The House version of the fiscal 2013 National Defense Authorization Act (H.R. 4310) recommends raising the Small business goals to 25%. Sen. Ben Cardin (D-Md.), along with Sen. Mary Landrieu (D-La.), chairwoman of the Small Business and Entrepreneurship Committee, introduced the Small Business Goaling Act (S. 3213) on May 22. It would raise the annual prime contracting goal by 2 percentage points, from 23 percent of contract dollars spent with small businesses to 25 percent. It also would raise agency subcontracting goals for small businesses from 35.9 percent to 40 percent.
The bill would also put the onus of succeeding at the contracting goals on the senior executives at an agency. Evaluators would have to consider in their performance how they did in meeting the contracting goals. The goals would become another factor in evaluations, along with productivity, efficiency and meeting affirmative action goals.
However, a survey conducted by American Express in 2011 found that it was increasingly hard for Small Business to get a government contract. The survey found that Small Business are having to spend an estimated 21% more in 2011 to compete for a government contract and succeeding less. As the average total investment made in seeking federal contracts has risen over the past year, bidding activity has declined by nearly half – both in prime and subcontracting activity. The average success rates for active small business contracts in both prime and subcontracting have declined as well – pointing to a more competitive and tighter environment.
Small business bring a number of advantages to the Government including lower overhead, more flexibility with ever changing requirements and increased innovation. As the saying goes, “A smaller ship is easier to turn.” Also Small Business usually have fewer clients and therefore are more dedicated to the contract mission as they have more to lose if they fail.
Despite these advantages, the survey found that it took active small business contractors an average of 4.4 bids before they won their very first contract. Average success rates are significantly higher among those companies with 10 or more years of contracting experience under their belts (53%) compared to those who have been seeking federal contracts for three years or less (20%). With federal procurement acquisitions timelines averaging 18 to 24 months, that makes it really hard for companies to break into the federal market.