Results

U.S. Senate Committee on Small Business and Entrepreneurship

06/12/2019 | Press release | Distributed by Public on 06/12/2019 18:28

Cardin Presses SBA on Steep Decline in Small Businesses Receiving Federal Contracts

(Washington, DC) - Senate Committee on Small Business & Entrepreneurship Ranking Member Ben Cardin (D-Md.) today called for increased small business participation in federal contracting citing a Bloomberg Government report that found that the number of small businesses with federal contracts in Fiscal Year 2018 was at a 10-year low, despite a steady rise in government contract spending over the same period. Cardin raised his concerns this afternoon during a Small Business Committee oversight hearing on the U.S. Small Business Administration's (SBA) contracting programs, including the 8(a) Business Development program, the Women-Owned Small Business program, the Service-Disabled Veteran-Owned Small Business program, and the Historically Underutilized Business Zones (HUBZones) program.

The report also found that small businesses are bearing the brunt of the federal government's shrinking vendor base, with federal agencies awarding contracts to 32 percent fewer small businesses in Fiscal Year 2018 than in Fiscal Year 2009. Meanwhile the number of large vendors receiving federal contracts fell by only 4 percent in the same period.

'This decline means that while contracts are getting bigger and bigger, we are creating an insular club where fewer and fewer businesses successfully compete for government contracts-creating a less competitive marketplace and reducing opportunities in the process,' Ranking Member Cardin said during his opening statement. 'That's contrary to what these set-asides and programs are all about, which is encouraging new small businesses that can bring innovation and job growth to our economy and help our nation.'

Federal contracting is a key industry in Maryland, where it accounts for 8 percent of the state's GDP and serves as a pathway to the middle class for thousands of working families.

'This trend is a cause of great concern in my home state of Maryland, where the federal government spent $33 billion in federal contracting dollars in Fiscal Year 2018, including $11 billion to small businesses,' Ranking Member Cardin continued. 'We want to create contracting where small, innovative businesses are encouraged, not shut out.'

Click here for a video of the hearing and click here for a video of Ranking Member Cardin's full opening statement, a transcript follows:

'Thank you very much, Mr. Chairman, I thank you for convening this hearing. This is our sixth hearing on the reauthorization of the Small Business Act.

'Today we will focus on the contracting programs within the SBA that help level the playing field for historically disadvantaged business owners. These programs include the 8(a) Business Development program, the Women-Owned Small Business program, the Service-Disabled, Veteran-Owned Small Business program, and the Historically Underutilized Business Zones program, also known as the HUBZone program.

'The motivation behind my commitment to ensuring a fair federal contracting process is two-fold:

'First, the federal government is the largest consumer of goods and services on the planet and federal contracting is a vital part of the economy in my home state of Maryland. In fact, federal government contracting spending accounts for 8 percent of Maryland's annual GDP and supports thousands of jobs that help lift families and bolster the middle class.

'Second, Congress passed the Small Business Act to ensure the, 'preservation and expansion' of opportunity for small businesses because doing so is, 'basic not only to the economic well-being but the security of our country.'

'Those words were true 65 years ago when the law was passed and it's even more true today.

'The Small Business Act sets a goal for the federal government to spend 23 percent of all contracting dollars with small businesses. While I am pleased that we are meeting this goal, I am troubled because the data shows that we have a shrinking base of contractors rather than an expanding base of contractors.

'A recent report by Bloomberg Government found that the number of federal contractors working on unclassified prime contracts is at a 10-year low despite a steady rise in government contract spending over the same period.

'This means that while contracts are getting bigger and bigger, we are creating an insular club with fewer and fewer businesses successfully competing for government contracts-creating a less competitive marketplace and reducing opportunities in the process. That's contrary to what these set-asides and programs are all about, which is encouraging new small businesses that can bring innovation and job growth to our economy and help our nation.

'This trend is being driven by the largest agencies. Since Fiscal Year '09, the number of companies working on contracts with the Department of Defense has declined by 24,000. Similarly, the General Services Administration has seen an 8,000-company decline while the Departments of Veterans Affairs and Interior have both contracted with 13,600 fewer companies. These are very troubling figures.

'Predictably, our nation's small businesses are bearing the brunt of this decline. According to the same Bloomberg report, the federal government did business with 32 percent fewer small vendors in Fiscal Year '18 than it did in Fiscal Year '09. For comparison, the number of large vendors fell by only 4 percent.

'This trend is a cause of great concern in my home state of Maryland, where the federal government spent $33 billion in federal contract dollars in Fiscal Year '18, including $11 billion to small businesses. We want to create contracting where small, innovative businesses are encouraged, not shut out.

'So today I am looking forward to speaking with our witnesses from SBA and GAO about how we can improve opportunities for our nation's small businesses to contract with the federal government.

'I am also looking forward to hearing from the small business owners here today about the support they need from the federal government to remain competitive and compete in the marketplace.

'I want to thank all of our witnesses for joining us and I am looking forward to hearing their testimony and innovative ideas for improving the SBA's contracting programs and the federal government's small business contracting procedures.

'Thank you, Mr. Chairman.'

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