Government Affairs Articles Government Affairs SBA Caught In Mixed Federal Messages
SBA Caught In Mixed Federal Messages

An Express-News editorial page cartoon a week ago showed a huge football player, labeled the “public sector,” winning the battle over a skinny, short “private sector” player to catch a ball called “jobs.”

Government, especially the federal government, is adding employment often at the expense of small businesses by “insourcing,” which takes contracts away from private companies.

Also, programs to give small businesses, especially women-, veteran- and minority-owned businesses, are being undermined by contract bundling. If the government wants a building built, it bids one contract instead of a dozen that would be broken up into specialties like carpeting, furniture, drywalls, painting, etc. Only large businesses can bid.

Those are the obstacles the editorial cartoon references. Insourcing and bundling put the U.S. Small Business Administration in a tough position, because the SBA is supposed to help small businesses create jobs.

When SBA Administrator Karen Mills gave interviews in San Antonio this week, I asked about these hurdles. Mills stressed the SBA will meet or exceed its 23 percent goal, the percentage of federal contracts that must go to small businesses.

Mill said the SBA has staged hundreds of matchmaking events so that big businesses will hire small companies when big businesses obtain contracts, an acknowledgement that the government is bundling contracts.

“Right now across the government, there is an enormous effort to focus to improve procurement,” Mills said. “We are having lots of success and momentum working in conjunction with the federal procurement initiative so that we can have both the most efficient operations and small-business access.”

That is another way of saying the government insourcing reduces the number of contracts for bid, but small businesses will still receive 23 percent of the contracts. It's not what businesses losing contracts at military installations, for example, want to hear.

If Congress approves the $5,000 tax credit for each new small-business job, won't that punish small companies that sacrificed to avoid layoffs and reward other companies that dismissed workers?

Mills answered by saying companies are asking the federal government for the tax credit.

“It puts money right in their hands,” she said. “If you are going to hire a worker for $40,000, $50,000 or $60,000 a year, I'll give it to you 10 percent cheaper. Small businesses know a bargain.”

If the federal government places $30 billion in community banks, will small companies borrow for expansion when they also fear pending federal health care and energy mandates that soon may increase their costs?

Mills answered that taxpayers will benefit because the $30 billion, which she said will leverage even more loans, mostly will be paid back, helping small businesses but costing taxpayers very little.

Mills never denied that government insourcing occurs at the expense of small businesses and that contract bundling is reducing contracting opportunities. It's happening.

The federal government says it wants small businesses to recuperate the jobs lost in the recession, but another part of the federal government is driving small companies out of business with insourcing and bundled contracts.

That's why the SBA is in a tough position.