What Happened to the Small Business Share of the Federal Pie?

Depending on how you look at it, the government missed its small-business contracting goal by a little, or a whole lot.

The government came out with its reckoning of small-business contracts this week and put the value of contracts awarded to small businesses at $93.3 billion in 2008, up $10 billion from 2007, and a record for such contracts. But that number still fell short of the Congressional mandate that 23 percent of government contracts go to small business. Only 21 percent of contracts went to small business, according to the government’s estimate.

Those are the government’s numbers.

But if you listen to advocacy group American Small Business League, the government shortchanged small business by a lot more than 2 percent.

The ASBL says the number’s more like 7 percent of government contracts going to small business. The group points out that since 2003, federal investigations have found that officials regularly cook the books when it comes to reporting small-business contracting, and 2008 was no exception.

The government, the ASBL claims, excludes large contracts as not being “small-business eligible,” taking a big chunk of government contracting out of the accounting for small-business contracts. The group also says some of the firms that made it into the government’s list of small businesses included Lockheed-Martin, Northrop-Grumman, Boeing, and Raytheon. Those are some thriving small businesses, all right.

After analyzing contracting data since 2000, ASBL claims small businesses have lost an average of $100 billion a year in contracts that should have gone to them.