With all the threat out there right now from Continuing Resolution to Sequestration to more deficit reduction pressure it is hard to find the positives some times. Certainly, there will be programs cut, there will be contracts terminated and there will be difficulty for many companies that have been doing business with the Federal Government. It is easy to get caught up in all the negativism. My mother used to tell me that need to look for the positives in each situation and only you can control your outlook. I think that is good advice for us all right now.
Yes, I think we all know that many of the programs in the DoD will be under scrutiny in the short run. But there are areas of the Defense Department where budgets many not see much reduction immediately. These areas are related to benefits for our troops. This includes medical care for soldiers and former soldiers. With that in mind, it is interesting to notice tht the HHS budget is relatively flat (rather than being reduced significantly) for FY2013. The budget for the Department of Energy shows a modest increase in FY2013.
But what about opportunities for small business contracting? One area of interest is the SBIR and STTR programs. The Defense Authorization Act of 2012 has increased the amount of each department's authorization for the SBIR and STTR programs. The maximum amount awarded in a Phase I award was increased from $100,000 to $150,000 and for Phase II from $750,000 to $1,000,000. In addition, the SBIR percent of the department's extramural budget is increased 0.1% per year each year from 2012 to 2017 (from 2.5% to 3.2%). These are all positive changes for small business.
In addition, the government seems to be placing more emphasis on meeting the Small Business contract goal of 23% (which hasn't been met since 2005). Small business received 21.6% of all purchases in 2011 (the latest year for which numbers are available) or about $91.5 Billion. Senator Tom Udall (D-NM) has just introduced a bill in the Senate to raise the Small Business goal to 25%. The bill was introduced on January 31 and is currently assigned to the Committee on Small Business and Entrepreneurship for review.
So, even with the budget cuts, there still should be a significant amount of money channeled to small business. Small business is still considered the best bet for development of new technology and certainly, small business is viewed as the largest employer in our "new economy". We may just have to shift our focus of where the opportunities lie going forward. It is the old "guns vs. butter" argument. We are coming off of a period where we concentrated on the "guns" and now we are moving into a period to concentrate on the "butter".