House Small Business Committee News

House Small Business Committee Chairman Sam Graves (R-MO) and Small Business Agriculture, Energy and Trade Subcommittee Chairman Scott Tipton (R-CO) will today introduce legislation that will strengthen the coordination of the federal export promotion agencies and help more small businesses export.  Although 95 percent of the business purchasing market exists outside the U.S., many small firms do not have the resources and personnel to utilize these opportunities, and rely heavily on federal and state agencies for assistance. This legislation comes as the United States celebrates World Trade Month during the month of May. 

The Export Coordination Act of 2012, introduced by Graves, will increase coordination between state and federal agencies to make the export process more efficient, while reducing duplication and wasteful spending of federal trade promotion agencies.  Currently, there are over 20 federal agencies that can assist with some or all of the steps in the export process.  The Transparent Rules Allow Direct Exporting (TRADE) for Small Businesses and Jobs Act, introduced by Tipton, will help small businesses increase their exports and enter new markets by better understanding foreign regulations. Both pieces of legislation have been evaluated by the CBO to have no cost.

“Now that the free trade agreements with Colombia, South Korea and Panama are close to all being implemented, we need to encourage more small businesses to export,” said Chairman Graves (R-MO). “If a company doesn’t know how to export, they can’t take advantage of the lower tariffs provided by these agreements to increase their sales and hopefully hire new employees. Ninety-seven percent of identified U.S. exporters are small businesses, yet that only represents a small fraction of those who could compete globally – there is great untapped potential.”

“The Export Coordination Act will help small businesses start or increase their exports by strengthening the coordination of the federal export promotion agencies and establish stronger congressional oversight of such programs, all without any cost to the taxpayer.   Many of the federal assistance trade programs overlap and offer duplicative services, including mirroring the same efforts as many individual state trade offices.  With one percent of small businesses exporting, these agencies need to work in unison with the states to help assist as many small firms as possible.  This legislation is a major step in improving the coordination between federal and state export promotion activities and ensuring that taxpayer money is being used most efficiently.” 

“Navigating the export process can be complex and confusing for small businesses, and many simply do not have the time and resources to deal with it,” said Chairman Tipton. “Like the United States, foreign countries have a variety of rules, many of whom are not transparent or easy to understand. These rules and regulations can change daily, making it difficult for a small business to stay up-to-date on the current compliance regulations. In an effort to help small firms increase their exports, the TRADE for Small Businesses and Jobs Act would direct the pertinent agencies to monitor and collect up-to-date information on tariff and non-tariff laws, regulations, and practices. It will then be presented in a clear and easy-to-read format, and will serve as a resource for businesses looking to enter a new market.”

Export Coordination Act of 2012:
• To help exporters know where to go, the Export Coordination Act will direct the Trade Promotion Coordinating Committee (TPCC), through the National Export Strategy, to clearly outline the role of each agency in each part of the export process (Sec.3). 
• The Export Coordination Act will direct the TPCC to coordinate with member agencies to provide a detailed listing of current and future Federal and State-led trade missions, trade fairs, and related activities (Sec.2). 
• The Export Coordination Act will encourage stronger coordination with state trade agencies. The TPCC shall include one or more representatives from the State Trade Agencies (SIDO, NGA, etc.). This position will be selected by the President (Sec.4).
• The Export Coordination Act will create stronger congressional oversight by directing the TPCC to review the proposed annual budget for each federal trade promotion agency and provide their recommendations based on their assessment.  It will be submitted to Congress, along with the strategic plan.  In addition, the Inspector General of the U.S. Department of Commerce will prepare an annual report on the TPCC’s ability to carry out its duties. Both the TPCC report and IG report will be submitted to multiple committees of jurisdiction (Sec. 6).

TRADE for Small Businesses and Jobs Act:
• The TRADE for Small Businesses Act will help small businesses increase their exports and enter new markets by helping companies better understanding foreign regulations.
• The TRADE for Small Businesses Act will provide a one-stop source to monitor changes in foreign regulations and trade barriers.

The Small Business Committee has held several hearings on trade barriers for small business. A full committee hearing titled, “Help Wanted: How Passing Free Trade Agreements Will Help Small Businesses Create New Jobs” was held on April 6, 2011 and a hearing titled, "Bureaucratic Obstacles for Small Exporters: Is our National Export Strategy Working?" was held on July 27, 2011. The Small Business Subcommittee on Agriculture, Energy and Trade held a field hearing in Pennsylvania titled, “Impact of U.S. Trade Policies on Small Businesses and Manufacturing” on April 2, 2012.

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Week Ahead for the Committee: May 7-11

 Committee to Hold Hearing on the Threat of High Gas Prices to Small Business

WASHINGTON, DC— On Wednesday, May 9, 2012, at 1:00 p.m. the Committee on Small Business will conduct a hearing titled Running on Empty: The Effects of High Gasoline Prices on Small Businesses.

Persistently high gasoline prices are draining family budgets and putting increased stress on small businesses. According to a recent survey by the Small Business and Entrepreneurship Council, 72 percent of small businesses report they are affected by high energy prices. Of these businesses, 41 percent report that they have altered hiring plans and another 22% report reducing employee hours because of high energy costs. Small businesses are the historic source of new job creation in the economy, but are currently facing many challenges, including the burden of high fuel prices, that inhibit their ability to invest, grow and hire new workers. The hearing will study the relationship between high gasoline prices and small businesses.

“Small businesses often operate on razor thin margins and simply cannot withstand the increase in operating costs that rising gas prices bring,” said Chairman Sam Graves (R-MO). “The price of gas can have devastating effects on small businesses, whose success or failure will, in turn, greatly affect our economy. This hearing will serve as an opportunity to examine how to best protect the health of both economies from the weight of soaring energy prices."                                               

Hearing Details

Wednesday, May 9, 2012, 1:00 p.m.
2360 Rayburn House Office Building
Small Business Committee
Running on Empty: The Effects of High Gasoline Prices on Small Businesses
                                                       

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Graves and Tipton Applaud the Reversal on DOL Youth Labor Rule

WASHINGTON, DC—House Small Business Committee Chairman Sam Graves (R-MO) today issued the following statement in response to the Department of Labor’s reversal of its harmfully intrusive rule on youth labor on family farms:

“This Committee has worked hard to highlight the negative consequences of nonsensical rules including those proposed by the Department of Labor to restrict our youth’s ability to work on family farms. It appears our oversight has yielded some positive results as the Department of Labor is finally abandoning efforts to further regulate the industry. Having grown up on a farm, I understand how important they are to rural communities and what this proposed rule would have meant to their way of life. Restricting family chores and a child’s ability to learn the trade of their parents by regulation is a primary example of agency overreach and I will continue to provide the necessary checks and balances to ensure similar efforts fail.”

