Dirty little secret of small business goals

Day one of the ACQUIRE Show brought lots of great content on cybersecurity, workforce issues, professional services, IT and acquisition.

For the Washington Technology Industry Day sessions, we had a special focus on small business and we’ll have lots to write about for several days. And we have more small business insights lined up for day 2.

Among all the advice and insights on doing business with the government, an observation by two of our speakers stood out for me.

In general, government agencies are supposed to spend 23 percent of their prime contract contract dollars with small businesses. The exact goal can vary from agency to agency.

While many agencies are proud of reaching their small business goals in recent years, there is a caveat that often gets overlooked. The real dollars aren’t changing much.

Both Mark Teskey, director of Air Force small business programs, and Deniece Peterson, director of federal industry analysis for Deltek, talked about growing questions around the small business goals.

The issue is that the percentages might be going up but the topline dollars have gone down. So the increase in the percentage doesn’t mean that total dollars going to small business have gone up. For the most part the actual dollars going to small businesses have stayed the same. Because the small business spend is flat in dollar value, the percentages have increased as overall budgets have shrunk.

This is leading to many questioning the value and importance of agencies exceeding their small business goals.

Yes, they are right to be proud, but have they really done anything that has improved the environment for small business?

The positive sign is that while agencies have seen their budgets shrink in recent years, they seem to be protecting the amount of work going to small businesses. From comments I hear around the market, agencies have been more aggressive about converting full-and-open competitions to small business contracts. Much to the chagrin of the large contractors.

While overall the small business goals look good for most of the categories, there is one that is consistently under its goal. Agencies are struggling to meet their HUBzone goal. HUBzone contractors are located in historically underutilized business zones.

At one time they were high flyers but after the 2010 census many of the business zones – easiest to think ZIP codes – were reclassified and were no longer HUBZone areas. So companies that were located in those zones no longer qualified for HUBZone set asides. This knocked thousands of small business contractors out of the program.

Agencies are still struggling to reach their 3 percent goal for HUBZone prime contracts.

The speakers during the WT Industry Days at ACQUIRE offered plenty of other observations and insights including dos and don’ts for small businesses, how to increase engagement with agencies and where to find data on upcoming opportunities.

Look for more coverage in the coming days.