By Jerry Chautin
September 26, 2011
The U.S. Small Business Administration's loan guarantee programs give lenders a bit more comfort to approve borderline applicants they would reject conventionally.
The federal agency also makes disaster loans, promotes exports and facilitates congressional legislation meant to direct 23 percent of federal contracts to small businesses.
But the contracting program has been fraught with controversy, missed goals and even lawsuits claiming that contracts have been awarded to ineligible "large" corporations posing as "small."
According to news reports, Lloyd Chapman, founder of the American Small Business League, has sued SBA several times claiming that corporate giants such as Halliburton, Boeing, Rolls Royce and Lockheed-Martin have managed to masquerade as small businesses, as defined by SBA online at tinyurl.com/5uyly6q.
In my opinion, however, the government's procurement officers prefer to do business with large, stable, financially solvent and, most of all, proven corporations. If I am correct, Congress' politically motivated requirement to move 23 percent of federal contracts to small businesses is meeting with resistance from federal agencies.
Congress recently passed legislation for 5 percent of the 23 percent, or $6.5 billion this year, to be set aside for women-owned businesses. But on Sept. 9, the Washington Business Journal said that, altogether, women-owned businesses got a mere $500,000 divvied up by "only a handful of set-aside contracts."
The weekly newspaper wrote, "About 6,500 women-owned businesses are registered or in the process of registering for the program." It profiled the disappointment of Tina Young, a Maryland-based small-business owner. "There was so much hype at the onset of the program, but then very little came of it," she said.
I asked Marla Hough, a Bradenton-based professional engineer and small-business owner, if she intends to become certified as a "women-owned business" and vie for federal government set-aside contracts.
"I haven't really looked into the amount of paperwork and effort required," she said.
She formed her award-winning Hough Engineering 14 years ago and got her small business certified in several set-aside categories that have not met her expectations. "A lot of money gets spent without getting the intended results," she said.
Hough has better results getting contracts from state and municipal entities than from the federal government. She landed primary and subcontracts from Manatee and Sarasota county governments, for example.
SBA acknowledges that getting certified for its small-business set-aside programs, and complying with its registration requirements is not enough. They urge small-business owners to market their capabilities to decision makers.
Successful business owners make extensive, face-to-face sales calls on procurement officers inside the Washington, D.C., Beltway. That is why companies there are more apt to land federal contracts. Others hire beltway-based representatives to pitch their products and services.
According to the SBA, military and civilian purchases total more than $425 billion per year. Find out how to get your share at tinyurl.com/3vg6k3c.
But Hough wants less government in the procurement process. "If I were in charge, I would privatize, privatize, privatize," she said.