Don't Let Small Business Set-Asides Fool You!
In June I said I'll Take What's Behind Curtain Number Two Monty! when it comes to pursuing work as a small federal contractor vice the 'set-aside or bust' approach adopted by many small business concerns. 'Curtain Number Two,' in this case, represents those opportunities captured by small businesses but not set-aside by federal agencies. Understanding the dollars and cents impact may astound you.
Here's the scoop.
Small businesses are often given default advice by small business advocates, experts and the Government to pursue subcontracting opportunities or, if they should dare try to do it themselves, small business set-asides which are those very brightly lit areas of opportunity within the various agencies. Maybe because of how I came into government contracting and the importance of the work we did, I never bought into that way of thinking and it seemed to work well for me over the years. Most of the business I won with and for the companies I supported or owned was not set-aside and I only worked for or owned small businesses.
While my opinion and over twenty years in government contracting have me solidly convinced set-asides are a political shell game, the result is what counts. The result I'm referring to is money into the coffers of the small business community to create jobs and more opportunities. But these 'gifts' along with small business subcontracting are not the only contributors to small business growth in government contracting. In fact, small federal contractors do a pretty good job of this without leveraging the assistance of Uncle Sam. Here's a look at what I mean.
For the current fiscal year-to-date and using competitive and non-competitive purchasing methods, agencies have obligated $264B to small and 'other than small' business concerns according to the Federal Procurement Data System (FPDS-NG). Of that total, $27B has been set-aside for small business concerns. However, if we look at total dollars obligated to small business regardless of set-aside, that number skyrockets to $48B on the year. That's $21B in competitive and non-competitive buys made from small business concerns where set-asides were not a factor. Here's a summary breakdown of these dollars to include what award instruments, competition, agencies and what they were buying:
- Nearly $18B of the obligated dollars were competitively awarded;
- Sixty-two agencies, boards and commissions contributed to these non-set-aside awards to small businesses;
- The top five agencies by obligations, DoD, VA, Treasury, HHS and DOT, account for $15B of the total;
- Most of the dollars, $14B, were obligated to established contract vehicles such as BOAs, BPAs, GSA Schedules, GWACs and IDIQ/MACs (GSA Schedule accounts for $4B of the spend);
- Awards using standalone contracts (buys not against an established contract vehicle) account for $7B;
- Delivery orders which include orders against GSA Schedules, GWACs and IDIQ/MACs, account for $12.4B with $8B to multiple award contracts and the rest to single award contracts.
What are agencies buying from small business concerns when set-asides were not used? So far, 1,085 NAICS Codes have been referenced. The top twenty NAICS Codes account for $11B of the overall spend and it looks eerily similar to the list of top NAICS Codes awarded to large prime contractors. In fact, it looks very similar to the NAICS Codes awarded to large businesses in those competitive Simplified Acquisition buys I talk about in a recent article about small businesses leaving money on the table.
Here's the secret to finding and winning these opportunities. There is no secret! It takes the same 'stuff' to go after these as it does any other piece of business in government contracting, maybe except reverse auctions. That 'stuff' is Information and Relationships. Consider this as well. The majority of small business concerns are tracking set-aside opportunities whereas far fewer are scoping out non-set-aside requirements. The Chief Visionary
Since I began tracking this years ago, overall small business obligations typically double the amount set-aside by agencies each fiscal year. My advice? Instead of a traipsing around in a limited field of play, wipe clean that foggy lens to get a good look at the bigger opportunity. It takes more work and the risks are greater, but the rewards are often more than worth it.
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