Greater procurement role sought for small businesses.

• Author: Burnside, Chandra
• Position: GOVERNMENT POLICY NOTES

The National Defense Industrial Association is placing major emphasis upon expanding small business participation in procurements by the Defense Department and other federal agencies.

Nearly two thirds of NDIA's corporate members are classified as small businesses. Small businesses play an important part in the overall U.S. economy, representing more than 99 percent of all employers. They include 51 percent of private-sector workers, 51 percent of workers on public assistance and 38 percent of workers in high-tech jobs. Small businesses account for nearly all of the self-employed, which comprise of 7 percent of the work force. Small businesses play a role in federal contracting, receiving about 33.3 percent of federal prime and subcontract dollars.

Women own either all or part of approximately 9.1 million small businesses. They are the primary owners of 5.4 million of those enterprises

In 1997--the latest data available for minority-owned figures--Native American-owned firms had experienced an 84 percent increase in number to a total of 197,300 firms. Asian-owned businesses had increased 30 percent to a total of 913,000 firms. Hispanic owned firms had risen 30 percent to a total of 1.2 million firms, while African-American enterprises had increased 26 percent to a total of 820,000 firms.

Small businesses create two-thirds to three-quarters of net new jobs. However, the small firms share of all jobs is about 50 percent.

The reason the share stays at 50 percent is that when small businesses create new jobs, the businesses expand and become medium or even large firms. Of 110.7 million non-farm, private-sector workers in 1999, 55.7 million worked for small firms with fewer than 500 workers, and 55.7 million were employed by larger firms. A total of 40.1 million of the 55.7 million worked for firms with fewer than 100 employees each.

The Small Business Innovation Development Act, passed in 1982, has helped thousands of enterprises to compete for federal research and development awards. Between then and 2000, almost $11 billion in Small Business Innovation Research awards were granted for more than 59,500 projects. These awards have allowed firms to perform more research and development projects with commercial potential.

During 2001, the U.S. government made more than five million individual purchases worth more than $50 billion from small businesses, according to an annual report by the Federal Procurement Data System. This amounted to 22.81...