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Federal Market Intelligence for Small Business |
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Exclusive research:8(a) contract awards rebounding; but participation is still shrinkingThe good news for the Small Business Administration’s flagship 8(a) Business Development Program is that 8(a) federal contracting awards have been on an upward trend, rising nearly 40% in the last 10 years. Awards to 8(a) firms grew from $11.8 billion in fiscal 2005 to $16.3 billion in fiscal 2014, which was a 38% net increase, according to exclusive research by Set-Aside Alert. The research utilized data from the SBA’s annual procurement scorecards displayed in the Federal Procurement Data System. 
During those years, there were highs and lows: fairly steady growth from 2005 to 2008, followed by a huge surge in 2009 and 2010 with the stimulus package, and a significant dip in 2012 and 2013 due to sequestration and budget cuts. Awards partially rebounded in fiscal 2014. The awards to the 8(a) firms were:
But the bad news is that the number of 8(a) firms continues to shrink. After reaching a peak of 9,946 firms in July 2007, 8(a) program participation has steadily dwindled to 6,697 firms in November 2015, Set-Aside Alert has found. Set-Aside Alert obtained those figures from the SBA’s Dynamic Small Business Search. Here are the average 8(a) participation figures per year, from Set-Aside Alert’s tabulations:
About 1,900 firms have left the program since July 2012. SBA officials say most of those firms graduated after hitting the nine-year limit. SBA officials have said in the past that they are making efforts to grow the number of firms in the program. In October, SBA established a goal of increasing 8(a) participation as a priority goal for 2016, as displayed on the SBA’s web page in the performance.gov website. However, that goal no longer appeared at that website as of press time. SBA officials were not immediately available for comment. How 8(a) works The 8(a) program is a longstanding SBA program aimed at assisting economically and socially disadvantaged small business owners. Participants who are certified by the SBA are then eligible for set-aside and sole-source federal contracts. However, the government does not set an explicit goal for 8(a) contracting. Participation in 8(a) is limited to nine years, and then the firms must “graduate.” Once an agency has designated a contract for the 8(a) program, the contract generally must be competed among 8(a) firms upon expiration. 8(a) vs. small disadvantaged A complicating factor is that small business owners may self-certify as disadvantaged in federal databases. Currently there are about 94,000 firms self-certified as disadvantaged vs. about 7,000 8(a) firms. While there are no set-asides for the self-certified, those firms nonetheless capture a significant share of federal contracts. The government has set a goal of awarding 5% of eligible contracts to small disadvantaged businesses each year, which includes both the self-certified and 8(a)s. That goal has been exceeded in recent years. In fiscal 2014, small disadvantaged firms received $34.7 billion in federal contract awards. That included the $16.3 billion in 8(a) awards. In fiscal 2014, 9.5% of eligible award dollars were awarded to small disadvantaged firms (including 8(a)s), and 4.5% were awarded to 8(a)s alone, according to the SBA. Another way to view the situation is to examine the awards to non-8(a) small disadvantaged firms, by subtracting the 8(a) awards from the total small disadvantaged awards. The trend for non-8(a) small disadvantaged has been steadily upward for the last 10 years. Those awards doubled from $9.2 billion in fiscal 2005 to $18.4 billion in fiscal 2014. SBA officials did not respond to requests to comment on this story by press time.
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