Doing business with the U.S. Federal Government: a survey of small businesses on Guam.
Ruane, Maria Claret M. ; Santos, Annette Taijeron ; Enriquez, Anita Borja 等
INTRODUCTION
Doing business with the U.S. Federal Government, hereafter referred
to as "Federal Contracting" is considered to be an attractive
opportunity for many businesses. This is particularly true for
businesses on Guam, a U.S. territory in the Western Pacific region. Guam
is a small island economy that is undiversified and relies heavily on
three sectors: tourism, military and the local economy. Like in many
other economies, the majority of businesses on Guam are small
businesses, defined by the U.S. Small Business Administration as
"one that is independently owned and operated, not dominant in
its field, which also meets the employment or sales standards developed
by the Small Business Administration based on the Standard Industrial
Classification (SIC) Codes for businesses. In general, the SBA in
determining if a concern qualifies as a small business uses the
following criteria:
WHOLESALE--not more than 100 employees
RETAIL or SERVICE--Average (3 year) annual sales or receipts of not
more than $5.0 to $21.0 million, depending on business type
MANUFACTURING--Basically not more than 500 employees, but in some
cases to 1,500
CONSTRUCTION--Average (3 Year) annual sales or receipts of not more
than $7.0 to $17.0 million, depending on business type"
Table 1 shows the magnitude of business opportunities created by
the U.S. Federal Government. In the aggregate, the amount of contracts
awarded by the U.S. Federal Government ranged from $258 billion in
fiscal year 2002 to $528 billion in fiscal year 2008. Of these amounts,
0.12% on average was spent on projects on Guam, a figure that is so
small and perhaps seemingly insignificant from the U.S. Federal
Government's perspective.
However, the view is different from the perspective of a small
economy like Guam whose local businesses and community seek
opportunities for renewed economic growth and sustainable and
participatory development. U.S. Federal contracts for work performed on
projects on Guam make up an equivalent of an economic sector or industry
that is between 6% to 9% of the Guam economy, depending on which year
the local economy is measured.
Annual surveys by the Guam Small Business Development Center (SBDC)
have shown that small businesses on Guam are interested in Federal
Contracting. In the 2008 survey, 46.3% of the 60 respondents identified
"Government Contracting" as an area of counseling interest.
From the same survey, 48.2% of the 60 respondents identified
"Federal Contracting" as a workshop topic that they would be
most interested in.
Despite the level of interest suggested by the above survey, only a
minority of Guam small businesses have actually pursued Federal
Contracting opportunities as primary or sub-contractors. Relatedly, in a
recent Naval Facilities Engineering Command (NAVFAC) Marianas survey of
Guam small businesses, only a very small number of these businesses
responded to the survey.
In this regard, Table 2 is telling as it gives a breakdown of U.S.
Federal contracts on projects on Guam that are awarded to local
businesses and non-local (i.e., non-Guam) businesses. On average during
the period 2002-2008, local businesses received little more than half of
all U.S. Federal contracts awarded for projects on Guam. This figure can
also be viewed as a measure of how much business with the U.S. Federal
Government is "lost" by local businesses. Of course, the
figure does not show the extent to which local businesses pursued (e.g.,
submitted a proposal) these "lost" businesses but simply did
not win the awards. Hence, the figure represents a mix of opportunities
to do business with the U.S. Federal Government which were pursued,
though unsuccessfully, by local businesses, as well as those that were
not pursued or remained untapped. In the first case, it will be
interesting to know why local small businesses' attempt at Federal
Contracting was unsuccessful and to explore measures that will improve
their success in future attempts. In the second case, the question
becomes why local businesses, although perhaps interested in Federal
Contracting, chose not to pursue or tap these opportunities and what
measures will encourage them to do so in the future.
From the above points, there appears to be a disconnect between
Guam small businesses' interest in Federal Contracting
opportunities and their ability and actual experience in pursuing
Federal Contracting opportunities. This study is based on a survey
designed to find explanations for the above disconnect. The survey
results, analyzed later in this report, will be useful in developing
policies and/or approaches to increase the capacity and confidence of
small businesses on Guam to pursue Federal Contracting opportunities.
