Business

Are local businesses missing out on military contracts?

Providing parts for Navy aircraft carriers, submarine overhaul stations and industrial shops can be a profitable enterprise.

But many small businesses in Kitsap County have missed out on the bulk of opportunities to provide those supplies — even for local bases, according to Peggy Williams, deputy for small business for the Fleet and Industrial Supply Center, a purchasing agency for the government.

Local business could benefit mightily from proposed multibillion dollar defense spending increases, according to Kitsap business advocates, but firms must be primed to act.

“They are going to have to seek it out. It won’t just come knocking on their door,” said Donna Kirkpatrick, president of the Electronic Commerce Technical Assistance Group, a non-profit agency which helps small businesses win government procurement contracts.

Last year, the Navy spent $226 million on procurement contracts greater than $2,500 for bases and ships in Washington, Japan, the western Pacific Ocean and on the island of Diego Garcia in the Indian Ocean, Williams said. Kitsap businesses captured just 2.8 percent of that business, about $6.4 million.

The figure is especially small considering the federal mandate to patronize small businesses.

All else being equal, the government is mandated to contract with small businesses — especially those owned by women, minorities, the disabled, veterans or those located in historically underutilized business districts like Jackson Park and Pacific Avenue in downtown Bremerton, Williams said.

“We require contractors to have affirmative action, under the small business act of 1953. That is one of our guiding principals. Procurement is offered to small business to the greatest extent possible,” Williams said.

Why local businesses aren’t doing more to capture large government contracts is not entirely clear. But Williams, Kirkpatrick and businesses owners offered several theories.

The government requires that contractors accept electronic payments, register for a database tracking number and have codes which explain what they do, Williams said.

“People just think it’s too hard,” said Elayne Burton, co-owner of Silverdale-based EHB Supply. “I also think people area afraid they won’t get paid, but we have not found that to be the case.”

Burton said it took her business, an industrial distributor which sells tools, telephone systems and safety equipment, an entire year to be comfortable with the nuances of government bids.

And businesses with few employees can find it difficult to assign one to the full-time task of searching government Web sites www.fedbizopps.gov and www.neco.navy.mil for contract opportunities.

“We expect contractors to hit our Web site and bid in that format. It is very direct and more efficient than sending our quotes to 5,000 contractors,” Williams said.

Small business also might have trouble purchasing goods or providing services, then waiting up to two months to be paid. There is also the inherent risk of investing money in a bid with no guarantee of winning a contract.

“A lot of times you have the opportunity to win, so you spend money going after it. I might spend $50,000-$60,000 going after a $20 million project. You have to have a sixth sense about what to go after,” said Gary Grosz, vice president of Envisioneering, a minority-owned engineering firm with a branch office in Silverdale.

However, small businesses also have a number of advantages in addition to being favored by the government. Many have fared better with smaller contracts, of less than $2,500, Williams said.

Communication is easier and Navy officials can speak directly to the corporate president, Williams said. Decisions can be made more quickly, Burton added, and small companies might be able to bid lower than competitors because of lower overhead, Burton said.

“Overall, they are a joy to work with,” Williams said.

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