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As Biden administration pushes big spending, small businesses fear ‘missing out’


After a decade of chasing federal contracts, small business owner Rosemary Swierk knows they’re not worth all the time, energy, and money – sometimes five digits – it takes to bid.

“There are some projects that we know of: it’s just not worth it,” Swierk said. “The federal government has unwittingly crippled small businesses in a number of ways. “

His company, Direct Steel and Construction, got its foot in the door with federal contracts about a decade ago during the last recession as a subcontractor after reaching out to a full list of 660 Department of Justice contractors. Defense.

“It’s an extremely difficult process for anyone to get their foot in the door,” she said.

As the Biden administration proposes billions in new spending In the wake of the coronavirus pandemic, small businesses fear they will miss the opportunity to participate in the work, even as the administration emphasizes increasing the number of businesses.

The federal government spent nearly $ 600 billion on contracts alone in fiscal 2019 on everything from building operations and maintenance to IT and power. As part of this, 23% of federal procurement funds must go to small businesses.

“That’s a lot of money, and it only gets higher as the government spends more on purchases,” said Dane Stangler of the Bipartisan Policy Center. “It contributes to economic development and local economic development.

While the government tends to hit its goal of small businesses each year, more of that money goes to fewer businesses: the number of small businesses participating in federal contracts has fallen 38% over the past year. decade, found the Bipartisan Policy Center.

Small business owners overwhelmingly support growing opportunities through federal, state and local processes. But 88% of small business owners support changes to the federal procurement process to ensure they can receive more federal contracts, according to a new survey from Goldman Sachs, which found that small businesses are asking for more often. state and local contracts as federal contracts.

“When we asked only the population of companies that have only done state or local work, would you be interested in applying for federal work? The good news is that 75% say yes,” Joe Wall , which oversees the bank’s education and small business initiative. “So there is a real pipeline in a variety of industries that are very interested in applying for federal work, and I think if the procurement system were reformed to make it simpler, to make it more transparent, to To make it more accessible, there are entire populations that could be brought into the federal contractual space.

Among small business owners who requested state and local contracts but not federal contracts, 54% said the federal procurement process was taking too long, 42% said they did not have enough information about opportunities, 42% said the process was too complicated, 41% said small businesses are not prioritized enough so winning a contract seemed unlikely, and 31% called the procurement process federal too expensive, according to the survey.

“[No one] wants the government to devote our tax dollars to underground operations, so these processes are in place for a reason, ”Stangler said. “However, if we prioritize small businesses in our contracting process, there is an interest in taxpayers in wanting to ensure that these processes are as streamlined and efficient as possible.”

Even among those who had applied for federal contracts, only 51% said they felt able to access necessary information about open federal contracts – meaning almost half don’t think they know potential work.

“There’s a lot of discovery time just to find where we are,” said Ben Johnson, CEO of Freya Systems. His software and data analytics company submitted six proposals in about two years. While none were successful, Johnson is hoping for more constructive feedback in the future.

“I am convinced that we can do great things for the government, but the existing framework and transparency is a bit of a challenge,” he said.

While there are opportunities for small businesses to be sub-contractors on federal prime contracts, the survey found that small businesses fear being dropped as sub-contractors on projects after award. contracts. Of those who had requested federal contracts, 58% said it was a significant problem.

“The challenge that small businesses face, especially on infrastructure related contracts, the government uses a lot of large companies because of the size of the contracts. They don’t trust small companies to be able to do it, so they assign to a few bigger ones, and they expect those big companies to then outsource to small ones. [ones]”Said Reena Bhatia, whose company Proposal Helper works with companies to secure government contracts.” Well, that’s a very dirty game. ”

Bhatia said there are regulations, but that doesn’t guarantee that small businesses will get the money they expect.

But the Biden administration wants to extend federal contracts to small businesses. Earlier this month, the president announced plans to increase federal contracts with disadvantaged small businesses by 50% as part of an effort to close the racial wealth gap.

“Just imagine if, instead of denying millions of entrepreneurs the opportunity to access capital and contracting, we were to make their dreams come true in the marketplace to create jobs and invest in our communities,” President Joe Biden said on June 1 in Tulsa.

Small business administrator Isabelle Guzman also said contracting programs would be a priority under her leadership.

Swierk hopes there will be more and fairer opportunities in the future that have reasonable requirements for small business participation.

“I think if there is a real intention to help small businesses,” she said, “it’s really important that these decision makers understand how difficult it is to be a federal government entrepreneur. “

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