Could you make it as a mid-sized?

GAO says very few small vendors thrive after growth

      People say it’s very difficult for small federal contractors receiving set-asides to outgrow their small status and then to continue to win government contracts while competing as mid-sized firms.

      Now the Government Accountability Office has a study that basically proves that is the case. The study looked at 5,339 small businesses awarded set-aside contracts in fiscal year 2008, and were awarded any sort of federal contract--set-aside or not--five years later.

      Only 104 of those small firms grew to be mid-sized by fiscal 2013. Mid-sized was defined as up to five times larger than small.

      Of those 104 businesses, 23 remained mid-sized through fiscal 2017, winning 75 contracts during that time period. Another three of those businesses became large and won six contracts.

      Also,, in a separate but related finding, most small businesses that received set-asides in fiscal 2017 were not even close to outgrowing their size standard, the GAO added in the report.

      About 86% of the set-aside contracts awarded that year went to small vendors in the lowest 25% of their size standard.

      Small businesses that ranked in the top 25% for size won about 7% of all set-aside obligations that year.

      The GAO identified options to help small firms transition to mid-sized, such as requiring agencies to consider past performance as a team member or subcontractor. Other options, such as creating set-asides for mid-sized firms or raising size standards, were said to potentially hurt small firms.

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