Proposals to open up the federal government’s small-business designation to a larger number of businesses had some local engineering firms worried they suddenly would find themselves competing with firms up to 10 times their size when they sought federal contracts.
The new standards, released earlier this month weren’t as drastic as they had feared. Architecture businesses that make up to $7 million annually now qualify as small businesses under the Small Business Administration’s new rules, up from $4.5 million.
The federal agency increased the small-business size standards for a total of 34 industries. The idea was to allow more small businesses into the “federal contracting universe,” said John Hart, a regional advocate with the SBA.
The new size standards go into effect March 12.
When the agency’s proposed changes came out last spring, those applying to the architecture and engineering industry caused the most alarm, Hart said.
“It is going from seven- or eight-man architecture firm to one that has over 100 people,” Hart said. “It was a drastic change we thought needed to be re-examined.”
Even companies that have more than 40 employees are hard for small firms to compete with because they have marketing departments that can focus specifically on the lengthy proposals required to apply for federal contracts, said Michael Russell, owner of Russell Engineering in Durango.
Russell’s firm has 17 employees and two offices.
Government contracts make up about 10 percent of his business, down from about 18 percent a few years ago, Russell said.
Though government work has fallen off a bit in the last two years, Russell said he expects it to pick up.
“When there are budget cuts, the roads and water and sewer systems still deteriorate, so at some point, (the government) is going to have deferred maintenance it’s going to have to take care of,” he said.
At the same time, competition for federal dollars also seems to have increased, said Parker Newby, president of Durango-based Goff Engineering. Government work is a valuable supplement to private-sector work, which also has seen a decline, he said.
Goff sees about 10 percent of its business come from government contracts, Newby said.
Small Business Administration regulations are important for the vast majority of business owners in Colorado. In 2009, small businesses represented 98 percent of all employers and employed 49 percent of the private-sector workforce.
Under the Small Business Jobs Act, signed into law in 2010, the Small Business Administration is required to periodically review its size standards and make adjustments to reflect market conditions.