Set-Aside Alert exclusive research:

SDVOSB set-asides rebounded in 2021, but not those for VOSBs

SDVOSB set-asides hit 14-year high of $7.2B in FY2021

      Like most federal set-aside contract awards for small businesses, those for Service-Disabled Veteran-Owned Small Businesses (SDVOSBs) fell off a hypothetical cliff in fiscal 2018.

      SDVOSB set-aside awards dropped to $5.3 billion that year, down from $7.1 billion the year before, according to Set-Aside Alert’s exclusive research of federal data. That was a 25% decrease in one year.

      But unlike several other types of set-asides for small firms, the SDVOSB set-aside awards began to grow, bouncing up to a 14-year high in fiscal 2021, reaching $7.2 billion.

      That was not the case for Veteran-Owned Small Business (VOSB) set-aside awards, which fell dramatically in 2018 and have continued to slump.

      But the SDVOSB set-asides may see somewhat limited growth ahead if another trend continues.

      Set-Aside Alert found that SDVOSB set-aside awards in recent years have comprised a shrinking percentage of total SDVOSB awards.

      From fiscal 2008-2016, SDVOSB set-asides accounted for an average of 38% of all SDVOSB awards. For the more recent period of fiscal 2017-2021, the SDVOSB set-asides accounted for only 29% on average, according to Set-Aside Alert’s research.

Overall set-aside trends

      The drop in SDVOSB set-asides in fiscal 2018 occurred in an environment of several trends:

• Several other types of set-asides previously examined by Set-Aside Alert also experienced sharp drops in fiscal 2018, including small business, 8(a) and HUBZone set-asides, which have continued to slump or show sluggish growth.
• Total small business awards increased during the fiscal 2017-2020 period, rising from $106 billion to $146 billion during that period, a 38% increase, according to SBA data.
• Total federal contract awards also rose substantially from fiscal 2017-2020, while leveling off in fiscal 2021, according to USASpending.gov data. From $510 billion in fiscal 2017, total contract spending increased to $668 billion in fiscal 2020, a 31% hike. In fiscal 2021 it decreased slightly to $632 billion.

      The multiple trends suggest that agencies may have relied less on set-asides during fiscal 2017-2020 because they were more easily achieving their small business procurement goals. With a huge influx of funding for federal contracting overall, the rising tide likely lifted the small firms as well.

      The staffing demands of handling the large increase in procurements from 2017-2020 also may have left little time for set-asides, since set-asides can require additional marketing research and paperwork in comparison with non-set-aside contracts of the same value.

SDVOSB set-aside awards

      Here are total SDVOSB set-aside awards, including sole-source awards, which generally made up less than 5% of all set-aside awards. All years are fiscal years.

      While SDVOSB set-aside awards rebounded in 2021, there is a troubling trend: SDVOSB set-aside awards have been comprising a smaller percentage of all SDVOSB awards in recent years.

Editor’s Note: Total VOSB awards are not tracked. Also, VOSB sole-source set-aside awards averaged 8% of all VOSB set-asides from 2017-2021.

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