“After much pressure from Congress and agriculture producers, the Department of Labor has announced that it will pull the proposed rule, which would have restricted youth from on-the-job learning, the ability to participate in 4-H programs, and to do chores on the family farm,” said Small Business Subcommittee on Agriculture, Energy and Trade Chairman Scott Tipton (R-CO). “This is a tremendous victory for common sense. I applaud the Department of Labor for coming to its senses and joining Congress in support of farming and ranching families across America.”

On February 2nd, Small Business Subcommittee on Agriculture, Energy and Trade Chairman Scott Tipton (R-CO) held a hearing on the effects of this rule and encouraged the Department of Labor to pull it.

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House Small Business Agriculture, Energy and Trade Subcommittee Chairman Scott Tipton (R-CO) today held a hearing to examine innovative ways small businesses contribute to energy production. Specifically, the Subcommittee focused on advanced biofuels, such as cellulosic ethanol, and new innovative technologies small companies have developed to produce energy from previously unused materials.

“Today’s  hearing was on a topic of significant importance for our nation,” said Chairman Tipton. “Economic prosperity in the United States is closely tied to the availability of reliable and affordable supplies of energy. In recent years, we have seen energy prices skyrocket. You only need to fill your gas tank, or pay your home heating bill to realize how much more you are paying for energy now than just 10 years ago.  This puts tremendous strain on American families, small businesses, and farms.  In order for us to take steps forward, we must acknowledge the role of innovative small businesses in reducing our dependence on foreign sources of energy and developing new ‘homegrown’ energy solutions right here in our own communities.”

For related hearing documents, click here.

Notable Witness Quotes: 

Jerry Taylor, President and CEO of MFA Oil and Co-founder of MFA Oil Biomass in Columbia, MO said: “Our farmer-owners see incredible opportunities as this endeavor takes off.  They recognize the potential to offer America’s rural communities permanent manufacturing jobs, a new cash crop for farmers, a local source for green hearing, renewable liquid fuel sources, biobased chemicals, green building materials, water treatments systems, soil reclamation systems, and consumer packaging.”

Michael McAdams, President of Advanced Biofuels Association in Washington, DC said, “…the advanced biofuels industry is extremely innovative and has moved rapidly over the last five years. We believe we can and should be a fundamental part of an American energy policy that adopts a portfolio approach. [We] are already starting to see advanced biofuels delivering on its promise of creating new jobs, and helping to strengthen our nation’s economic and energy security.”

Ralph Tommaso, CEO and Head of Business Development at Greenworks Holdings in Bethlehem, PA said, “Running a business is tough. There are layers of regulations and laws at the Federal, state, county and town level. Small businesses need stable policies with reasonable time frames for permits and approvals. Our main challenge is regulatory uncertainty and the fluctuating and more often than not tightening policies under the Renewable Fuel Standard 2.

“Biofuels represent a potentially cost effective way for the manufacturing industry to reduce harmful emissions, thus saving manufacturing jobs while simultaneously creating and preserving jobs in the biofuels industry.”

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The House Small Business Subcommittee on Healthcare and Technology today joined the Science, Space, and Technology Subcommittee on Investigations and Oversight in holding a hearing to examine how the Department of Health and Human Services’ National Toxicology Program Report on Carcinogen classification process affects small businesses.

The Report on Carcinogens (RoC) is a Congressionally mandated, science-based, public health report that identifies substances that may pose a risk to people in the United States. The National Toxicology Program published the 12th RoC last year and is embarking on preparations for the 13th RoC.

“While the National Toxicology Program is preparing the 13th Report on Carcinogens, it is important that we have an open conversation about how the process could negatively affect small businesses,” said Small Business Subcommittee on Healthcare and Technology Chairwoman Renee Ellmers (R-NC). “When the government publishes scientific information that could have widespread negative consequence on small business owners, the government has the responsibility to ensure that the information is determined with a scientifically sound process.  It is extremely important that we protect Americans from harmful substances, but this can be done while also protecting our nation’s primary job creators from premature backlash and unnecessary burdens.”

“As a legislator, I am very concerned with protecting public health and safety,” said Investigations and Oversight Subcommittee Chairman Paul Broun, M.D. (R-GA).  “As a physician, I take this responsibility even more seriously.  When substances are found to be harmful, we should make every effort to minimize the public’s exposure.  We also have a responsibility to ensure that these determinations are appropriate, are not arbitrary or capricious, and are communicated correctly.”

For related hearing documents, click here.

Notable Witness Quotes:

John E. Barker, Corporate Manager of Environmental Affairs, Safety and Loss Prevention at the Strongwell Corporation in Bristol, VA said, “…we are very concerned about the potential regulatory burden that could be placed on our operations should the RoC listing form the basis of regulatory changes. Changes to the regulations already in effect by OSHA and EPA could cause the cost of compliance to increase substantially. Further, focusing on a matter that should be of no concern will make it harder for employees to give full attention to the safety issues that are important.”

Richard B. Belzer, Ph.D., President of Regulatory Checkbook in Mount Vernon, VA said, “For the RoC to ever produce useful information about human carcinogens, the authorizing statute will have to be changed. Legalese will have to be replaced with the language of science. The NTP must be directed to stick to science, and its incentives to practice bureaucratic self-aggrandizement must be eliminated. Only then will it be possible for the RoC have any practical value for informing decisions.”

James S. Bus, Ph.D., D.A.B.T., A.T.S., Director of External Technology, Toxicology and Environmental Research and Consulting at The Dow Chemical Company in Midland, MI said, “…the RoC process is almost entirely ad hoc and lacks explicit criteria needed to assure consistency and transparency. Second, the RoC process lacks adequate checks and balances, including peer review and addressing outside/conflicting data. Finally, the RoC fails to employ scientific best practices, relies on outdated approaches and has not adopted recent NAS recommendations.

“In summary, the current RoC process falls well short of producing evidence‐based listing decisions. I urge Congress to oversee a thorough assessment of the RoC – ideally through an NAS review – to ensure that any future RoC listings are evidence‐based, provide accurate public health information and reflect the highest scientific standards in its processes, and to begin to determine the RoC's fundamental relevancy going forward. This will increase the public’s and industry’s confidence in the RoC’s listings and their application to science‐informed decision‐making.”

Bonnie Webster, Vice President of Monroe Industries, Inc. in Avon, NY said, “The RoC has hidden in the shadows, pretending only to be harmless input to public health agencies. It has been largely unsupervised by the Congress, unreachable by the courts, and not even carefully supervised by the senior officials in their respective agencies. Yet, its actions have every bit as much an impact as regulations, which in contrast are subject to the Administrative Procedure Act, are held accountable for responding to public comments, are scrutinized by the Congress, and can be challenged appropriately in Court.”

