As the November election approaches, the Federal government sits on high pressure to cut spending to check an ever growing national deficit. The Effect: Budget cuts and fat trimming by all agencies throughout the public sector.
Despite a naked eye positive yield, some feel underlying rumblings in the other direction. Small business government contractors are predicting cutbacks on spending that will lead to Federal agencies not renewing their government contracts. With many small business clients being hugely reliant on government contracts to sustain their revenue, some claim as much as 80% of their sales being government contracts. Losing Federal agency business would make it difficult for these private sector companies to stay afloat.
Closer examination of the issue doesn’t provide any comfort to small business owners. The findings show that government contracting to small businesses has been in peril longer than most think. According to the Small Business Administration, the Federal government has been below quota of providing government contracts since 1999. Being in the midst of this downward trend, how will the November election results affect this issue?
President Obama appears committed to remedying these contract shortcomings as he has put through legislation as recently as 2011 to expand small business research programs such as Small Business Technology Transfer (STTR) and Small Business Innovation Research (SBIR), with specific focus on developing information technology firms.
While previous documentation has Governor Romney praising and backing small business innovation, his recent tone toward the subject has been more focused on the excessive spending aspect. His adamant feelings that deficit spending must be reduced at any cost, has dictated a plan to reform government entitlement programs. While the reformation details are unclear, expansion would be a difficult component to expect.
As the election draws near, government contractors must keep a wary eye on the horizon, as the future of many contracts, and thus many small businesses, may be decided soon.
