Small manufacturers, big hurdles | SBA advocates come to Oak Ridge for answers
Some federal regulations are creating costly roadblocks for small manufacturers trying to break into government contracts — and the Small Business Administration wants to hear about it.
Knoxville-Oak Ridge sits at the center of the nuclear renaissance. Meaning, the region supports the growth of some of the fastest-scaling advanced energy enterprises in the country. To do so, small- to mid-size area manufacturers are stepping up to meet the need. But occasionally, federal regulatory red tape makes it difficult for these companies to land government contracts.
On Thursday, Michael Vallante, the regional advocate for the U.S. Small Business Administration (SBA) Office of Advocacy, and Jeff Grove, the national SBA advocate for manufacturing, energy, and technology, visited the Oak Ridge Chamber of Commerce for a discussion on how to dissolve some of those roadblocks.
“It is our job to get out and talk to small business owners face-to-face. We’re trying to get direct input from people, especially in growing communities like here in Oak Ridge,” Vallante said. “Our goal is to find out some of the pain points, challenges, rules, and regulations that are hurdles for businesses to be successful.”
Then, Vallante and his team would take those grievances back to the appropriate agencies in Washington.
A magnifying glass on manufacturing
The Office of Advocacy has been around for more than 50 years, initially established in 1976. Yet, just last year, the office added a national manufacturing, energy, and technology advocacy arm through the Made in America Manufacturing Initiative.
“This is the first time this agency has hired a small business person with manufacturing experience to go out and talk to small manufacturers, find out what their specific pain points are,” Grove said.
From the start of Grove stepping into his role, he said he had a keen interest in visiting Oak Ridge to explore the nuclear industry and the support network surrounding it.
“I was thrilled that we were able to get down here and set this up,” Grove said.
The Oak Ridge Chamber, the Tennessee Small Business Development Center (TSBDC), local community colleges, and business owners met for a morning session to discuss the unintended consequences of federal regulations and their impact on the community.
An existing hurdle: cybersecurity requirements
One of the challenges to business owners being able to land contracts and clearances with the federal government is the “Cybersecurity Maturity Model Certification (CMMC),” which is a Department of War (DoD) level cybersecurity clearance that small businesses must adhere to. However, obtaining this credential has proven to be timely and costly for small to medium-sized manufacturers.
“It’s a several-step process, and for any small business, that takes time and money, which are two huge challenges for them,” Vallante said.
The DoD put the CMMC certificate in place, thinking it would be inconsequential, but Vallante and Grove said they heard during the roundtable in Oak Ridge that one company has spent $250,000 so far, and expects to have spent $500,000 by the time its business gets certified.
“The hardest part about this, too, is that the certification that doesn’t guarantee them any federal contracts, that just gets them a seat at the table,” Vallante added.
An existing hurdle: outstanding payments
Another example that is concerning to manufacturing owners is the timeliness of accounts receivable.
“Maybe the government is supposed to pay the company within 60 days, and instead it takes 90 days or 100 days,” Grove said. “A big business could probably float that, but for a business that has to make payroll every couple of weeks, this is a huge issue.”
In some cases, those timelines can even become a deterrent for companies to want to seek and execute government contracts.
What is the best way to work with SBA Advocates?
Grove and Vallante said the best way to work with the Office of Advocacy is to identify a federal regulation that is burdening their business, and express it to a regional advocate (like Vallante), or an industry-specific advocate (like Grove).
The Office of Advocacy is tasked to represent not only for-profit small businesses, but also nonprofits, and small municipalities, with fewer than 50,000 inhabitants.
Reach out to the Office of Advocacy today.
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