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SBA takes aim at big firms on contractor list

Special to The Times

The Small Business Administration has unveiled its latest effort to get serious about being small.

The SBA began sending letters last week to as many as 1,000 prime contractors asking them to identify by Sept. 30 any small-business contracts they or their subsidiaries and divisions hold.

Federal agencies then could no longer count those contracts toward their goals of awarding 23% of their contract dollars to small businesses.

With the information from the large contractors, and new rules that went into effect June 30 that require more frequent checks on the size of small-business contractors, the SBA said last week that it was on track to scrub nearly all large firms from the small-business contractor rolls within a year.

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The large firms, which include corporate giants such as Northrop Grumman, are estimated by the House Small Business Committee to hold $12 billion in contracts that federal agencies have tagged as being held by small businesses.

Many of the large firms were given the small-business label when they acquired a small company that held a federal contract. Before June 30, those big companies could be counted as small for the life of a contract, which these days could be as long as 20 years.

Cleaning up the government’s contractor database can be done within a year, according to the Small Business Administration.

“Based on the results we’ve seen and the collaboration with other agencies, we feel that it’s very realistic,” said Arthur Collins, director of government contracting at the SBA.

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The companies were also asked to flag any short-term contracts they have with renewal options greater than one year and to voluntarily alert the government that the contracts are held by companies “other than small.”

The prime contractors have been asked to alert the federal contracting officers they deal with as well as the SBA when they make the changes, although there are no penalties for those that do not.

After years of criticism, the SBA announced in November that, as of June 30, all companies with small-business federal contracts would have to recertify their size when a contract was up, which for a short-term contract is typically after five years. They also have to recertify when an option to continue a contract is exercised, as well as when they acquire or merge with another company.

Some critics have said companies should recertify annually and have expressed concerns that the new rules lack teeth.

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To reach its goals, the SBA has enhanced the small-business search tool, part of the federal contractor database, to make it easier and faster for contracting officers at federal agencies to find the small businesses they need to meet their contracting goals.

The agency also is reorganizing its procurement specialists. SBA district offices and resources partners, such as the Women Business Centers, will handle front-line procurement counseling and training. Meanwhile, the SBA’s 55 procurement center representatives will focus on helping federal agencies make more opportunities available for small businesses

“We’ve got two markets: small business and acquisition agencies,” Collins said. “Right now we feel we need to focus on the acquisition agencies.”

For more information on the new recertification rules, go to www.sba.gov.

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Core services top expense study

Small businesses spent most of their money on core business services last year, including data processing, administrative support and management consulting, which together accounted for 34.5% of the $4.88 trillion spent by firms with annual revenues of $25 million or less, according to an analysis of the 2006 Visa Commercial Consumption Expenditure Index.

The biggest percentage jump in spending was in the category of rent, which increased 14.3% over 2005. Overall, small-business spending grew 4.3% in 2006.

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The index, which excludes payroll expenses, is compiled from government data by credit card and debit card giant Visa USA of San Francisco.

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Forum to tackle health insurance

For small-business owners who would like to do more to help their employees obtain health insurance, a public policy forum is scheduled Tuesday from 11:30 a.m. to 1:30 p.m. at the City Club on Bunker Hill in downtown Los Angeles.

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The event, organized by the Los Angeles chapter of the National Assn. of Women Business Owners, will update attendees on the healthcare proposals before the state Legislature. The outcome probably will affect small employers’ finances.

“Health insurance is a significant line item in my business,” said Cynthia McClain-Hill, co-founder and managing director of the 15-employee, Los Angeles-based law firm Strategic Counsel, sponsor of the event.

Proposals include a government-run system with an 8% employer tax and a 3% employee tax and programs with no mandates and no charges. A panel of speakers including the senior health policy advisor to Gov. Arnold Schwarzenegger will explain the proposals and advise listeners on how they can weigh in with their representatives.

The women’s business association is determined to get small-business owners involved to help solve the dual problem of affordability and availability of health insurance, McClain-Hill said.

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“Small-business owners have often a very intimate relationship with their employees and tend to be consumed with desire to provide [health] insurance for themselves and their employees and, frankly, riddled with guilt when they are unable to do so,” said McClain-Hill, who is a small-business owner, a past president of the association’s local chapter and president-elect of the national organization.

Registration for the event costs $55 for nonmembers and $40 for members. On-site registration is $5 more. For more information, go to www.nawbola.org.

For a brief look at some of the proposed healthcare legislation, go to the Small Business California website at www.smallbusinesscalifornia.org.

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Online courses for entrepreneurs

Almost 30 new online workshops meant to help users start, manage or market a business have been added by the Service Corps of Retired Executives at www.score.org as part of a series of new content at the free site.

Articles on data security and e-commerce along with free technology tools and templates are also available.

The organization also has updated its disaster preparation and recovery information and links, and has identified 50 online counselors with expertise in this area.

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cyndia.zwahlen@latimes.com

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Cost breakdown

How small firms spent their money in 2006:

*--* Amount Percentage Change Expense (in billions) of total since ’05 Core business services $1,683 34.5% +4.5% Maintenance/operations 1,377 28.2 +2.9 Raw materials/ manufactured goods 807 16.5 +0.9 Rent 471 9.6 +14.3 Travel/entertainment 105 2.2 +6.1 Capital equipment 50 1.0 +4.2 Other 389 8.0 +5.1

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Source: Visa Commercial Consumption Expenditure Index


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