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Cutting the EPA would hurt small government contractors

“The American dream is back,” declared President Donald Trump on Twitter on Monday, alongside a picture of him surrounded by small business leaders. The President describes himself as an ally of small businesses, promising that his moves to reduce regulations will unleash their potential. At the same time, however, the new administration’s moves to cut the spending of the Environmental Protection Agency (EPA) threaten to harm the many small businesses it purchases services from. If the EPA’s budget is cut, it is small businesses that will hurt the most.

The EPA’s very existence seems under threat lately. The organization, which spent $1.36 billion on contracts last year, is set to be headed by an administrator who has sued the agency 14 times as Oklahoma’s attorney general. Last week it was reported that a Florida congressman is drafting legislation to abolish the EPA completely. Transition officials have hinted at major changes to the EPA’s programs, and seem likely to slash spending and regulations.

Soon after taking office, Trump’s team announced a blanket freeze on all EPA grants and contracts, until the incoming administration had time to review them. The Trump administration lifted its freeze on the EPA’s grants on Friday, according to the Washington Post. EPA contracts, however, are still under consideration.

The Professional Services Council, an Arlington organization representing over 400 government contractors, wrote a letter to the EPA transition official, EPA acting administrator Catherine McCabe. The letter criticized the contract freeze, arguing that it could “disrupt core government operations” and have an “adverse economic impact” on the business community. “Many companies depend on payments to stay in business.”

Those businesses, the ones most dependent on regular payments, are most often small and disadvantaged. The Small Business Administration ranks the EPA as one of the top federal agencies for small business procurement: 40 percent of the EPA’s prime contracting dollars went to small businesses, in addition to 52 percent of subcontracting dollars.

A cut to the EPA’s funding would disproportionally affect these many small businesses. Though each individual business is small, the full economic effect is enormous: small businesses are awaiting future payments totaling over $2 billion from the EPA.

According to EZGovOpps data, as of February 1st, over 200 small or disadvantaged businesses have been awarded, but have not yet received, $2.1 billion in EPA contract funds. That means that if contracts remain frozen, or if the EPA’s budget is cut, it will be small businesses’ bottom lines that will suffer.

An EPA cut or freeze would have a disproportionate effect on certain states: Virginia alone would lose almost $700 million in small business contracting funds. Colorado, California, Georgia, Maryland and Ohio follow close behind.

EPA Government Contractors

The EPA has promised, but not yet paid, $2.1 billion in contracts to small or disadvantaged businesses. This chart shows the amount the EPA is expected to pay contractors registered in each state. If the EPA’s budget were to be cut or if the contract freeze were to continue, these states would be most affected.

Small businesses would not be the only ones to suffer from EPA cuts. The agency’s biggest prime contractor last year, Missouri-based Environmental Restoration LLC, gets over 93 percent of its government contracting payments from the EPA. A drastic change in EPA’s spending would put the company’s existence at risk, possibly putting over 400 employees out of work. Countless other businesses might meet the same fate.

The EPA awarded over $5 billion last year in contracts and grants, and spent $1.36 billion in contracts alone – in certain areas and for certain industries, it is one of the nation’s biggest spenders. And what it spends on is important. Its purpose, to protect Americans from health and environmental risks, is vital economically and morally. Shrinking the EPA, and leaving behind the contractors who support its mission, would be a costly mistake.

Don’t forget to view our full GovCon News section for more intel.

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