Government small business contracting down last year

By Joyce M. Rosenberg
AP Business Writer

The federal government gave a slightly smaller portion of its contracting dollars to small businesses in the fiscal year that ended Sept. 30, and also didn’t meet its goal for contracts with women-owned businesses.

The government surpassed its goal of giving 23 percent of overall contracting funds to small companies, but last fiscal year’s 24.34 percent was down from 25.75 percent in fiscal year 2015, according to figures provided by the Small Business Administration. The government awarded nearly $100 billion in small business contracts and subcontracts in fiscal 2016, up from $90.7 billion.

And while the government awarded more contracts and subcontracts in dollar terms to women-owned businesses — $19.67 billion versus $17.81 billion in 2015 — it failed to reach its 5 percent goal in fiscal 2016. Women-owned businesses received 4.79 percent of contracting money.

Congress set the 23 percent goal for small business contracts in 1997, and in recent years has passed bills aimed at making it easier for small companies to win contracts. Many contracts are too large for small companies to fulfill; in such cases, large companies are supposed to subcontract work to smaller businesses. Some lawmakers and small business advocacy groups have complained that the government and large companies don’t do a good enough job at ensuring that smaller companies get their fair share.

The Defense Department, the agency with the biggest contracting budget, surpassed its fiscal year 2016 goal of giving 21.26 percent of its money to small businesses, awarding 22.94 percent to small companies. The Department of Veterans Affairs, also one of the largest contracting agencies, fell short of its 32.5 percent goal, awarding 29.88 percent of its contracting dollars to small businesses.

Congress set a goal of 5 percent for contracts for women-owned business in 1994, but it wasn’t until fiscal year 2015 that the government reached that amount, awarding 5.05 percent.

Small businesses are finding that their customers, whether they’re consumers or other companies, have continually rising expectations for service and quality.