Set-Aside Alert exclusive research:

Competed 8(a) set-asides fell by 52% in FY2018; still struggling

Drop much steeper than for sole-source 8(a) set-asides

      The recent history of 8(a) set-aside contract awards shows two different paths: The competed 8(a) set-asides have sunk into a slump, while 8(a) sole-source awards stumbled but have recovered.

      While the 8(a) Business Development Program is arguably the flagship of the Small Business Administration’s contracting assistance programs, recent history shows a dramatic turn downward for all 8(a) set-aside awards in fiscal 2018.

      In that year, total 8(a) set-aside awards dropped by a startling 35%, as previously reported by Set-Aside Alert.

      Even more shocking is that competed 8(a) set-aside awards fell by 52% in that year, according to Set-Aside Alert’s exclusive analysis of USA Spending data.

      Competed 8(a) set-aside awards plummeted to $4.17 billion in fiscal 2018, down from $8.76 billion in fiscal 2017.

      The downward trend has mostly continued. From 2018-2021, competed 8(a) set-aside awards dropped further in the following three years, while trending upward slightly in fiscal 2022.

      From $4.17 billion in fiscal 2018, competed 8(a) set-aside awards decreased each year to a 15-year-low of $3.89 billion in fiscal 2021. They grew to $4.06 billion in fiscal 2022.

      During the same period, 8(a) sole-source set-aside awards fell by 18% in fiscal 2018, down to $6.91 billion, from $8.40 billion in fiscal 2017.

      That was a much smaller drop than the 52% drop in competed 8(a) set-asides. Furthermore, the sole-source 8(a) set-aside awards have mostly recovered. From $6.91 billion in fiscal 2018, they grew nearly every year, reaching $8.51 billion in fiscal 2022.

Analyzing the data

      The different trajectories for competed and sole-source 8(a) set-aside awards are not surprising, given that contracting officials have been known to praise the convenience and ease of sole-source awards.

      For example, Jimmy Smith, director of the Navy’s small business programs, said at a recent hearing his office is encouraging contracting officers to use 8(a) sole-source set-asides as a tool to meet small business procurement goals. (See March 31 issue of Set-Aside Alert).

      While the different paths for different types of set-asides are understandable, the 52% drop for the competed 8(a) set-asides in fiscal 2018 is stunning for a single year.

      It was a much deeper drop than was experienced by all small business set-aside awards. As previously reported by Set-Aside Alert, all small business set-aside awards fell by 39% in fiscal 2018, from $70.69 billion in fiscal 2019 down to $42.79 billion in fiscal 2018. (See March 31 issue for more data).

      Reasons for the sharp decreases have included:

• As long as total small business procurement dollars trend upward, set-asides may be less of a priority. For example, total small business awards rose by 14% in fiscal 2018, to $120.5 billion, from $105.7 billion the year before, and continued to rise in subsequent years, according to the SBA’s procurement scorecards.
• Small Disadvantaged Business awards (which include all 8(a) awards with or without set-asides) increased from $40.2 billion in fiscal 2017 to $46.5 billion in fiscal 2018, according to SBA data. That was a 16% boost that might have obscured the impact of the sharp drop in 8(a) set-asides, especially in the competed 8(a) set-asides.
• It is possible that politics was a factor in the 8(a) set-aside reductions. Fiscal 2018 was the second year of Republican President Donald Trump’s Administration, which generally did not support programs promoting racial equity and diversity. For example, Trump issued an Executive Order to stop all federal diversity trainings in 2020.

Sole-Source 8(a) set-asides data

      Here is the data from USA Spending. All years are fiscal years.

      Here is the data for competed 8(a) set-aside awards:

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