Small businesses win bigger share of federal contracts
Small businesses won contracts worth more money from the federal government in 2009 than the year before, increasing their share of a key source of income.
The U.S. government paid small businesses $96.8 billion last year to do a wide variety of jobs including defense work, scientific research, technological support and even janitorial services, up from $93.2 billion in 2008.
That amounted to 21.89% of all federal spending on contracts — a hefty share, and up from 21.5% the year before, but still short of the 23% goal set by Congress, according to new data from the Small Business Administration.
“This represents real progress, but not enough,” said SBA Administrator Karen Mills. When the government provides contracts to small businesses, it helps create jobs, she said in a statement.
Federal contracting has been a touchy issue in the small-business community.
Many business owners believe that large companies have a big advantage in winning lucrative government work. Some say not enough work goes to businesses owned by women or minorities, while others believe that the opposite is true.
By law, the United States government must track its efforts to offer contracts to small businesses owned by women, minorities and disabled veterans. Officials must also track contracts awarded to small businesses in economically distressed areas, called historically underutilized business zones.
Last year, federal agencies awarded $16.3 billion in contracts to small companies owned by women, according to the data, which were released last week. That was $1.6 billion more than in 2008 but still short of the goal of awarding 5% of government contracts to women-owned small firms.
About $33.5 billion in contracts were awarded to firms designated as “disadvantaged” by the federal government. These are companies owned by people who have had economic disadvantages and are members of certain ethnic and racial groups. Contracts to these firms amounted to 7.57% of the total, more than the 5% goal set by Congress.
Contracts to small firms owned by veterans who were disabled in the line of duty, however, did not meet the federal goal. Such companies won business worth 1.98% of all federal spending on contracts, rather than the 3% goal set by Congress. Still, the amount awarded to such businesses increased $2.4 billion over 2008, to $8.8 billion.
Business won by small companies in disadvantaged areas also rose last year, increasing to $12.4 billion from $10.1 billion in 2008.