Small Business Subcontracting Goals

ReliAscent is a small business (as defined by the SBA). All of our clients are small businesses. The Small Business Administration’s Office of Advocacy has recently released statistics relative to small business that I think are encouraging to all of us small businesses. The overall statistic of interest to people in industry is the amount of government contracts being given to small business. The government wide objective is 23% of all contracts to go to small business. The report for FY 2013 shows that the overall government small business contract level at 23.9%, which meets the objective. What is a little misleading here is that not all agencies are above the objective. For instance, let’s look at 2 of the largest agencies in the government, the DoD and DoE. DoD is at 21% and DoE is at 5.71%. Both are below the goal. Other departments like Agriculture (at 54.88%) and Interior (at 59.16%) help make up the difference. It takes quite a few of the smaller agencies above the limit to make up a small difference in defense spending because the overall budget of the Defense Department is so large. Also, contracts in areas like the Commission on Civil Rights (at 100%), Commission of Fine Arts (at 100%) or the Agency for International Development (at 101.71%) probably don’t use any technical services. So a lot of the expenditures by the government in meeting the small business goal may be skewed to certain areas which mean not all industries (especially some of the technically oriented businesses) are going to receive 23% of the share in their area of expertise. Still, this is an achievement to reach the goal of 23%, which hasn’t happened in the past. The fact that 63% of the net new private-sector jobs have come from small business over the last several years is significant. 99.7% of the “employer firms” in this country are small businesses. From 2008 thru 2010 there were more small businesses that “died” than new firms created. That trend has changed and there were 800,000 new business creations in 2012 compared to 732,000 business deaths in 2012 (the most current year data is available). California leads, by far, all states in the creation of new small businesses. For 2013, California recorded 73,900 new businesses, more than twice the amount of the next state (Florida with 33,000). California also leads the country in small business employment with over 6 million employees in small businesses (Texas is second with over 4 million). What is encouraging to me is that the trend is up for government contracts going to small business. The number of new small businesses is again growing and employment from small business is growing. These are all solid signs of an economic recovery. Small business is definitely the driver in America’s economy and we are seeing the Federal Government recognize this. Yes, the way in which some of these statistics are measured is debatable but the fact of improvement cannot be lost.


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