Small Business Administration in President’s Cabinet

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For the first time ever, the Director of the Small Business Administration will be a member of the President’s Cabinet. By Executive Order, President Obama elevated, SBA Director Karen Mills to Cabinet level position. The move was part of reorganization and streamlining of government agencies undertaken by the President. Given the critical importance that small businesses play in our economic recovery, the Obama Administration should be applauded for not just “talking the talk” about small businesses, but also for “walking the walk”.

Five other functions will be consolidated in one department. They include the Commerce Department, Office of US Trade Representative, Export-Import Bank, Overseas Private Investment Corporation, and Trade and Development Agency. However, to do this the President Cannot Use Executive Order but must get congressional approval. According to the Washington Post and the Globe and Mail,  the move is part of the administration’s effort to increase greater government efficiency and reduce redundancy. It is expected to lead to the elimination of 1000 jobs and save $3 billion over the next 10 years.

While the SBA was founded officially in 1953, its history dates back to the Second World War when growing concern was being expressed over the lack of participation of small businesses in war-related production. The organization’s mission is to assist an advance the interest of small businesses and ensure they receive any fair proportion of government contracts. Today, the organization has a number of programs in areas such as finance, government contracting, management assistance, and special outreach programs to minorities, women, veterans and disadvantaged business owners.

The organization is critical to the health and well-being of small businesses, but it is particularly important for minority and women-owned businesses that often encounter disadvantages and discrimination in the private marketplace. As a result, they tend to pursue government contracting opportunities in much greater numbers than nonminority business owners. For example, one EuQuant study found minority-owned small businesses comprised almost 40% of federal government contractors while representing only 20% of all small businesses and society. The table shows that the percent of small business contractors in each race and ethnic group is as follows: Asians 6%, blacks 15.3%, Hispanic’s 10.8%, Native Americans 4.3%, and subcontinent Asians 4.3%, and nonminorities 59.2%.

A primary mission of SBA is to create prime contracting and subcontracting opportunities for small businesses among federal departments and agencies. SBA establishes goals for departments and agencies, and it monitors the achievement of those goals annually. The subcontracting goals in 2010 were as follows: small businesses 27.3%, women-owned small businesses 5%, small disadvantaged businesses 5%, service disabled veterans 3%, and businesses located in HUBZones 3%. In this new cabinet position, small-business owners will be looking for more attention and resources to be directed towards ensuring equal participation and contracting opportunities.

 
Industry

Asian Pacific

Black

Hispanic

Native Americans

Sub-continent Asian

Non-Minority SBCs

Construction of Buildings

6.4%

21.5%

18.7%

11.5%

3.0%

38.8%

Heavy Construction

3.3%

10.8%

12.7%

7.7%

1.3%

64.2%

Specialty Trades Contracting

4.0%

15.9%

13.9%

4.7%

1.0%

60.4%

Textile and Leather Manuf.

5.9%

12.7%

9.7%

3.3%

2.3%

66.2%

Paper, Printing and Manuf.

5.6%

18.8%

13.4%

3.2%

2.5%

56.4%

Chemical, Non-Metallic

5.4%

8.7%

6.8%

1.7%

3.5%

73.8%

Plastics and Rubber Manuf.

2.4%

3.9%

8.3%

2.8%

2.3%

80.2%

Primary Metal and Mach

4.0%

3.7%

7.9%

3.3%

2.0%

79.2%

Computer and Electr. Manuf.

8.9%

9.2%

6.5%

2.3%

6.0%

67.0%

Wholesale Trade

5.4%

14.9%

9.7%

3.5%

3.3%

63.2%

Publishing, Except Internet

7.1%

14.6%

6.3%

1.8%

8.5%

61.8%

Internet Publishing, Telecom

8.1%

24.9%

9.4%

4.2%

11.0%

42.4%

Professional, Scientific

6.9%

20.0%

10.0%

2.9%

6.4%

53.8%

Total

6.0%

15.3%

10.8%

4.3%

4.3%

59.3%

Last modified: January 19, 2012

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