Small biz buys rose to $132.9B in FY2019; WOSB 5% goal met

      The government’s procurements from small businesses comprised 26.5% of all eligible procurements in fiscal 2019, exceeding the 23% goal for the seventh year in a row, the Small Business Administration announced.

      Small firms benefited from expanding federal acquisitions, which hit an all-time high of $578.4 billion last year, according to www.USASpending.gov.

      Of those contracts, $501.5 billion worth were deemed eligible for small business competition or set-asides, and small companies won a record high value of contract awards totaling $132.9 billion in fiscal 2019, the SBA said in a news release.

      The small business percentage also got a boost from double credits given for certain types of set-asides, SBA officials said. The total value of those credits was not immediately available.

      Other achievements from the SBA’s annual Small Business Procurement Scorecard for fiscal 2019 included:

• Procurements from Women-Owned Small Businesses (WOSBs) reached $26 billion and exceeded the government’s 5% goal for the second time. The first time was in fiscal 2015. However, only a small percentage of the contracts to WOSBs were from WOSB set-asides (see story page 1).
• Awards to small firms owned by service-disabled veterans reached 4.39%, totaling $22 billion. The 3% goal in that category has been met for 7 years in a row, SBA said.
• The government awarded $51.6 billion to small disadvantaged firms, which was 10.29% of eligible awards. The 5% goal for that category has been attained each year in recent years.
• The government once again failed to meet its 3% goal for HUBZone small business contracting. HUBZone contracting was 2.28%, totaling $11.4 billion.

      Of the 24 federal agencies reporting, eight received an “A+” grade for small business procurement, 14 received an “A” grade and two received a “B” grade.

      “One of the agencies that did particularly well was Veterans Affairs Dept., which rose from a “B” last year to an “A,” Frank Spampinato, associate administrator for government contracting and business development, said in a press call.

Trends in small business buys

      The growth in federal small business procurement tends to follow the same pattern as the growth in federal contracting overall, but there have been exceptions to that rule in recent years, according to Set-Aside Alert’s analysis of data from USASpending.gov.

      For example, during the sequestration years under President Obama, total contract obligations fell from $458 billion in fiscal 2013 to $440 billion in fiscal 2014. During the same period, small business procurement rose from $83.1 billion to $91.7 billion.

      However, in most recent years, as total federal contract awards have risen, so have small business awards.

      That was the case in fiscal 2017, when total acquisitions increased by 8.1%, (to $501.4 billion) in comparison to the year before, and in the following year, when total acquisitions increased even more, by 8.7% (to $545.2 billion).

      During the same two years, small business acquisitions also rose, with a 5.7% increase in fiscal 2017 (to $105.7 billion), followed by a 14.3% increase the next year (to $120.8 billion).

      From fiscal 2018-2019, total procurements jumped up by 6%, to $578.4 billion, while small business procurements got a 10% boost, to $132.9 billion.

Total procurements vs. eligible procurements

      A complicating factor for assessing trends in federal small business procurement is that Congress and the SBA periodically have adjusted the criteria for determining which contracts are “eligible” for small business contracting. For example, overseas contracts were considered ineligible for many years, and in 2017 became eligible.

      The percentage of small business contracting is computed as a percentage of eligible contracts. For example, for fiscal 2019 the SBA said small business procurement was 26.5% of eligible procurements. However, if computed with all federal procurements instead, the percentage for small firms would have been 22.9%.

      The determination of which contracts are eligible has been a contentious issue at times, with some critics claiming that eligibility is vulnerable to manipulation to enhance the government’s score.

      In fiscal 2019, the gap between eligible contracts and total contracts widened. Total acquisitions exceeded eligible acquisitions by $76.9 billion.

      By comparison, in fiscal 2018, the gap was $62.8 billion.

      In fiscal 2017, it was $58.8 billion.

      In fiscal 2016, $52.9 billion.

      To be fair, however, it should be pointed out that the gap has been greater at previous times, under previous rules set by Congress and the SBA.

      In fiscal 2013, for example, the gap between total acquisitions and eligible acquisitions was $102.8 billion. Following criticism for such a wide gap, overseas contracts were included in the goaling base starting in fiscal 2016.

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