This report will be shared with relevant government agencies (GEDA) and
small business support agencies (U.S. Small Business Administration
(US-SBA), Guam SBDC, Guam Procurement Technical Assistance Center
(PTAC), Guam Chamber of Commerce, Guam Contractors' Association).
This study has been conducted by the University of Guam Pacific
Center for Economic Initiatives and is funded by the U.S. Department of
Commerce Economic Development Administration.
This study contributes to existing efforts to fill in the gaps in
availability of periodic and updated business and economic data on Guam.
It is hoped that these data will be useful for planning by policymakers,
businesses and the local community in general, and in preparation for
the military build-up on the island, in particular.
THE SURVEY
Background
The survey instrument was designed in early August 2009. Feedback
was received from Guam SBDC and Guam PTAC. Prior to conducting the
survey, this study sought the approval of the Committee on Human
Research Subjects (CHRS). The application packet was submitted on August
10, 2009 and was approved on August 24, 2009 as CHRS# 09-45. While
waiting for the CHRS approval, the survey was set up online at
http://www.keysurvey.com/survey/269397/1533. After the survey was
approved by CHRS, prospective survey participants were contacted by
email. Assistance was received from Guam SBDC, which also facilitated
contact with US- SBA, as well as from Guam PTAC, Guam Contractors'
Association, and Guam Chamber of Commerce. In addition, an announcement
was posted in the University of Guam website, as well as sent out to
local media such as the Pacific News Center and the Pacific Daily News.
The Results
This section will highlight the survey results received from
respondents who participated in the 2009 Survey of Federal Contracting
by Small Businesses on Guam. A total of 84 respondents participated in
the survey. Summaries of their responses to the survey questions are
presented including a descriptive analysis in accompanying tables. The
data in this section will provide a snapshot of the situation under
study.
Participants were asked to determine whether their business would
be categorized as a small business according to the Small Business
Administration's definition of small business. The survey results
show that 67 respondents considered their business to be a small
business, whereas, 14 indicated their business was not a small business
concern (see Table 3).
Those respondents who identified their business as meeting the SBA
small business definition were asked to further categorize their small
business into the following categories: disadvantaged, women-owned,
historically underutilized business zone, veteran- owned, minority
institution. Interestingly, most respondents indicated their business to
be women-owned, followed by disadvantaged and historically underutilized
business zone. The results are found in Table 4
Participants further categorized their business into the following
industry sectors, with the top three most responded sectors being
construction, followed by retail trade and then
professional/scientific/technical service. A complete breakdown of the
businesses by industry section is provided in Table 5. A total of 105
industries were selected. This implies that some respondents may own
more than one business and/or participates in more than one industry
sector.
Respondents reported approximate annual sales/revenue for their
business(es). These amounts are presented in Table 6. While most
respondents (32%) approximate their annual sales/revenue to be less than
$100,000, the next largest response at 17.28% indicate their
business' annual sales/revenue to be over $10 million.
The results of the survey indicate that most participants (39%)
have been conducting business on Guam for more than 10 years. A
breakdown of participants' length of business operation on Guam is
provided in Table 7. More than half of the respondents have been in
operation for more than five years.
Based on the responses from survey participants, a little more than
half (53.95%) of businesses employ between 1-10 employees on Guam.
Results further imply that most small businesses employ less than 100
employees on Guam. These are illustrated in Table 8.
Based on the survey results, 43.37% of participants conduct
business online, whereas 56.53% do not conduct business online (see
Table 9).
Only 18 respondents indicated that they are a home-based business
while 65 indicated that they were not a home-based business. Results are
illustrated in Table 10.
As illustrated in Table 11, a little over half (56.63%) of the
participants in the survey indicated they conduct business with the
federal government, whereas 43.37% have never done business with the
federal government.
Small businesses that had experience conducting business with the
federal government were asked to rate their level of satisfaction using
the following responses: highly satisfied, okay, somewhat satisfied, and
not at all satisfied. Most respondents (34.69%) reflect a positive
business experience with the federal government reporting they were
highly satisfied and 44.9% indicating their experience was okay. The
results are shown in Table 12. [Note that 47 respondents indicated
having experience doing business with the federal government and 49
responses were received in the follow-up question. It is possible that
participants may have provided multiple responses.]
