The future of small businesses in the U.S. federal government marketplace
| Date | 01 March 2004 |
| DOI | https://doi.org/10.1108/JOPP-04-03-2004-B006 |
| Published date | 01 March 2004 |
| Pages | 450-470 |
| Author | Major Clark,Chad Moutray |
| Subject Matter | Public policy & environmental management,Politics,Public adminstration & management,Government,Economics,Public Finance/economics,Texation/public revenue |
JOURNAL OF PUBLIC PROCUREMENT, VOLUME 4, ISSUE 3, 450-470 2004
THE FUTURE OF SMALL BUSINESSES IN THE
U.S. FEDERAL GOVERNMENT MARKETPLACE
Major Clark, III and Chad Moutray*1
ABSTRACT. The federal government purchased goods and services valued at
approximately $100 billion from small businesses in FY 2003, which was up
from previous years. Moreover, in FY 2003, the federal government exceeded
its small business contracting goal of 23 percent. Despite such achievements,
implementation of the acquisition reforms enacted in the 1990s has limited small
businesses’ access to the federal procurement market. Federal agencies have, for
instance, not met their goals for women, minorities, or veterans, and contract
bundling and purchase cards may restrict small business opportunities.
Meanwhile, both judicial actions and a reduction in the number of acquisition
workers complicate matters. This paper discusses each of these issues and offers
five recommendations that, if fully implemented, should ensure a brighter future
for small businesses in the federal government marketplace.
INTRODUCTION
According to the United States Federal Procurement Data
System (FPDS), the federal government purchased goods and services
valued at $307.5 billion in fiscal year (FY) 2003. Contracts worth
approximately $100 billion flowed to small businesses in the form of
prime contracts or subcontracts from prime contractors.2 The number of
contracts to small firms has been growing, but obtaining federal contracts
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* Major Clark, III, J.D., is the Assistant Chief Counsel for the Office of
Advocacy of the U.S. Small Business Administration (SBA) specializing in
acquisition policy. Chad Moutray, Ph.D., is the Chief Economist for the Office
of Advocacy of the SBA. Prior to that, he served as the Dean for the School of
Business Administration at Robert Morris College in Chicago from 1997 to
2002.
Copyright © 2004 by PrAcademics Press
THE FUTURE OF SMALL BUSINESSES IN THE U.S. FEDERAL GOVERNMENT MARKETPLACE 451
is often a struggle for small businesses. They often find hurdles in their
way. Substantive reforms in the procurement process, often implemented
with the best of intentions, are another obstacle for small businesses in
their quest for a fair share of federal dollars.
This paper will explore some of the impacts the acquisition reforms
of the 1990s have had on the small business community in the United
States. This examination will utilize several research studies conducted
for the Office of Advocacy of the U.S. Small Business Administration
(SBA) and will discuss the impact of three specific changes in how the
government now conducts its procurement business. These are the SBA
Certificate of Competency Program, the acquisition work force re-
allocation, and the judicial/administrative redistribution of contract law.
Finally, this article will provide five recommendations that, if fully
implemented, should ensure a continuing future for small businesses in
the federal government marketplace.
SMALL BUSINESS IMPORTANCE
In 1953, Congress stated in the Small Business Act:
The essence of the American economic system of private
enterprise is free competition. Only through full and free
competition can free markets, free entry into business, and
opportunities for the expression and growth of personal initiative
and individual judgment be assured. The preservation and
expansion of such competition is basic not only to the economic
well being but to the security of this Nation. Such security and
well-being cannot be realized unless the actual and potential
capacity of small business is encouraged and developed. It is the
declared policy of the Congress that the Government should aid,
counsel, assist, and protect, insofar as is possible, the interests of
small business concerns in order to preserve free competitive
enterprise, to insure that a fair proportion of the total purchases
and contracts or subcontracts for property and services for the
Government…be placed with small business enterprises…
(Public Law 83-163 § 202).
Nearly 50 years later, President George W. Bush determined that,
while much progress had been made in fulfilling the policy articulated in
the Small Business Act, small firms were still encountering barriers to
full participation in the federal acquisition marketplace. Thus, on March
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