Column: Is Your Goal to Become “Large”?

      Set-Aside Alert reported in our Nov. 30, 2018, edition on a study conducted by the Center for Strategic and International Studies: “New Entrants and Small Business Graduation in the Market for Federal Contracts” (https://bit.ly/2DGRcup). A primary conclusion of the study is that the government’s strategy of utilizing set-asides to promote small business expansion may be backfiring.

      “The low graduation rates of small businesses that survived for 10 years rings (sic) alarm bells over the efficacy of small business set-aside programs,” the CSIS report states.

      This narrow view of small business and its role in the economy and the federal marketplace has gnawed at me ever since the report was released. It furthers what I consider to be a number of mistaken beliefs about small business and its role.

      Over 600,000 small businesses are started every year. Forbes reported in 2013 that 50% of those small companies are still doing business after five years, 33% after 10 years and 25% after 15 years. One can fairly conclude that being small does not equate to inability to participate productively in the American economy.

      So let’s go back to the specifics of CSIS’ criticism of current small business programs. CSIS bases its analysis on the premise that businesses exist to grow large and “graduate” from their small business status, and furthermore that the objective of federal set-aside programs is to produce “other-than-small” – i.e., large – businesses.

      I disagree.

      First of all, only one of the set-aside programs currently has any kind of “graduation” to it, and that’s the Small Business Administration’s 8(a) Business Development program. That “graduation” has nothing to do with growing to become large. And when a company graduates from the 8(a) program, if they are small they continue to be eligible for small business set-asides and other set-asides for which they qualify (HUBZone, women-owned, service-disabled veteran-owned, etc.).

      Secondly, there are many different styles of small businesses serving Uncle Sam:

• They may be created to exploit an innovative technology breakthrough achieved by an individual owner or small group who want to see it to fruition. These companies may aim to sell their idea or their company and retire to Florida, or use the proceeds to springboard the next development.
• They may be created to maintain the services of experienced agency talent, such as in maintaining legacy systems or repairing older models of equipment when agency budgets or personnel are cut and the work is still essential.
• Many small businesses serve a specific locale where commercial revenue is much more capable of supporting local services, e.g. logging or wildfire suppression or a larger manufacturer’s local dealer and parts networks.
• Many small business owners recognize that growing large is not in their best interest as they would lose control and create headaches they prefer to avoid.
• Some small business owners are very focused on a narrow niche, where there is little room for large scale growth but plenty of opportunity to satisfy the customer and the owner.

      All of these types of small businesses can be considered successful.

      I know a number of small business federal contractors that choose to remain small and work to take advantage of small business set-asides. For those companies it is an intentional part of their business plans to remain below small business thresholds.

      Do they constrain or impede the government’s buying practices? Of course not. They would not win contracts if they were unable to meet the terms of the contract as responsible, responsive, technically-evaluated awardees.

      Have they misused or “taken advantage of” a government “give-away program?” Of course not. The competition in the government set-aside contract arena is quite substantial, with numerous bids on offers. Compare this to the large Defense Dept. weapons systems contracts where frequently there are only one or two capable suppliers left among the primes.

      The small business programs also benefit the government in that there is a supply of experienced, capable, knowledgeable small business suppliers they can count on for quick response with expertise, delivery, low overhead and attention to the government’s needs.

      The CSIS study concludes, “Policymakers should reevaluate their small business set-aside programs as these programs could be creating perverse incentives for small businesses that are contracting with the federal government. Their focus should pivot towards helping small businesses survive simultaneously with growth.”

      We conclude that the authors have not done their homework. Small businesses are an essential and effective part of the American economy. The study team does not seem to understand the goals and objectives of business ownership. They have concluded that becoming “Large” is the objective desired by Congress for set-aside programs.

      On the contrary, the Congressionally-approved set-aside programs have never been incentives to growth, but rather protections to create cost-effective and reliable alternatives to the oligopolies in the Defense community today.

Tom Johnson is the publisher of Set-Aside Alert. You can reach him by email at tjohnson@setasidealert.com.

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Bethesda, MD – December 30, 2018

     Hold on to your seat!

     If you, like us, hold a federal contract, we are in a difficult time! It looks like it will at least be Thursday before a resolution, and maybe longer. What's that mean to you?

• A stop-work order from your CO?
• Inability to reach your CO?
• Outstanding invoices not being paid?
• Barred from accessing your customer's facility?
• Loss of billable hours/expenses?
• Cancelled deliveries of products?
• Necessity for you to furlough key employees, even those not doing federal contract work?

