December 13, 2021 at 5:00 am ET
Small-business owners across the country were hit by countless obstacles since the pandemic began and have made Herculean efforts to retain their employees, serve their customers, support their communities and keep their doors open. This holiday season, they face mounting uncertainty from the omicron variant, ongoing pandemic difficulties, substantial supply chain disruptions and significant inflation.
An announcement from the Biden-Harris administration earlier this month brought hope to small-business owners whose businesses depend on contracts with the federal government to provide critical goods and services, but much more needs to be done to level the playing field for small businesses. Congress has an opportunity to take action in the must-pass National Defense Authorization Act to provide critical support for small businesses, particularly when it comes to the procurement process.
The U.S. government is the largest procurer of goods and services in the world — with federal contracting reaching nearly $700 billion in 2020. Small-business owners play a crucial role in government contracting — yet burdensome regulations and the high costs of navigating the procurement process left many small businesses on the sidelines for far too long, hurting their businesses and the economy. More small businesses involved in government procurement mean more jobs, more innovation, more robust security and more resilient supply chains.
A Goldman Sachs 10,000 Small Businesses Voices report published in partnership with the Bipartisan Policy Center highlighted concerning declines in small-business procurement opportunities and engagement. The number of small businesses providing common products and services to the federal government fell 38 percent from 2010 to 2019. Even more dramatically, the number of new small-business entrants into the procurement marketplace declined by 79 percent from 2005 to 2019. Adding insult to injury, each year 5 percent of federal contract spending is supposed to go to women-owned small businesses and 3 percent is supposed to go to small businesses in economically distressed communities called HUBZones — but the women-owned small businesses goal has only been met twice since 1994 and the HUBZones goal has never been met.
The Biden-Harris administration’s December announcement will materially reform the federal procurement system for small businesses by increasing opportunity and giving small businesses a fairer chance to compete with larger businesses for federal contracts. The administration is also implementing new forms of transparency and accountability to help ensure their stated goals are met. The announcement builds in part on the president’s goal — set forth at the June centennial of the Tulsa Race Massacre — to increase the share of contracts going to small, disadvantaged businesses to 15 percent by 2025.
The Goldman Sachs 10,000 Small Businesses Voices community is proud to have worked with the Biden-Harris administration on these important reforms — but there is much more to be done and no time to waste. Congress has the opportunity to make further strides, including by passing House and Senate NDAA amendments designed to support small businesses engaged in government contracting and increasing government-wide goals for small-business participation in government procurement. Failing to make these and other reforms supporting small businesses would be a missed opportunity.
Small-business owners like 10,000 Small Businesses Voices community members Ben Johnson and Haleema Shafeek know their teams can do the work, but too often are shut out by outdated processes and unnecessary regulatory burdens. Ben’s Pennsylvania-based data analysis business Freya Systems and Haleema’s veteran-owned Ohio-based commercial interiors business GOFS have appreciated opportunities to work on projects for NASA, the U.S. military and government agencies, but they want a level playing field for other small-business owners like them.
Small-business owners are not looking for a hand out. They are just looking for a fair shake when it comes to winning their government’s business. The Goldman Sachs 10,000 Small Businesses Voices community calls on Congress to further increase opportunities and level the playing field for small businesses in federal contracting and by streamlining and improving procurement processes.
The holiday season reveals the challenges facing small businesses across the country, but the problem is even bigger: Small businesses are asking for much-needed support from their representatives to help them not just survive, but thrive and grow in the new year.
Joe Wall is the national director of the Goldman Sachs 10,000 Small Businesses Voices Program and a managing director in the Goldman Sachs Office of Government Affairs.
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