|
Federal Market Intelligence for Small Business |
|
|
|
|
Set-Aside Alert news analysis:13,000 small contractors left the federal market in FY2018Largest one-year drop in small biz vendors in a decadeThe number of small business federal contractors has been declining for a decade--a trend that accelerated last year with a record of more than 13,000 small vendors leaving the federal market in fiscal 2018, according to a new Bloomberg Government study by Senior Data Analyst Paul Murphy. The exit of 13,158 small federal contractors last year was the largest such loss recorded in a single year. Last year’s decrease was the latest in a long slide, Bloomberg found. The total number of small business federal contractors has fallen from about 131,000 small firms in fiscal 2009 to about 88,000 in fiscal 2018. Those numbers reveal a 32% drop in the number of small federal vendors over the last decade. “This decline means that while contracts are getting bigger and bigger, we are creating an insular club where fewer and fewer businesses successfully compete for government contracts,” Sen. Ben Cardin, D-MD, said at a Senate Small Business & Entrepreneurship hearing on June 12. The number of “not-small” vendors also fell in the last decade, but only by 4%. Small business trends Small businesses come and go in the federal market each year. Some grow too large for the category, while others leave due to lack of work or better prospects elsewhere, or the small firm no longer exists due to merger, acquisition or failure. Lawmakers have expressed concern about decreasing numbers of small firms in the federal market, saying that having a robust community of defense and technology companies in particular is needed to provide critical goods and services to the government. Strong trend of decline From 130,593 small business federal contractors in fiscal 2009, the numbers have been reduced nearly every year, hitting 88,382 in fiscal 2018, the Bloomberg report showed. There have been three years in which small vendors withdrew from the market in especially high numbers: in fiscal 2012 and 2013, with about 11,000 small firms leaving in each of those years, and fiscal 2018, with 13,158 small firms departing the market. Meanwhile, the number of “not-small” businesses in the market (which includes all large and medium-sized firms) remained fairly stable, with 27,927 not-small firms reported in fiscal 2009 and 26,904 not-small firms in fiscal 2018. The study did not include classified work or subcontracts. Reasons for the declining numbers Lawmakers and industry observers generally have blamed the falling numbers of small federal contractors on the government’s increased reliance on strategic sourcing, category management and large multiple-award acquisition vehicles. In these initiatives a relatively high percentage of dollars often goes to small businesses, but only to a select few small firms. “Particularly with Schedules, Multiple Award Contracts, GWACs and BICS, agencies are able to push more money out on fewer contracts and tasks,” Paul Murphy, author of the report, told Set-Aside Alert. Another concern is that shutdowns and continuing resolutions have shortened the buying season, reducing the amount of time for full and open solicitations, Murphy said. Other factors that have contributed to reducing the vendor base include:
Small business awards The reduction in the number of small business federal contractors has occurred partly against a backdrop of declining awards to small firms. Small business awards fell steadily from a high of $127 billion in fiscal 2010 down to a low of $98 billion in fiscal 2015, the Bloomberg report indicated. Congress applied budget caps under sequestration during part of that time. However, while small business awards have increased for the last three years in a row, the number of small vendors ticked upward briefly, and then had a major decline. Small business awards rose to $105 billion in fiscal 2016, $110 billion in fiscal 2017 and $125 billion in fiscal 2018, in Bloomberg’s calculations. The Small Business Administration’s official small business procurement report for fiscal 2018 has not yet been released. Meanwhile, participation in the market was 97,000 small firms in fiscal 2016, 102,000 small firms in fiscal 2017 and 88,000 small firms in fiscal 2018. The average size of small business federal contractors has risen during the period, from an average of $775,000 in annual prime contract revenues in fiscal 2009, to $1.4 million in such revenues in fiscal 2018, the Bloomberg report said.
|
Washington Insider:
|
Copyright © 2019 Business Research Services Inc. All rights reserved.