Policy

Keeping Tabs on Federal Small Business Contracting


The Argonne National Laboratory in Illinois is one of the U.S. Department of Energy's biggest research centers

Photograph by Argonne National Laboratory/Getty Images

The Argonne National Laboratory in Illinois is one of the U.S. Department of Energy's biggest research centers

Earlier this month, the Small Business Administration said that the federal government had missed its goal of awarding 23 percent of prime contracts to small businesses in fiscal year 2012, and it also fell short of contracting targets for women-owned small businesses and small companies in disadvantaged neighborhoods.

Which agencies were most to blame? Kathleen Miller dug into the SBA data for Bloomberg News, and found that in terms of awarding jobs to women-owned businesses, the U.S. Department of Energy and the National Aeronautics and Space Administration lagged the field:

Across federal agencies, women-owned small companies attracted about 4 percent of eligible contracts dollars in fiscal 2012, according to an SBA review. The government missed its goal of 5 percent.

Not all agencies underperformed. The Department of Housing and Urban Development awarded 14.7 percent of eligible contracts to women-owned firms, and the Treasury Department, 13.2 percent.

The Energy Department had the worst performance of the 10 biggest agencies by contract spending, with 1.24 percent. It was followed by NASA, with 2.94 percent. On its SBA report card, the Energy Department scored an F (PDF), the lowest possible score, for its contracting with all small businesses.

According to Miller, the Department of Energy said that the nature of its work made it difficult to award contracts to small businesses, while NASA cited a lack of women-owned contracting companies in its field.

Women-owned businesses weren’t the only ones underused by the Department of Energy: the agency also came up more than halfway short (PDF) of its goal of awarding 5 percent of contracts to minority-owned businesses, and it fell even further off targets for businesses owned by disabled veterans, as well as those located in disadvantaged neighborhoods.

NASA, on the other hand, received an ‘A’ grade (PDF) from the SBA, despite having come up short on goals for women. That may be because the agency met goals for overall small business contracting, as well as targets for subcontracting and working with minority-owned businesses. It may also be because the SBA is a soft grader (PDF): Of 24 agencies that received scorecards, 17 earned an ‘A’ or ‘A+’.

The SBA allows each agency to comment on its scorecard, giving the Department of Defense a chance to explain its ‘B’ grade by commenting (PDF) that “there are no small businesses, or a group of small businesses, that have the capacity or infrastructure” to supply much of the military vehicles and warships that the department needs. The Department of Education said its ‘C’ grade (PDF) was the result of setting a “stretch goal.” The Treasury Department, on the other hand, said it earned its ‘A+’ grade by setting out to “crush the goals.”

Clark is a reporter for Bloomberg Businessweek covering small business and entrepreneurship.

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