the Homeland Security and Governmental Affairs Committee’s Contracting Oversight Subcommittee, and Sen. Rob Portman (R-Ohio), the pane's ranking member, said agencies should stop getting the credit when a company outgrows the small business size status; the credit should stop, even before the contract ends.

However that isn’t the way the credits are counted currently, and as a result, the senators said it makes the percentage of contracts going to small business misleading.

SBA gives a 'B' in 2010 small-business contracting efforts 

“It is also an empty achievement,” McCaskill said about annual 23 percent small-business contracting goal. Get more information on the hearing.

SBA reported June 24 that the government awarded $97.95 billion in federal contracts to small businesses, or 22.7 percent of eligible contracting dollars in fiscal 2010, less than the 23 percent goal.

Disagreeing with the numbers, McCaskill said, “Clearly, we didn’t do 22.7 percent.”

Joe Jordan, associate administrator of government contracting and business development at SBA, said the numbers are accurate based on current rules and their intent.

Under the rules, a contract is recorded as a small-business set-aside contract, if the winning company was small at the time of the award. An agency gets credit toward its various small business contracting goals for the life of the contract, even if the company grows into a large company during the contract.

Current SBA rules and the Federal Acquisition Regulation require a firm to recertify as a small business before the sixth year of any long-term contract. In addition, a firm must now recertify in 30 days when it merges with another company or is acquired.

The rules, as they stand, are intended the persuade agencies to contract with small businesses and then help them grow successfully, Jordan said.

It would penalize a contracting officer and agency by not giving them credit throughout the contract, “because they did such a good job finding these small businesses that those small businesses grew and exceeded those size standards,” he said.

However, those rules don’t give a clear picture of what the government is doing with small businesses, McCaskill said.