President Elect Obama has a Big Challenge with the SBA

On January 20, 2009, President Obama will receive management of a federal agency that is in complete shambles.  The Small Business Administration has been on a downgrade since the mid 1990’s.  It is at a state of life support and our new administration must address it immediately as the status of small and minority business has been greatly suffering.

When the National Black Chamber of Commerce was incorporated in May, 1993, there were over 5,000 SBA employees and its budget was about $1 billion annually.  Erskine Bowles was the Administrator and the management of the agency was extremely motivated.  President Clinton and Congress sponsored the White House Conference on Small Business and the whole nation was pumped up about new procurement opportunities.  Then something happened along the way.

Vice President Gore introduced his “Reinventing Government” program and big business started eating up the opportunities that small business was use to.  Giants like Boeing, Lockheed, Northrop Grumman, Halliburton, etc. started getting into the janitorial business, landscaping, trash removal, housing construction, IT, etc.  The new event called “Bundling” came in and predatory practices to the detriment of small business began to happen.

At the start of the second Clinton Administration, the SBA was on its third Administrator, Aida Alvarez.  Deputies started realizing that if they would not fill employee attrition their budgets would shrink and they would be rewarded with annual bonuses.  Personal greed led to the start of starving the field offices of vital personnel.  The SBA was shrinking and the managers in DC were mysteriously happy.  The district and regional offices could no longer adequately serve their constituency.  8a, minority business, volume started dropping at a rate of over $1 billion per year.  The party was indeed over.

When the Bush – Gore campaign got started we found a one sided advocacy.  Bush was talking about revitalizing the SBA and putting more attention toward small business development.  Gore would not even give it lip service.  It was obvious which side small business associations would support.  The new Bush Administration put Angela Styles at the Office of Management and Budget, OMB, and there she would craft a great strategy for improving the small business outreach and procurement activity.  But, oh the “wolves” were of another mind.  She would be dismissed for her aggressive effort and replaced with a crook (he is in prison today).  Halliburton, sole sourcing big businesses, and other friends of Vice President Cheney took over Department of Defense procurements and then the other agencies.  Minority and other small business were for the most part on the outside looking in.

It really showed when Katrina hit the Gulf Coast.  Prior to the hurricane the SBA district office in New Orleans had 39 personnel and the Jackson, MS office had approximately 24.  When the disaster occurred we discovered that there were only 9 staffers in New Orleans and 6 in Jackson.  They were helpless in the recovery and still are.

Today, the SBA has less than 2,300 employees and its budget is about $400 million.  That makes it inoperable from an efficiency perspective.  The budget needs to be immediately increased to $1 billion.  That isn’t asking for much in the atmosphere of $700 billion bailouts and saving our bungling auto industry.  We need to return the staffing to over 5,000 once again and begin servicing our small businesses throughout the land.  The federal government needs to return to offering small business a chance to compete for its procurement opportunities and that alone will decrease the costs and increase the competition and jobs.  The more that small business is in the mix, the greater the economy will be as 70% of all new jobs come from small business.  That will also mean a big increase in Black owned businesses.

President Elect Obama has already nominated his Administrator for SBA, Karen Mills, a venture capitalist from Maine with an impressive resume.  That is a big improvement from President George W. Bush who took over six months to fill the position.  The focus must be to give her Cabinet like authority and pump the funding into the SBA as soon as possible.  As we gear up for the Economic Stimulus, the SBA should be a major player in this.  We must all get involved in this effort.  Send resumes for empty desks at your local district level.  Let’s recruit good talent to fill the high level positions and may our Congress give the SBA strong support like it use to.

Big business is not going to be the salvation for the economic development of our communities.  It is going to be the growth of small business and we need an SBA that can do the job it once did – provide capital access, technical assistance and procurement opportunities for ready and willing small businesses throughout the land.  May President Obama lead us on to better days.

Mr. Alford is the co-founder, President/CEO of the National Black Chamber of Commerce, Inc.  Website: www.nationalbcc.org.