The SBA Wants to Hear From You: How Small is Small?

Depending on how the SBA decides, the new guidelines will determine how many large contractors can muscle their way into government RFPs, which by law requires that 20 percent be apportioned in some way to small contractors and another 5 percent to minority-owned forms.

The way the SBA puts it, it's looking to address the gray area that has existed in procurement circles between system manufacturers and wholesalers. The SBA is creating a new category that applies to solution providers--those that bundle hardware, software and provide integration services, said SBA assistant administrator for size and standards Gary Jackson in an interview.

The good news is that solution providers that bid on government IT contracts under SBA eligibility guidelines no longer will be bound to bundling hardware or software made by small vendors. In other words, you can buy PCs from Dell, IBM or HP and integrate your own solution. "The main change would be [small companies that provide services and equipment would no longer have to provide the product of a small manufacturer," Jackson said.

But that masks a bigger issue, says Lloyd Chapman, general manager of Novato, Calif.-based GC Micro, who accuses the SBA of bowing to political pressure, something Jackson denies. The plan establishes a new NAICS (North American Industry Classification System) that defines a small business as one with 500 employees or less. Such a move would give larger contractors with hundreds of millions of dollars in revenues, buying power over small solution providers. "They are attempting to make it easier for federal agencies and federal contractors to reach their small business goals by redefining what constitutes a small business," Chapman said.

While Jackson says that doesn't make smaller solution providers any less eligible, it certainly doesn't create a level playing field for those who are really small, said Oli Thordarson, CEO of small solution provider Alvaka, who like Chapman and other small solution providers would rather see the cap put at solution providers with 100 employees.

While Thordarson doesn't sell to the Feds but rather municipalities, he's concerned the proposal could have a ripple affect that will favor larger integrators. "I just don't want to see a trend happening where the SBA guidelines start getting shifted to favoring what really aren't small VARs, if that organization is going to stay true to its charter," he said. Small solution providers bidding against those with up to 500 employees will be stomped on by their buying clout and ties to even larger systems integration firms, he fears.

Chapman seems determined not to let that happen. Typically when the SBA solicits comments, a few dozen people at most have anything to say, Jackson said. This time they're going to get flooded with hundreds, Chapman said. And if the SBA still decides 500 is too small, Chapman said he is prepared to mount a legal challenge. He's already formed a consortium called the Microcomputer Industry Suppliers Association. Since Jackson said the 500 figure is not set in stone, if you want to stop the effort dead in its tracks, now's the time to act.

So if you want to have input on how small, small should be, make sure to weigh in with the SBA this week. Make your vote count. You can send your comments to the SBA at [email protected].