3/29/2011 8:00:00 AM
By John Byrne
Vice President and CEO
Byrne Transportation Services LLC
This Opinion piece appears in the March 28 print edition of Transport Topics. Click here to subscribe today.
The U.S. transportation industry, which contains many hundreds of small businesses among the sizable firms, has a government champion: the Small Business Administration.
For more than half a century, the Small Business Administration has focused on getting the small firms a share of the action when a government agency or a government contractor purchases goods and services. This is a sizable amount of spending: According to the SBA, the figure for fiscal year 2008 was $550 billion.
In a perfect SBA world, 23% of that amount â€” more than $126.5 billion in fiscal year 2008 math â€” would be spent on the services and products provided by organizations defined as â€œsmall.â€�
Thereâ€™s another math that takes effect in the event that a government contractor fails to meet or exceed the 23% requirement: Fines can be onerous.
Good as it can be for a company to prevail in a competition for a government project with a value greater than $650,000, the success comes with a serious obligation and some peril. The company has to fulfill its contract at the proper level of quality at the right time â€” while allocating at least 23% of the total spending, at least $149,500 â€” for purchase of services and goods from small businesses.
Fall short of the 23% mark and incur a significant fine. Purchase goods and services from firms with inferior abilities and incur the risk of fines for failure to meet obligations of quality and completion date.
The peril is the same for governmental units. While conscientiously managing the sourcing of services so that small businesses in various categories have an opportunity to participate, the agency itself has to blend the providers together so that the full project is successful. Categories of small business are:
• Businesses owned by someone with a disability.
• Businesses with a principal office in a HUBZone (historically underutilized business area).
• Businesses whose owners are members of socially and economically disadvantaged groups.
Â© 2010, Transport Topics Publishing Group. All rights reserved.
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