Government Contracts Monitor

Federal Government Meets 23% Small Business Prime Contracting Goal for FY13, But Falls Short in Other Categories: Information You Can Market.

August 12, 2014

The U.S. Small Business Administration (SBA) recently announced the federal government’s Fiscal Year 2013 (FY13) small business goaling results and Small Business Procurement Scorecard. Government-Wide Performance Scorecard FY13. SBA understandably highlighted the fact that, for the first time in eight years, the federal government achieved its goal to award 23% of eligible contracts to small businesses, accounting for more than $83 billion. This is a significant accomplishment. However, this headline ignores the actual decline, for the second straight year, in prime contract dollars awarded to small businesses – a decline of 7.6% -- meaning that the overall dollars going to small businesses continue to go down. Scorecard Summary by Prime Spend FY13. SBA’s headline also downplays the fact that the government fell short on prime contracts for Women-Owned Small Businesses (WOSBs) and HUBZone small businesses, as well as its subcontracting goals for small business, Service-Disabled Veteran-Owned Small Business (SDVOSB) and HUBZone. Importantly, this data and the continuing shortfalls create marketing opportunities for large and small businesses alike in putting together new proposal teams and marketing to the respective agencies.

By way of background, and as you likely already know, Congress has established an annual overall small-business contracting goal of “not less than 23 percent of the total value of all prime contract awards.” Congress also has established goals of 5% for awards to each of (i) Small Disadvantaged Businesses (SDBs), including 8(a)s, and (ii) WOSBs, and 3% for each of (iii) SDVOSBs and (iv) HUBZone Small Businesses. Similar goals exist for subcontracting by large businesses, requiring 36% of eligible subcontracting to go to small businesses, with the same percentages as for prime contracting applicable to each of the same four sub-categories. All of these goals are minimums, which agencies are encouraged to exceed. Indeed, each year each individual agency negotiates with SBA individual agency-specific goals for the coming year, based upon the specific agency’s past performance in each category. Thus, a specific agency’s goals may be significantly higher if the agency has shown an ability to obtain higher percentages in the past.

The FY13 prime contract goaling numbers evidence the continuing emphasis on small business contracting, which is reinforced by the fact that agencies are now required to consider success in these areas in personnel evaluations, and bonus and promotion decisions, for senior agency officials.

This means that agencies across-the-board are focusing on at least maintaining, and likely increasing, their small business prime contracting, not only in the aggregate, but also in each of the relevant subcategories. In order to understand the mindset of any particular agency, it is important to analyze that agency’s goaling scorecard, and specifically the agency’s negotiated goals and past progress. Agency scorecards are available on SBA’s website website at http://www.sba.gov/content/small-business-procurement-scorecards-0. These scorecards reflect both the agency’s past openness to and success in contracting with the various small business communities, as well as areas in which the agency is falling short and may be particularly open to appropriate small business marketing initiatives.

Similarly, the continuing overall shortfall for small business subcontracting, and particularly the continuing shortfalls in SDVOSB and HUBZone subcontracting, presents marketing opportunities for large businesses in assembling their proposal teams. Large businesses have the opportunity to set themselves apart from their competitors by aggressively seeking out and including in their proposals outstanding small businesses that will help both them and their customer agencies increase and exceed the agencies’ respective small business subcontracting goals. This is particularly important in those RFPs in which subcontracting plans are an identified evaluation factor.

For large and small businesses alike, it is worth spending time focusing on the ways in which you can use this data to enhance your agency-specific marketing efforts, and how to address counter-marketing efforts by your likely competitors.