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Chairman Sam Graves
 Floor Speech on H.R. 9, the Small Business Tax Deduction Act
April 19, 2012
CLICK HERE to view the video.

(Remarks as Prepared)

Tax season reminds us that small businesses are disproportionately affected by tax compliance and high tax rates. The Small Business Administration reports that the average tax compliance cost per employee for small businesses is almost three times the cost of larger firms. And according to the NFIB, tax issues are the single most significant set of regulatory burdens for most small firms.

The Small Business Tax Deduction Act is simple, fair, and gives small businesses access to badly needed capital to invest in their companies, while providing a little more certainty to help them plan for the future.

As the Chairman of the Small Business Committee, I hear from small business owners every week about their regulatory and tax burdens. Through our interactive webpage “Small Biz Open Mic” we have heard that tax policies may drive some small firms out of business.

On Tuesday, Wendy Koller, owner of Koller Moving and Storage in Fort Smith, Arkansas said, “We are hesitant to hire new employees for fear of what new tax burdens await us with the expiration of older tax law and the new health care laws coming. We are concerned that these new issues may be the ones that push us out of business.”

Last Saturday, Debbie Peacock, owner of a fabricating distributor company in Mesa, Arizona wrote to us, “Any additional taxes will only stop any chance of a recovery and [the government] needs to realize we need every penny to increase staff which puts people back to work!”

I could go on and on with examples like these.

Yesterday, our Committee held a hearing on the flood of new taxes that are right around the corner, such as new taxes from the health care law, and the massive tax increases that will occur if the 2001 and 2003 tax cuts expire. All of these measures could send the economy into a tailspin, costing thousands of jobs.

That’s why the Small Business Tax Deduction Act is necessary. It will provide some tax relief for America’s most robust job creators. America’s 27 million small businesses employ about half of all private sector employees and create about 7 out of every 10 new jobs.  If you truly want to support legislation that creates jobs, you should vote for this bill.

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House Small Business Committee Chairman Sam Graves (R-MO) today issued the following statement on the House passage of the Small Business Tax Deduction Act:

“There is no debate about whether America’s small businesses are the engines of job creation. But to build a stronger economic recovery, we must help small businesses by addressing our debt crisis, pulling back on unnecessary federal regulations, ending any threats of tax increases, and providing substantive tax relief with legislation like the Small Business Tax Deduction Act.

“Small businesses are especially sensitive to expected tax policy because they must make important, long-term decisions today on investment, hiring and expansion. Yesterday, our Committee held a hearing about how upcoming tax increases will affect small firms, specifically the health care law taxes and the expiring tax rates at the year’s end. What we heard is that small firms need relief now, in the midst of immense uncertainty, more than ever.

“According to an independent study, this bill would yield $112 billion more in GDP, create 194,000 jobs, and lead to a 2.24 percent increase in business capital. The Small Business Tax Deduction Act would provide tax relief for millions of small businesses, from mom and pop stores to small manufacturing and service companies, allowing them to invest and hire workers. This is just the type of a jobs legislation that Washington should focus on, and I encourage the Senate to take up this bill.”

To view Chairman Graves’ floor statement before the vote, click here. On March 21st, the Chairman joined Majority Leader Cantor in introducing the bill.

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House Small Business Subcommittee on Economic Growth, Tax and Capital Access today held a hearing to examine the current regulatory environment for equity finance and ways to strengthen the ecosystem. Equity financing is a funding method where a business owner sells a percentage of their company in exchange for an ownership stake.

“Because many start-up businesses do not have sufficient assets to pledge as collateral to secure a bank loan, equity finance is an important source of funding for them,” said Rep. Mick Mulvaney (R-SC). “Equity finance provides not only growth capital, but also strategic partners who are invested in the business’ success.”

“In order to continue small business’s historical role as the engine of our economy they must have access to capital; unfortunately, there have been regulatory barriers that have limited this access. In order to help small businesses gain access to the credit and capital they need to run their business successfully, Congress must adopt policies that support functional capital markets without imposing undue restrictions on providers of debt and equity capital.”

For related hearing documents, click here.

Notable Witness Quotes:

Jason W. Best, Co-Founder of Startup Exemption in San Francisco, CA, said, “Many main street businesses may never fit into the typical venture-backed business model but may be good investments for individuals in that community. Now, crowdfunding can provide these businesses and entrepreneurs a chance to raise capital from their communities. Soon a dry cleaner could crowdfund to add much needed equipment, or a restaurant, to open a second location. While crowdfunding alone cannot solve all capital formation challenges, it may provide benefits to many businesses.”

Tony Shipley, Founder and Chairman of Queen City Angels in Cincinnati, OH, and testifying on behalf of the Angel Capital Association, said, “In the current economic times, Congress may also want to complement a lower capital gains tax for successful early-stage investments with a tax credit for investments in innovative small businesses. Federal ordinary income tax credits for angel investments in small business start-ups could improve the flow of angel capital to small businesses in communities throughout the country.”

“Angel investors are passionate about helping build great new companies in our communities. Many angel investors enjoy being part of the entrepreneurial ecosystem, along with business incubators, accelerators, attorneys, accountants, venture capitalists and other private experts who can guide new entrepreneurs through many key business processes and issues.”

Angela Jackson, Managing Director of Portland Seed Fund in Portland, OR said, “With the JOBS Act passed, opportunity still remains on the Federal level to both reduce friction for emerging startups and increase incentives to angel investors who put risk capital to work stimulating the economy. There are a number of proposals to amend the tax code to reward investors through tax credits and/or capital gains treatment that could be effective, fair and compelling. Similarly, the tax code provides a way to reward the job creating companies themselves with tax cuts and/or deductions."

 

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House Small Business Committee Chairman Sam Graves (R-MO) today held a full Committee hearing to examine upcoming new taxes on small businesses and their economic effect.

“Tax season reminds us that small businesses are disproportionately affected by tax compliance, therefore slowing growth and hiring,” said Chairman Sam Graves. “Today’s testimony supported the notion that higher tax rates and tax uncertainty can mean that small firms have less capital to create jobs and invest back in their companies.”

“As we count on small firms to lead our economic recovery, we must realize that they are bracing for new taxes and tax increases in the health care law, such as the increase in the Medicare payroll tax and an unprecedented Medicare tax on non-payroll income. And on top of that, they remain uncertain about whether the 2001 and 2003 tax relief will be extended. Coupled with other burdens, such as rising gas prices and inconsistent access to capital, this creates an ominous outlook for small firms. In order to help provide a better environment for small business job growth, Washington should end any threats of tax hikes.”

