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Federal Market Intelligence for Small Business |
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Set-Aside Alert exclusive research:Number of small biz federal vendors has shrunk since 2017Trending down despite sharp rise in total award valueFederal data shows a strong downward trend in the number of small business federal contractors since 2017, even while total contract awards and small business awards skyrocketed. Data sets managed by both the Small Business Administration and the General Services Administration show overall shrinkage in the number of small business contractors in the federal market in recent years. However, the SBA and GSA acknowledge shortcomings in their vendor-counting methodologies. Their vendor counts have substantial unexplained differences. GSA figures According to the GSA’s reports as of June 24, the number of small business federal contractors dropped by 23% from 2017 to 2020, from 91,007 vendors to 69,940 vendors. All years shown are fiscal years. There were decreases in the number of firms in all categories:
Meanwhile, total contract awards rose by 23%, from $511 billion to $665 billion, during the same time frame. SBA data on vendor numbers The SBA calculates vendor numbers by two different methods in its annual Small Business Procurement Scorecard. In the SBA’s updated method, the number of small vendors fell by 12%, and in the older method, 14%, from 2017-2019 (2020 data was not yet available).
All categories shrunk, except for HUBZone firms. Meanwhile, small business awards jumped by 25% during that time, from $106 billion in 2017 to $133 billion in 2019, according to SBA data. The SBA’s older method of counting also showed shrinkage. However, the number of firms counted was substantially greater, suggesting “double-counting” of firms in multiple categories may have occurred. GSA also cautions that its numbers may include overcounting.
Why are vendor numbers falling? Analysts have blamed factors including “Category Management,” contract bundling practices and large multiple-award contracts for the decline in the number of small contractors. Small business procurement has exceeded the government’s 23% goal in recent years, and awards to small firms have risen in tandem with total awards, so there has been little incentive to maximize the number of small vendors. GSA and SBA officials were not immediately available to comment. The U.S. Women’s Chamber of Commerce recently initiated a campaign to raise awareness about category management’s effect on vendor numbers (See related story)
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