2003 Small Business Contracting Set Record, But Some Doubt The Numbers Small businesses won a record 25.4% of federal prime contract dollars in fiscal 2003, the Federal Procurement Data System reported, but some critics question the accuracy of the statistics. Small firms’ share of the federal market exceeded the congressionally mandated 23% goal for the first time. The report said $62.7 billion went to small businesses, an 18% increase over 2002. In the most dramatic increase in the 2003 numbers, the report showed prime contract dollars flowing to 8(a) companies spiked by almost 70% above the 2002 total. The 8(a) market share jumped to 3.9%, from 2.4% the year before. SBA Administrator Hector Barreto trumpeted the figures as a triumph of the Bush administration’s policies. “These record-breaking numbers did not happen by accident,” he said in a statement. ”President Bush and the SBA have worked hard to help small entrepreneurs do business with the federal government. The president is working to create an environment in which small businesses can succeed, and these tremendous results show that his policies are working.” Some federal officials involved in procurement issues are skeptical about the accuracy of the report, but they declined to be quoted by name. Officials in several agencies have said in past years that the Data System’s figures did not match those collected by agencies in-house. As part of the administration’s emphasis on small business contracting, SBA worked to improve the accuracy of this year’s report, said Emily Murphy, senior adviser in the Office of Government Contracting and Business Development. “We went out to the agencies and emphasized (the need for) a very careful scrub of their data,” she told Set-Aside Alert. Each agency reports its results to the Procurement Data System. Pointing to the president’s strong statements, Murphy said, “Hopefully that message has gotten out to the agencies.” Henry Wilfong Jr., president of the National Association of Small Disadvantaged Businesses, is one doubter. Wilfong, a Republican and former SBA official, wrote in an e-mail message, “We are in constant contact with the agencies involved, and (with) the SDBs who are NOT seeing, smelling or getting these contracts that they lump in their numbers...We wonder if this is something ‘prettied up’ with The Election Season in mind.” Rep. Nydia Velazquez (D-NY), ranking minority member of the House Small Business Committee, said the figures “raise many questions.” She pointed to last year’s General Accounting Office report showing that the small business procurement statistics are inflated to an unknown extent by regulatory loopholes that allow companies to be counted as small after they have outgrown size standards or been acquired by a large company. (SAA, 5/16/03) Other highlights of the report: *The Defense Department awarded 24.8% of prime contract dollars to small businesses, up from 21.2% in 2002. Defense accounts for nearly two-thirds of federal procurement. *Woman-owned businesses’ market share increased to 3.2%, from 2.9% in ’02. That is still below the 5% goal set by Congress. *Small disadvantaged businesses that are not 8(a)s saw their share fall to 3.5%, from 4.4% the year before. *The share going to HUBZone firms remained below 1%. The governmentwide goal is 3%. *Companies owned by service-disabled veterans won less than one-quarter of 1% of the dollars, twice as much as the year before, but still not within sight of the 3% goal established by Congress. *Eighteen of the 21 largest departments and agencies exceeded the 23% small business goal; 17 exceeded the goal in ’02. *The Department of Housing and Urban Development was the best friend of woman-owned businesses, awarding 32.8% of its dollars to those firms. *SBA led in 8(a) contracting, with almost 23% of its business going to the program. *The Energy Department again finished at the bottom of the rankings, sending just 4.1% of its dollars to small firms. Energy Secretary Spencer Abraham has announced that the department’s large facilities management contracts will be re-competed as they expire and some work may be set aside for small businesses. Total federal procurement grew to $247 billion, a 5% increase over the previous year. The Procurement Data Center’s statistics are the official ones, but they have long been criticized as unreliable. Federal agencies submit their procurement reports to the center, but the reports are subject to errors in data entry and contract classification. GSA launched a new Procurement Data System last fall in an effort to produce more accurate results. The fiscal 2004 report will be the first under the so-called Next Generation system.