Participants who responded "somewhat satisfied" or
"not satisfied" with federal government business were asked to
indicate reasons for their responses. Participants' responses were
spread almost equally among length of time to become eligible as a
federal contractor, length of time to receive payment, and poor
communication between federal government and one's business. Other
reasons provided by participants are included in the table below (see
Table 13). Note that only 10 respondents indicated they were somewhat or
not satisfied with their business experience with the federal government
(see Table 12), however, a total of 21 responses were received (in Table
13). It is possible, in this case as well, that participants provided
multiple reasons.
The survey asked participants to identify what factors may
encourage them to pursue federal contracts. Participants offered
multiple responses highlighting the following top factors: user-friendly
federal government website, followed by easier access to federal
government representative assistance, then assistance in applying for
certification or registration to conduct business with the federal
government and then ease in applying to get certification or
registration to do business with the federal government. Other factors
recommended by participants are included in Table 14.
DISCUSSION OF SURVEY RESULTS
The goal of this study was to examine what factors may be
contributing to the disconnect between the level of interest of small
businesses on Guam in pursuing federal contracting opportunities and
their ability and actual experience in pursuing federal contracting
opportunities. The survey results offer some meaningful information for
small business support agencies (such as the Guam PTAC, GEDA, U.S. SBA,
SBDC, Guam Chamber of Commerce, and Guam Contractors' Association)
and federal government representatives who interact with small
businesses.
Among the 84 businesses who responded to our survey, 47 indicated
that they had done business with the U.S. Federal Government. The
profile of these 47 businesses is summarized in Tables 15, 16, 17 and
18, which support the following observations:
* They are diverse in business size defined by annual sales or
revenue: 24% represent businesses with high annual sales or revenue of
$10 million dollars or higher, 15% have low annual sales or revenue of
less than $100,000, and almost half have midrange annual sales or
revenue between $500,000 and $5 million (see Table 15).
* They are also diverse in the length of their business experience
on Guam. Although 42% of these businesses have been operating on Guam
for more than 10 years, 21% have only been in operation between 1 and 3
years, and another 21% have been operation between 5 and 10 years (see
Table 16).
* For us and other advocates of small businesses, we are pleased to
see that almost half (45%) of the 47 businesses who had Federal
Contracting experience have 1-10 employees and 75% have 1-100 employees
(Table 17).
* They represent several industries or economic sectors. Although
19% are in the construction business, other sectors making up
significant shares of 16% and 14% are
"Professional/Scientific/Technical Services" and Retail Trade,
respectively. This debunks the view that only construction businesses
have an opportunity or experience to pursue Federal Contracting (Table
18).
It is important to highlight that of the 84 participants only
56.63% indicated they had ever done business with the federal government
with 34.69% indicating a highly satisfied experience and 44.9% reporting
their experience was okay. Considering the 43.37% who never conducted
business with the federal government, it is recommended that small
business support agencies recognize the following implications resulting
from this study:
* Federal contracting opportunities are not limited to construction
and engineering projects as perceived with the planned military buildup.
* Federal contracting opportunities are not limited to Department
of Defense needs.
* As provided by the Fleet Industrial Supply Center and the General
Services Administration, small businesses can provide an array of
support services and goods to just about all federal government
agencies, similar to what any community would need
These points imply a new market development opportunity for small
businesses that have never even attempted to engage in federal contracts
and may be seeking ways to expand their respective business.
The reasons offered by the survey participants who reported levels
of dissatisfaction provide meaningful feedback for federal government
representatives and more importantly, for small business support
agencies who interact directly with small businesses. The factors to
encourage small businesses to pursue federal contracts provide a basis
for addressing potential underlying reasons why small businesses may
demonstrate reluctance to do business with the federal government and
address potential issues that often lead to levels of dissatisfaction.
Findings imply the following:
* Small business support groups should identify more robust ways to
reach small businesses to address their need for assistance in
registering or applying for certification to do business with the
federal government as well as training on how to access and use the
federal government website.
* Need for easier access to a federal government representative and
ease in registering or applying for certification to do business with
the federal government (or assistance with such) may be an issue arising
from only 43.37% of participants doing business online. Future research
is suggested to identify reasons why more small businesses are not
utilizing online technology.
