16: Barriers to Entry

Reduce barriers to entry for small innovative technology companies

Other Information:

Small businesses in the technology space drive enormous innovation throughout the economy. However, the Federal Government does not fully tap into the new ideas created by small businesses. Unlike larger, more established firms, new entrants have little at stake in current technological systems ranging from software standards, to operating system and file standards, to business processes. While large firms drive many incremental improvements to the status quo, smaller firms are more likely to produce the most disruptive and creative innovations. In addition, with closer ties to cutting edge, ground-breaking research, smaller firms often have the best answers for the Federal Government. However, small businesses too rarely approach the Federal Government as a customer because of the real and perceived barriers to contracting. The sales process is perceived as lengthy and complex, and, therefore, not seen as worthwhile unless done at scale. Without existing knowledge or access to specialized lawyers and lobbyists, small firms default to more traditional channels. And given their limited size, small businesses often find it difficult to bid on the large chunks of government work that require a substantial workforce across many functional capabilities. Ultimately, the government contracting process is easier to navigate by large, existing players, who in turn dominate the volume of contracts and therefore create a track record making them “less risky” and more likely to win future contracts. To address the barriers that small businesses face generally (both in IT and more broadly), in April 2010, the President established an interagency task force to make recommendations for improving the participation of small companies in Federal contracts. The task force made 13 recommendations in its August 2010 report, which are currently in various stages of implementation. Of the 13 recommendations, six were also included, in whole or in part, in provisions of the recently-enacted Small Business Jobs Act of 2010. As part of this effort, and to enable small IT companies to work with the Federal Government, SBA, GSA, and OFPP will take concrete steps over the next 18 months to develop clearer and more comprehensive small business contracting policies.

Stakeholder(s):

• Small Innovative Technology Companies

Indicator(s):

Indicator:1

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