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Set-Aside Alert news analysis:8(a) participation falls under Trump; 8(a)s won $27B in FY17New CRS report shows rise in 8(a) administrative costsA new report shows a drop in the number of small disadvantaged businesses in the 8(a) Business Development program over the last two years, as well as a steep rise in 8(a) administrative costs during the same period. The Congressional Research Service report also found that 8(a) companies won $27.2 billion in federal contracts in fiscal 2017, a 1.4% reduction from the $27.6 billion won in fiscal 2016. The CRS report of April 17 provides an overview of the Small Business Administration’s longstanding 8(a) program for small business owners who are certified as socially- or economically-disadvantaged. The owners can bid on 8(a) set-asides and win sole-source contracts, among other benefits. Among its findings, the CRS noted that 8(a) firms in recent years have won more federal contract awards through other types of set-asides or through open competition rather than through 8(a) set-asides. Number of 8(a) firms The number of 8(a) firms dropped during the first two years of the Trump Administration, from 8,010 firms in fiscal 2016, down to 6,789 firms in fiscal 2018, which is a 15% reduction, according to the CRS report. An SBA official declined to comment at this time, indicating more time was needed to review the CRS report. In previous years, the number of 8(a) participants ranged from a high of 8,442 firms in fiscal 2010, falling to a low of 6,660 firms in fiscal 2014, and then rising to 8,010 firms in fiscal 2016 before falling again. The SBA previously blamed the drop from 2010 to 2014 on the fact that a large number of firms graduated from the program during that period after their nine-year limit had been reached. The Obama administration revised applications to make it easier to apply and to raise participation from fiscal 2014 to 2016, which was successful, but the SBA’s Inspector General raised concerns that some of the safeguards that kept out questionable firms may have been eroded. Administrative costs During the last two years, while 8(a) participation was sliding, the SBA’s administrative costs for running the program were skyrocketing, according to the CRS report. The SBA’s total administrative costs for the 8(a) program rose from $47 million in fiscal 2016 to $71 million in fiscal 2018, which is a 51% increase, the CRS said. The amount the SBA spends on administration for each 8(a) firm also increased sharply, from $5,902 per firm in fiscal 2016 to $10,525 per firm in fiscal 2018, according to the CRS. Previously, administrative costs varied from a low of $6,730 per firm in fiscal 2010 to a high of $8,237 per firm in fiscal 2012. The CRS provided no explanation for the decrease in the number of 8(a) firms in the last two years or for the recent increase in administrative costs. An SBA official asked for more time to review the CRS report before commenting. 8(a) awards The $27.2 billion in federal contracts awarded to 8(a)s in fiscal 2017 included $8 billion in 8(a) set-asides, $8.5 billion in 8(a) sole-source awards and $10.8 billion in other types of set-asides for small businesses or in open competition. The pattern of 8(a)s winning the greatest amount of awards through other set-asides or through open competition has been the trend in each year since at least fiscal 2010. From fiscal 2010 through fiscal 2017, 8(a) firms were awarded, on average, 5.45% of the total amount of federal contracts awarded, the CRS report indicated. Roughly 27% of those awards were 8(a) set-asides, 34% were 8(a) sole-source awards and 39% were through open competition or other types of set-asides. Issues of concern for 8(a)s The CRS identified the following current significant issues regarding the 8(a) program:
More information: CRS report: https://bit.ly/2UwMeFl
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