Small Business Report leaves questions

An article at points out that the Small Business Administration may have overstated the percentage of federal contracts going to small businesses in a recently released report.

An Aug. 25 SBA report states that the government awarded small businesses $69.2 billion worth of prime contracts in fiscal 2004, just more than the minimum 23 percent statutory requirement.

However it is believed that this number is inaccurate because it does not take into account all awards including contracts awarded outside the United States and those that agencies such as the Transportation Security Administration and the U.S. Postal Service funded. These concerns are valid because the SBA notes that there is a “margin” or error in the reporting used to generate these numbers. The agency’s report marks the first time that SBA has used the Federal Procurement Data System-Next Generation (FPDS-NG) as the source for the small-business report.

Critics complain that the revamped federal database contains errors. The SBA report states that transitioning to FPDS-NG has created some data challenges, but the business impact of most of those challenges is minimal.

This leaves the question of what is considered “minimal”? And how will these discrepancies be corrected for future reporting? Unfortunately according to this account

An agency document states that as a matter of policy, SBA measures small-business wins using a baseline that includes contracts funded with appropriations covered by the Federal Acquisition Regulation. “We anticipate following the same procedure when we next update the goaling guidelines,” Raul Cisneros, an SBA spokesman Cisneros added.

It appears that in this case, close is good enough, but is that true? The Small Business Administration negotiates with each agency to determine how much money should be spent with small companies. SBA is responsible for regulating compliance with government-wide goals. If they set these goals, and they are monitoring these goals, shouldn’t the reporting be as accurate as possible? The overall goals established by SBA for the agencies to award are:

  • 23 percent of prime contracts to small businesses.
  • 5 percent of prime and subcontracts to small disadvantaged businesses.
  • 5 percent of prime and subcontracts to woman-owned small businesses.
  • 3 percent of prime contracts to HUBZone small businesses.
  • 3 percent of prime and subcontracts to small businesses owned by service-disabled veterans.

Why is any margin of discrepancy acceptable when we are discussing small business retaining its fair share of the pie? Would any margin of discrepancy be tolerated if this was a report for big business’? How can small businesses change this and make sure that the reporting numbers are accurate and that a true representation of what the agencies are spending with small business is reported?