Agencies end 9-year small business contracting drought

Monday - 8/4/2014, 4:54am EDT

Jason Miller, Executive Editor, Federal News Radio

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Small business contractors had a banner year in 2013. For the first time in almost a decade, agencies awarded 23 percent of all available contracts to small firms.

The Small Business Administration reported Friday that agencies spent more than $83 billion with small firms out of a possible $355 billion last year. That equaled 23.4 percent of all prime contracts went to small firms.

The government hasn't met its 23 percent goal since 2005, which is why officials from SBA and NASA, and members of Congress celebrated this achievement at the NASA Goddard visitors center in Greenbelt. Maryland.

"The announcement you made today—meeting the goal of 23 percent—in case you all didn't know, it's a tough economic environment. Yeah, you know. You know how tough it is," said Sen. Ben Cardin (D-Md.), a member of the Small Business and Entrepreneurship Committee. "And I can tell you it's difficult to break through a procurement process when everybody is trying to hold on to all the dollars. When you have a growing pie, you can bring more people in and you can meet your goals. It's a little bit easier. But it's tough in tough economic times. So, this really is big news that we've met the small business goal."

Cardin said the fact that agencies made progress against several of the socioeconomic goals as well is even more impressive.

Highest percentage ever

SBA says agencies awarded a higher percentage of contracts to small disadvantage businesses, women-owned businesses and service disabled veteran owned small firms last year than ever before.

Agencies awarded 8.6 percent of all contracts to SDBs, 4.3 percent to women-owned small firms and 3.4 percent to service disabled veteran owned firms. The government made its goals for SDB and service disabled but missed its goal for women-owned businesses. The SDB goal is 5 percent and service disabled veteran owned small business goal is 3 percent. The women-owned small business goal is 5 percent.

Agencies also missed the goal to award 3 percent of all contracts to firms under the Historically Underutilized Business Zone (HUBZone) program. In 2013, agencies awarded 1.3 percent of all contracts to these companies.

The government has never met its women-owned or HUBZone goals in more than a decade of trying.

All of these accomplishments are part of what Maria Contreras-Sweet, the SBA administrator, said is a broad effort to improve access to federal contracts for small businesses by the Obama administration.

"During President [Barack] Obama's first five years in office, the federal government has awarded $459 billion in contracts to small businesses. This is a $62 billion increase over the five preceding years even as contract spending has declined due to the sequester and government downsizing," Contreras-Sweet said. "Since 2010, the President has convened the White House small business procurement group. The work of this group doesn't get a lot of publicity, but it's been critical. The President also implemented the QuickPay program, which helps the government small business suppliers get paid in 15 days or less. This, today, marks another important achievement."

Contreras-Sweet said while meeting the 23 percent goal is important, there is a lot more that can be done such as getting agencies to meet the goals for women- owned and HUBZone businesses. She said Congress needs to pass a law to let agencies award sole source contracts to women-owned small firms—a benefit every other socio-economic class of contracts already enjoys.

Majority of agencies got excellent grades

Overall out the 24 cabinet level agencies responsible for meeting the governmentwide goals, SBA gave 20 of them an "A" grade and three of them a "B" grade. Only the Energy Department earned an "F" grade. But Energy has a disadvantage versus other agencies in that so much of its contract spending goes to run their national labs. Small businesses are not qualified to win those contracts.

SBA determined the grades based on how agencies met their prime and subcontracting goals. If an agency meets or exceeds both goals then it receives an A grade.

The government's accomplishments can be traced to several reasons, said John Shoraka, SBA's associate administrator of Government Contracting and Business Development.

First, he said, agencies have been building toward meeting the goal—coming close the last few years.

But more importantly, Shoraka said the White House's attention to the goals has really been the difference maker.

"There's been a laser-like focus with respect to small business procurement from the White House. As an example, although this became law in the National Defense Authorization Act of 2013, keeping Senior Executive Service members accountable to a goal," Shoraka said in an interview with Federal News Radio after the press briefing. "As the White House asked, not only on the acquisition side, but the program side. You have a program, you have budget, you should be held accountable for a goal, and your evaluation criteria as an SES is going to count on that. We've seen that gain traction."

Shoraka said another example is how these accountability measures are becoming institutionalized is when the director of the Office of Small Disadvantaged Business Utilization (OSDBU) reports directly to the deputy secretary or higher.

"Once these are institutionalized, our perspective is, it will be much more difficult to go backwards," he said.

Congressional pressure paying off

Shoraka added the flow down of attention from the White House was helped by the Small Business Procurement Council.

The council is made up of SBA, the Commerce Department's Minority Business Development Agency and each of the agency's OSDBU director. Congress established the council in 2012 in the Defense authorization bill.

Shoraka said the council had regular meetings on the goal to hold agencies accountable.

"There is a lot of focus on how agencies perform on their scorecards. A significant number of agencies accomplished a grade of ‘A' or ‘A+' so there is a lot of focus from the White House, there is a lot of questions with respect to why we missed and there is a lot of accountability demanded," he said. "We've worked closely—you hear in this city there isn't a lot of opportunity to work closely with the Hill—but we've actually worked very closely with our committees to make sure the Small Business Jobs Act is being implemented, to make sure the provisions around the National Defense Authorization Act are being implemented. There are a lot of provision and a lot of rulemaking in both of those legislations to really gain traction when it comes to small business procurement."

The House and Senate small business committees have been pressing the executive branch to meet the goal for several years and even raise it.

Congressman Sam Graves (R-Mo.), the chairman of the Small Business Committee, said in a release that the government meeting the 23 percent goal shows the reforms Congress approved over the last two years are working. The reforms include holding senior officials more accountable, making size standards easier to understand and giving more authority to agency small business advocates.

Graves introduced a bill in February to increase the governmentwide goal to 25 percent.

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