Thursday, December 9, 2010

The Plight of Small Businesses in Obtaining Government Contracts

Small businesses, and especially minority and women owned businesses, face many hurdles in competing for government work.  

Washington State Task Force:  The State of Washington's Capital Projects Advisory Review Board (CPARB) recently established a Small Business Task Force to identify strategies and tools to open up opportunities for small and minority businesses.

The purpose of the Small Business Task Force is to identify not only challenges faced by small businesses, but to think through possible solutions that may end up as legislative recommendations for CPARB to consider.  

First Task Force Meeting:  The Small Business Task Force held their first meeting on Thursday, December 9, 2010 and was attended by many representatives from various constituencies: small businesses, minority businesses, public agencies, contractors, organized labor, and others.

The Task Force spent the first meeting discussing both the challenges of small businesses in participating in capital projects (design and construction) as well as identifying potential solutions.

Issues to Discuss:  From my perspective, the types of challenges fall into four broad categories that can help make public procurement more "small business friendly":
  1. Selection Processes:  What can agencies do to reduce the level of effort required to respond to solicitations while still meeting their business needs?  Are there ways to reduce the level of effort required by public agencies in producing solicitations?
  2. Contract Requirements:  Should the length and substance of contracts be adjusted for specific projects based on the dollar value and risk of the project, rather than have a one-size-fits-all contract for all projects that may create problems for small business compliance?
  3. Contract Administration:  What can be done to help ensure that public agencies report consistently and in a timely manner on their utilization of small, minority, and women owned businesses?  When agencies establish goals for small business utilization, do they have the necessary staffing and processes to follow-up on commitments made by contractors and consultants?
  4. Regulatory Requirements:   Are there laws and regulations that should be changed that would help small businesses?  Are there existing laws that would be beneficial to small and minority businesses but which are not used by public agencies?
No One-Size-Fits-All Solution:  There are a host of other issues that must be taken into account in addressing this important issue:
  • A recognition of the differing experiences and needs of prime contractors/consultants versus subcontractors/sub-consultants  
  • The size of the public agency.  Some small and medium sized agencies don't have staffing resources to deal with small business issues
  • The availability level of small and minority owned businesses in different geographic areas of the state.
Competing Interests:  In developing solutions that will help open up opportunities for small and minority owned businesses, it is important to remember that there are different and often conflicting interests of the various stakeholders, including the following:
  • Small Businesses versus Large Businesses
  • Minority Owned Businesses versus Non-Minority Owned Businesses
  • Non-Union Businesses versus Union Businesses
It will be important for all parties on the Task Force to work together cooperatively in understanding the interests of the other parties, and to work creatively to craft solutions that work for all parties.

New Port of Seattle Program:  On a related note, the Port of Seattle is launching, in 2011, a Small Contractor and Supplier Program (SCS).  For more information about the program, visit the Port's website.
Mike Purdy's Public Contracting Blog 
© 2010 by Michael E. Purdy Associates, LLC

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