Report: Small biz struggles with contracting, capital

Contracting projects with the government and accessing venture capital are two major hindrances to small businesses working to gain footing in this economy, and the government is not helping, according to a congressional report released Dec. 15.

Policy-makers have failed to update or implement initiatives protecting small businesses, states the 109th Congress Small Business Record, a review of the past year’s small-business-related policies.

One such policy is contracting bundling. The practice combines several contracts into one, which limits opportunities for small companies because they do not have the resources to complete an entire project, said Rep. Nydia Velazquez (D-N.Y.).

“There hasn’t been one mega-contract that has been unbundled by this administration,” Velazquez, the ranking Democrat on the House Small Business Committee, said at press conference Dec. 15.

“We strongly agree that as many contracts as possible should be unbundled or unconsolidated, ” Small Businesses Committee spokesman Rich Carter said. The committee found it unproductive to try to pass legislation regarding the policy, so committee Chairman Rep. Don Manzullo (R-Ill.) instead tries to work with federal agencies, and has “often worked out a solution to the satisfaction of the small-business community,” Carter said.

“Consolidation is necessary and justified if agencies can derive measurably substantial benefits,” Small Business Administration spokesman Michael Stamler wrote in an e-mail message.

As for capital, the report states that it remains elusive for small businesses. The report states that the SBA burdened businesses by shifting operating costs for its loan program to small businesses and lenders. It leaves businesses with “substantial upfront costs to secure capital,” the report adds.

SBA disagreed. Last year’s fees were the same as those five years ago, Stamler said. Congress temporarily lowered the fees in December 2001 to aid in the economic recovery following the 2001terrorist attacks. As legislation mandated, the fees returned to the previous amount at the start of fiscal 2005.

“Some people say we raised the fees, but that’s not true,” he said.