Small Business Federal Contracting: Trends and Drivers? Executive Summary. Dana Pinkava
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1 Small Business Federal Contracting: Trends and Drivers? Executive Summary Dana Pinkava
2 Scope and Methodology Scope: This report provides an overview of historical trends in small business prime and subcontracting goal achievement and contract obligations by industry segment of 24 Federal Agencies as well as an overview of small business programs and the impact of the implementation of the Small Business Jobs Act of 2010 on small businesses in Government contracting. Methodology: This report was developed using: The SBA s Goaling Program data from Federal Procurement Data System (FPDS) spending data reported as May 2012 FAR/DFAR The Small Business Jobs Act (SBJA) of 2010 (H.R. 5297) Deltek Content Various government websites and documentation 2
3 Executive Summary The Small Business Administration (SBA) established a small business goaling program over 30 years ago to ensure small business participation in Federal Government contracting. The SBA uses Small Business Scorecards to evaluate small business goal achievement at the agency-level as well as Government-wide. During 2010, Congress passed the Small Business Jobs Act (SBJA) which established a policy that small businesses should be given the maximum practicable opportunity through Federal contracting to participate in providing goods and services to the Government. When analyzing contract dollars obligated during FY 2011 against the 23% Government-wide small business goal, the percentage of the total contract dollars awarded to small businesses for the professional services industry segment exceeded this small business goal while the IT and AEC industry segments were below this 23% goal. Recent NAICS Code size standard increases may benefit small businesses as these firms can now compete as prime contractors on larger IDIQ contracts without fear of losing their small business status by exceeding the maximum annual receipts to qualify as a small business. While an agency s performance in meeting their prime and subcontracting goals should be a key factor for any small business developing a strategy to target agencies that are most supportive to their small business status, small businesses should also evaluate the agency s budget, the types of requirements that contractors have fulfilled for the agency previously and historical spending data. 3
4 Government-Wide Small Business Goals and Achievements The SBA sets Government-wide small business goals for both prime and subcontracting and negotiates with each agency to ensure that both the agency s goals and the Government-wide goals are achieved. According to the SBA, the Government has not achieved its 23% small business goal since FY According to the OMB in a February 2011 Memo, achievement of Federal small business contracting goals depends greatly on effectively communicating those goals throughout agencies and on clear lines of accountability for results. "SBA s small business procurement scorecard shows progress, but also uneven results, across agencies. Small Business Status: Statutory Goal Category: Goal %: FY 2011 Actual %: Small Business: Prime Contracts 23% 21.75% Small Disadvantaged Business (SDB): Prime and Subcontracts 5% 7.71% Women-Owned Small Business (WOSB): Prime and Subcontracts 5% 3.99% Service Disabled Veteran-Owned Business (SDVOB): Prime and Subcontracts 3% 2.66% Certified HUBZone Small Business: Prime Contracts 3% 2.35% 4 Source: SBA Goaling Program, GovWin IQ Source: Small Business Dashboard, GovWin IQ Source: OMB, GovWin, IQ
5 Government-Wide Overall Prime Contracting Small Business Goal Achievement While goaling data from indicates that the Government is not achieving the majority of its small business goals, the Government s small business goal achievements have been rising each year. Status 2008 Goal 2008 Achievement 2009 Goal 2009 Achievement 2010 Goal Small Business 23% 21.5% 23% 21.9% 23% 22.7% SDB 5% 6.8% 5% 7.6% 5% 8% WOSB 5% 3.4% 5% 3.7% 5% 4.0% HUBZone 3% 1.5% 3% 2% 3% 2.5% SDVOB 3% 1.5% 3% 2% 3% 2.5% 5 Source: SBA Goaling Program, GovWin IQ Source: Small Business Dashboard, GovWin IQ 2010 Achievement
6 Conclusions The Federal Government s budget for IT and professional services contracts is typically higher than the AEC budget and with more contract dollars to spend, agencies have an increased opportunity to award contracts to small businesses. The Information Technology (IT) and professional services industry segments account for a larger percentage of the total contract dollars obligated to small business than the AEC industry segment. During FY 2011, DoD, DHS, HHS, the Department of Treasury and the VA had the highest IT contract obligations in all small business statuses. In the professional services industry segment, HHS and DHS were the agencies with the highest contract obligations followed by VA, DoD and GSA. During FY 2011, AEC contract spending was concentrated between GSA, VA, the Department of Interior, DHS, USDA and DOE. These agencies and in particular GSA and VA are typically AEC-heavy agencies. It is important to keep in mind that the spending data in this report is filtered by small business status and not the total spending allocated to the agency by industry. Therefore, a significant amount of contract dollars may be procured on an unrestricted basis. There may be additional opportunities for small businesses to identify teaming partners on these unrestricted efforts (prime contractors on covered contracts must develop subcontracting plans to include small businesses). 6
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