N.C. small firms get bigger slice of stimulus

By Caitlin Coakley

Small contractors have had more opportunities in North Carolina than they have nationally, at least when it comes to reaping the benefits of the federal stimulus bill, according to data provided by the Washington, D.C.-based National Association of Small Business Contractors.

Of the $64.9 billion in American Recovery and Reinvestment Act of 2009 funds that have been awarded through federal contracts, 19.2 percent has gone to small businesses, according to NASBC data.

In North Carolina, that percentage is more than double. Of the $350 million in projects awarded by the federal government to North Carolina contractors, 52.8 percent has been secured by small businesses. Six stimulus-funded federal contracts, from the Department of Commerce, Department of the Interior, Department of Labor and Department of Defense, have gone to projects in Mecklenburg County, and all of them have been awarded to small businesses.

Small-business counselors said they’re not sure why small businesses in North Carolina have had more opportunity, but they credit, in part, the support system in the state. The Raleigh-based Small Business and Technology Development Center and Fayetteville-based North Carolina Military Business Center offer small businesses assistance in getting the proper certifications and finding contracting opportunities.

“North Carolina does have a very good support system for small businesses compared to other states,” said Mark Mills, director of the SBTDC’s Procurement Technical Assistance Center.

The Military Business Center works out of 13 community colleges across the state and has a counselor, Fran Perez-Wilhite, who works out of Central Piedmont Community College. While the SBTDC has Procurement Technical Assistance Center counselors in seven regions of the state, the Charlotte-area position has been vacant for about three weeks since the previous counselor retired, Mills said, adding that he expects the position to be filled within the next few weeks.

Given the amount of stimulus money available and the fact that the residential and commercial markets have all but dried up in the recession, many contractors who hadn’t done government work before are considering getting into the market now.

David Boyles, majority owner of LandDesign Surveying Inc., said his business took a tough hit with the recession, downsizing from 33 employees in 2007 to eight now because of a lack of work. While he had done some contracting with the city and county, he decided to go after some federal contracts in 2008.

“We really didn’t do a lot of public sector work prior to the economy. We mostly did work in the private sector,” he said, adding that public contracts are where the money is.

“We decided to go after them in 2008,” he said, “but we didn’t get a contract until the end of 2009.”

His first federal contract was for an Army job conducting an environmental assessment for a proposed shoreline stabilization at John Kerr Lake on in Boydton, Va. Boyles credits the Procurement Technical Assistance Center counselors and the NCMBC for his success in securing the contract.

“I firmly believe that the only reason we got the contract was because we went there and we listened,” he said. While the contract alone didn’t have a big impact on his business, Boyles said it gave him the confidence to pursue other federal opportunities, leading to a recent contract with the U.S. Department of Agriculture.

Many contractors like Boyles recognize the benefits of doing business with the federal government; however, government contracting is a tough egg to crack, say small-business counselors.

“There’s a four-letter word that we never use, and that’s ‘easy,’” said Scott Dorney, the Military Business Center’s executive director. “We want businesses to know about the opportunities that are out there, and we want to help connect them with the opportunities. But we do want to caution people that it’s not something that everyone is ready for.”

One thing that government representatives, whether they’re state or federal, consider when choosing a contractor is whether the contractor has previous experience working on a government-funded project. Without that proven track record, the contractor might be at a disadvantage, Perez-Wilhite said.

“If a small business is too new, they’re not considered as competitive because they don’t have that track record of success,” she said.

Price, which can often be the deciding factor in choosing a contractor, is another area where a smaller business may have trouble competing, said Margot Dorfman, NASBC vice president. Larger firms have more opportunity to buy materials in bulk, which Dorfman said is a key to offering a competitively priced bid.

Similarly, small businesses, particularly those struggling during the recession, might not have the capital to purchase all materials upfront or the finances for the required bonding and insurance, Dorfman said.

“What we need is to make sure there are opportunities for small businesses and opportunities in accessing capital to make sure they can grow,” she said.

Perez-Wilhite and Mills suggest that small firms consider becoming subcontractors on government-funded projects if they haven’t done any government work before, and from there try to win local government contracts, then move to state government contracts and then to federal government contracts.

The plan worked for Tangela Davis, who owns Concord-based management-consulting firm Trinity Strategic Consulting. Trinity has been contracting with local and state governments since the business was started seven years ago but only began to look at the federal market four years ago.

“We’ve always done some level of government contracting, but the federal market is a very new area for us,” Davis said. “We figured that the federal market, being one of the biggest buyers around the world, would offer us the most opportunity.”

Though Davis said she got help with the U.S. Small Business Administration, the SBTDC and the NCMBC, she said that her own experience as a management consultant was helpful. Still, she said the process — getting all the certifications, putting together bids and proposals — was a long one.

“It takes a long time to understand how to do business with the federal government,” Davis said. “It does require one to have a lot of patience and to make sure you’ve done your homework.”

Though Perez-Wilhite, who worked with Davis for four years, said that there are opportunities for businesses to find government contracts, she cautions that it should not be the only market for a business to be in.

“If this is the company’s only chance of remaining in business, it’s not the way to go,” she said.

Caitlin Coakley can be reached at [email protected].

Stimulation calculations

According to data provided by the National Association of Small Business Contractors, more than half of the stimulus funding that went to federal contracts for work in North Carolina was given to small businesses. Here’s how the state and county compare with the national average.

Nationally

Total federal stimulus dollars awarded: $64.9 billion

Amount secured by small businesses: $10.5 billion

Amount secured by other than small businesses: $54.4 billion

Percentage secured by small businesses: 19.2

North Carolina:

Total federal stimulus dollars awarded: $350.3 million

Amount secured by small businesses: $183.8 million

Amount secured by other than small businesses: $166.5 million

Percentage secured by small businesses: 52.8

Mecklenburg County:

Total federal stimulus dollars awarded: $3.96 million

Amount secured by small businesses: $3.96 million

Amount secured by other than small businesses: $0

Percentage secured by small businesses: 100