Government breaks small-business goals with stimulus funds

A major share of the money under the economic stimulus law has been given to small businesses, topping a contracting goal the government tries to reach each year.

As of Oct. 2, the government, as whole, has spent 26 percent of the American Recovery and Reinvestment Act's  (ARRA) funds on contracts for small businesses, an estimated $4 billion, said Joseph Jordan, associate administrator for government contracting and business development at the Small Business Administration. Jordan made the statement today in testimony to the Senate Small Business and Entrepreneurship Committee.

Each year, the government tries to obligate 23 percent of its money to small businesses, but it often falls short of the goal. The government has not reached the goal since 2005, according to SBA’s figures.

In more specific categories of small businesses, Jordan said agencies are exceeding goals.

• Small disadvantaged businesses have received 11 percent of the stimulus contract funding, 6 percent above the goal.
• Service-disabled veteran-owned small businesses have received 4 percent of the funds, 1 percentage point over the goal.
• Small businesses in Historically Underutilized Business Zones have received 7 percent, 4 percent more than the goal.

Jordan also said minority businesses have received 15 percent of contracting dollars, or $2.4 billion. However, his figure included some businesses that would not qualify as small.

Meanwhile, agencies are short of the mark for woman-owned small businesses, Jordan said. Those companies have received 4 percent of contracting dollars, while the goal is 5 percent. With the usual appropriated funds, agencies haven’t reached that goal since 2002, when such firms got 5.1 percent, according to SBA figures.

While agencies are still obligating stimulus money, the law has an overall $60 billion in prime contract opportunities available, and awarding approximately $13.8 billion would hit the 23 percent goal, Jordan said.

In the Defense Department, small businesses have been awarded more than half of the department’s already obligated ARRA dollars. Linda Oliver, acting director of DOD's Small Business Office, said as of Sept. 25, DOD had obligated $2.2 billion, or 31 percent, of the $7.4 billion in ARRA funds it received. Of those funds, $1.3 billion, or 58 percent, has gone to small businesses.

In September, SBA reported to the committee how specific agencies are doing in small business contracting with ARRA money. Of the agencies on SBA’s annual small business contracting scorecard, the Social Security Administration had awarded 1.8 percent of its $10.9 million in recovery act contracting funds, as of Sept. 11. The General Services Administration had awarded 5.2 percent of its $1.5 billion to small businesses.

Meanwhile, the Justice Department had awarded 95.8 percent of its $1.4 million to small businesses, as of Sept. 11, according to SBA.

“These goals are floors, not ceilings,” committee chairwoman Sen. Mary Landrieu (D-La.) said during today's hearing.