* Issues of unfair competition with Alaska Native Corporations,
federal government not working to expand businesses with local wholesale
distributors of U.S. brands, and concern that off-island vendors may
takeover local opportunity suggest the need for more fluid communication
and transparency among small businesses, local entities that provide
support to small businesses and the federal government.
CONCLUSION
Overall, this study provided some meaningful information that
paints a different view of the situation on Guam in regards to small
businesses--who they are, the industries they represent, their concerns,
and their needs. The survey results present some thoughtful content for
those entities providing support to small businesses and how they may
enhance their processes to meet the needs of their clients. The survey
results also highlight areas that the federal government may address to
continue enhancing customer satisfaction in the areas of responsiveness,
accessibility, timeliness, and convenience. In addition, this survey
provides a good indication that most small businesses have had a
positive experience with the federal government and those who have not
yet engaged should pursue the opportunities offered to them.
REFERENCES
Guam Small Business Development Center (2008). SBDC Online Survey.
Retrieved August 8, 2009, from http://www.pacificsbdc.com
Naval Facilities Engineering Command (NAVFAC) Marianas (n.d.).
Retrieved on September 10, 2009, from https://portal.navfac.navy.mil/
portal/page/portal/navfac/NAVFAC_WW_PP/NAVFAC_NAVFACMAR_PP
Pacific Daily News (August 25, 2009). UOG asks small businesses to
take survey. Retrieved on August 25, 2009, from
http://www.guampdn.com/apps/pbcs.dll/article?AID=200990825002
Pacific News Center (August 25, 2009). UOG conduct small business
survey. Retrieved on August 25, 2009, from
http://www.pacificnewscenter.com
USASpending.gov (n.d.). Contracts Performed in Guam. Retrieved
September 10, 2009, from http://www.usaspending.gov/
fpds/fpds.php?reptype=r&database=fpds&fiscal_year=200
9&detail=1&mustcd=y&datype=T&sortby=f&pop_cd2=GU98
U.S. Census Bureau (2009). Economic census of island areas: 2007
Guam data. Retrieved June 1, 2009, from
http://factfinder.census.gov/servlet/IBQTable?_bm=y&-ds_name=EC0700A1&- geo_id=04000US66&search_results=01000US&-_lang=en
U.S. Census Bureau (2005). Economic census of island areas: 2002
Guam data. Retrieved January 10, 2008, from
http://www.census.gov/prod/ec02/ia0200aguam.pdf
U.S. Small Business Administration (n.d.). Small business act.
Retrieved September 11, 2009, from http://www.sba.gov/idc/groups/
public/documents/sba_homepage/serv_small_bus_act.pdf
Maria Claret M. Ruane, University of Guam
Annette Taijeron Santos, University of Guam
Anita Borja Enriquez, University of Guam
Table 1: Contracts Awarded by the U.S. Federal Government
Total
Contracts Federal
Awarded Contracts Contracts on
by the Awarded for Guam Projects
US Federal Projects on as % of Total
Fiscal Government (in Guam (in Federal
Year millions $) millions $) Contracts *
2000 246.176718
2001 220.990589
2002 258980 300.810028 0.1162%
2003 297828 521.316011 0.1750%
2004 341013 355.205744 0.1042%
2005 385691 403.530598 0.1046%
2006 426006 422.955562 0.0993%
2007 462592 517.093844 0.1118%
2008 528833 630.121189 0.1192%
Average 0.1186%
2002-08
2009
(partial
year) 310621 218.713386 0.0704%
Guam Guam
Projects Projects as
as % of Guam's % of Guam's
Fiscal Economy in Economy in
Year 2002 ** 2007 **
2000 5.3612% 3.9423%
2001 4.8127% 3.5390%
2002 6.5510% 4.8172%
2003 11.3531% 8.3484%
2004 7.7356% 5.6883%
2005 8.7880% 6.4622%
2006 9.2110% 6.7733%
2007 11.2612% 8.2808%
2008 13.7227% 10.0909%
Average 8.7552% 6.4381%
2002-08
2009
(partial
year) 4.7631% 3.5025%
* Authors' own calculated. **Guam's economy is measured using the
2002 and 2007 figures for "Sales/Receipts/Revenues/Shipments", as
reported in the U.S. Census Bureau's Economic Census for Island
Areas.
