Where Obama, Romney Stand on Small Business Contracting

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The Associated Press is looking at the positions that President Barack Obama and Republican presidential candidate Mitt Romney have taken on small business issues. The AP submitted questions to both candidates' campaign staffs. Here's where they stand on finding ways for small businesses to win more federal contracts:

BACKGROUND: Winning more federal contracts has been an issue for small businesses for decades. Federal law calls for 23 percent of contract dollars to go to small businesses. Data for fiscal 2010, the most recent numbers available, showed that small businesses received 22.7 percent of those dollars, up from 21.9 percent in 2009.

A bill in Congress would raise that amount to 25 percent. One of the most important issues is what's known as bundling. That's the practice of awarding a contract to a large company with the expectation that that company will turn around and subcontract to small businesses. Critics of bundling say small businesses don't get as many of these subcontracts as they should because of burdensome paperwork, favoritism and fraud. The Romney campaign has pointed to requirements that union workers be used on large federal construction contracts and the rule that workers on construction projects costing more than $2,000 must be paid at least the same amount as workers on similar projects in the area. The wage requirement is mandated under the David-Bacon and Related Acts.

THE QUESTION: List three specific things that you would do as president to help small businesses win more government contracts.

ROMNEY'S POSITION: "Gov. Romney is committed to ending favoritism in government contracts, especially those that give unions special advantages over other competitors, including small businesses. He will reverse President Obama's Executive Order requiring agencies to use union labor on large projects. A Romney administration will also repeal Davis-Bacon so that government projects can be competitively bid out to all contractors."

FACT CHECK ROMNEY: The Romney campaign's response focuses on two issues, unions and wages. It does not address other ways to funnel more federal contracts to small businesses.

OBAMA'S POSITION: "Under President Obama, nearly $100 billion each year in federal contracts go to small businesses, up from $83 billion in 2007. More than 32 percent of all federal contracting dollars in the President's Recovery Act went to small businesses. To give a few specific examples of actions the President is taking to build on this record:

  • The President established a new Interagency Task Force to create stronger rules around small business contracting requirements, improve outreach to small businesses, and improve training for agency personnel responsible for acquisition.
  • The President's new QuickPay systems cut in half the amount of time that it takes small business contractors to receive payment from the federal government.
  • President Obama launched an unprecedented small business outreach program last year. More than 22 top administration officials, including Secretary of Energy Steven Chu and Secretary of Veterans Affairs Eric Shinseki, have joined more than 10,000 small business owners at 20 matchmaking events around the country."

FACT CHECK OBAMA: The Obama campaign's response does not address plans to increase small business contracting opportunities if he wins re-election.

ANALYSIS: "Mr. Romney's position on small business federal contracting does not speak to the core issues and rights of America's small businesses to receive fair access to tax-payer funded federal contracts," says Margot Dorfman, CEO of the U.S. Women's Chamber of Commerce, who has testified before Congress about contracting issues. Dorfman says Romney "talks about competition but focuses on the narrow issue of unions without addressing core competitive issues including the continual decline in the number of new suppliers to the U.S. government and the declining number of companies securing contract awards each year."

Looking at the Obama campaign's statement that nearly $100 billion in federal contracts went to small businesses each year between 2007 and 2010, Dorfman notes that the government still failed in each of those years to reach the statutory 23 percent minimum goal. "The growth Mr. Obama mentions is simply due to the tremendous increase in the overall federal spending during this time," she says. Dorfman says the Interagency Task Force did establish some promising ideas but none of these ideas have driven much progress, as evidenced by the shortfalls in contracting with small businesses. "Nor has Mr. Obama used his executive authority to clearly call upon agency leaders to bring about fair access to contracts for small businesses and hold these appointed leaders accountable for their actions," Dorfman adds.

Steven Schooner, a George Washington University Law School professor who specializes in government contracting law, says of the Romney campaign's proposal, "Threatening to repeal Davis-Bacon is an impractical and, probably, empty promise, but it remains an extremely popular campaign theme. The Romney campaign hopes to exploit what it sees as a target of opportunity in President Obama's pro-union bias in government contracting. It is not difficult to demonstrate that, as a result of long-standing congressional mandates, the government consistently pays above-market wages to contractor labor. Conservatives and liberals can differ on whether that makes sense. But President Obama's initial Executive Orders signaled a deep commitment to aggressively supporting organized labor's interests in federal contract work, and the President has not wavered since."

Of the Obama response, Schooner says the president has "little to offer small business."

"He cannot, with a straight face, promise small businesses more contracting dollars in the foreseeable future," he says. "The era of relentless growth in federal procurement spending is over. After a decade of extraordinary growth, federal contracting dollars plateaued for the last few years (at around $530 billion a year), all signs suggest that we reached a peak, and small decreases in spending aren't out of the question. In other words, small businesses will continue to compete with large business for their slice of a stable or shrinking pie."