A FEDMINE research project recently focused on companies who won federal contracts as small businesses in 2006. Numbers were compiled from the latest Federal Procurement Data for that year as of August 31, 2008.

Of the top 150 “small business” contractors sampled, 51 were determined to be large corporations that far exceeded the SBA size standard for a small business contractor. Of these 51 companies, 23 companies routinely report annual sales in excess of a billion dollars. In singling out contracts to these large firms made as small businesses,  it reduces the SBA’s small business goaling numbers by as much as $17 billion, shaving almost 22% from the $77 billion the government claimed went to small business, to $61 billion. Total federal spending in FY 2006 amounted to $427 billion, of which 23% is required to be set aside for small business contracts.

Also worthy of mention is that there were 11 Alaska Native Corporations (ANC) that also exceeded the SBA size standards for a small business contractor from those sampled, this combined ANC group received 1.5 billion dollars in federal small business contracts. In summing it up, total small business awards made to large firms represented 36% of all small business contract dollars amongst the Top 150, when including the ANC group the percentage jumped to 47%. A deeper analyis also reveals DoD’s use of a “Miscellaneous Foreign Contractors” company name, which it apparently uses to assign multitudes of mostly foreign businesses to a set of DUNS numbers that do not belong to any company, but contracts awarded to the Miscellaneous group of companies are claimed towards meeting the Defense Department’s small business goaling numbers. It seems the government became aware of these issues, because in 2007 and 2008 small business contract awards are more accurately awarded to small businesses and less to large businesses, but that has also helped reduce the overall small business contracts reported by the government that went to small businesses in 2007.

For viewing FY 2006 and FY 2007 Top Small Business Contractor Reports click on respective links below:

For further details about this report write to amehan@fedmine.us or visit www.fedmine.us to view various reports.

Been hoping for a good night’s sleep on your next business trip?  If your contract uses GSA per diem rates, starting in FY09  rates will increase in about 400 locations in the continental United States to a per diem higher than the national standard.  Included in the rate increase are major cities among them, Boston, Chicago, Denver, New York, Los Angeles, San Francisco, and Washington, DC.    Traveling into Washington, DC to conduct federal business?  The FY09 lodging per diem range will increase to $165 to $233 per night depending on the season; a big bump from FY08 range of $154 to $201.  Washington, DC meal and incidentals will remain at the FY08 rate, $64.   The national standard will remain unchanged from FY08 at $70 for lodging and $39 for meals and incidentals.  For more information visit http://www.gsa.gov/perdiem.

The VA published a proposed rule in the Federal Register that would establish a set-aside program for Veteran and Service Disabled Veteran Owned small businesses.  (VOSB/SDVOSB) The rule implements portions of the Veterans Benefits, Health Care, and Information Technology Act of 2006.  The proposed rule would require that VA procurements valued in excess of $100,000 be set-aside if there is a expectation that two or more VOSBs / SDVOSBs will submit proposals.  SDVOSBs would be given priority.  The VA would also be allowed to award contracts valued at less than $100,000 to such firms on a sole-source basis.  To participate, firms must register at VetBiz.gov.   The proposed rule is also likely to increase subcontracting opportunities as prime contractors will receive extra evaluation points if they propose to use VOSBs / SDVOSBs as subcontractors.  The downside to the proposed rule is that it will likely lead to less work for other types of small businesses.  Comments are due on October 20, 2008.

DFAS says good things are on the horizon…so when can contractors expect to see faster payments?Is your organization tight on cash these days? There has been a consistent pattern of late payments coming from DFAS as DFAS continues to consolidate processing centers and implement new systems. Pam Franceschi, Director of Finance and Rebecca Beck, Director of Accounts Payable Acquisition of DFAS spoke at PSC contract finance and cash flow committee meeting on August 20, 2008. The message from DFAS was that processing was getting better and hopefully you will be seeing improvement. So what has DFAS been doing? Basically, they have integrated 500 new employees and consolidated 8 processing sites. They have steadily improved automation to reduce manual processing and continue to work to improve integration amongst the various departments. These factors led to delays in payment for many contractors. We all hope this was well spent and are waiting to see prompt payments return.

DFAS also highlighted pay.gov. Pay.gov can be used to make secure electronic payments to Federal Government Agencies. Payments can be made directly from your bank account or by credit/debit card. This automated system will reduce posting time, verification time, and manpower. There are some limitations and DFAS as well as other agencies continue to improve the site. The largest disconnect in the system highlighted by a contractor was the final administrative close-out of the contract once payment was made. Since 2006 the use of pay.gov has increased from 300 payments in 2006 to over 4,000 to date in 2008.

So we’d like to hear your thoughts on DFAS, let us know if you see improvement in fiscal year 2009. We all agree at this point it can only get better….or at least we hope.

Federal contractors have additional options to highlight their specialized capabilities to customers with the current refresh of GSA PES Schedule 871 (Professional Engineering Services).  A new Special Item Number, SIN 871-7 Construction Management, has been added.  Construction Managers can assume the role of professional adviser to the customer agency by helping expand the agency’s capabilities through consultation and advice in construction, design and management.  Available since April 2008, currently, only 14 contractors offer Construction Management (CM) under SIN 871-7.

