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Federal Market Intelligence for Small Business |
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Set-Aside Alert news analysis:Top 18 small business federal contracting stories of 2018The year 2018 started off with two brief government shutdowns and ended with a much longer shutdown dragging on and on. There were highs and lows, progress in some areas, puffed-up plans that didn’t go anywhere, and a lot more procurement regulation than you might expect from an administration that aimed to reduce regulation. Meanwhile, the daily blitz of news coming from Washington kept everyone frantically multi-tasking. Here is Set-Aside Alert’s review of the Top 18 small business federal contracting stories of 2018. #1 Defense Spending Boom Following six years of budget caps set by Congress and a small rise in funding in fiscal 2017, Defense Dept. spending zoomed upward in fiscal 2018. Lawmakers approved an 11% increase in appropriations for DOD for the year. That included $11 billion more for operations and maintenance, a category in which small businesses typically do well, and $9 billion more for procurement, according to the Congressional Budget Office. The surge in DOD spending, along with flat tax revenues--mostly due to a major tax cut, primarily for corporations--caused the U.S. deficit to rise sharply to $779 billion by the end of fiscal 2018, the highest in six years. If the deficit continues to rise, another round of clamping down on federal spending could be around the corner. #2 - Democrats win the House Following total Republican domination of Congress and the White House for two years, Democrats in the November 2018 elections captured the majority in the House of Representatives by flipping more than 40 seats. Expect major shakeups in legislative priorities, most likely accompanied by the usual gridlock of a divided government. For small business vendors, it means Rep. Nydia Velazquez, D-NY, likely will be the new chair setting the agenda for the House Small Business Committee, which oversees small business federal procurement. #3 - Massive NDAA Congress in November 2018 approved a voluminous National Defense Authorization Act for fiscal 2019 that once again included a large number of provisions affecting government procurement, as do most NDAA bills. Highlights included Sec. 875, which removes the requirement for federal agencies to complete a Determination & Findings prior to utilizing a Government-Wide Acquisition Contract (GWAC) approved by the Office of Management and Budget. Also, Sec. 876 says prices need not be considered as an evaluation factor for some schedules contracts for services at an hourly rate and for some IDIQ multiple-award contracts. And Sec. 880 directs federal agencies to avoid the use of Lowest-Price, Technically Acceptable criteria as much as is practicable for “knowledge-based professional services.” Set-Aside Alert developed a comprehensive list of the NDAA acquisition provisions in the Nov. 30 issue. #4 - Regulations aplenty Small business federal contractors had to pay attention to over a dozen new regulations affecting them in 2018 - including rules going into effect and proposed new rules. There were new regulations in effect for certification of veteran-owned small firms, and new rules proposed for HUBZone firms and 8(a) Business Development participants, along with changes that affect all small federal vendors, including sick time rules and increases in the micropurchase threshold. Set-Aside Alert is preparing to publish a list of the major 2018 regulatory actions affecting small business contractors in an upcoming edition. #5 Consolidation of schedules The General Services Administration announced on Nov. 27 that it intends to consolidate 24 separate Multiple-Award Schedules into a single schedule for products and services. The schedules, which for decades have been the bread and butter of small contractors, currently generate about $31 billion a year in orders. The consolidation is expected to take about two years, and it is not necessarily going to be a slam dunk, according to the GSA’s inspector general. The shift to a single schedule faces hurdles, including potentially a lack of buy-in from all stakeholders, inadequate resources and excessive costs of modifying existing systems, the inspector general wrote in a recent report. #6 - Sect. 809 panel‘s advice The DOD’s Section 809 panel examined small business procurements and concluded that the small business strategy should be closely aligned with DOD’s warfighter needs, rather than simply having DOD aim to reach a negotiated numeric goal. While the panel’s work is not completed, and it is not clear what the impact of the panel’s recommendations will be on DOD’s policies and practices, the panel’s advice has added to uncertainty about the purpose and effectiveness of Congress’ setting of a broad 23% goal for small business federal procurement. #7 - CSIS report on set-asides Along the same lines as the Section 809 panel’s questioning of the value of setting a small business procurement goal for DOD, a report by the Center for Strategic and International Studies questioned the effectiveness of small business set-asides in federal procurement. In recent years, 81% to 94% of small contractors that survived 10 years in the federal government market remained small, CSIS said. Their failure to grow beyond the “small” category suggests that the strategy of awarding set-asides for small vendors may be backfiring, CSIS suggested. #8 VA wins on Med-Surg A federal judge refused to dismantle the Veterans Affairs Dept.’s Medical-Surgical Prime Vendor-NextGen program for purchasing medical and surgical supplies, even though the program does not comply with the “Rule of Two” implementing the VA’s required preferences for veteran-owned small business contractors. Under the Rule of Two, if two small firms owned by veterans are willing and able to do the work, the VA must contract with one of them. The VA generally applies the rule to carry out a 2006 law making veteran-owned small companies the top priorities in VA contracting. VA officials said they handed over urgent medical supply purchasing to four prime vendors because complying with the Rule of Two could not deliver products fast enough and patients were at risk. Judge Eric Bruggink, while noting that the VA’s Med-Surg procurements do not comply with the Rule of Two, denied the protest and denied an injunction. The judge agreed veteran patients were endangered if supplies such as bandages and prosthetics cannot be procured quickly under the Rule of Two, and it is Congress’ fault for saddling VA with such unduly strict requirements under the 2006 law. Calling the 2006 law “a labyrinth of legal and regulatory hoops and hurdles,” Bruggink said “the result is a danger to veterans’ healthcare and increased cost to the government.” Bruggink said he denied the protest because the potential harm to the VA and its patients far outweighed the harm to the service-disabled veteran small business owners who were the plaintiffs in the case. NOTE: Part II will run in the Jan. 18 edition of Set-Aside Alert.
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