According to reports released in Jun 2015 by the Small Business Administration (SBA), the federal government awarded almost 25 percent of its prime contracting dollars to small businesses in fiscal 2014 (SBA full report). In 2013, they awarded just over 23% to small businesses.
So for the second consecutive year, federal agencies have met the government’s 23 percent small business (SB) contracting goal! This is something that has rarely been attained in the past.
Last year when the news was announced about exceeding the SB goals, I wrote a blog discussing the good news and bad news. One issue was that many COs had stated they were being driven to award to SBs that ultimately failed to accomplish the work. Another issue was that the SBA’s Inspector General’s (IG) office identified $400 million worth of contracts that were given to ineligible firms but the agencies still counted the awards toward their targets. The IG also identified over $1.5 billion in contract actions where the firms were in the programs at the time of contract award, but in FY 2013 were no longer in the 8(a) or HUBZone programs. Auditors found that COs erroneously claimed $208 million in HUBZone contracts and $219 million for economically and socially disadvantaged firms. We will have to wait until after this fiscal year end to see if the same issues occur.
The June 2015 report included the fact that some contracts, such as contracts awarded for overseas work, are excluded from this goal report. If they were included, the small business share of total contracts likely would be lower.
But let’s talk about the real story. A story that has been in the making for decades about agencies trying and failing to meet SB goals. The tide is clearly turning and that is awesome news.
Small businesses received nearly $92 billion in federal contracts last year. For 24 of the agencies scored in the report, 16 made their small business contracting goals, including the Department of Defense. Nearly 9.5 percent of federal contracting dollars went to small disadvantaged businesses (primarily minority-owned companies.)
The government also beat its 3 percent goal for contracting to service-disabled veteran-owned small businesses. Agencies are still trying to meet the 5 percent goal for women-owned businesses, but their share rose to 4.7 percent in 2014 from 4.3 percent in 2013. The government also came in short of its 3 percent goal for contracts to businesses in low-income HUBZones, hitting only 1.8 percent in this category.
The bottom line is that federal agencies are getting more comfortable with awarding larger dollar contract to small businesses and the small businesses are stepping up to the challenge. I cannot wait for next year’s report. If you are a small business who has been waiting to dip your toes in the federal contracting waters, now may be the time to dive in!