Living in the limelight

Agencies see grades and work to boost their average

Thanks, in part, to the limelight that procurement spending is getting nowadays, small businesses received the largest two-year increase in more than a decade, one federal official said in June.

Contracting increased for the first time since 2003. From 2004 to 2008, small-business contract information has declined year after year. In 2009, though, a turn occurred. The numbers increased, and in 2010, the government again awarded more contracts to small businesses in the overall percentage.

Still one category of small business didn't get the turn around in 2010.


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Small companies located in Historically Underutilized Business Zones (HUBZones) slipped compared to 2009. Companies in economically depress areas received $11.97 billion, or 2.77 percent of contracting dollars. In 2009, the government had awarded HUBZone businesses $12.41 billion, or 2.81 percent of contracting dollars. The goal is 3 percent.

Joe Jordan, associate administrator of government contracting and business development at the Small Business Administration, said the controversial issue of parity among the different types of small businesses played a part in the decrease.

“I think the confusion around parity during 2010 had some contracting officers skittish around HUBZones and what they should and should not do,” Jordan said in June during his announcement about the latest small business figures. “And that’s why it’s so great that parity is now the law of the land. There is no more confusion.”

In September 2010, lawmakers settled a disagreement among SBA, the Obama administration, Congress, the U.S. Court of Federal Claims and the Government Accountability Office. They were debating whether the law demanded agencies to offer small-business set-aside contracts to HUBZone companies first. The debate was over the small, but powerful, word “shall” in the law. In the Small Business Jobs Act, Congress replaced the word with “may,” clearing up any confusion about the equality of small-business categories.

However, the confusion about the parity may not have played too much of a role in the decreased HUBZone set-aside contracts.

Mark Crowley, executive director of the HUBZone Contractors National Council, didn’t pin the problem on parity alone.

He said, in the first place, there was no universal acceptance of the HUBZone-first policy among federal contracting officers. Now though, officers can make their own decisions on which type of business could compete for the contract.

“We think the HUBZone program will be looked upon more favorably and actually utilized for more contracts in the future,” Crowley said.

Crowley also said new regulations played a part.

There was a decrease in the number of HUBZone-certified firms due to SBA’s recertification process. It’s generated a number of voluntary withdrawals from the program by companies that no longer met the requirements to remain a HUBZone-certified business.

Despite parity’s conclusion and the recertification, Crowley said HUBZone companies face a much more significant problem in the future.

The HUBZone program is in the hands of 2010 Census results. The Census will define where areas may meet the definition of a HUBZone or, more importantly, areas will lose their rights as an economically depressed area.

“Although the results won’t be announced until Oct. 1 or later, we expect that many current HUBZone areas will lose their HUBZone designations due to improved income and employment figures,” he said.

A HUBZone is defined based on an area’s income level, among other characteristics.

Crowley said the changes will likely cause considerable confusion, inconvenience, and contraction of the number of HUBZone-certified companies, at least for the short term.

The limelight

Small businesses are garnering attention when agencies' scores go public.

In SBA’s first score card regarding fiscal 2006 figures, half of the 24 graded agencies got the red mark of failure. In fiscal 2010 though, 13 agencies received an A, a new grading system but based on meeting specific small-business goals.

Because SBA put the numbers out for the public to read, agencies have started to pay more attention to small-business contracting efforts, Jordan said.

“I think the transparency and accountability provided by this small business score card is a big reason why,” he said.

In 2010, SBA gave the government as a whole a grade of B for its attempts to reach small-business contracting goals, including the annual 23 percent overall goal.

The government awarded 22.7 percent of its contracting dollars to small companies in fiscal 2010, compared to 21.9 percent the previous year. It awarded $97.9 billion to small businesses in 2010, compared with $96.8 billion in 2009, a $1.1 billion increase.

For 2010, the government improved in four of the five categories of small businesses compared to SBA’s previous score card.

The B grade means that the government met 90 percent to 99 percent of its goals for the year.

SBA has stepped up its game in terms of fighting for small businesses.

Richard Dean, chairman of the American Small Business Coalition’s Market Intelligence and Education Committee and director of strategic partnerships at Geneva Software, said SBA officials have taken action against agencies not only to improve their statistics but to also stick to regulations.

“When current work is or was a small business set-aside, SBA has redressed the agency to continue pursuit of recompeting the contract as a small business set-aside when there is no obvious change in scope,” he said.

SBA’s moves have had a positive effect on agencies’ office of small and disadvantaged businesses and small business offices.

“They seem to be encouraged or are increasing their fight for small business shares of contracting actions within the agency,” Dean said.

As contracting officers gave grown fewer and overloaded with work, it “means greater bundling of work within a contract offering and less of a chance for small businesses to compete for that work.”

This fight from federal small business advocates is key for small businesses to get their place in the federal marketplace.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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