The year started off with a crackdown on federal spending on employee conferences and travel, setting a harsh tone that continued throughout the year in ongoing battles over the budget between Congress and the White House.

The presidential election heated things up even more. Sequestration loomed. The “fiscal cliff” yawned.

Through it all, small federal contractors rode out the swells--including a fast-paced fourth quarter--and fell hard into the dips.

The frustration that the government missed the 23% small business procurement goal for the 11th year in a row was followed by the pain of new “demand-based’ procurement consolidation policies taking aim at the weakest firms.

“A year contractors would prefer to forget”--proclaimed the Washington Post. Few would disagree.

But before they are forgotten, here are the 12 top stories for small federal contractors in 2012.

1. Uncertainty the norm. Ups and downs in outlook became the norm for federal contractors in 2012, due to a very divided and partisan political environment and a slow recovery from the recession that began after the mortgage banking industry emergency bailout in 2008.

The presidential election heightened the tensions. And the election outcome--reelection of President Obama and preservation of the status quo in Congress to a large degree--seemed likely to ensure more uncertainty and contentiousness in the near term.

2. Centralization trend

Consolidation was the strongest trend for 2012 procurements. The Obama Administration and House GOP leaders pushed for centralized structuring of acquisitions in the Federal Strategic Sourcing Initiative to lower costs. Many small vendors expressed resistance because of fears of being left out. Agency leaders pledged set asides for small businesses.

In a related effort, the General Services Administration initiated a “demand-based” model for weeding out little-utilized vendors on the GSA schedules and temporarily closing off schedules to new offerings.

And in the House, Rep. Darrell Issa, R-CA, who chairs the House Committee on Oversight and Government Reform, promoted a bill to dramatically consolidate authority over $80 billion in annual federal information technology spending.

3. Federal travel ‘scandals’

Members of Congress, along with federal auditors, expressed outrage at GSA, Defense, Veterans Affairs and others for alleged excessive spending on conferences and travel. GSA chief Martha Johnson resigned in the fallout.

GSA was the first on the firing line over a Las Vegas conference that featured mind readers and a clown. VA was next with an embarrassing (and mildly expensive) video. Defense officials also took a turn at the front lines of rebuke.

4. Small biz goal a fail

For the 11th year in a row, the federal government failed to meet the 23% small business contracting goal established with the Small Business Administration.

The lack of success brought with it some soul-searching, along with an initiative in the House to raise the goal to 25%. While the 25% provision ultimately was approved within the House defense authorization bill, it was removed in talks with Senate members. White House officials said in a policy statement in May that raising the goal to 25% was “laudable but overly ambitious.”

5. SBA Size Standards

The SBA continued its major update of its size standards for small businesses in 2012. A main driver for size standard changes was conforming to the Office of Management and Budget’s 2012 modifications of the North American Industry Classification System, which created 76 new industries, among other changes.

The revisions to size standards are stirring some opposition, with House Small Business Committee members including language addressing the SBA’s methodology, and with vendor complaints that small business owners in some industries may face more competition from larger firms.

6. Women-owned stalling?

Congress created the women-owned small business set-aside program in 2000, but implementation languished until a final rule was published in February 2011. After a pretty good start, it seemed to stall.

In the first half of fiscal 2012, about 8,000 women business owners had signed up and the set-asides generated about $3.6 million contracts to date in the first six months of fiscal 2012. But that was lower than in the previous year, in which the program delivered $21 million in activity.

7. VA recertifications

Following many complaints about denials in VA recertifications of veteran-owned firms, the program had a surprising turnaround mid-year.

From October 2010 to September 2011, 69% of initial applications were denied. From September 2011 to August 2012, 73% of initial applications were approved, the VA told Set-Aside Alert in an exclusive story.

8. HUBZone shrinkage

More than 2,500 HubZone firms were decertified in 2012, representing about 27% of the total. Most of the changes reflected shifts in population shown in the 2010 census. Set-Aside Alert is continuing to investigate these changes.

9. Simplified Acquisition

SBA Associate Administrator John Shoraka announced that about 64% of procurements under simplified acquisition procedures go to small business, according to a Set-Aside Alert exclusive report. (Dec. 21) Even so, many specialists argue that simplified acquisition could be even more effective as a tool for boosting small vendors.

10. Small biz in politics

Small business became a highly political topic, with GOP contenders promoting “We Built It” and Obama hitting GOP Candidate Mitt Romney’s past involvement in company outsourcings and layoffs while at Bain Capital.

On taxes, the Republicans asserted that Obama’s plan for people with incomes over $200,000 would hurt small business owners. The National Federal of Independent Business agreed, while the Small Business Majority said 96% of small business owners would be unaffected.

11. Set-Asides in Court

Federal set-asides for small businesses under the 8(a) program sustained a landmark constitutional challenge in the U.S. District Court for the District of Columbia. But the case did not uphold the Defense Department’s application of the 8(a) program in a specific case. (See Set-Aside Alert issues of Aug. 31 and Sept. 14, 2012).

In the DynaLantic decision, the court ruled that 8(a) was not constitutional as applied by DOD to the military simulation and training industry, according to Jon Williams, partner at PilieroMazza PLLC.

12. National Defense bill

Every year, the big defense authorization package bill contains some important provisions affecting small contractors (See story on page 1).