     The last significant federal shutdown, in October 2013, lasted 13 days. Are you prepared to survive that kind of loss of revenue?

     Not all agencies are affected. Contracts with DoD agencies, HHS and some of the other big spenders should not be affected.

     Contracts with DHS, Justice, Transportation, State and Commerce are somewhat affected.

     But USDA, Treasury, Interior, EPA, HUD and others, including many smaller regulatory agencies, are at serious risk. Close to 400,000 federal civilian workers could be locked out of their worksites - almost 25% of civilian employees.

     Right after the 2013 shutdown, we published the following advice to contractors:

      "A major looming issue for contractors is whether they are owed money by the government in the form of equitable adjustments. The government may authorize such adjustments to contracts to compensate for contractor expenses that occurred due to the actions of the government.

      "Contractors have 30 days from the resumption of work to request an equitable adjustment.

      "Robert Burton, partner with Venable LLP law firm [ed. note: now with Crowell & Moring], said contractors first must determine if the costs they incurred, as a result of a Stop-Work Order, are eligible for equitable adjustments.

      “The costs of stop work are generally reimbursable under firm-fixed price and cost-type contracts, Burton told Set-Aside Alert.

      "On the other hand, the costs of stop-work may not be reimbursable under an indefinite delivery, indefinite quantity contract where the government has already purchased the minimum quantity required, or under a requirements contract, where the failure of requirements to materialize is a risk the contractor accepted, he said.

      "Even if the costs are presumed to be reimbursable, another key issue is whether the contractor will be able to prove damages, Burton added.

      “'Contractors that received Stop-Work Orders should definitely file for equitable adjustments,' Burton told Set-Aside Alert. 'Contractors that did not receive Stop-Work Orders also should file for equitable adjustments if they incurred costs because of the shutdown. But, these costs may not be reimbursable depending on the terms of the individual contracts at issue and the ability of the contractors to show a direct relationship between the costs incurred and the Stop-Work Orders.'

      The late Tom Petruska, president of Contracts Unlimited Inc., "also recommended that if the contractor received a Stop-Work Order, he or she should file a Request for Equitable Adjustment (REA) for verified costs incurred during the shutdown, including a reasonable profit.

      “'I would assume that the government will be deluged with REAs to recover the costs incurred, particularly for personnel on stand-by awaiting the resumption of work,' Petruska told Set-Aside Alert.

      "Even if the contractor did not receive a Stop-Work Order, Petruska advises filing an REA.

      “'As a general rule, if a contractor did not receive a Stop-Work·Order but nonetheless incurred costs during the shutdown, I recommend that they also file an REA to recover their costs under the constructive-suspension-of work theory, where the government but not the contractor is responsible for the work stoppage... These contractors probably have a reasonable chance of obtaining relief as an adjustment to their contract,' Petruska said. But, he cautioned, voluntary work stoppage would not be compensated."

      Mary Pivec and Anthony Anikeeff, attorneys of the Williams Mullen law firm, offered additional guidance on equitable adjustments in an Oct. 16, 2013 story.

      “'Under a Stop-Work Order, a contractor is required to ‘take all reasonable steps to minimize the incurrence of costs allocable to the work covered by the order during the period of work stoppage.'' Pivec and Anikeeff wrote.

      “'Upon the end of a Stop-Work Order, if contract work resumes, the contracting officer is required to make an equitable adjustment in the delivery schedule or contract price, or both, if the Stop-Work Order results in an increase in the time required for, or in the contractor’s cost properly allocable to, the performance of any part of this contract,' the attorneys added.

      "The total amount to be recovered, if any, will vary from contract-to-contract, and will depend on individual circumstances and the type of contract involved.

      “'Within reason, one might prepare to claim a number of expenses that could not be avoided if they are allowable expenses and allocable to your contract, although you must be prepared that some of which ultimately may be denied by the government. If denied, that sets up a potential claim situation,' Pivec and Anikeeff added.

      "Keeping good records of expenses is critical; insufficient records are one of the major reasons that claims of this nature are denied. [emphasis added]

      "When the Stop-Work Order ends, contractors are expected to make a request for adjustment within 30 days after resumption of work." [emphasis added]

     Further guidance comes from a column in our October 25, 2013, issue regarding filing claims:

     Bryan King, associate, General Counsel PC, provided "10 Things to Know About Filing a Claim Against the Government". Here are his points:

      "In an ideal world, government contractors will perform exactly as expected under a government contract, and receive prompt, full payment from the government. Unfortunately, things do not always go that smoothly, and contractors may find themselves in a dispute with the government over the amount of money owed under a contract. In these cases, it is important for contractors to understand the claims process. Claims against the government are covered by the Contracts Disputes Act (CDA), which has specific procedures that must be followed for a claim to be legitimate. 41 U.S.C. § 601 et seq.

