News analysis:

Is reaching 23% enough?

Socio-economic goals lag; Do grades make sense?

      The Small Business Administration announced last month that the government had reached the 23% goal in fiscal 2017 for small business procurement for the fifth year in a row (See May 25 edition of Set-Aside Alert).

      Now the criticisms are rolling in.

      Overall, small business dollars rose, from $100 billion the year before to $105 billion, but the percentage dropped, from 24.34% the year before to 23.88%.

      But only half of the socio-economic goals were met, and the percentage of prime contracts awarded to HUBZone, women-owned small businesses (WOSBs) and small disadvantaged firms slipped.

Fiscal 2017 scorecard

      Sen. Ben Cardin, D-MD, Senior Democrat on the Senate Committee on Small Business & Entrepreneurship, noted that WOSB, small disadvantaged and HUBZone contracting lost ground, percentagewise.

      WOSB procurements fell to 4.71%, down from 4.79% last year. Small disadvantaged awards decreased to 9.1%, from 9.53%, and HUBZone awards dropped to 1.65%, from 1.67%. At the same time, dollar spent in each of those categories rose slightly.

      Even so, Cardin is worried that the trend is downward. “I’m increasingly concerned that we are moving in the wrong direction,” he said in a statement.

      Robb Wong, SBA’s associate administrator for government contracting and business development, told Set-Aside Alert in an email that 18 out of 24 agencies exceeded their small business goals negotiated with the SBA. Furthermore, the government exceeded the 5% goal for small disadvantaged and the 3% goal for SDVOSB contracting, Wong added.

Small business procurement grades

      Another area of concern is the appearance of possible inflation in grading: 21 agencies got an “A” or “A+” while only two got a “B” and one got a “C.”

      Steven Koprince, government contracting attorney, noted that the Energy Dept. got an “A” even though it missed all four socio-economic goals.

      “So long as almost everyone is going to get a top grade anyway, I say we just replace next year’s SBA goaling grades with agency participation trophies,” Koprince wrote in his blog.

      In response, Wong pointed out that small business prime contracting is 50% of the grade; subcontracting, 20%; growth in small firms participating, 20%; and agency peer review, 10%.

More information:
SBA's Methodology: https://bit.ly/2LoKsCb
Koprince blog: https://bit.ly/2JcgUuY

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