Set-Aside Alert analysis:

SDVOSBs gain in contracting, but not in SDVOSB set-asides

      Service-disabled veteran-owned small businesses (SDVOSBs) are winning more dollars in federal contract awards in recent years, but the value and proportion of those awards gained through SDVOSB set-asides has been shrinking.

      While total SDVOSB awards hit a record high of $22 billion in fiscal 2019, the value of awards won through SDVOSB set-asides has fallen sharply over the last two years, according to Set-Aside Alert’s analysis of data from USASpending.gov and the Small Business Administration.

      Total value of SDVOSB set-aside awards fell from $6.9 billion in fiscal 2017 to $5.2 billion in fiscal 2019, which was a 24% reduction over the two-year period.

      The proportion of SDVOSB contract value achieved through SDVOSB set-asides also has been decreasing over the last two years. In fiscal 2019, that proportion hit its lowest point of the last 7 years.

      The reduction in SDVOSB awards occurred as the number of SDVOSB prime contractors also dropped, by 1.6%, to 12,032, from 2017 to 2019. (See story on page 1).

Total SDVOSB awards

      SDVOSB contracting with the federal government has benefited from a strong upward trend in all federal contracting in the last four years. Previous to that, there were several years of stagnation due to sequestration. All federal contract awards totaled:

• $458 billion in fiscal 2013;
• $440 billion in fiscal 2014;
• $431 billion in fiscal 2015;
• $464 billion in fiscal 2016;
• $501 billion in fiscal 2017;
• $545 billion in fiscal 2018; and
• $578 billion in fiscal 2019.

      As federal contracting enjoyed rapid growth, total SDVOSB awards also have been rising steadily for five years. SDVOSB federal contract awards totaled:

• $12 billion in fiscal 2013;
• $13.5 billion in fiscal 2014;
• $13.8 billion in fiscal 2015;
• $16.3 billion in fiscal 2016;
• $17.9 billion in fiscal 2017;
• $20.6 billion in fiscal 2018; and
• $22 billion in fiscal 2019.

SDVOSB set-asides

      However, SDVOSB set-aside awards did not follow the same growth pattern. Since fiscal 2017, the SDVOSB awards achieved through SDVOSB set-asides have declined.

      SDVOSB set-asides totaled:

• $4.35 billion in fiscal 2013;
• $4.68 billion in fiscal 2014;
• $4.78 billion in fiscal 2015;
• $5.79 billion in fiscal 2016;
• $6.87 billion in fiscal 2017;
• $5.07 billion in fiscal 2018; and
• $5.21 billion in fiscal 2019.

      Those figures show a 26% reduction from fiscal 2017-2018 and a 24% drop from fiscal 2017-2019.

      Correspondingly, SDVOSB set-aside awards accounted for much smaller shares of total SDVOSB awards in the last two years:

• 36.3% in fiscal 2013;
• 34.7% in fiscal 2014;
• 34.6% in fiscal 2015;
• 35.5% in fiscal 2016;
• 38.3% in fiscal 2017;
• 24.6% in fiscal 2018; and
• 23.7% in fiscal 2019.

SDVOSB trends

      The data shows that set-asides specifically for SDVOSBs have experienced a downturn in the last two years. Meanwhile, SDVOSB awards achieved through other types of set-asides and through open competition have been on the rise.

      The reasons for the recent fall in SDVOSB set-asides have not been fully explored. A similar pattern is hitting all set-asides, the value of which fell by 42% from fiscal 2017-2018 and only slightly recovered in fiscal 2019. (See Set-Aside Alert’s June 19, 2020 article "Small biz set-asides and sole source awards trending down".)

      It could be that as contract spending has been booming for the last five years, there is less time for contracting officers to do the extra work it takes to create SDVOSB set-asides, and less incentive because the SDVOSB total award numbers also have been rising despite the reduction in set-asides.

      The growth of multiple-award contracts, which often incorporate small business tracks, also may contribute to fewer traditional set-asides.

      SBA officials did not respond to a request to comment by press time.

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