Small business office breaks record

Published Nov. 15, 2009

Small business is big business, and this year it’s been very big for the Louisville District.

The district awarded $494 million to small businesses for fiscal year 2009, breaking the district’s in-house record. The district set out to award 32 percent of all contracts to small businesses, but it awarded 34 percent.

The new record wouldn’t have been possible had it not been for the Department of Defense’s reinstatement of small business set-asides under the Small Business Competitiveness Demonstration Program. Reinstitution of small business set-asides is limited to federal agencies that failed to meet small business goals.

Instead of setting aside certain business areas—cleaning services for example—for small businesses, the SBCDP opened all areas to small business. But, the SBCDP opened up all areas to large businesses, as well. The smaller businesses weren’t able to gain ground in their non-niche areas, but larger businesses were able to expand into those
businesses normally set aside for small businesses.

As a result, DoD fell short of its small business contract award goals last year, and that’s why it decided to reinstate the small business set-asides, according to Louisville District Small Business Deputy Linda Hunt-Smith.

“For several years, DoD was working within the guidelines of a demo plan that didn’t give any advantage to small business competing for Corps jobs,” said Hunt-Smith. “While not distinguishing between the two may seem fair, that approach doesn’t take reality into consideration.”

Hunt-Smith said that DoD uses the SBCDP during years when the agency is meeting its small business contract award goals. However, DoD will reinstate the set-asides program if small business goals aren’t being met.

Under the normal program, agencies are required to “set aside” contracts for small businesses if at least two responsible small businesses meet certain market criteria.

“If a market survey comes back and tells us that we have qualified small business contractors in any subcategory of small businesses, then we’ll set that project aside for small business,” said Hunt-Smith. “The market surveys are key to determining if a project is going to be set aside for small businesses.”

Why do large businesses have a competitive advantage over smaller businesses?
Every year, Hunt-Smith advocates for all small businesses by assuring that they are afforded an equal opportunity to receive their fair share of contract dollars. Small businesses can be either prime contractors or subcontractors. A business is classified as small based on either its size standard--number of employees--or annual gross receipts, depending on the types of services or supplies it provides. The size standards are determined by the Small Business Administration.

Larger businesses do have a competitive advantage, according to Hunt-Smith. For example, when a larger business solicits bids from a subcontractor, the subcontractor will give the larger business smaller quotes than what they will give smaller businesses. The subcontractor believes that since it’s working with a larger business, the subcontractor will have fewer issues.

“It shouldn’t matter if the prime contractor is large or small, but we know it happens,” Hunt-Smith said.

Small business impact anything but small
America’s small business sector has solidified its role as the nation’s “job factory,” said Louisville area Small Business Association spokesman Steve Ayers. They have generated 70 percent of new jobs in the last decade, represent 99 percent of all employer firms, employ more than half of all private sector employees, pay 44 percent of the nation’s private payroll, hire 40 percent of high tech workers, and produce 13 times more patents per employee than large patenting firms.

While Ayers does work to level the playing field for small businesses, there is a bit of irony in his mission.

“We want to maintain a platform where small firms can grow up to be large firms,” he explained. “On the other side of the coin, large firms in local communities do create several tiers of opportunity for the small business sector as suppliers of products and services. However, it is the best of all worlds when a small firm grows up to be a large firm in a local community.”

Corps commitment
The Corps is so committed to its support of small business, that Hunt-Smith regularly hits the road to educate small business representatives on the necessary procedures for contracting with the federal government. The Louisville District also hosts it own annual event that draws about 300 guests on average.