More than 80 percent of America’s smallest companies do little or no business with the federal government, and those owned by women and minorities fare particularly poorly in that regard, according to data released by the U.S. Chamber of Commerce.
The report, which was released Thursday at a Chamber-sponsored small business summit in the District, found that the majority of small businesses get less than 10 percent of their revenues from federal contracts. As the single largest customer in the world, the federal government buys about $200 billion in goods and services every year. By comparison, FedEx — a Fortune 100 company — spent about $1 billion on contracts last year, excluding its fleet of airplanes.
Women- and minority-owned businesses find it especiallydifficult to access federal contracting opportunities, the survey found, with 48 percent of respondents citing either lack of awareness or lack of understanding of federal contracts as reasons they don’t pursue federal contracting opportunities.
“This is bothersome information,” said Rita Perlman, executive director of the Chamber’s Access America program, in light of the fact that women- and minority-owned businesses are growing faster than the national average.
Federal agencies are supposed to reserve 23 percent of their procurement dollars for small businesses. That figure includes 5 percent for women-owned small businesses and 3 percent to service-disabled veterans.
But according to the American Small Business League, the government isn’t meeting its goals. Federal procurement dollars increased 7 percent in 2002 — the most recent data available — but in the same year, the number of contracts awarded to small businesses dropped 14 percent.
The League attributes this drop to contract “bundling,” or the practice of combining several agencies’ contracts. Bundling often makes a contract too big for a small business to service.
Only 5 percent of respondents to the Chamber’s survey, however, said large contracts were an issue. Instead, the survey indicated the problem was business owners’ lack of preparedness or understanding in the often-cumbersome world of federal contracting.
“Things that seem logical in the commercial world do not hold true in the federal world,” said Ralph C. Thomas, a lawyer with Buchanan Ingersoll’s government contracts section.
Thomas said business owners new to federal contracting often don’t know how to work through the system and don’t have enough patience to land contracts, which can sometimes take several years.
“They don’t understand why everything falls the way it falls,” he said. “You have to understand the system so you knowhow to market.”
Federal contracting roadblocks
Small-business owners gave six primary reasons for not pursuing federal contracts:
» 29 percent say it’s difficult to learn about contracting opportunities.
» 19 percent say they are not familiar with the contracting process.
» 15 percent say they lack contacts in federal agencies.
» 5 percent say the contracts are too large.
» 5 percent say they are leery of going into an unknown market.
» 27 percent say they are not interested in federal contracting.
Source: U.S. Chamber of Commerce’s Women and Minority Outreach Initiative