Small businesses are especially sensitive to expected tax policy because they must make important, long-term decisions today on investment, hiring, and expansion. One of the most significant threats is the expiration of the 2001 and 2003 tax cuts, which would be an enormous tax increase. According to an American Action Forum study, this would result in the loss of between 300,000 and 2.9 million jobs.

In addition, five of the 18 new tax hikes from the health care law will begin in 2013. The most economically damaging tax in the law may be the Medicare hospital insurance 3.8% surtax on wages and salaries over $250,000 and investment income over that amount. 

A tax credit was included in the law to help small firms with the cost of covering their employees. The President’s Council of Economic Advisors estimated that over 4 million small businesses would use the credit, however, only 309,000 small businesses used it in 2010, and only about 360,000 in 2011, according to the Treasury Department. Studies found that the credit was too complex and its temporary nature didn’t provide real solutions to the crushing burden of the law.  

For related hearing documents, click here.

Notable Witness Quotes:

Aparna Mathur, Ph.D. Resident Scholar at the American Enterprise Institute in Washington D.C., said, “The academic literature suggests that higher taxes and new taxes (such as those outlined in the Patient Protection and Affordable Care Act) not only affect the formation of new businesses, but also adversely impact the growth and survival of existing businesses. Moreover, uncertainty in policies relating to government spending and taxes further constrains business activity. This policy lesson is particularly relevant in the current economic climate when we have seen limited hiring and capital investments by not just small businesses, but also large businesses. Raising taxes on these businesses will negatively affect the weak economic recovery. To get the economy on the path to sustainable growth, we need to understand that raising taxes and health care costs on these businesses is the wrong policy prescription for these times.”

Martin J. Mitchell, Vice CEO of Mitchell & Best Homebuilders LLC, in Rockville, MD, said, “As the economy emerges from the Great Recession, NAHB strongly urges Congress to extend the 2001/2003 tax reductions. Small businesses organized as pass-thru entities pay individual income tax rates on their net business income. Thus, for small businesses, traditionally the nation’s foremost job creators, individual income tax rates are business tax rates.”

“Putting the federal government on a sustainable fiscal path is critical, especially for an interest-rate sensitive industry like home building that depends on debt finance for business and homebuyers. The federal government should strive to constrain the growth of government spending so that tax increases – particularly tax increases that disproportionately affect particular sectors of the economy – are not required”

Leonard Steinberg, Principal of Steinberg Enterprises, LLC of West Windsor, NJ, said, “Whenever money is taken out of the economy from the small business community, the consequences have multiple effects. Business owners cannot afford to give their employees timely raises, profit sharing and other fringe benefits are cut or withdrawn, business owners defer capital expenditures affecting their suppliers and the supplier workers, worker disposable income is reduced affecting vacations, restaurants, entertainment, and other activities. The workers who work in these industries also suffer due to the cutback. The Las Vegas economy is a prime example. Tax increases also disproportionately affect minority populations and their communities since small businesses usually operate in their own neighborhoods.”                                                                                                               

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The House Small Business Committee Chairman Sam Graves (R-MO) today testified during a House Armed Services Committee hearing about including the Committee’s small business contracting legislation in the Fiscal Year 2013 National Defense Authorization Act.

Earlier this year, the Small Business Committee introduced a series of bills that will create jobs by reforming the federal procurement system to provide more opportunities for small firms. The comprehensive effort to reform small business contracting resulted in legislation that will increase opportunities for small businesses, create protections to fight fraud and abuse, and empower advocates who fight for small businesses during the acquisition process.                                                         

To view the video CLICK HERE.  

The Chairman delivered the following remarks during the hearing:

“Thank you, Chairman McKeon, Ranking Member Smith, and members of the Committee. Given that federal government spends over half a trillion dollars each year through contracts, the federal procurement market is incredibly important for small businesses.  Improving small business opportunities for federal contracts is a triple play – small businesses win more contracts; workers win as the small businesses create jobs; and taxpayers win because small businesses bring competition, innovation and lower prices to save the government money and improve the health of the industrial base.

“Over the past year the Small Business Committee has held ten hearings on federal procurement issues.  These have resulted in 8 bills introduced by the majority, each of which has been voted out of Committee with bipartisan support.  This package of reforms has been supported by over 20 trade associations, including the National Defense Industrial Association, the Associated General Contractors, the Chamber of Commerce, the Financial Services Roundtable¸ the Minority Business Roundtable, Women Impacting Public Policy, and many others. 

“At the same time that the Small Business Committee was developing legislation, this Committee’s Panel on Business Challenges in the Defense Industry was holding hearings and roundtables addressing many of the same issues under the leadership of Mr. Shuster and Mr. Larsen.  I was pleased to be part of one of these roundtables with Mr. West and Mr. Shuster in Florida. The Panel’s final report, issued last month, and the legislation marked up by the Small Business Committee complement each other and reflect a common understanding of issues facing small business participation in the industrial base. 

“Therefore, I am here today to support the inclusion of the eight small business contracting bills in this year’s National Defense Authorization Act.  As I discussed in detail in my written statement, each of them ties to the Panel’s report, including raising the government wide small business contracting goal from 23% to 25%; increasing the level of responsibility for small business advocates embedded within each federal agency; addressing fraud and abuse and eliminating the deceptive practice of pass-throughs, improving mentor-protégé programs and the size standard review process; and lastly, addressing unjustifiable contract bundling. 

“Each of the bills received bipartisan support in Committee.  Each supports the intentions, if not specific recommendations, of the Panel Report produced by this Committee.  And most importantly, each bill provides more opportunity to small businesses to create jobs at a price that is in the best interest of taxpayers. 

“I am pleased that our two Committees are working so cooperatively, and hope that this language will be incorporated into this year’s National Defense Authorization Act.  Thank you.”

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Leading up to tomorrow’s hearing "The Tax Outlook for Small Businesses: What’s on the Horizon?” American small businesses shared their
 thoughts abouthow federal taxes, including new ObamaCare taxes and 2013 increases, are affecting their ability to grow and create jobs.

We are hesitant to hire new employees for fear of what new tax burdens await us with the expiration of older tax law and the new health care laws coming. We are concerned that these new issues may be the ones that push us out of business. There are many, many small businesses like ours that contribute to the health of the economy of our community. If we go out of business, many more people and businesses are hurt than just our own.

 Wendy Koller (Fort Smith, AR)
Koller Moving and Storage
4/17/12

I am holding off hiring employees and acquiring equipment until the Supreme Court (hopefully) strikes down the Health Care Act in full. Also, the expiration  of the tax cuts from the 2000's will have a tremendously negative effect on my business, as well as many other businesses I know of. How are even small companies supposed to plan andbudget for the future, when Congress and the Executive Branch cannot operate on a budget?

