It sounds like a splendid program for small businesses interested in bidding for federal contracts on a scale which they might handle. Under a pilot program launched in September, so-called Very Small Businesses-those which have fewer than 15 employees and less than $1 million in annual revenues-can now bid on federal contracts worth less than $50,000. While these account for only about 2 percent of all federal contracts, the category totals a whopping $5.2 billion each year.
There's one catch, though: The pilot program isn't available to businesses in Northeastern Ohio. Only those businesses headquartered in 10 areas of the country, including several central Ohio counties and all of New Mexico, Michigan, Massachusetts and Louisiana need apply. Why? Pork barrel politics may have something to do with it. The main sponsor of the bill, after all, was Republican Rep. Richard Baker of Louisiana.
The new set-aside program also highlights the fact that the Small Business Administration uses no single standard to define small businesses, contrary to most assumptions.
While the benchmarks of 500 employees or fewer and $5 million or less in annual revenues have generally come to be regarded as the standard definitions, the SBA actually has as many as 30 size standards it applies throughout the economy, says D.J. Caulfield, an SBA official in the Washington headquarters. In the aerospace industry, for instance, where there are fewer and larger companies than in other industries, a company with as many as 1,499 employees can be designated a "small" business.
"The deal is, everything is relative to the industry. So we do tailored analysis," says Caulfield.
The new VSB program is an attempt to open up the pie to even smaller companies, though the fine print notes that these earmarks are only required where there's a reasonable expectation of drawing two valid bids from among the very small.
The pilot program, which will run through September 2000, is a response to legislation which Congress passed in 1993. But it sat on the shelf for years because it ran squarely into Vice President Al Gore's Reinventing Government Initiative, which sought to streamline the government procurement process. It was launched only after those bureaucratic snags were cleared away.
No word yet on whether this area might eventually be added to the mix, should the program succeed and be adopted as a regular feature of federal procurement policy.