SBA not letting agencies rest on contracting laurels

The reason agencies finally beat the governmentwide goal of awarding at least 5 percent of all “eligible” contracts to women-owned small businesses in 2015 can be traced back to a decades-old fight that spanned three administrations.

In 2000, Congress passed a bill and President Bill Clinton signed it into law that established the women-owned small business procurement program. It did several things to promote federal efforts to contract with women, including creating set-asides in certain industries where women were under-represented.

But it took the Small Business Administration nearly 11 years to implement the program. So just in 2015, agencies now are taking advantage of the tools.

SBA reported March 2 that agencies awarded $17.8 billion in contracts last year out of a total of $352.2 billion that it considers eligible for small firms.

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“It started gaining traction and significantly making an impact on beating the goal this past year, but there have been a lot of changes,” said John Shoraka, SBA’s associate administrator of Government Contracting and Business Development, in an interview with Federal News Radio. “We knew we had a program that wasn’t perfect. It had caps on contracts. There wasn’t a sole source provision. It had a reduced number of industries where contracts could be set-aside. We worked with the Hill closely to remove some of those restrictions, and I think again, we are seeing the fruits of that labor to help us meet the 5 percent goal.”

SBA is taking one more step to help women-owned businesses by adding 36 new industries — for a total of 113 — where these firms are under-represented in federal procurement, thus letting agencies set-aside more contracts.

“Those additional [industries] represent another $39 billion in potential opportunities for women-owned small businesses,” Shoraka said. “I think that will create a lot of opportunities and even create an opportunity to exceed the 5 percent goal.”

SBA Administrator Maria Contreras-Sweet commissioned a second study with the Commerce Department to determine if the list of industries needed updating. SBA sent the study to the Hill in January and issued a Federal Register notice detailing the new industries.

While the achievement for women-owned businesses was 21 years in the making, the fact of the matter is agencies met the small business goal for the third consecutive year, and doubled the 5 percent for contracts awarded to small disadvantaged businesses and surpassed the 3 percent goal for service disabled veteran-owned small businesses as well.

Shoraka said the achievements across all categories can be attributed to a few main reasons.

“There are a lot of things the administration has done to institutionalize the success — keeping senior leadership accountable and having the Office of Small Disadvantaged Utilization report to senior leadership. Those types of things are now gaining traction and are creating an environment where small business procurement is now on the front burner as opposed to the back burner,” he said. “How much further can we grow when it comes to small business? But certainly we see that somewhere around the 25 percent range is a trend that should continue.”

One way SBA and Congress are trying to help is by expanding the mentor-protégé program to all agencies and for all types of small firms.

Shoraka said SBA expects to issue the final rule this summer — June or July — and begin implementation by the fall. The program today is only open to firms in the 8(a) business development program.

“In the 8(a) world, the mentor-protégé program has created a lot of opportunities for new, nascent companies to partner with a mentor to pursue larger and more complex contracts,” he said. “Expanding that program to all small businesses should help us cast a broader net.”

While recognizing the achievements for 2015 is laudable, there are some who believe SBA is doing a disservice to the small business community because of how they are counting contract dollars.

SBA continues to base agency progress on “eligible” contracts — $352.2 billion out of $440 billion —instead of on all spending. SBA says certain contracts shouldn’t be counted because small businesses don’t have a chance to win them, because of the size or scope.

The American Small Business League said in a release that it is challenging the SBA’s announcement based on the fact that they are not using the total federal acquisition dollar figure and that their numbers include contracts to large corporations and Fortune 500 firms.

The House Small Business Committee also is concerned about SBA’s data, saying looking at only “eligible” contracts excludes up to 20 percent of all spending.

Rep. Steve Chabot (R-Ohio), chairman of the committee, introduced legislation to change the way SBA counts agency spending with small firms.

Shoraka said Congress also passed provisions in the 2013 Defense Authorization bill to require SBA to look at the exclusions.

In 2014, SBA added building leases back into the mix. Shoraka said for 2016 SBA will no longer exclude overseas contracts for their totals.

“I think it should include as much as feasibly possible. There are certain instances where the government will purchase an F-16 for a foreign government. In those instances, the contracting officer doesn’t have any discretion to buy from a small business. So those will continue to be excluded, but I think the broader that base can be, the more fair, accurate representation of small business participation we can have.”

Shoraka said SBA, working with the General Services Administration, is tackling another big issue, the quality of the data. SBA and GSA instituted a data quality working group about three years ago to address anomalies.

“As we’ve moved forward, we created standalone reports for agencies to run on a quarterly basis and those are housed at the Federal Procurement Data System. At the end of the year when they certify their numbers to Office of Federal Procurement Policy, not only do they certify the accuracy of their overall numbers, but they certify the accuracy of their small business numbers,” he said. “In addition to that, our administrator has specifically asked us to run anomaly reports on an annual basis on the top 10 spenders and share it with agencies before the numbers are locked down. So we’ve continued to do that year in and year out. This certainly is the best data set we’ve had in history. Is there potential error when you have millions of millions of transactions each year? It is the cleanest data we’ve had.”

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