Squeezed Out? Is there any room left for small businesses in federal contracting?

With the Bush administration opening 850,000 government jobs toprivate bidding and the Department of Homeland Security getting offthe ground, it's the best of times to be a federal contractor.Technology, engineering and outsourcing companies are expected tobenefit from new government projects coming down the pike."It's a good time for small businesses to get on awardschedules," says Bruce Shirk, a government contracts attorneywith law firm Powell,Goldstein, Frazer & Murphy LLP in Washington, DC.

Or is it the worst of times for small businesses? A recentreport commissioned by the SBA's Office of Advocacy found that51 percent of federal contracts awarded in 2001 were"bundled," meaning many individual contracts were groupedinto one large contract. For the government, bundling increasesefficiency and decreases administrative costs.

For small firms, however, bundling resulted in the loss of $13billion in contracts in 2001, according to Eagle Eye PublishersInc., the Fairfax, Virginia, research firm that conducted thestudy. And for the past two years, the government has failed tomeet a Congressional mandate that requires it award 23 percent ofcontracts to small businesses (defined as those with fewer than 500employees).