Growth Strategies

U.S. Federal Spending at Small Businesses Misses Mark. Again.

Senior Entrepreneurship Writer at CNBC
2 min read

Uncle Sam can’t seem to spend enough money on Main Street.

The U.S. government awarded 22.25 percent of its contracts to small businesses in the 2012 fiscal year, which ended in September, according to a scorecard released by the U.S. Small Business Administration today. According to the Small Business Act of 1953, 23 percent of all government spending is supposed to go toward small business contracts.

The shortfall amounts to billions of dollars that are not getting into the hands of small-business owners.

Related: Still Waiting for Obama's SBA Chief Nominee

The $89.9 billion awarded to small-business contractors in 2012 is 22.25 percent of more than $400 billion spent by the U.S. government that year. That’s a slight increase over the 21.65 percent of spending that went to small businesses in 2011, but lower than the 22.66 percent that went to small-business contractors in 2010, according to SBA scorecards.

Pressure on Washington, D.C., to cut its overall spending has resulted in fewer government contracts available for all businesses, says John Shoraka, associate administrator for government contracting and business development at the SBA, in a conference call with reporters. “The overall pie of dollars for small businesses is down, but the portion of that pie that is available to small-business owners is up,” Shoraka says of the U.S. government’s improved performance from 2011 to 2012.

Related: Women Entrepreneurs Can Win Larger Contracts Through SBA Set-Aside Program

Meanwhile, House Small Business Committee Chairman Sam Graves (R., Mo.) lambasted the Obama Administration for its failure to meet the small-business contracting threshold. This is the seventh year in a row the small-business contracting target has been missed, according to a statement from the House Small Business Committee.

“The fact that the federal government hasn’t met this meager 23 percent small-business contracting goal for seven years is simply unacceptable, and further proof that our government continues to give lip service to small companies,” says Graves in a statement. “Improving small-business opportunities through federal contracts creates jobs and saves taxpayer money because small businesses bring competition, innovation and lower prices.”

Related: SBA Secures Pledge from Banks to Lend More to Veteran Entrepreneurs

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