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More Good News for the SBA

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The United States Small Business Administration has been under fire as of late with their oversight committee alleging fraud and misuse of funds. As a result some members of congress have been calling for its abolition. Whether or not the SBA will be in existence this time next year is up in the air but recently, some good news was released showing that small business owners are gaining ground in the area of winning government contracts.

In a press release the SBA announced that government was awarding more contracts to small businesses and the percentage of awarded contracts was now less than 1% away from the mandate.

Here’s how it works. There is a mandate that requires the Federal Government to award 23% of all goods and services contracts to small businesses. This means that the Home Depots, GEs, and Boeings of the world are not eligible for 100% of the business that the government has to offer. Of that 23%, 5% of all contracts should go to women owned businesses, 3% to businesses ran by disabled veterans, another 3% to HUBZone (Historically underutilized business zones) businesses and 5% to small, disadvantaged businesses.

Although the mandate is pretty easy to understand, the reality has been that the government hasn’t complied. The 23% to small businesses mandate was at 21.86% in 2009 but in 2010, it rose significantly to 22.66%. One bright side has been the 5% mandate. The 5% of contracts that should go to disadvantaged businesses was at 7.57% in 2009 but in 2010, it went up to 7.95%.

The Small Business Administration credits a number of initiatives aimed at upping the compliance rate. Among them:

The Small Business Act of 2010- This act included 19 provisions designed to help small businesses by increasing government opportunities for them.

  • Formation of an Interagency Task Force- This task force developed 13 recommendations to help small businesses compete for and win more government contracts.
  • Collaboration with Senior Officials- The SBA is helping to advise senior agency officials of their role in meeting the 23% mandate.
  • Women Owned Programs- For the first time, in 2011 some contracts will be set aside only for women.

The SBA continues to be under scrutiny. SBA director Karen Mills has faced tough questioning by members of congress as of late including being asked why the government is in the business of backstopping loans for small businesses. Regardless of any shortcomings found in the SBA, it cannot be denied that these figures represent a great step forward for small businesses in the United States.