The article described the government contracting field as “Catch-22”; mid-size companies work hard to expand and grow only to find that they are shutout by much larger corporations with unlimited resources.
Groups like Mid-Tier Advocacy, a Washington, D.C.-based lobbying group formed early last year to advocate for businesses that have outgrown the small-business size standards, are trying to make the transition to a bigger firms easier for companies. The Advocacy group has more than 1,000 members, many of which have revenues ranging from $25 million to $100 million.
The group’s executive director Tonya M. Speed said, “There is no category or recognition of midsized firms. Many inevitably surpass the size limits and consequently they are competing with companies that are sometimes more than 30 or 40 times their size.”
According to a report by the Center for Strategic and International Studies (CSIS) in Washington, D.C., “firms above the small-business designation but which still had less than $3 billion in annual revenue got 34% of government professional-services contracts in 2010, compared with about 40% in 1995.”
The Wall Street Journal spoke with the CEO of Vistronix, Deepak Hathiramani, about the difficult transition from a small business to a mid-size and large corporation. Hathiramani founded his company in 1994 with 15 employees. By 2003 he had expanded to $30 million, the problem was, his mid-size company could not compete for the larger contracts.
Hathiramani watched his company downgrade to $13 million, and has since been working towards expanding his small business to compete at the mid-size level once again. “Our rate of growth has definitely slowed…In the midtier squeeze, there is a lot of pressure,” said Hathiramani.
According to Maltby, Hathiramani is only one of many CEO’s who are concerned.
Dan Gordon, the current administrator of the procurement policy office, said the Obama administration is making efforts to help growing contractors. Gordon said, “the current administration is increasing transparency about upcoming business opportunities and breaking up large contracts into multiple, smaller ones that are within a midtier’s reach.”
However, some smaller firms oppose this legislation arguing that it does not tackle the root of the problem.