Jim Acher (Big Lake, AK)
Northern Pioneer Helicopters
4/16/12

We are struggling to recover from the recession and the government needs to realize that small business is the ones keeping the country moving.  Any additional taxes will only stop any chance of a recovery and they need to realize we need every penny to increase staff which puts people back to work!

Debbie Peacock (Mesa, AZ)
Fabricating Distributor
4/14/12

This administration has convinced a significant segment of voters that small business owners who "make" more than $250k per year are wealthy. But, they fail to  realize that the mythical $250k in my bank account on December 31 is needed to make payroll, rent, and buy inventory on January 1. Just like it was on June 30, or August 24, or any other day of the year. Except, on December 31, the government confiscates 30%.

Will Leaman (Roanoke, VA)
BCDS
4/16/12

President Obama's latest tax proposal includes changes which will specifically harm ESOP [Employee Stock Ownership Plan] Subchapter S companies. These changes will directly harm many middle class people. ESOP's have been proven to be an equitable way to engage people at all levels of a company in economic success. ESOP's have been proven to be more-resistant to layoffs than other companies. Why would we implement tax proposals that hurt the poor and middle class and which are anti-employment? Put it another way - if these proposals pass, we will likely need to  lay off 10 - 15% of our workforce.

Donald Waltzer (Rochester, NY)
H&C Tool Supply
4/16/12

I am a new start up business; it is extremely scary starting a business not knowing what the future will bring. We would like to hire more employees but it is hard to feel that things are stable enough that we can maintain their employment. If we are able to supply good jobs and we turn around and get hit with all these other costs, Healthcare, (which continues to escalate) taxes on small business, (which we have no clue where it could end)…all of these  issues place a damper on getting to excited about following our dreams when it seems to always be taken away from us for one reason of another. The policies implemented the pastfew years have precipitated this thinking.

Grant Kohler (Midway, UT)
Heber Valley Artisan Cheese
4/14/12

Increased taxes, regulations and health care costs make it increasingly difficult to the point that there's no sense in running a business. Whenever the  economy recovers and business picks up, I'll likely keep my staffing as low as possible by using more sophisticated software and outsourcing to Eastern  European companies to keep my costs low enough to afford the software.

Barry Lewis (Mechanicsville, MD)
Lewis Engineering Associates, Inc.
4/14/12

The current economic policies have just about destroyed the construction industry, including remodeling & new residential construction. New taxes & massive increases in new regulations continue to destroy the economy.

Robert Hellebuyck (Kansas City, MO)
Standard Improvement Co.
4/14/12

My business requires constant capital investment to keep up with changing technology. The Obama tax increases directly affect my ability to invest in equipment and prevent me from hiring people to expand my business.

Nathan Wicker (Dallas, TX)
Zelva Holdings
4/13/12

Recognizing the importance of Entrepreneurs’ feedback in the process of shaping the very policies that will help
determine their businesses’ sustainability and growth, Chairman Graves launched Small Biz Open Mic in September of 2011.

House Small Business Committee Chairman Sam Graves (R-MO) today issued the following statement on the Chamber of Commerce 2012 Q1 Small Business Survey. The quarterly surveys are designed to track the small business community’s outlook on their business, the local economy, and the national economy over time.

“This report shows that small businesses are not comfortable enough to hire, and it even shows a slight increase in the number of small businesses who have lost employees in the last year. The survey shows that pessimism about government over-regulation is at an all-time high, with 42 percent of small businesses citing it as a major concern and 52 percent citing regulations as the top threat to their business. If this doesn’t get the President’s attention, I don’t know what will.

“As Chairman of the Small Business Committee, I hear from small businesses every week about the burdens that are preventing them from growing and hiring. Last month’s poor unemployment report, coupled with surveys like this, should serve as yet another reminder to Washington that we still have work to do to help provide an environment for a strong recovery. We must address the policies that have led to an unemployment rate above 8 percent for 38 months, a national debt that is out of control, and rising gas prices.

“In order to help our small firms, we must provide more stability and relief on issues like taxes, regulations, energy costs, and government spending. The House will vote on a bill this week that will provide necessary tax relief for America’s small firms. The bill is simple, fair, and gives small businesses access to sorely needed capital to grow. It is legislation like this that small businesses need; I encourage the President and the Senate to join us in providing relief o our most robust job creators.”

Highlights of The First Quarter Chamber of Commerce Optimism Index Report:

The Small Business Outlook is Improving but Hasn’t Impacted Hiring Trends.

• While small business confidence is increasing, with a 7% increase in the confidence of the economy since January, hiring has remained stagnant. Q1 saw a slight increase in the number of small businesses who have lost employees in the last year (30%). Nearly half of small business respondents (49%) have kept the same number of staff, and only 20% have hired in the last year.
• Concerns about over-regulation are the highest we’ve seen in the past year, with 42% of small businesses citing it as a major concern and 52% citing regulations as the top threat to their business, increasing 9 percentage points since last June. 

Rising Energy Prices are a Growing Threat to Small Businesses

• There are real concerns about rising energy prices—and no sense that the administration is doing much about it. The perceived threat of gas prices on small businesses has more than doubled, from 10% of respondents citing it as a top concern in January to 24% in March. 
• Seventy eight percent think the Obama Administration has not done enough to keep prices low, increase domestic sources of energy, or support American job creation. In Congress, only 2% of Democrats are trusted to address domestic energy production. 

Small Businesses Believe They Should Lead Recovery

• The large majority of small businesses (92%) think the business community should lead the American Recovery, compared to 8% who think the federal government has the best solutions.
• The vast majority of small businesses still are looking for the government to get out of the way (81%) and for more certainty opposed to government assistance.

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Uncertainty from Washington is Holding Back Small Businesses By Chairman Graves

