Column: Declining number of set-asides

      We’ve wrapped up fiscal year 2019, and the scuttlebutt is that it’s been a good year for small business federal contractors. Opinions are floating around, but we won’t know the significant numbers until the Small Business Administration publishes its annual Small Business Procurement Scorecard.

      Unfortunately, that likely won’t happen until usually sometime in May or June next year. Last year the scorecard was published on June 25, nearly nine months after the fiscal year ended.

      But wait a minute – Set-Aside Alert has been counting the number of published set-aside solicitations for years. We tallied the set-asides for fiscal 2016 through to Sept. 30, 2019.

      The tabulation is made from our “Contract Opportunities” email, which is based on data from the Federal Business Opportunities website (FBO.gov). FBO.gov lists competitive solicitations of $25,000 and above; sole-source not included. Not all solicitations result in contracts.

      In our count of set-asides, the numbers are not so pretty, and raise questions about what is happening in the small business federal market.

Number of set-asides declining

      Here is why we are concerned:

      There was a 10.3% increase in the total number of set-asides in fiscal 2017. But the trend reversed in fiscal 2018, with a 4% drop, and in fiscal 2019, with an 8.6% reduction, amounting to a 12% decline over the last two years.

      Historically, many people associated federal set-asides with the SBA’s 8(a) Business Development Program for socio-economically disadvantaged individuals.

      But by far the largest number of set-asides that are published are designated for any small business that meets the size standards set by the SBA for its industry and that fulfills the general requirements for registration. Small vendors who wish to be federal contractors need not be certified by the SBA, as self-certification is sufficient.

      Looking at the count of all fiscal 2019 set-asides, 78% were designated for any small business. The number of generic small business set-asides has declined in recent years:

Breakdown by type of set-aside

      Since the 8(a) program is one of the oldest types of set-asides, many people associate federal set-asides with the 8(a) program. However, in terms of the numbers of competitive 8(a) set-asides, it is not that significant. Only 2.7% of all set-asides we counted in fiscal 2019 were designated for 8(a)s. The last two years have seen a decline in the number of 8(a) set-asides:

      Similarly, the number of set-asides for Woman-owned small businesses has decreased in the last two years to an even greater degree. The tally includes set-asides for Economically-Disadvantaged Women:

      Overall, the Woman-owned set-asides comprised 1.8% of all set-asides in fiscal 2019.

      HUBZone set-asides have trended downward:

      HUBZone set-asides totaled 1.2% of all set-asides counted in fiscal 2019

      Set-asides for Service-Disabled Veterans had a big bounce after the Supreme Court decision in 2016 upholding the top priority of such set-asides in the Veterans Affairs Dept. The following year, in fiscal 2017, we saw a 99.4% increase in the number of published set-asides for Service-Disabled Veterans. However, in the following years there has been a reduction from that peak, though the total is still much higher than in fiscal 2016:

      In fiscal 2019, 16.8% of all the set-asides we counted were for Service-Disabled Veterans.

Putting the numbers in perspective

      Counting numbers of set-asides is a data point exclusively collected by Set-Aside Alert. As such, these numbers need to be viewed in a broader context. Join us as we continue to discuss and examine the changes in the federal market for small business federal contractors and how you should respond.

      Also, keep in mind that the declines are for competitive set-asides only. For some types of set-asides, including 8(a), sole-source set-asides are substantial.

What can you do to safeguard your firm while set-asides are decreasing?

      Are you responding to Sources Sought notices? More than 3,000 such notices are published every year. Many do not specify a type of set-aside, so you have to cast a wide net. Responding to such notices is one of the most important things you can do.

      Also, get to know your “OSDBU” offices. They monitor the contracting staff and push to get opportunities set-aside for small businesses. Show you will be responsive and establish your reputation as a company they know and can trust.

      Finally, don’t dwell on your small business category or status. Sell your capabilities and expertise first. The government’s goal is to achieve the mission. Show how you can support that goal.

Tom Johnson is the publisher of Set-Aside Alert and president of Business Research Services. He can be reached via email at tjohnson@setasidealert.com.

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Column: Declining number of set-asides

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