Congressman Bill Owens introduced legislation this week to ensure that federal agencies provide more work for small businesses, allowing them to hire and expand in New York. There is a congressionally mandated goal that 23 percent of all annual federal contracts are awarded to small businesses, but that goal is regularly ignored. H.R. 3779, the Small Business Growth and Federal Accountability Act, would decrease an agency's procurement budget by 10 percent each year it fails to meet its small business contracting goals.
"Small businesses are a major driver of economic development, so it is critical that federal agencies be held accountable for giving New York entrepreneurs the tools they need to create jobs and grow the economy," said Owens. "This legislation will do just that and ensure that Washington lives up to its promise to foster an environment of success for small businesses. When federal agencies fail to meet their small business goals, I call on the Appropriations Committee to direct the savings from their reduced budgets towards paying down the federal debt."
Congress set a goal in 1997 that 23 percent of all federal contracts would be awarded to small businesses. While each federal agency is permitted to set its own small business procurement goals in consultation with the Small Business Administration (SBA), the sum of all agencies' goals must add up to 23 percent. However, federal agencies typically fail to meet their small business contracting goals and there are currently no penalties for these shortfalls.
According to House rules, discretionary spending is provided for through the annual appropriations process. Under House Rule X, the Appropriations Committee is responsible for directing the rescissions of appropriations or transfers of unspent balances from federal agencies. H.R. 3779 would allow the opportunity for the Appropriations Committee to direct additional funds to pay down annual deficits.
The Government Accountability Office (GAO) and SBA Office of Inspector General both issued reports in 2010 noting that many small business contracts are actually going to larger corporations either because a company misrepresents itself or the small business grows or is acquired and the agency fails to take note of those changes.
The Small Business Growth and Federal Accountability Act would also require federal agencies to give preference to small business when awarding contracts. The SBA generally defines a small business as ranging from a maximum of 500 to 1,500 employees, depending on the industry and type of product manufactured, which is in turn independently owned and operated.