There has been much dissent about the federal government’s involvement in small business. Small business engagement has been a concern since the federal government failed to meet its contracting goals. There is a need to develop programs to help small businesses remain afloat. Small businesses should be aware of how this change will affect their business and what they need to do going forward. Here’s what small business owners may need to know.
Dollars Allocated to Engage Small Businesses in Fiscal 2012
In the fiscal year of 2012, the Small Business Administration (SBA) states that only 22.25 percent of federal contracting dollars or $89.9 billion was allocated to help engage small businesses meet their contracting goals. Though the number is higher than in previous years, the company says that it is still not enough. According to the SBA, this is the twelfth year that officials have missed their goal to help governments engage small business, but at least, they managed to increase the contribution by 0.6 percent. It’s not much, but it is an improvement.
How the Government Addressed Women-Owned Firms in Economically Disadvantaged Areas
Again, the government failed to engage small businesses that were owned by women in economically disadvantaged areas. This neglect or failure was, in part, due to budget cuts prompted by the sequester. Small firms and women-owned firms were hit the hardest by the oversight or neglect. The Obama administration has responded by trying to dedicate a larger percentage of funds to small businesses. Despite its efforts, the government has struggled to make an impact, especially with federal spending cuts.
Which Type of Small Businesses Did Meet Their Goals?
Service-disabled veterans represent 3 percent of all the government contracts. The government actually met their goal for these groups, while other groups were underrepresented. This was the first time since it was put in place that the goal was actually met. Pundits speculate that the increase in returning veterans helped the agencies meet the goal.
Public Response to Failure to Engage Small Business
Numerous people have commented on the current problem. In fact, Sam Graves, a representative of Montana, called the government’s continued failure to meet the small business contracting target unacceptable. Most people think that meeting the goal should be a priority since small businesses comprise a large part of commerce and revenue generation in America. Small businesses can help to save taxpayers money by creating more jobs through federal contracts. This sentiment was communicated through an email Graves sent to the Washington Post.
What the Obama Administration is Doing
President Obama signed legislation to encourage leaders to focus more on small businesses, and the White House is vowing to raise small business contracting goals to meet higher goals even though they cannot meet the current goals. Unfortunately, there is much to do to get the numbers back on track since the procurement goals are not the only goals that are off-target. Currently, most of the contracts end up going to large corporations instead of small businesses where the money is needed.
Government officials are working to curb fraudulent behavior related to small business contracts. In fact, one Arlington-based contractor was sentenced to four years in prison for creating a small business to act as a front for a larger business to gain more than $31 million in government contracts that were meant for small businesses. Another former chief executive was sentenced to six years in prison for winning more than $150 million in contracts that were earmarked for small, minority-based businesses that were also disadvantaged.
Challenges Faced Going Forward
Unfortunately, there are numerous actions that the government needs to take to overcome the challenges they face with fraudulent behavior. Once these companies are identified for misuse of funds, the government can reallocate the funds towards small businesses that really need the funds. The government will be one step closer to rectifying its problem when these issues are addressed.