The actual figures were $4,591.828 billion in the year 2002 and
$6,244,465 in the year 2007.
Sources: http://www.usaspetidmg.gov and U.S. Census Bureau
Table 2: Federal Contracts on Guam Projects Awarded to Guam vs.
Non-Guam Businesses
% Federal Contracts % Federal Contracts on
Awarded to Guam Guam Awarded to Non-
Fiscal Year Contractors * Guam Contractors **
2000
2001
2002 61.13% 38.87%
2003 42.28% 57.72%
2004 48.96% 51.04%
2005 52.57% 47.43%
2006 54.39% 45.61%
2007 60.83% 39.17%
2008 46.16% 53.84%
Average 2002-08 52.3307% 47.6693%
2009 (partial year) 0.0420% 0.0284%
* Data from http://www.usaspending.gov.
** Authors' own calculation.
Table 3: Category of Business
Small Business (using SBA definition) 67 82.72%
Not a small business concern 14 17.28%
TOTAL RESPONSES 81
Table 4: Categories Within Small Business
Women-Owned 31 37.80%
Disadvantaged 17 20.73%
Historically Underutilized Business Zone 17 20.73%
Minority Institution 11 13.41%
Veteran-owned 5 6.10%
Service-Disabled, Veteran-owned 1 1.22%
TOTAL RESPONSES 82
Table 5: Type of Business by Industry/Economic Sector
Construction 19 18.10%
Retail Trade 17 16.19%
Professional/Scientific/Technica1 Service 12 11.43%
Wholesale Trade 9 8.57%
Finance/Insurance 6 5.71%
Real Estate/Rental/Leasing 4 3.81%
Administration & Support 4 3.81%
Transportation/Warehousing 3 2.86%
Manufacturing 3 2.86%
Accommodation/Food Service 3 2.86%
Arts/Entertainment/Recreation 3 0.95%
Not In Business 3 2.86%
Health Care/Social Assistance 2 1.90%
Agriculture/Forestry/Fishing/Hunting 1 0.95%
Educational Services 1 0.95%
Information 1 0.95%
Management of Companies/Enterprises 1 0.95%
Mining 0 0.00%
Public Administration 0 0.00%
Utilities 0 0.00%
Water Management/Remediation Service 0 0.00%
Other Services (except Public Administration) 13 12.38%
TOTAL RESPONSES 105
Table 6: Approximate Annual Sales/Revenue
Less than $100,000 26 32.10%
$100,000 to $249,999 10 12.35%
$250,000 to $499,999 5 6.17%
$500,000 to $999,999 8 9.88%
$1 million to S 1,999,999 6 7.41%
$2 million to S4,999,999 9 11.11%
$5 million to $ 10 million 3 3.70%
Over $10 million 14 17.28%
TOTAL RESPONSES 81
Table 7: Length of Business Operation on Guam
1 Year or less 13 15.85%
More than 1 year, but less than 3 14 17.07%
3 to 5 Years 8 9.76%
More than 5 years and less than 10 years 15 18.29%
More than 10 years 32 39.02%
TOTAL RESPONSES 82
Table 8: Number of Employees in Business Operation on Guam
1-10 employees 41 53.95%
11-20 employees 12 15.79%
21-100 employees 10 13.16%
101-250 employees 7 9.21%
251-500 employees 2 2.63%
more than 500 employees 4 5.26%
TOTAL RESPONSES 76
Table 9: Do you do business online?
Yes 36 43.37%
No 47 56.63%
TOTAL RESPONSES 83
Table 10: Is your business home-based?
Yes 18 21.69%
No 65 78.31%
TOTAL RESPONSES 83
Table 11: Have you done business with the U.S. Federal
Government/Have you engaged in Federal Contracting?
Yes 47 56.63%
No 36 43.37%
TOTAL RESPONSES 83
Table 12: If your business had engaged in Federal Contracting,
what is your level of satisfaction doing business with the U.S.
Federal Government?
