Agencies Miss Small-Business Goals

Federal agencies encouraged by Congress to meet specific spending goals with small, women-owned or disadvantaged businesses missed those targets last fiscal year by more than $10 billion, a report released Wednesday showed.

The third annual scorecard, issued by Democrats on the House Small Business Committee, showed that among 21 agencies, accounting for roughly 96% of all federal spending, only two--the Interior and Agriculture departments--met at least 80% of their spending goals.

In contrast, the Defense Department, which accounts for 65% of all federal contracts, failed to meet any of its procurement goals with small, women-owned or disadvantaged businesses or firms in low-income areas, the report showed.

Disadvantaged businesses are those run by economically and socially disadvantaged entrepreneurs as determined by their net worth, education and history of their business.

Had the government met its spending targets, $76.9 billion would have gone to small, women-owned or disadvantaged businesses or those in low-income areas. The actual spending amount was $66.5 billion, according to the report.

With many small businesses dependent on government contracts for a large portion of their income, the failure to reach out to small firms has some congressional leaders worried.

“Our concerns are based on the fundamental question of fairness,” said Rep. Nydia M. Velazquez (D-N.Y.), ranking Democrat on the House committee. “Unless there is an immediate and radical shift in the way agencies structure their contracts and work with small businesses, next year’s scorecard will surely be worse than today’s.”

The federal government, which spent $219.6 billion in fiscal 2001, has at least four programs designed to funnel more contracting dollars to small, women-owned or disadvantaged businesses or to those located in low-income, high-unemployment communities.

Each has separate goals established by law, but there are no statutory penalties for noncompliance. The scorecard is designed to add some accountability, a spokeswoman for Velazquez said.

Of the programs reviewed, the one targeted toward women fared the worst.

The report showed that federal agencies met less than half the goal of spending 5% with women-owned firms, costing those companies more than $5 billion.

In contrast, the largest of the programs, aimed at small business in general, fell just short of its target. Government agencies spent 22.81% of their dollars with small businesses. The goal was 23%.

According to the report, missing targets in each of the programs cost firms across the nation $10.4 billion in lost business.