By Brian Neill
May 16, 2007
Small business seeks fair share: Proposed federal law offers bigger slice of contracts, but owners wary of details
The aim of a proposed law now before Congress is to help small businesses procure government contracts.
But critics of House Resolution 1873, which has reached the Senate, say the measure could actually wind up hurting small businesses' chances of getting a piece of the action.
How the measure, if passed, might affect local small businesses remains to be seen.
Peter Straw, who heads the Sarasota/Manatee Area Manufacturers Association, representing about 600 local manufacturers, said he believes there are more pressing issues, such as regulatory mandates and competition with companies outsourcing their operations, facing area small businesses.
The proposed Small Business Fairness in Contract Act would increase the government's small business procurement goal from 23 percent to 30 percent, which most small business advocates agree is a good thing.
But it would fail to require small businesses to recertify themselves as large companies for up to five years after being acquired by a major corporation.
That would give them an unfair advantage over other small businesses benefitting from the higher procurement standards but lacking the bidding advantage of a large corporation behind them, said Lloyd Chapman, president of the American Small Business League, based in California.
Chapman said the certification should be required annually.
"If nobody in the Senate adds on the annual certification for all firms, when this passes Florida small businesses will lose billions of dollars," Chapman said. "If this bill passes, small businesses in Florida will have to compete head to head with large businesses for at least five years."
U.S. Rep. Vern Buchanan, R-Sarasota, who co-sponsored the bill that passed the House on May 10, agreed that the measure falls short of assuring that small businesses get their fair share of federal contracts.
"The bill is an improvement over current law, but it does not do enough to prevent large corporations from receiving small business contracts," Buchanan said in a statement released by his press secretary. "I will continue to work for stronger reforms and expand opportunities for small businesses to compete for federal contracts."
Chapman's group found that dozens of Fortune 500 companies have received billions of dollars in small business contracts because they failed to recertify the small businesses they acquired over the years.
That means that Florida small businesses, and those throughout the country, could lose out on government contracts, he said.
About 98 percent of all businesses in Florida have fewer than 100 employees, Chapman said, citing United States Census data.
The Small Business Administration classifies small businesses as those that range in size from 100 to 1,500 employees, depending on industry. There are also income limitations that vary by industry.
Straw, of the Sarasota/Manatee Area Manufacturers Association, said about 80 percent of the 600 local manufacturers his association represents have fewer than 100 workers.
"Eighty percent or more of the manufacturing that is done in the state of Florida is done by companies with less than 20 employees," Straw said. "That's an astounding fact."
However, Straw said he feels the issue of certification posed by Chapman's organization is moot for many local manufacturers who have gained a solid footing in the business of government contracts.
Those companies range from Gyrocam, a company located at the Sarasota-Bradenton International Airport that manufactures rotational surveillance cameras, to MadahCom, Inc., a Sarasota company that specializes in mass notification systems used by the military and at ports and borders.
Some of those types of businesses in the area have been acquired by larger corporations.
Straw suggested that the success of such businesses depends on them doing things right rather than a certification requirement.
"It's almost a moot point for our guys," Straw said. "If they were targeted to be bought that just shows they've done things right. I can think of half a dozen (small businesses) right in this area that are doing government contracts."
Rather, Straw said he believes industry regulation and outsourcing by large corporations are more crucial issues facing small businesses today.
"Our biggest concern is that we have a level playing field to operate on," Straw said. "I think those (issues) are a higher concern to my vendors than this particular issue of government contracts."