Closing In on Government Contracts

The federal government is getting closer to meeting its goal of awarding at least 23 percent of its contracting dollars to small businesses, but it’s not there yet.

That’s the word today from Karen Mills, head of the Small Business Administration, who delivered the keynote address for National Small Business Week.

Contracting “is the single biggest way the federal government directly supports small businesses,” Mills said.

Small firms win about $100 billion a year in contracts through the federal government. That number would be larger if the government met the 23 percent small-business goal set by Congress. The actual percentage of contracting dollars that went to small businesses increased from 21.5 percent in 2008 to 21.9 percent in 2009. Numbers for 2010 have not been released yet, but it “looks good,” Mills said.

Every percentage point gain in small businesses’ share of federal contracts represents $4 billion in additional revenue for small firms, she said.

The last time the federal government met its small-business contracting goal was during President George W. Bush’s administration. A close examination of those numbers, however, revealed numerous cases in which contracts that went to large businesses were erroneously counted as small-business contracts.

The SBA and federal agencies have been working to clean up those numbers to get a more accurate account. Hitting that 23 percent goal without cooking the books is a top priority for the SBA. Reaching the goal is good for taxpayers and for small businesses, Mills said.

“Firms like yours get the oxygen to scale up and create good jobs here at home,” Mills told the small businesses gathered for National Small Business Week’s procurement awards breakfast. “At the same time, the federal government taps into the most nimble, dynamic, and innovative firms in America—often with a direct line to the CEO.”

As an example of the progress being made on the procurement front, Mills noted that more than 30 percent of contracts awarded with economic stimulus funds went to small businesses. The SBA finally implemented a program to set aside federal contracts for women-owned businesses in 83 industries in which they have been under-represented in procurement.

Congress created the program in 2000, but the Bush administration never implemented it. About 3,000 women-owned businesses have submitted documents certifying their eligibility for the program, Mills said.

After Mills spoke, the SBA handed out its awards. Innoventor Inc. of St. Louis won Small Business Prime Contractor of the Year.

The engineering firm was founded in Kent Schien’s basement in 1996. Now it’s the prime contractor for a cesium-based clock that regulates secondary clocks in complicated systems for the Air Force’s E-RB Advanced Airborne Command Post.

During the breakfast, Raytheon’s logo flashed on the screen behind the podium, along with SBA’s logo. That’s because Raytheon sponsored the event.

Raytheon, of course, is a big business, not a small business, but its sponsorship was appropriate because large government contractors like Raytheon subcontract billions of dollars of work each year to small businesses.

The SBA recognized the importance of subcontractors in government procurement by naming a Small Business Subcontractor of the Year. The winner was J&P Khamken Industries Inc. of Montgomery, Alabama. The company was founded by two brothers from Laos who moved to the United States at the end of the Vietnam War. The company manufactures aircraft components and other products for the defense industry and has worked as a subcontractor for companies ranging from Lockheed Martin to Raytheon Missile Systems.

The SBA also honored four large government contractors that have excelled in using small businesses as suppliers and subcontractors: Watts Constructors of Honolulu; Babcock & Wilcox Technical Services Pantex of Amarillo, Texas; SAIC of McLean, Virginia; and AMEC Earth and Environment Inc. of Plymouth Meeting, Pennsylvania.

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Kent Hoover is the Washington bureau chief for bizjournals.