WASHINGTON- Maryland-based contractors earned $11.7 billion in federal contracts in 1998, with the vast majority of the awards going to businesses in the Baltimore-Washington corridor.
A Capital News Service analysis of federal contracts over $25,000 in Maryland showed that just under $7 billion of the government’s business was concentrated in 10 ZIP codes: four in Montgomery County, two in Prince George’s County, two in Howard County, and one each in Anne Arundel and Baltimore counties.
But lawmakers and business experts said that while larger Maryland companies are doing a good job of bringing in federal contracting dollars, small businesses in the state are lagging.
“They don’t know how to do it, they don’t have the persistence for it, and they don’t have a … mechanism to identify contracts that will fit their capabilities,” said Joanne Laing, chief executive officer of Small Business Depot, which helps companies that are trying to land federal business.
The CNS analysis is based on the General Services Administration’s Federal Procurement Database from 1998, and only includes grant awards of at least $25,000.
The type of work done by Maryland contractors included primarily computer- related services, administrative and technical support services, building leasing, and janitorial services, all for government agencies.
Many of the top 10 ZIP codes, not surprisingly, are clustered near large federal operations. The No. 1 ZIP code in the state for federal contracts, Bethesda’s 20817, is just across the street from the National Institutes of Health and the fifth-highest ZIP Code, 20814, includes NIH.
The two Prince George’s County ZIP codes on the list are neighbors of the Goddard Space Flight Center and one of the Howard County ZIP codes is home to Johns Hopkins University’s Applied Physics Laboratory.
Within the top 10 ZIP codes, computer-related services and engineering were by far the most common type of work done by contractors for federal agencies.
But the contracts also included construction and sewage maintenance in Bethesda’s 20814, painting and paper hanging Lanham’s 20706, and aircraft parts and shipbuilding in Middle River’s 21220 and Columbia’s 21045.
Laing said the average amount of a contract to a small business is $80,000, and that once a company gets one contract it is likely to get more: 80 percent of all government contractors get other contracts.
Laing’s Lyndhurst, N.J., company, formerly based in Silver Spring, alerts clients to federal contracts for which their company might be qualified to compete, and it helps clients use the necessary government jargon for the contract paperwork.
“A lot of small businesses simply do not participate in this,” Laing said. “There are $56 billion worth of services and goods offered every year by the government specifically for small businesses.”
Rep. Al Wynn, D-Largo, represents several areas that are hotbeds of federal contracting and he has been heavily involved in trying to get more small businesses involved.
“We want to encourage people to do several things,” said Wynn, who sits on the House Commerce Committee.
He said a lot of small companies “don’t bid enough” and if they were to bid on government business more often, on a broader range of contracts, their chance of getting awards would grow.
But the larger companies can be a daunting hurdle for small businesses trying to get into the game, said Wynn: It’s easy for big firms to squeeze out a smaller business and offer services more cheaply or on a much broader scale.
But small businesses are also responsible for some of their own misfortune, said officials familiar with the process. They said small firms tend to depend on certain programs too heavily, which can put them at a disadvantage when it comes to winning contracts.
Wynn said small businesses often rely too much on a specific classification to bring them contracts, such as the 8A program, which allows minority-owned businesses a greater opportunity to bid for federal contracts.
Companies also need to “be able to handle purchases and payment by credit card,” Wynn said, because that is most often how the government handles federal contract funds.
Another thing small contractors can do is join their efforts with other small companies in other fields, allowing the two of them to bid on federal contracts that neither one alone could have competed for, Wynn said. They should also continue to look to the private sector for business, rather than rely solely on the federal government.
Despite the drawbacks that can come with any business venture, lawmakers and government officials said that federal contracts are worth pursuing. The contracts bring small-business expansion that inevitably improves communities, they said.
“The taxpayer benefits in two ways when small businesses are active participants in contracting,” said D.J. Caulfield, a spokesman for the Small Business Administration.
In addition to the direct investment in jobs, he said, the spin-off benefits in home sales and increased business for unrelated local firms can ultimately help broaden the tax base, Caulfield said.
“The way to view government contracts is as a job creator,” Caulfield said.