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The POTUS budget proposal and small business impact

After the election, EZGovOpps made predictions on how the FY18 budget would look in terms of contracting and how Linda McMahon would affect the SBA as it’s administrator, the damage that EPA cuts could do to small business. Our analysts have also made important guides on Federal programs supporting the success of set-aside contracts for Minority Business Enterprises (MBEs) and Women-Owned Small Businesses. Now, with the release of the President’s “Budget Blueprint,” EZGovOpps will take a look at the potential impact of the selective budgetary increases and decreases, and how they could impact small-businesses in the Federal contracting space.

Budget increases defense spending, cuts other agencies

As EZGovOpps predicted, the Department of Defense would see a $52 billion increase in spending from FY17 levels, for a total $639 billion. This funding would “primarily invest in a strong military” through “addressing pressing shortfalls, such as insufficient stocks of critical munitions, personnel gaps, deferred maintenance and modernization, cyber vulnerabilities, and degraded facilities” and increasing in the size of the US Navy fleet, among other measures. The Department of Homeland Security would receive $44.1 billion, a 6.8% increase that would include $1.5 billion to strengthen Federal cybersecurity, particularly for protecting “Federal networks and critical infrastructure.” The budget would allot an initial $2.6 billion for the planning, designing, and building of a wall along the southern border.

To pay for these increases, the budget outlines major cuts to a number of agencies, including a 31% cut to the Environmental Protection Agency and a 28% reduction in funding for the State Department/US Agency for International Development, with a base funding of $25.6 billion and $12 billion in “Overseas Contingency Operations” for a total of $37.6 billion. In 2016 alone, according to USASpending,the State Department awarded $19,141,315,807 in contracts, and this could decrease significantly in FY18. However, the budget does allow for $2.2 billion in State Department spending for construction and maintenance.

Small business-focused funding

An MBDA Meet and Greet at Hannover Messe 16 (Courtesy of Department of Commerce via Flickr)

An MBDA Meet and Greet at Hannover Messe 16 (Courtesy of Department of Commerce via Flickr)

With Linda McMahon at the helm, the Small Business Administration would see a 5% reduction in funding for a total of $826.5 million in the FY18 budget. Reductions in funding specifically targeted grant programs from the SBA including “PRIME technical assistance grants, Regional Innovation Clusters, and Growth Accelerators.” While McMahon has in the past been outspoken in her opposition of SBA loan guarantees, the budget supports more than $45 billion in loan guarantees to “assist America’s small business owners with access to affordable capital to start or expand their businesses.”

At the Department of Commerce, the Minority Business Development Agency (MBDA) faces elimination in a bid to cut the $32 million in funding it received in FY17. The MBDA, originally called the Office of Minority Business Enterprise at the time of it’s creation in 1969 by President Nixon, holds the mission to “to foster the growth and global competitiveness of U.S. businesses that are minority-owned.” Specifically, MBDA states it’s work as such:

“We work throughout the Nation to link minority-owned businesses with the capital, contracts, and markets they need to grow. We advocate and promote minority-owned business with elected officials, policy makers, and business leaders. Serving as subject matter experts and advocates for the minority business community, we conduct high quality research and cultivate domestic and international relationships… Through a national network of MBDA Business Centers and a wide range of domestic and international strategic partners, we provide Agency clients with technical assistance and access to capital, contract, and new markets opportunities to create new jobs.”

According to Ron Busby, Sr., the President & CEO of the U.S. Black Chambers, Inc, the MBDA “has been an integral resource center for African American entrepreneurs nationwide. By providing relevant business expertise, tools and advocacy, MBDA serves our members in a truly invaluable capacity.” According to the FY18 Budget Blueprint, the MBDA is “duplicative” of other small-business assistance programs, particularly those operated by the Small Business Administration.

In a report on FY14 performance, MBDA assisted African American, Asian American, Hispanic, and Native American-owned firms in winning $6.9 billion in contracts and capital, and create/retain a total of 30,656 jobs. Without the MBDA, minority-owned businesses may experience a significant impact on funding and more difficulty in navigating the Federal contracting space.

EZGovOpps has the tools needed to take a closer look at where Federal contracting dollars have and will be spent. With custom analyst updates and a platform updated daily with new market intelligence, EZGovOpps can help you predict the market trends being shaped under the new administration.

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

Published Mar 21, 2017

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