Small business owners air contracting frustrations

Small business owners and advocates told members of the Obama administration on Monday that it must quickly break down barriers to contracting opportunities.

At a jam-packed public meeting in the Commerce Department auditorium, dozens of small business contractors expressed frustration with a system they claim is geared unfairly to large companies.

Entrepreneurs from across the country told officials from Commerce, the Office of Management and Budget, and Small Business Administration that they are losing out on opportunities because of contract bundling, poorly enforced acquisition rules and awards diverted to large companies.

The three agencies co-chair the Interagency Task Force on Federal Contracting Opportunities for Small Businesses, which President Obama created in late April.

The task force has been charged with expanding outreach to small firms and helping agencies meet and exceed the federal statutory goal of awarding 23 percent of all contract dollars to small business. The group must submit recommendations to the White House by the end of August.

For more than three hours, dozens of visibly frustrated small business owners criticized the federal acquisition process. They lashed out at agencies that package small contracts together and awarded them to large firms; others criticized delays in implementing a women-owned small business program or alleged inequities that allow Alaska Native contractors to dominate the small business marketplace.

The administration's top contracting official said the panel was prepared to listen, and possibly implement, some of the audience's ideas. "The president is committed to making sure that small businesses get their fair share of federal contracting opportunities," said Dan Gordon, administrator of OMB's Office of Federal Procurement Policy."

Members of the public offered detailed recommendations for the panel, including raising the revenue threshold for remaining in the SBA's 8(a) business development program and increasing information technology opportunities for Historically Underutilized Business Zone contractors.

Guy Timberlake, president of the American Small Business Coalition, a Maryland-based trade association, called for the simplified acquisition threshold to be increased from $100,000 to $500,000.

Others called on the administration to radically shift its policy proposals.

John Palatiello, president of the Business Coalition for Fair Competition, an industry advocacy group, asked OMB to withdraw its inherently governmental policy proposal and to immediately halt its insourcing initiative. "Let's make the pie larger for small businesses," Palatiello said.

Participants also cited what they saw as the lack of enforcement and oversight of small business set-asides, alleging fraud, waste and abuse in the programs, including contracts unfairly awarded to large firms masquerading as small businesses.

"Fortune 500 companies should not be getting small business contracts," said Lloyd Chapman, president of the American Small Business League, a trade association.

Another source of angst for both industry and government officials is the ongoing parity dispute among the small business set-aside programs. Last year, the Government Accountability Office ruled that HUBZone firms, based on some technical language in their statute, were legally at the top of the small business pecking order. The Court of Federal Claims affirmed the decision, but the administration is appealing it.

Gordon told the audience, which was packed with HUBZone, 8(a) and service-disabled veteran-owned small businesses, that Congress was moving in the coming days to finalize legislation to restore parity to the programs.

Those who were unable to attend Monday's meeting can e-mail their comments to the task force by June 30.

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