Highly satisfied 17 34.69%
Highly satisfied 17 34.69%
Okay 22 44.90%
Somewhat satisfied 8 16.33%
Not at all satisfied 2 4.08%
TOTAL RESPONSES 49
Table 13: If you are somewhat or not satisfied with your
experience of doing business with the U.S. Federal
Government, why?
Length of time to become 5 23.81%
eligible as a federal
contractor.
Length of time to receive 4 19.05%
payment.
Poor communication between 4 19.05%
federal government agency and
your business.
ANY OTHERS
Not primary contractor/worked 1 4.76%
as sub-contractor
Would like more interaction 1 4.76%
between commissaries and local
distributors
Difficult to become 8a 1 4.76%
certified
Requirement are sometimes too 1 4.76%
stiff for some small
businesses
Too much bureaucracy, concern 2 9.52%
over government employees'
performance
Did not specify 1 4.76%
Not given fair treatment 1 4.76%
TOTAL RESPONSES 21
Table 14: What might encourage your business to pursue business
opportunities with the U.S. Federal Government?
User-friendly federal 36 25.00%
government website.
Easier access to federal 35 24.31%
government representative to
assist with questions or
problems.
Assistance in applying to get 32 22.22%
certified or registered to do
business with the federal
government.
Ease in applying to get 30 20.83%
certified or registered to do
business with the federal
government.
ANY OTHERS
Federal government pays unlike 2 1.39%
the Government of Guam
Unfair competition with Alaska 1 0.69%
Native Corporations
Should expand business with 1 0.69%
wholesalers who are the
locally appointed distributor
for U.S. brands
Need more time to respond to 1 0.69%
bids and better access to base
to survey job site
Bonding issues/requirements 1 0.69%
User-friendly government 1 0.69%
Improved communication such 1 0.69%
as on Request for Proposals
and available opportunities
Better information on package 1 0.69%
rating and recourse
Concerned that off-island 1 0.69%
vendors may takeover local
opportunity
Did not specify 1 0.69%
TOTAL RESPONSES 144
Table 15: Profile of businesses that have done business with the
U.S. Federal Government-Part 1
Annual Sales/Revenue Frequency
Less than $100,000 7 15.22%
$100,000 to $249,999 5 10.87%
$250,000 to $499,999 2 4.35%
$500,000 to $999,999 7 15.22%
1 million to $1,999,999 6 13.04%
$2 million to $4,999,999 6 13.04%
$5 million to $10 million 2 4.35%
Over $10 million 11 23.91%
TOTAL RESPONSES 46
Table 16: Profile of businesses that have done business with the
U.S. Federal Government-Part 2
Length of Business Operation on Guam Frequency
Less than 1 year 2 4.26%
More than 1 year, but less than 3 10 21.28%
3 to 5 Years 5 10.64%
More than 5 years and less than 10 years 10 21.28%
More than 10 years 20 42.55%
TOTAL RESPONSES 47
Table 17: Profile of businesses that have done business with the
U.S. Federal Government-Part 3
Number of Employees
on Guam-based
business Frequency
1-10 20 45.45%
11-20 7 15.91%
21-100 6 13.64%
101-250 5 11.36%
251-500 2 4.55%
More than 500 4 9.09%
TOTAL RESPONSES 44
Table 18: Profile of businesses that have done business with the
U.S. Federal Government-Part 4
Industry/Economic Sector Frequency
Mining 0 0.00%
Retail Trade 9 14.52%
Public Administration 0 0.00%
Health Care/Social Assistance 1 1.61%
Transportation/Warehousing 3 4.84%
Agriculture/Forestry/Fishing/Hunting 0 0.00%
Utilities 0 0.00%
Manufacturing 3 4.84%
Educational Services 0 0.00%
Accommodation/Food Service 2 3.23%
Professional/Scientific/Technical Service 10 16.13%
Information 0 0.00%
Finance /Insurance 3 4.84%
Real Estate/Rental/Leasing 3 4.84%
Construction 12 19.35%
Wholesale Trade 5 8.06%
Arts/Entertainment/Recreation 1 1.61%
Management of Companies/Enterprises 1 1.61%
Water Management/Remediation Service 0 0.00%
Administration & Support 2 3.23%
Other Services (except Public Administration) 7 11.29%
Not In Business 0 0.00%
TOTAL RESPONSES 62
