Each year, Uncle Sam awards more than $200-billion in government contracts. By law, some is awarded to small businesses and some to disadvantaged small businesses. Last year, more than $40-billion went to the two groups.
Yet, many small businesses have never explored the lucrative world of government contracting.
Why? Paperwork and government red tape, small business advocates say. Most small businesses simply do not have the time or the wherewithal to participate in the bidding process for government work.
The government finally got the message. It recently revised its outdated, cumbersome procurement regulations, making it easier and more attractive to bid on government contracts.
"The new simplified processes will make it easier, more practical and less costly for small businesses to participate in federal contracts," said Jere Glover, chief counsel for Advocacy for the Small Business Administration. "We are hopeful that more small businesses than ever will choose to do business with the government."
Among the more noteworthy aspects of the Federal Acquisition Streamlining Act of 1994 are:
It makes more contracts available specifically to small businesses.
Previously, all contracts under $25,000 _ the vast majority of government contracts _ were automatically awarded to small businesses. Now, any contract up to $100,000 will be earmarked for small businesses. That will make 45,000 new contracts available to small businesses, according to the Federal Procurement Update, an independent newsletter on government contracting.
Sets a deadline of Jan. 1, 2000, for implementing the Federal Acquisition Computer Network, known as FACNET. Eventually, the entire process _ from viewing contracts, to submitting bids and invoices, to getting paid _ will be handled electronically.
Simplifies procedures for contracts up to $50,000, up from $25,000. As buying agencies increase the use of electronic commerce, they can use the simplified procedures on contracts up to $100,000.
Sets goals for participation by women-owned businesses for the first time. Until now, at least 5 percent of a government contract had to be awarded to small disadvantaged businesses. At the federal level, women were not included in this category. At the state level, however, women-owned businesses could be _ and were _ used to fulfill the 5 percent set-aside requirement. That led to complaints that women were getting contracts intended for ethnic and racial minorities.
Now, women have their own 5 percent set-aside. The 5 percent consideration for small disadvantaged businesses still applies. The change is expected to be a bonanza for both women- and minority-owned companies.
The SBA is hosting a national teleconference to explain the procurement reforms from 1:30 to 3:30 p.m. Oct. 31. Locally, interested vendors can participate in the teleconference at the University of South Florida's School of Business, Room 2302. Call the Small Business Development Center at 554-2341 for details.
If you are even tempted to cheat on an application for a Small Business Administration loan, take heed.
The SBA has teamed up with perhaps the most feared government agency, the Internal Revenue Service, to detect fraud in the SBA's popular multibillion-dollar loan program that helps small businesses get bank financing.
The IRS will provide tax information on business owners applying for the SBA loan. The IRS-supplied tax returns will be compared to the tax returns submitted by business owners with their loan application.
The SBA started working with the IRS after discovering dozens of doctored tax returns included in loan applications in California. Some indictments and convictions have resulted from the investigation.
"The problem is computers," said Mark Stampler, spokesman for the SBA. "Your computer can spit out an exact replica of a return and just change the numbers."
The SBA has tested the IRS program in select markets and has uncovered some suspicious-looking tax returns, Stampler said.
The SBA expects to receive 60,000 to 70,000 applications for small-business loans. The administration approved $8.17-billion in loans in fiscal 1993.