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Are Federal Agencies Meeting Their Small Business Goals?

The Federal government has continued efforts to provide contracting dollars for certified small businesses. With new rules and set-asides in place, and the final procurement numbers from FY16 published by the SBA, EZGovOpps can report on some of the successes and failures of Federal agencies in meeting their small business goals.

Overall, the SBA graded Federal government small business efforts in FY16 with an “A,” with some real success evident in certain areas of procurement.  Small disadvantaged businesses, for example, were allotted 5% of Federal contracting dollars as a part of the 2016 small business goals. At the final tally, small disadvantaged business contracting dollars amount to $39.1 billion, or 9.53%. Overall, small business prime contracting in the Federal space reached 24.34% of eligible contracting, exceeding the 2016 goal of 23%. The most improved agency in meeting small business goals continues to be the Department of Energy (DOE), which is important for an agency that spends almost 90% of its budget in contracting dollars. After receiving grades of “F” from the SBA in FY-12,13, and 14, DOE received grades of “A” in FY15 and FY16. The prior years of difficulties at DOE could be explained by the unique contracting environment which DOE operates in, something that EZGovOpps explained in a prior article.


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Room for Improvement

However, while many of these successes are quite obvious, some failures in meeting the small business goals are similarly glaring. As highlighted in our 2017 State of the WOSB: after setting a goal in 1994 of awarding 5% of contracting dollars to Woman-Owned Small Businesses (WOSBs), the Federal government finally reached that milestone in FY15. Unfortunately, prime contracting dollars for WOSBs in FY16 fell back below the 5% mark to 4.79%, or $19.7 billion. WOSBs won’t receive extra help originally allotted in the 2017 National Defense Authorization Act (NDAA) for increased funding and grant levels for Women’s Business Centers, as the Senate ratified the NDAA without the extra WBC assistance. Last year less than 23% of WOSBs listed in had been awarded prime contracts, meaning that subcontracting provides an important lifeline for small businesses seeking Federal contracting opportunities.

While the Federal government was able to allot 32.20% of subcontracting dollars for small businesses, including 5.7% for WOSBs, other small business designations are experiencing a more difficult time in the subcontracting area. While the Federal government created a 3% subcontracting spending goal for Service Disabled Veteran-Owned Small Businesses (SDVOSBs) and HUBZone contractors, those designations only received 1.6% and 1.3%, respectively. Luckily, in July 2016, the SBA made an important decision on subcontracting regulations, which EZGovOpps explained here. Ruling on an NDAA stipulation first passed in 2013, the SBA has placed certain regulations on subcontracting in an effort to spur more small business involvement. For any small business which wins a prime contract, the contractor is limited in awarding subcontracting to only 50% of the work, unless the subcontractor is a similarly certified small business. This was done in an effort to prevent large businesses from taking subcontracting work from small businesses, and providing more subcontracting opportunities to small businesses.

For FY17, the Federal government created slightly higher small business goals across the Federal agencies, while maintaining the 20 year-old 5% goal for WOSBs. EZGovOpps will continue to keep and eye on small business set-aside spending as FY17 comes to an end. For other Federal spending trends, take a look at our analysis of the Top NAICS Codes in Federal procurement. Seeking a deeper look at a particular Agency, or looking for teaming partners with a particular small business set-aside? Sign up for a free trial with EZGovOpps. As the premiere market intelligence platform, EZGovOpps can provide the information needed to follow procurement trends, produce personalized opportunity forecasts, and provide custom analyst-updates for a complete understanding of the Federal contracting market today.

Don’t forget to view our full GovCon News section for more intel.

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