After attending (in person, YAY) the HUBZone Contractors National Council Small Business Summit this week, I am even more passionate about the need to assist small government contractors. I have read increasingly about the rapid decline in participation by small businesses in government contracts over the last 10 years. Yet, there is still incessant touting of more dollars for small business set-asides equating to equal opportunities for success in the federal marketplace. So, what gives?
The Reason for Low GovCon Award Competition
It seems that the reports of success by the SBA aren’t accurately reflective of more participation, but of dollars spent. We aren’t succeeding with bringing in the best and most innovative technologies and proficiencies of emerging small govcons as much as we are celebrating the same businesses being reallocated award dollars. Competition isn’t driving the market like it should because less are throwing their hat into the ring and staying in commercial work, even with the promise of a secured payday offered in federal procurement.
There are many reasons why there is a decline, status quo being the biggest culprit. Big business is still dictating who gets paid to play and they still aren’t letting any rookies replace the old reliables. But it isn’t easy for the whole system to change without addressing some major issues creating the setbacks. It isn’t enough to point out the problems unless you have some remedies to add to the mix. So where do we go from here?
Getting Access to Working Capital
The biggest issues facing small businesses in general is access to working capital. What happens when a small contractor gets awarded a multi-million dollar contract opportunity? That doesn’t translate immediately into earned income but creates a ground swell of financial obligations that they may not have access to proper funding to fulfill.
Ultimately the award will go to those that can pay to play and not those with the best solution to the problem. If small businesses don’t have access to the cash they need upfront to execute successfully what they are hired to do, they will likely not maintain any ability to succeed long term in the industry. Liken this to a dog chasing its tail.
Next up, regulatory compliance requires expenditures above and beyond awarded contract dollars. For instance, CMMC is a necessary implementation, however a costly one at that. This could likely be the newest delineator of small businesses from the federal market because they just flat out can’t afford the extra expense. And with little to no options for funding and no clear path to getting paid back for upfront costs to be assessed to validate certification, why and how would any small business start into the industry that is literally setting them up to go bust?
Using Category Management to Achieve Small Business Goals
For the purpose of this discussion, the next issue to tackle is Category Management. This espouses to be the catalyst to achieving small business goals in GovCon, when in reality it makes it commonplace to consistently award work to the same businesses over and over with no reason other than consistency and no result other than what we have always gotten. It doesn’t promote advancement or competition, which would actually increase savings and create better options. This just gives the right of way to consistently giving contract opportunities to the same businesses with no recourse.
Ralph Waldo Emerson said, “A foolish consistency is the hobgoblin of little minds.”
Affordable Financing for Small Contractors
We need change. Small business advocates have been screaming this from the bleachers for years. We need to accurately score agencies’ interactions with small businesses so we can adequately gauge success and failures. We need to educate small businesses on where they can access affordable financing and not completely stay silent in fear of promoting one option over another.
It is the greatest need, yet government agencies won’t touch the subject and educate the marketplace on what to do so they can successfully participate. New regulations need to be met with a plan of execution that doesn’t constantly change and require more money each time to comply. Standards are necessary, but small businesses cannot bear the same financial responsibility as the larger participants in the marketplace.
Small businesses employ the greatest number of people in our country yet receive the least amount of benefit. We need these contractors to succeed. We need more to engage in the work. We need change.
So, where do you see small business participation in government contracting in the next 5 years? How can we stop the decline? What is working and what isn’t and how can we make a change that has a positive impact?