Today to help mark National Small Business Week, U.S. Rep. Gary Peters announced that he will introduce legislation to help our local small businesses grow and create more jobs. Peters' bill, the Small Business Contracting Opportunities Expansion Act of 2012, would immediately increase the government's small business contracting goal from 23% to 25%, and later to 27%. This bill would also call for a 20% increase in government contracting for minority owned small businesses, that's about $5.5 billion per year.
This announcement came during a Small Business Week press conference today at Future Help Designs, a local small business located in the Waterman building in Pontiac. Peters was joined at the event by Moses Olaniran of MWP Imaging Company, Glen Konopaskie, President of the Pontiac Downtown Business Association and Co-founder of Future Help Designs, and Kevin McCormick of the Michigan Black Chamber of Commerce's Pontiac Chapter.
"Small businesses are the engine that's driving our economic recovery, that's why I'm working to direct more government contracts toward our local small businesses," said U.S. Rep. Gary Peters. "Because two thirds of all new jobs are created by small businesses, I'm introducing a bill to increase the government's small business contracting goal to give entrepreneurs the opportunity to compete and succeed. By investing in American innovation and ingenuity, we'll grow our local economy and build a stable economic future for our region. And, by increasing government contracts for minority owned small businesses by 20%, we'll make sure that everyone has a fair chance to succeed."
"As a small government contractor here in Pontiac, directing more contracts toward businesses like mine would help me create more jobs," said Moses Olaniran, President of MWP Imaging Company, an SBA certified minority owned business in Pontiac. "By increasing the minority owned small business contracting goal by 20%, Congressman Peters is fighting to deliver billions of dollars worth of new economic development opportunities to communities like ours."
"Gary Peters has a long record of fighting to help small businesses succeed, and we are excited that he is working hard to create opportunities for minority businesses in our area," said Kevin McCormick, President of the Pontiac Black Chamber of Commerce. "Peters' proposal to increase government contracting to minority-owned businesses would help local entrepreneurs become job creators and provide much needed, stable employment to fellow citizens in our community."
"As a small business owner, I'm always looking for new opportunities and ways to grow our company," said Glen Konopaskie, Co-founder of Future Help Designs and President of the Pontiac Downtown Business Association & Main Street Program. "Congressman Peters' proposal to steer a higher percentage of government contracts toward small businesses like ours would give us a new way to earn more business, grow our company and create new jobs."
Rep. Peters currently serves on the House Small Business and Financial Services Committees where he has worked with President Obama to expand lending to small businesses.
BACKGROUND ON THE IMPORTANCE OF SMALL BUSINESS GOVERNMENT CONTRACTING
Significant portion of federal budget spent on procurement: The federal government spends nearly $540 billion in contracting for goods and services every year, with a goal of awarding 23% of prime contract dollars to small businesses. The federal government awarded $97.9 billion in prime contracts to small businesses in 2010.
Contracting goals for targeted groups: The federal government sets contracting goals for small businesses owned by members of specific groups. This includes $17.4 billion to women owned small businesses, $34.4 billion to small disadvantaged businesses (SDBs), $10.8 billion to service disabled veteran owned small business, and $12.0 billion to small businesses in HUBZones.
Chance to directly invest in small businesses, save taxpayer dollars and create jobs: Government contracting provides a critical opportunity to invest in small businesses and boost our economy. Small businesses create two out of every three new jobs, and they have shown that they can fulfill government contracts cheaper and often quicker than larger contractors.
WHO QUALIFIES AS A SMALL BUSINESS AND AS A SMALL DISADVANTAGED BUSINESS (SDB)
Size standards: The Small Business Administration has significant discretion as to what firms qualify for small businesses, but they must be "independently owned and operated." Small businesses are generally defined by the government as having fewer than 500 employees or less than $7 million in average annual sales.
Socially and economically disadvantaged small businesses (SDBs): Economic disadvantage is determined by personal net worth and statements submitted to the SBA. Social disadvantage includes a broad array of groups including: Black Americans; Hispanic Americans; Native Americans; Asian Pacific Americans and members of other groups designated by SBA.
RECENT DECLINE IN MINORITY CONTRACTS
First drop in a decade: U.S. government contracts to Black-and Hispanic-owned small businesses fell in FY 2011 for the first time in a decade, declining at a sharper rate than awards to all companies. Contracts to the Black-owned firms dropped 8% and Hispanic-owned businesses decreased 7% compared to 2010.
Disproportionate impact: Contracts to the these two groups fell at a significantly faster pace than all contracts, which dipped 1% as the U.S. government slowed spending to help reduce the federal deficit.
REP. PETERS' SMALL BUSINESS CONTRACTING OPPORTUNITIES EXPANSION ACT OF 2012
Immediate increase in SDB goal: This legislation would immediately increase the SDB government-wide contracting goal from 5.0% to 6.0%, a 20% increase that represents $5.5 billion in contracts. It would also immediately increase the government-wide contracting goal for all small businesses from 23% to 25%, providing an additional $11 billion in contracts.
Backslide prevention: Some agencies are significantly exceeding the government-wide goal that sets the floor for their small business contracting. They should have a new goal that reflects their achievement. This legislation would create new, agency-specific goals that reflect an average of their past three years. For example, if an agency had 6.0% participation by SDBs in 2009, 7.0% participation in 2010, and 6.5% participation in 2011, its goal for 2012 would be 6.5%.
Studies on improving small business contracting: Studies on internal government processes, increasing outreach, and recommended legislative action will help increase contracting participation by targeted groups in coming years.
Increase in government-wide goal for all targeted groups after studies: After completion of the studies, the government-wide goal for all small businesses would be increased from 25% to 27%, SDB's would be increased from 6.0% to 7.5%, women-owned businesses would be increased from 5.0% to 6.0%, and service disabled veteran owned and HUBZone businesses would both be increased from 3.0% to 4.0%.
Enforcement mechanism in complementary legislation: The Peters bill builds on legislation approved by the House Small Business Committee, the GET Small Business Contracting Act of 2012 (H.R. 3850), which would make procurement managers' bonuses contingent on hitting these goals. These federal employees are members of the Senior Executive Service and make six figure salaries. This mechanism doesn't affect their base pay, just their eligibility for bonuses.