What affects job creation throughout Missouri and the United States? A lack of certainty hampering small businesses and preventing them from doing what they do best: expand their company and hire more Americans. As the spring begins and President Obama ramps up his rhetoric highlighting his administration’s plan to put Americans back to work, consider this: in a recent United States Chamber of Commerce poll, more than four out of five small business owners believe that government does more harm than good when it comes to growing their business. According to the poll, 86 percent of small business owners preferred greater certainty to more government assistance. As our nation’s premier job creators, small business owners are a self-sufficient group. Just like anyone making a decision on whether or not to invest in something, they want to know the rules, the cost and the return. In other words, they want to know what regulations they will face, how much it will cost to produce their product, and whether there will be customers to purchase their product. Small business owners cannot invest in their business and hire more employees in good faith if they do not have some measure of confidence in the answers to these simple questions. Solid predictions become even harder to make when our nation’s out of control federal spending remains unchecked, the implementation of the health care reform law is unclear, and the prospect of greater federal regulations threatens to make doing business harder and more expensive. This uncertainty creates doubt across the economy as a whole, making it more difficult for companies to find willing customers. A Gallup poll of small business owners last fall listed the three biggest problems facing small business as: government regulation (22 percent), consumer confidence (15 percent) and lack of consumer demand (12 percent). A real commitment to reining in government regulation and a serious plan to tackle the federal budget deficit will go a long way towards giving small businesses the steady ground they need to succeed and grow their business. As the Chairman of the House Committee on Small Business for just over a year now, I hear this message every week. At a recent hearing, Michael Fredrich, president of MCM Composites in Manitowoc, Wis., focused on the uncertainty caused by our spiraling federal deficit. “Please understand that the current level of federal spending and debt accumulation is not sustainable,” said Mr. Fredrich. “Small business owners know this, and that is why they are most concerned about this issue. A recent survey released by the Small Business and Entrepreneurship Council and the Financial Services Forum in November found that small business owners believed that changes to federal fiscal policy would be the single most effective strategy to encourage hiring and to get the economy back on track.” In addition to Mr. Fredrich, many small business owners have highlighted economic uncertainty as a concern when reaching out to the committee through our interactive website, Small Business Open Mic. “The inability of Congress and the White House to agree on the federal budget is a major source of uncertainty for my business,” said Edward Pope of Unico Technology in Westlake Village, Calif. “This is no way to run a country and it makes it challenging for those of us in small business to run our companies. I’d like to hire in 2012, but with no budget certainty, I’m having to put those plans on hold.” This sentiment was echoed by Steve Mitchell of G.R. Mitchell Inc. in Lancaster, Penn. “We are a small business that has business opportunities. But because of the uncertainty of the economy we are fearful of hiring new employees. Allow businesses to expand our economy. Help us put these people back to work.” Small businesses are the engine of our economy, with 27 million small firms creating about 65 percent of new jobs in the United States. Many of these businesses, here in Missouri and around the country, want to grow and expand, which will result in more jobs. But they are wary to invest in their companies when they do not know what is coming around the corner. The sooner that Washington provides small businesses the certainty that they need to grow, the sooner they can power a stronger economic recovery. U.S. Rep. Sam Graves, a Republican representative from Tarkio, Mo., is the chairman of the House Committee on Small Business. Read the Op-ed Online HERE

House Small Business Committee Chairman Sam Graves (R-MO) today issued the following statement on the March National Federation of Independent Business (NFIB) Small Business Optimism Index. The Index fell by almost 2 points in March, down to 92.5 after February’s 94.3 and six consecutive months of gains. The report showed that small business owners’ expectations for sales and profits fell, along with any plans to hire more workers.

“The March NFIB Index report sheds some light on why we saw a weak unemployment report from the Bureau of Labor Statistics last Friday. This should be a reminder to Washington that despite the winter’s more promising economic data, we still have work to do to help provide an environment for a strong recovery. Due to many of the President’s policies, unemployment has been too high for too long, the nation’s debt is out of control, and gas prices are rising; we cannot ignore these realities.

“In order to address the pessimism felt by small businesses, we must provide more stability and relief on issues like taxes, regulations, energy costs, and government spending. In the coming months, our Committee will take a close look at these issues and how they relate to small businesses. Congress faces important decisions this year that will have a big impact on small business optimism and their certainty about what the economic future holds; it is important to keep this in mind as we make decisions in Washington.” 

Highlights of The March NFIB Optimism Index Report:
• Sales and Earnings: Owners reporting higher nominal sales over the past three months (seasonally adjusted) gained a surprising 8 points, rising to a net 1 percent, and providing the best reading since December 2007. However, even with the improvements in retail sales in recent months, 22 percent of owners surveyed still reported “weak sales” as their top business problem.
• Capital Expenditures: The frequency of reported capital outlays over the past six months fell 5 points to 52 percent, a reversal of the gains made during the two months prior. Of those making expenditures, 36 percent reported spending on new equipment (down 4 points), 20 percent acquired vehicles (down 3 points), and 13 percent improved or expanded facilities (unchanged).
• Job Creation: The net change in employment per firm seasonally adjusted was 0.22, far above January’s “0” reading. Seasonally adjusted, 10 percent of the owners added an average of 3.1 workers per firm over the past few months, and 13 percent reduced employment an average of 2.1 workers per firm.
• Credit Access: Only four percent cited financing as their top business problem, compared to 20 percent citing taxes and 19 percent citing unreasonable regulation. Ninety-two (92) percent reported that all their credit needs were met or that they were not interested in borrowing.

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House Small Business Committee Chairman Sam Graves (R-MO) today issued the following statement on the President signing the Jumpstart Our Business Startups (JOBS) Act of 2012 into law:

“I applaud the President for signing the bipartisan JOBS Act into law. This is further proof that both parties can put aside politics to work together to pass legislation that will boost the economy through helping our nation’s most robust job creators – small businesses. Access to capital continues to be a significant challenge for entrepreneurs and small firms who want to start or grow their business, and this law will help provide solutions to that problem.

“Americans who want to start new businesses currently face many discouraging obstacles that have dampened the entrepreneurial spirit of this country and damaged a critical source of job creation. Since 2007, we've seen a 23 percent drop in new business creation, according to the Bureau of Labor Statistics, and October’s annual World Bank's Doing Business report found that the United States fell to No. 13 for ease of starting a business, down from No. 3 in 2007. The JOBS Act will help address our recently declining entrepreneurial track record by providing opportunities, increasing capital formation and paving the way for more small-scale businesses to go public and create more jobs.”

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Small Vendor Protests Delay $32 Billion U.S. Drug Contract
By Kathleen Miller

DMS Pharmaceutical Group Inc. says it’s had enough.

After the Department of Veterans Affairs excluded small businesses from its largest contract for the third time, the 25-employee Park Ridge, Illinois, drug wholesaler filed a protest. PBA Health, a small Kansas City, Missouri, drug wholesaler, also has protested being shut out of the drug distribution deal, now valued at about $32 billion.

“It’s like it’s set up for failure,” Jean Hawkins, a DMS vice president, said in an interview. “We do similar work for the Department of Defense. It’s not like we’re some small business who doesn’t know what they’re doing.”

The companies say their cases show how hard it is for small businesses to crack the federal government market, especially for large contracts, and why the government has missed its small-business contracting goal every year in the past decade. The three largest U.S. drug distributors by revenue -- McKesson Corp., Cardinal Health Inc. and AmerisourceBergen Corp. -- are all vying for the business.

