A report of federal incentives offered to small businesses in Puerto Rico, one of the few tools of economic development provided by the federal law known as Promesa, concluded that small businesses on the island receive more federal contracts proportionally than the rest of the United States.

The reportfromthe General Accountability Office (GAO), a branch of Congress comparable to the Comptroller Office in the Puerto Rican government, was a mandatefromCongress included in the Promesalaw, whichestablishedthe Fiscal Control Board. That same law procured from the GAO another report on the debt of the territories, including Puerto Rico, which has still not been published.

For the small business report published on June 30, the GAO is supposed to compare the grant ofthe Island withwhat isoccurringthroughout all of the United States and to identify any legislation that could be an obstacle to the efficient application in Puerto Rico of federal contracting policies.

From the information recovered,they concluded that 'duringthe fiscal years between 2006 to 2016, a higher percentage of federal contracts were awarded to small businesses within Puerto Rico compared to the percentage for small businesses nationwide.'

'In the 2016 fiscal year, small businesses in Puerto Rico received about 47 percent of federal contracts awarded in Puerto Rico (about $319 million of $682 million) compared to the 23 percent of federal contracts awarded to small businesses throughouttheNation,' the report added, while précising that the grants in the four eligibility programs the Small Business Administration (SBA) has on the island reflected a proportion equal to or greater than the United States.

According to the Census criteria, 99 percent of businesses on the island, about 44,000, are classified as 'small'or have fewer than 500 employees and less than $7 million in annual revenues. As early as 2016, modifications had been made so that practically all geographic sectors of the Island would qualify as HUBZone, one of the four SBA programs that also have programs for veterans and women.

Manufacturing, construction, and professional services are the types of businesses that received the most in federal contracts on the island, according to the GAO, while the Department of Defense, the Veterans Administration, and the General Service Administration are the federal agencies that have channeled the most contracts to small businesses.

The report did not identify laws that were creating obstaclesfor handing outfederal contracts to small businesses, but did identify factors such as: lack of knowledge about the process of obtaining federal contracts, difficulty in meeting requirements, and difficulty in obtaining capital, sureties and financing. '[T]he banks are not willing to extend credit to small businesses,' says the report ofthe behavior of Puerto Rican banks, despite advertising campaigns of banking institutions that use precisely the small entrepreneurs as protagonists.

Also, it is stated that the need to translate documents from Spanish to English applications may be an obstacle for more business to go through federal programs.

The GAO report also

highlights the promise of governor Pedro Rossello's campaign to get the federal government to grant Puerto Rico a number of contracts proportional to the population and create 25,000 jobs. In that promise, for which no advance has been announced by the First Executive, there was no distinction between contracts for small businesses and contracts for businesses that are not considered small.For more information on federal contracting, visit the

Puerto Rico Federal Contracting Center.For the GAO report, see the link below.

GAO Small Business Administration Report_26086