As a CM contractor under the Construction Management SIN 871-7, you can advise and provide oversight to agencies for the following services:
- Project Preplanning/Programming Phase
- Project Design Phase Services
- Project Procurement Phase Services
- Project Construction Phase Services
- Commissioning
- Testing Services
- Claims Services
- Post Construction Services
- General Services

As the 4th quarter end approaches, current PES contractors who have been awarded Construction Management labor categories will want to submit a modification to add SIN 871-7 to be visible to customers looking for these services.

To learn more about these services, for help in adding them your Schedule 871 contract, or to discuss whether acquiring a GSA PES schedule contract is right for your business, contact Pete O’Neill at poneill@aronsoncompany.com or 301-222-8226.

According to the Department of Veterans Affairs, in order to win business as a service-disabled veteran-owned business, the company must meet the same requirements as a veteran-owned business, plus the veteran or veterans owning the controlling interest must have a VA-rated service-connected disability.

A recent VA document shows what is at stake: there are in all 23,701,354 veterans in the country. From that group there are 7,884,000 Vietnam era veterans, but Gulf War era veterans now comprise the second largest component, numbering 4,996,000.  World War II veterans were numbered at 2,912,000, while Korean conflict veterans totaled 2,961,000 amongst others. The Veterans Entrepreneurship and Small Business Development Act of 1999 set a spending requirement for federal agencies to at least 3 percent of prime-contract funds to be spent with service-disabled veteran-owned small businesses.

The government has failed to meet those goals consistently over the past ten years, and consequently Executive Order 13360 was issued recently to remedy the situation and accelerate providing opportunities for Service-Disabled Veteran Businesses (SDVOSB) in Federal Contracts and Subcontracts. A study conducted by FEDMINE puts the number of Veteran Owned Businesses doing business with the federal government at 23,947, of which only 4,515 are SDVOSBs that won any kind of contract award from the government over the last 5 years. That represents a huge opportunity for those firms, and food for thought for the roughly 30,000+ disabled veterans returning from the Gulf War.

It is noteworthy to note that although contracts to SDVOSBs are increasing, those numbers represent only 0.8635% of the $486 Billion spent last year by the federal government in 2007, a staggering shortfall for meeting the 3% goal indeed!!

The chart below represents a part of this study, click to see a graph of comparative numbers between Veteran and SDVOSBs federal contracts. Data for FY 2008 is incomplete and will not be determinable until well after the close of the fiscal year.

For questions regarding this study or suggestions for covering new topics, please contact Ashok Mehan at amehan@fedmine.us. Visit www.fedmine.us for the latest federal contract related reports and statistics.

The Veterans Entrepreneurship Task Force, (VET-Force) composed of more than 200 organizations and affiliates, include many small businesses, has entered into an agreement with GSA designed to help GSA reach its goal of awarding 3% of its contracting dollars to Service-Disabled Veteran Owned Small Businesses.  (SDVOSB)VET-Force will use its network and resources to provide information and training on Federal opportunities to SDVOSBs.  In GFY 07, GSA awarded 2.2% of its contracting dollars to SDVOSBs compared to a goal of 3%. 

 VET-Force may be accessed at http://www.vet-force.org/

After a longer than expected nomination process, Jim Williams will be designated as acting administrator of the General Services Administration on August 30, 2008.  Williams will be taking over his new role just a day after the current acting administrator, David Bibb, retires on August 29, 2008.

Williams nomination was temporarily delayed in early July because of his involvement in the highly publicized Sun Microsystems GSA IT contract negotiations. During the nomination process, Senator Charles Grassley said that Williams “may have improperly interfered in the ongoing contract negotiations with Sun Microsystems”, and shouldn’t have the top position at GSA.  Despite Grassley’s stance, his nomination was finally approved on July 30, 2008.

A recent study by the Associated Press has confirmed what many Government contractors have long known - when it comes to winning government work, it pays for small businesses to have a presence inside (or near) the beltway. Despite the extensive spread of Federal Government facilities and projects stateside and worldwide, a full third of all small business contracts are awarded to companies within a 50-mile radius of the White House. When you’re talking about $212B in total small business contracts from 2004-2007, that equals a lot of cash concentrated in a region that comprises only 0.2% of the United States!

So how does a small business in Osh Kosh or Austin go about getting their piece of the pie? It helps to focus on the right agencies. The AP study showed a wide variance among agencies in the geographical distribution of small business awards. For example, while the EPA awarded 75% of small business contracts outside of the DC region, the National Science Foundation awarded less than 20%. It’s also imperative to learn the lingo - government proposals are infamous for the quagmire of acronyms - and you can’t respond to an opportunity if you don’t know what it means! Finally, check out some of the links at the bottom of the AP article for a wealth of small business resources or contact Tom Williams at Aronson, (301) 222-8289, to learn how Aronson’s Federal Market Assessment and GSA Schedule services can help you better penetrate the Federal Market.

On July 18th the SBA increased the monetary based small business size standards to account for inflation.  The new size standards apply to procurements issued after August 18, 2008.  As a result of the adjustment, many service related size standards increased form $6.5 million to $7 million.  Similarly, information technology size standards increased form $23 million to $25 million.  Size standards covering the architectural, engineering, surveying, and mapping industries were not adjusted as inflation has not materially affected these industries.

The last inflation adjustment was made in December, 2005.  This inflation adjustment is unrelated to the comprehensive size standard review that SBA is conducting over the next 2 years.