“When you eliminate a role for small businesses, you create these behemoths that are too big to fail,” said Nick Smock, the chief executive officer of PBA Health, which has about 100 employees. “Small businesses should have the first shot at bidding on these kind of contracts because we’re really the job creators in this country.”

Award Delayed

DMS and PBA Health have complained to the U.S. Government Accountability Office, which arbitrates contract disputes. The GAO must issue a decision by April 9 on the DMS protest, and by June 4 on the PBA Health case, according to the agency’s website. Josh Taylor, a VA spokesman, declined to comment on the protests.

The new contract is expected to have about the same value as the current one held by McKesson, or about $4 billion a year for as many as eight years, according to the VA. The award will be delayed until the protests are resolved, Jo Schuda, a VA spokeswoman, said in a March 26 e-mail. Eric Shinseki, the VA secretary, had hoped to award the new drug contract by the end of last month, according to a December letter he sent to a U.S. lawmaker.

PBA Health, DMS and three other small pharmaceutical wholesalers have asked Representative Sam Graves, a Missouri Republican who chairs the U.S. House Small Business Committee, to intervene to help small businesses win a portion of the work.

Letter to Lawmaker

“The Veterans Affairs has a $4 billion budget for pharmaceutical goods, which gives it ample opportunity to award small business set-aside contracts if it chooses,” the companies said in a January letter to Graves. “Instead, the VA continues to follow the same process every time by awarding the entire contract to one dominant pharmaceutical wholesaler, even though there are competitive and capable bids from small businesses.”

Graves and the committee have been “engaged in an aggressive contracting reform initiative to help small business” over the last few months, said DJ Jordan, a spokesman for the House Small Business Committee. The committee is looking into the VA contracting issue raised by the letter, Jordan said in an e-mail today.

“We agree that small business contracting is a great value for the taxpayer and a way to boost job creation,” he said.

One Warehouse

Kris Fortner, a McKesson spokesman, declined to comment in an e-mail yesterday.

The companies say they are in a Catch-22 situation: The agency rejected them in part for not meeting conditions they might satisfy if they won a big enough piece of the contract.

DMS’s Hawkins said VA officials determined her company isn’t eligible to assist with the drug supply work because it only has one warehouse and lacks an online inventory management system. DMS planned to add warehouses and the required technology if it had received a spot on the contract, she said.

“We weren’t going to do these things without the guarantee of business,” Hawkins said.

The VA faulted PBA Health for having only one warehouse and for the pricing it offered, said Don Raby, PBA Health’s chief financial officer. Yet the company provides next-day delivery to about 45 states, and it would provide better pricing if it were allowed to serve the entire contract, rather than just the roughly 10 percent of work that was set aside for small business, Raby said.

Missed Targets

“Give us the whole $4.5 billion contract, and our pricing is going to be a lot different,” he said in an interview.

The government has a target of awarding 23 percent of eligible prime, or direct, contracts to small businesses. It awarded 21.8 percent of $422.4 billion in such awards to small companies in the fiscal year that ended Sept. 30, according to federal data posted online.

The U.S. has missed its small business contracting goal every year in the past decade, led by annual shortfalls at the Pentagon, which represents more than two-thirds of all prime contract revenue. The VA was one of the top performers. It awarded 34 percent, or about $6 billion of $17.6 billion in eligible awards, to small businesses last year, bolstered by spending with companies owned by disabled veterans.

McKesson, the largest U.S. drug distributor by revenue, has been the VA’s primary medicine supplier for veterans’ hospitals and the department’s mail-order pharmacy since 2004. The San Francisco-based company has received as much as $27 billion in awards under the current contract, according to data compiled by Bloomberg Government. The contract expires in May. McKesson’s total revenue last year was $112.1 billion.

“A spot on a contract like that could have really moved the needle for a company like us,” PBA’s Raby said. “That would be a boon for our business, our hiring, our local economy. Something like that doesn’t really move the needle much for McKesson, I’d imagine.”

A GAO decision favoring the small businesses won’t guarantee they receive any work. Federal agencies aren’t required to comply with GAO decisions, although it’s rare for a department to ignore its guidance.

House Small Business Subcommittee on Agriculture, Energy and Trade Chairman Scott Tipton (R-CO) today held a field hearing on the impact of U.S. trade policies on small businesses and manufacturing at the Pittsburgh Technology Council in Pittsburgh, PA. The hearing was held near the district of Subcommittee Ranking Member Rep. Mark Critz (D-PA).

According to Census data, the United States exported over $2.1 trillion in 2011, or 14 percent of the gross domestic product (GDP). In 2010 alone, American exports supported nearly 10 million jobs, including an estimated 4 million for small businesses.

“Trade is a major component to the U.S. economy, and American businesses engaged in trade help support and create millions of good-paying local jobs,” said Chairman Tipton. “Multilateral and bilateral free trade agreements (FTA) create new market opportunities for small business exporters by removing trade barriers and making it easier to export. As a result, exports to these countries are growing at a faster rate than the rest of the world. In 2011, goods manufactured in the United States had a $49 billion trade surplus with FTA countries.

“With just one percent of the 28 million small businesses exporting, there is great untapped potential for economic growth and job creation. However, we must hold countries accountable for unfair trade practices to ensure small firms have a level playing field. It is important that we hold hearings like this to closely analyze how our trade policies affect small businesses.”

For related hearing documents, click here.

Notable Witness Quote:

Joseph Hanley, Director, Mid-Atlantic Region, U.S. Department of Commerce’s U.S. Export Assistance Centers, Philadelphia, PA, said, “Products and services carrying the 'Made in the USA' designation are valued around the world for quality and reliability. Increasingly, U.S. exports are contributing to America’s jobs growth. Jobs supported by exports increased to 9.7 million in 2011, up 1.2 million since 2009. In 2011, each billion dollars of U.S. exports supported just over 5,000 jobs. Through February 2012, U.S. manufacturers alone have added 429,000 U.S. jobs since 2010.”  

