Chamber member Pug Gutridge discussed the mid-tier squeeze in government contracting at a December 2 event.

Mid-sized government contractors are being "squeezed" out of lucrative contracts because they are not small enough to qualify for federal set-asides but are too small to effectively compete against industry giants for large contracts, according to panelists at a December 2 event at the U.S. Chamber of Commerce.

Pug Gutridge talked about the challenges he faces as a successful, "former small business." Gutridge, who owns Cherokee Information Services Inc., a 350-person technology company with $30 billion in revenues, noted that his company can't compete for contracts against multinational companies with household names. "The question is, How big do we have to be in order to compete," he said.

The government does not adequately track contracts doled out to mid-size companies. Al Matera, director of acquisition policy from the General Services Administration, said that his agency awards $36 billion in contracts every year. Though it tracks how much goes to small businesses, a large chunk of its contract dollars–$23 billion–go to 3,400 companies that are categorized as "other than small businesses."  Says Matera, "We know some of those must be mid-size, but we have no way to differentiate them from large businesses."

Nor do the agencies have a way of monitoring the growth of contractors. "We don't follow small businesses who graduate out of their size standard," said Thomas Essig, chief procurement officer with the Department of Homeland Security. "There's a significant absence of data on this group."

It's up to mid-tier companies to band together to make themselves heard on Capitol Hill, said Richard Buetel, a former staff member with the Senate Committee on Homeland Security and Governmental Affairs. "I already know the innovation argument from small businesses, but from you guys? I know nothing. You have to make yourselves sympathetic constituents," he said, adding that they need to come to members of Congress with specifics on the number of jobs they create, the number of patents they file, and the dollars at stake if they fail. "You need visibility, and you don't have that right now."