Small Business Federal Contracts Key to Job Growth

Washington, DC (PRESS RELEASE – March 29, 2010) — Even as federal spending has climbed over the past decade, many small firms struggle to win their fair share of federal contracts, entrepreneurs told a Congressional panel today. Lawmakers on the House Committee on Small Business said expanding contracting opportunities for small businesses offers an important opportunity to spur growth and foster job creation in local communities.

“When large corporations win federal contracts, their existing workforces take on the project, but, when small firms get the work, they hire people,” Rep. Nydia M. Velazquez (D-NY), the Chairwoman of the House Committee on Small Business, said. “Making the contracting system work for entrepreneurs is not just a small business priority, it is a jobs issue.”

With spending reaching $528 billion in fiscal year 2009, the federal government is one of the world’s largest consumers of goods and services. Although the law sets specific small business contracting goals for agencies and empowers the Small Business Administration (SBA) to assist small firms, audits continue to find small businesses are locked out of the federal marketplace.

“Last year, federal agencies missed their small business contracting goals by $10 billion,” Velazquez noted. “If that $10 billion went to small firms, they could use those funds to expand their operations and bring on new employees.”

Witnesses at today’s hearing described a procurement system full of complex obstacles that often block small businesses from winning their fair share of contracts. They identified practices like smaller contracts being “bundled” together, so that only large corporations can compete for them. Witnesses also said that, because the acquisition force is stretched thin, many agencies are not proactively helping small firms compete for federal projects.

“For small firms trying to navigate this process, it would be hard not to conclude that the procurement system is broken,” Velazquez noted. “It is time to ensure federal agencies start living up to their small business contracting obligations and allow entrepreneurs to win their share of federal work.”

The House Committee on Small Business has been aggressively pushing for greater SBA oversight of small business contracting programs, especially in the wake of investigations revealing widespread fraud in the HUBZone and Service-Disabled Veteran-Owned Small Business programs. The Committee was the first to identify the problem of large companies gaming the system to win contracts meant for small firms. Under Velazquez’s leadership, the Committee has also issued a series of reports examining problems in the federal marketplace.

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