U.S. small businesses serve as a catalyst for economic development, provide employment and drive new ideas and innovations. To nurture their important role in the economy, the U.S. government has established programs and annual small business contracting goals for prime and subcontract dollars. The intent is to ensure that small business have opportunities to fulfill the public policy objectives of the Federal Acquisition Regulation and to give federal government customers access to a source of innovative products and services. Explicit and implicit in the desired outcomes for these programs is for small businesses to compete effectively by maximizing their participation and by enabling them to grow through diversification of the goods and services they provide and expansion into the nongovernmental marketplace.
Over time, the success of small business programs has eroded due to a number of factors.
- Because of budget cuts in recent years, there are simply fewer dollars to go around, an effect felt throughout the supply chain.
- The challenges of doing business with the government, whether the high regulatory compliance costs or its slow and complex acquisition and procurement practices, have a magnified impact on small businesses.
- Recent small business contracting policies have confused small business participation with small business opportunities, weighing prime contracting goals too heavily over objectives of small business contracting programs and leading to unintended consequences.
- The implementation of service and IT contract portfolio-management initiatives, if not done fairly, threaten to create winners and losers in the small business community based on non-performance factors, and more broadly the commoditization of these portfolios may threaten certain small businesses.
Lawmakers must take a more comprehensive, strategic approach to the myriad of small business contracting programs to ensure they are clearly defined, coalesce with one another, properly promote the optimal role for small businesses within the industrial base, and are advancing their intended outcomes.