Jul 20, 2012

Vanessa Payne

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Federal Small Business Contracting Fails to Meet 2012 Goals, Again

Small Business Contractors won $91.5 billion in federal government work in fiscal 2011, or 21.65 percent of the total, according to the Small Business Administration’s (SBA) annual Small Business Procurement Scorecard for fiscal 2011 released on July 3rd. During the first three years of the Obama Administration, the SBA report continued, the federal government awarded $286.3 billion or 22.07 percent in federal contracting dollars to small businesses.  SBA said this equaled a $32 billion increase over the three preceding years even as contracting spending overall has declined across the federal government. Despite this, the government’s overall small-business contracting goal of 23 percent annually remains just out of reach as the FY2011 figures reflect a drop in dollars and percent from previous years – down from 22.7 percent in FY2010, and 21.9 percent in FY2009.

The government exceeded its five percent goal for contracting with small disadvantaged businesses, but missed targets for the remaining three socio-economic categories: HUBZone small businesses, women-owned small businesses, and service-disabled veteran-owned small businesses. Only two departments received an “A” rating, having met all of the small business goals: Treasury, and SBA.  Earning “C” ratings for goal achievement: HUD, OPM,  and Justice, all citing business requirements unable to be satisfied by small business prime contractors. There are no penalties for failing to meet small business goals.

A May 2012 SBA report, Characteristics of Recent Federal Small Business Contracting, noted nine characteristics of high-achieving agencies that meet their negotiated small business procurement goals compared to agencies not meeting their goals including: successfully negotiating contracts with small firms despite conducting large procurements; managing smaller contracts effectively by breaking tasks up into manageable parts and by issuing more competitive, fixed price awards appropriately sized for small firms; and utilizing the socioeconomic set-aside programs more intensively. Small business set-asides programs may see increased use in FY2012 due to the Nov. 2, 2011 Interim rule for FAR Case 2011-024, which provides agencies with the ability to set aside orders and Blanket Purchase Agreements (BPAs) issued under Multiple Award Schedules (MAS) program. Before this rule, only specified SINs were identified as set-aside. Efforts to “unbundle” contracts are also reviewed on the score card.

Critics of the score card’s methodology argue that agencies exaggerate contracting achievements, whether by fraud or mistake, by claiming small business credit for awards made to large business. Miscoding of large contractors as small companies can occur for a variety of reasons such as, data entry errors including those due to repeated manual selections across systems and contracts, reliance on expired or otherwise incorrect data, and failure by contracting officials to verify business size status in the appropriate system. Officials are obligated to verify size, or any other claims a company makes by using not the Central Contractor Registration (CCR), but the Online Representations and Certifications Application (ORCA), which imports size information from CCR.  Phased implementation of the System for Award Management (SAM), rescheduled to begin in late July 2012, will combine CCR, ORCA, and eventually FPDS-NG, potentially reducing unintentional miscoding.

Small Business Procurement Scorecards provide an assessment of federal achievement in prime contracting to small businesses by the 24 Chief Financial Officers Act agencies.  The prime and subcontracting component goals include goals for small businesses, small businesses owned by women, small disadvantaged businesses, service-disabled veteran-owned small businesses, and small businesses located in Historically Underutilized Business Zones (HUBZones). This data is captured at the department level in the Federal Procurement Data System (FPDS-NG) and was retrieved from FPDS-NG on 4/27/2012 for the date range 10/1/2010 through 9/30/2011 (FY2011).

See more on this topic in our other posts:

• Government Struggles with Small Business Contracting Goal
• Department of Veterans Affairs Takes Drastic Step to Meet Socioeconomic Goals