Agencies get 'D' in small business aid

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Originally published 10:03 p.m., September 30, 2004, updated 12:00 a.m., October 1, 2004

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Federal government agencies get a "D" when it comes to giving contracts to small businesses, according to a congressional report card.

The House Small Business Committee's Democratic staff yesterday released its fifth annual report on 22 federal agencies, rating them by how often they awarded prime contracts to small businesses.

The Department of Energy, National Aeronautics and Space Administration and the Small Business Administration, the federal agency for small businesses, were among the lowest scored, getting an "F."

Rep. Nydia M. Velazquez, a New York Democrat and ranking member of the committee, spearheaded the effort. Her group contacted 22 agencies, which provide up to 99 percent of all federal contracts, for their contract rate with small businesses.

Fourteen agencies replied with the numbers but eight of them said they did not have a way to track their procurement activity. For those agencies, the report estimated the goal percentage based upon samples from other agencies and data from the Federal Procurement Data System.

The report card concluded that no agency warranted an "A." Such a grade would be given for agencies that awarded 23 percent of its contracts to small businesses, 5 percent to small disadvantaged businesses, 3 percent to companies in economically distressed areas, and 5 percent to women-owned businesses.

More than half of the agencies in the report were given failing grades for not meeting federal goals for contracting with small companies, defined as having fewer than 500 employees or less than $6 million in annual sales.

Allegra McCullough, associate deputy administrator for SBA's office of government contracting, disputed the report, saying Mrs. Velazquez's team had not used the same procedures the SBA uses to figure out the federal government's procurement rate with small businesses.

Instead of failing, Ms. McCullough said the federal government had averaged above the requirement set by Congress. Under federal law the government must aim to award 23 percent of prime contracts to small businesses.

Sixty federal agencies had an average small-business contracting rate of 23.6 percent, she said.

However, individual agency scores have hit an all-time low this year, Mrs. Velazquez said on Capitol Hill yesterday. Missed contract opportunities cost small businesses $15 billion in the government's fiscal 2003 year, she said.

"Over the past year, we've seen unprecedented growth within the federal marketplace," up to $285 billion in its fiscal 2003, Mrs. Velazquez said. "It would only make sense that our nation's small businesses would secure more contracts but that unfortunately is not the case," she said.

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