The U.S. government is the world’s largest single purchaser of goods and services, offering a worthwhile market opportunity for many small businesses—including minority-owned firms. Federal goals for agency spending with minority-owned firms as well as the 8(a) program, which offers restricted competition for qualified firms, can help minority-owned firms gain experience and greater contracting opportunities.
A recent survey conducted among small business owners who are active federal contractors1 shows that they are working harder for less return than they were a year ago. A new report, Women and Minority Small Business Contractors: Divergent Paths to Equal Success, focuses on key trends among minority-owned firms in federal contracting. This report, published by American Express OPEN’s Victory in Procurement (VIP) program, finds that while minority business owners who are active contractors have reached the same level of contracting and overall business success as all active small contractors, success has come with a higher price tag.
Notable survey findings include:
•Minority-owned active contractors have achieved the same level of procurement and business success as all active small contractors. Over one-third (37 percent) of minority active contractors have received $1 million or more in federal contracts to date, identical to the 38 percent of all active contractors who have reached the same level of procurement success. In addition, 20 percent of minority contractors employ 50 or more workers and 41 percent have $1 million or more in annual revenues, virtually the same as the 18 percent and 47 percent seen among all active small business contractors.
•That equal success has come with a significantly higher price tag. On average, active contractors invested $103,827 in staff and financial resources seeking federal contracting opportunities during 2010. During that same period, minority contractors spent fully 35 percent more seeking those same opportunities—a total of $139,709. In addition, the overall investment small businesses made seeking federal contracts increased by 21 percent from 2009 to 2010, and it increased even more among minority-owned firms (29 percent).
•Minority business owners report that special procurement designations or certifications have proven to be very helpful in getting contracts. Self-certifications as well as qualified designations can increase procurement opportunities for many small firms. Over eight in 10 (81 percent) of minority-owned firms have one or more of these designations, compared to 70 percent of all active contractors. The most helpful certifications for minority contractors are 8(a) status (65 percent have found it very or extremely useful), service-disabled veteran status (61 percent very/extremely helpful), and veteran status (48 percent).
•Minority business owners don’t go it alone and are more likely to have been helped by their peers. Most small business owners who are active federal contractors agree that there has not been a single turning point to procurement success, just a long journey in which perseverance was the key. That said, however, nearly one in three (29 percent) minority business owners say that finding another business owner who shared their experiences with them was a turning point, a larger share than the 22 percent of all business owners who pointed to peer support as a turning point.
Other key findings in the report include the finding that minority business owners are much more likely than the average active small business contractor to point to agency OSDBU officials as having had a positive impact on their contracting success. This analysis also shows that it took minority business owners longer to win their very first federal contract: an average of 1.7 years and 6.1 unsuccessful proposals before notching their very first victory in procurement, compared to 1.3 years and 4.4 unsuccessful bids among all small firms.
Finally, while the investment that minority business owners have made in seeking contracting opportunities has increased higher than average between 2009 and 2010, minority firm success rates have actually improved by 10 percent, compared to an overall 8 percent decline among all small firms. And subcontracting success rates have declined at a lower rate, down 12 percent among minority firms compared to a 27 percent decline overall.
This report is the second in a series of four reports that will be published from the second annual survey among active small business federal contractors. The first, Trends in Federal Contracting for Small Businesses, focused on the overall situation for small firms in the federal marketplace today as well as key trends seen over the past year. Other upcoming reports will focus on how strategies and outcomes change with level of procurement experience, and what lessons can be shared from firms that focus on subcontracting as a procurement strategy.
To download and read the entire 11-page report click here, and to learn more about American Express OPEN’s VIP program, visit www.openforum.com/governmentcontracting.
An active contractor is defined as a business that is registered on the Central Contractor Registry to do business with federal agencies and is either currently performing on a federal contract or has performed on a contract within the past five years.
Article taken from Open Forum.
No comments:
Post a Comment