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Micro-Unions and Ambush Elections: Two Very Bad Ideas from Labor Regulators By Chairman Sam Graves

The rules to kickball are fairly simple. You kick the ball and then run to the base. If the ball beats you to the bag, or you get tagged, then you are out. It’s a lot like baseball. But what if the umpire changed those rules in the middle of the game? What if the umpire made more rules that cost your team time and money to comply with? What if the rules seemed to be structured to help the other team score? That would certainly make the game less fun and fewer people would want to play. Unfortunately for too many small businesses, this isn’t an off-the-wall scenario, it’s reality. In 2007, a bill known as “card check” — allowing the creation of union bargaining units without secret-ballot elections — passed the House. It did not come to a vote in the Senate. Yet much of what wasn’t passed into law is being enacted through agency regulations. The National Labor Relations Board recently handed down two rules I believe will make it much more difficult for small businesses to survive. The first allows the formation of micro-unions. These unions could be made up of two to three workers. A small business owner would have to spend money and resources fighting professional union organizers. Can you imagine different parts of a grocery store belonging to different unions? Would it make sense for the cashiers to belong to one union, the meat department belonging to another one and the stocking clerks belonging to a different one? How could a small business owner keep up with all the different groups? Another new rule concerns quickie or ambush elections. These are elections that are scheduled and conducted in a shortened time frame. The small business owners may be caught unaware and have little or no time to tell their side of the story. An important decision like unionization shouldn’t be rushed. Employers should have time to give their side of the story and employees should have enough time to weigh both sides. The NLRB has also proposed to make it easier for unions to get private information on employees from the company. This is a breach of trust. Those employees could be subjected to constant and aggressive lobbying on their home telephones, emails or at their doorsteps. I believe that if an employee wants to give out their information, they should be able to. However, I do not believe employers should be required to hand over personal information without the employee’s consent. What’s missing from all these rules is common sense. The National Labor Relations Board seems to be tipping the rules of the game in favor of big labor. I believe that micro-unions and ambush elections do little to help workers, but can be devastating to small businesses. In November, the House passed H.R. 3094, the Workforce Democracy and Fairness Act, to overturn these new NRLB rules. The Senate has an opportunity to do the same with the companion bill, S. 1843. I hope the Senate will join us in this common sense proposal to keep the rules of the game fair. U.S. Rep. Sam Graves, a Republican from Tarkio, represents Missouri’s 6th District and is the chairman of the House Small Business Committee. Read the Op-ed Online HERE

 

 

Small Businesses Short-Changed on U.S. Contracts for 10 Years

 

The U.S. government has missed its small-business contracting goal every year in the past decade, a sign of the continuing barriers facing companies seeking federal work.

The government has a target of awarding 23 percent of eligible prime, or direct, contracts to small businesses. It awarded 21.8 percent of $423 billion in such awards in the fiscal year that ended Sept. 30. The Pentagon, which represents more than two-thirds of all prime contract revenue, has also missed its goal for 10 years, according to federal procurement data.

The shortfalls have spanned both Republican and Democratic administrations, which have prodded officials to boost small-business awards. President Barack Obama’s Office of Management and Budget told agencies in a February 2011 memo that their underachievement deprives taxpayers and “takes away opportunities for small businesses to create jobs and drive the economy forward.”
The government’s track record is “a real eye-opener,” said Robert Burton, former acting administrator of the Office of Federal Procurement Policy and now a partner at the law firm Venable LLP in Washington. “As goes the Department of Defense, goes the rest of the agencies. If DoD doesn’t make it, probably the rest of the government isn’t going to make it.”
‘Known Quantities’

Agencies may be reluctant to take chances on small businesses, which generally don’t have the performance records of large corporations that are “known quantities,” Burton said.

“I’m convinced that if the government wanted to meet the goal, they could do it, but I don’t know that the government really wants to do it,” he said.

The Small Business Administration is working with agencies to help them meet their goals, John Shoraka, a SBA acting associate administrator, said in an e-mail.

“The goal is to make the goal,” Shoraka said. “Twenty-three percent is within reach, and the SBA thinks it should be the government’s objective to meet that goal.”

The federal government has “lofty goals,” said Steve Westerlund, president of Aquasis Services Inc., a small business in Pensacola, Florida, that collapsed after doing work for the Department of Defense for 27 years. “But nothing ever happens.”

Closed Business

Westerlund said his company did “the non-sexy stuff,” which included delivering mail, maintaining laundry equipment in military dormitories, and providing administrative support for Naval flight training at Whiting Field near Pensacola.

His military contracting officer told him in September 2009 that 30 of his 100 employees were being converted from contractors to federal workers, as part of a government effort to outsource less of the work, he said. Westerlund’s company had about $4.5 million in annual revenue at the time.

“I couldn’t believe it,” he said. “I knew that was the beginning of the end.”

Westerlund lost his remaining employees the following year and had to close his business. He said he’s now living off savings and still looking for federal contracting work.

It’s getting harder to win federal awards, said Annette Wright, president of Toledo, Ohio-based Unity Cable Technologies Inc., which has done work for the Pentagon and the Department of Homeland Security.

Business Winner

Wright started her company in 1994 as a wireless cable and electrical product supplier. She said she once had three employees, and that she now can’t afford to support anyone besides herself.
“I can’t pay anybody if I’m not winning contracts,” Wright said. “I will bid on supplying blankets these days if I can find them and be competitive on it.”

Small business contract winners such as Jeanne Peck, president of Nash Locke LLC, a McLean, Virginia-based technology company, said they’re not surprised by the government’s poor showing.
“I don’t want to sound like sour grapes, but I think people are comfortable doing business with people and companies they know,” Peck said. “Most little companies don’t have three or four years to mess around building brand new relationships. It is very hard to stay alive.”

Peck’s company won its first direct contract in September, when the Army Corps of Engineers awarded Nash Locke a $52,800 order to manage a technology project, according to the government’s federal procurement database.

Persuading the Government

The company had been a subcontractor for the Pentagon and Department of Education for four years, which she said helped keep her business afloat as she tried to persuade the government to give her that first direct contract.

Some members of Congress want to boost the government’s goal and penalize agencies.

Representative Sam Graves, a Missouri Republican, in January introduced a bill, HR 3850, that would lift the target to 25 percent and withhold the bonuses of senior agency executives if their agencies miss goals.

“The fact that the federal government hasn’t met the 23 percent small business contracting goal is very disappointing, not only for me but for thousands of small businesses who are losing out on opportunities,” Graves said in an e-mail. “It is particularly frustrating that the Department of Defense, which accounts for approximately 70 percent of all federal contracting, has steadily decreased its small business share over the past several years.”

Defense Department

The Pentagon’s direct awards to small businesses have been decreasing since 2009. The Defense Department had a goal of awarding 22.3 percent of eligible prime awards to small businesses in fiscal 2011. It awarded 19.9 percent of $290 billion in such contracts that year.

Total military contracts, including subcontracts, to small businesses have increased from fiscal years 2010 to 2011, Andre Gudger, director of the Pentagon’s office of small business programs, said in an e-mailed statement. The total figures for subcontracts aren’t publicly available.

“DoD has several ongoing initiatives that will continue to increase opportunities for small business participation in DoD acquisitions,” Gudger said.

The Department of Energy, the second-largest buyer across the government, missed its goal of 6 percent last year, awarding $1.3 billion, or 5.3 percent, to small businesses. The Department of Health and Human Services, the third-largest buyer, exceeded its goal of 19.5 percent, awarding $4.5 billion, or 24 percent, to small firms.