Small Business Contracting in America and Europe: A Comparison of Approaches

Abstract

The United States, the EU, and virtually all European nations undertook solemn commitments to promote small business access to public procurement and R&D programs as part of the 2000 OECD Bologna Charter on Small and Medium-sized Enterprises (SME) Policies. Notwithstanding these mutual commitments, the Europeans have continued challenging America's Small Business Act of 1953 and the set-asides it authorizes as unfair barriers to trade. Thus far, the United States has resisted the criticism. To put the transatlantic debate over small business contracting into concrete terms, this article compares European and US approaches to small business procurement assistance. Subjects of comparison include approaches to defining a small business concern; creation of small business procurement assistance agencies; availability of suitable contracts through reductions in bundling and consolidation; small business goals and set-asides; contracting with small firms for economic sustainability and remedial purposes; measures to enhance transparency and availability of public procurement information for small firms; small business subcontracting policies; and use of public procurement to stimulate innovation. The article notes that Europe is competing with the United States for best SME assistance policies. It concludes that the main elements of European and US policies to support SME access to public procurement and R&D are very similar and are continuing to further converge. Accordingly, EU trade complaints are without substantial merit. Indeed, both sides in this debate have legitimate reasons to help their small contractors, both sides have weaknesses in their SME policies, and both sides can learn from each other's best practices.