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Federal Market Intelligence for Small Business |
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NDAA Sect. 838 sparks concernsThe Senate version of the National Defense Authorization Act of 2017 has a subcontracting-related provision that is problematic for small business federal contractors. The government currently has separate goals for small business prime and subcontractor participation. The Senate version allows for a mix of the two. The provision, in Section 838, would allow first- and second-tier subcontracts on major defense acquisition programs to count toward the Defense Department’s small business goals. Currently, only prime contracts with small firms are counted toward those goals. The Senate Armed Services Committee said in its report that the change would increase small business participation. “Even at the first and second tier of subcontracts it is difficult to obtain small business participation. Counting small business participation at this level toward DOD’s top level goal could provide a greater incentive for small business participation in these programs,” the Senate committee’s report states. But John Shoraka, associate administrator for government contracting at the Small Business Administration, told Forbes magazine recently that Sect. 838 would have a negative impact on small businesses. “If your goal is 22%, and there’s a new pot of money available for reaching that goal, you’re going to get to that 22% a lot quicker,” Shoraka told Forbes. “And once you get to 22%, how likely are you to put out more opportunities? And so I don’t see how it wouldn’t be negative for small business.” Forbes estimated that if DOD were to take full advantage of the provision it could replace as much as $22 billion in small business prime contracts with subcontracts. While subcontracts provide revenues, they generally do not provide the same level of opportunity to vendors as do prime contracts.
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