      "Below are 10 key things to know about the process of filing a claim against the government.

     "1. The Beginning, It’s a Good Place to Start
      "Every claim has to start somewhere, and that is typically with the submission of some request for payment from the government. This can be something as simple as an invoice, or something more substantial such as a Request for Equitable Adjustment. If the government agrees to pay the full amount of the request, then all is well and a claim will likely not be necessary. However, if the government declines to make the full payment, or delays the payment, the contractor can seek redress by filing a claim.

     "2. You Haven’t Been Paid—Now What?
      "The requirements for what must be submitted, and to whom, in order to constitute a 'claim' under the CDA has been refined through the years by federal statutes, regulations, and case law. Failure to submit a claim according to the very specific requirements can have significant consequences, costing the claimant both time and money. The claimant loses time because it will need to begin the process over, which may be an issue if the statute of limitations on the claim has lapsed. The claimant may also lose money, as interest on the claimed amount does not begin to run until a proper claim is filed. A proper CDA claim has to be: a.) A demand for payment; b.) That is in writing; c.) Submitted to the Contracting Officer; d.) Seeking as a matter of right; e.) The payment of money in a sum certain; f.) And requesting a final decision. In addition to the procedural formalities listed above, a claim to the government must also include sufficient detail to allow the contracting officer to know what is being claimed and why.

     "3. Certification of Claims over $100,000
      "The CDA also requires that claimants certify any claim demanding payment in excess of $100,000. The claimant must certify that the claim is submitted in good faith and there is sufficient data in support. Failure to provide a proper certification can lead to the dismissal of a claim.

     "4. How Much Time Do You Have To File a Claim?
      "Contractors have six years from when they knew, or should have known, of the government’s liability.

     "5. Negotiated Settlements are Possible
      "Contracting Officers are generally encouraged to avoid litigating disputes with contractors. The claims process can be time-consuming and costly, for both the claimant and the government. Thus, when possible, it may be beneficial for the claimant to attempt to negotiate a settlement with the contracting officer. This can be done at virtually any point in the claims process, even before the claim is filed at all.

     "6. The Decision
      "Contracting officers are required by statute to issue a final decision on every CDA claim he or she receives. For claims of $100,000 or less, the Contracting Officer’s Final Decision (COFD) must be issued within 60 days of the contracting officer’s receipt of the claim. For claims over $100,000, the contracting officer must, within 60 days, either issue a COFD or inform the claimant of the time frame in which the COFD will be issued. The COFD must be issued within a reasonable amount of time.

     "7. The Indecision
      "While there are statutory deadlines set for the issuance of a COFD, it is not uncommon for deadlines to pass with no word from the contracting officer. Claimants do have the option to file a request with either the United States Court of Federal Claims or one of the boards of contract appeals, to direct the contracting officer to issue a COFD within a specified period of time. However, when the COFD is not issued by the required deadline, the claim is 'deemed denied,' and can be appealed by the claimant.

     "8. Denial Does Not Mean Final
      "If the contracting officer denies the claim, in full or in part, or i the claim was 'deemed denied,' the claimant can appeal the COFD in either the Court of Federal Claims or one of the boards of contract appeals (Typically, the Civilian Board for civilian agencies or the Armed Services Board for defense agencies). The choice of forum is an important decision, as once the appeal is filed in one forum, it generally cannot be filed later in a different forum. Both forums follow general litigation procedures (pleadings, discovery, hearing, etc.), however the boards have accelerated and smalls claims procedures for low valued claims.

     "9. How Long Do You Have To File an Appeal?
      "To appeal the COFD to one of the boards of contract appeals, the claimant must file within 90 days of receiving the COFD. To file an appeal with the Court of Federal Claims, the claimant must file within 1 year of receipt of the COFD.

     "10. Appealing the Appeal Decision
      "If the appeal is denied, the contractor still has appeal rights. The United States Federal Circuit has jurisdiction to hear appeals of decisions by the boards of contract appeals that are filed within 120 days of the board’s decision. The Federal Circuit can also hear an appeal of a Court of Federal Claims decision, as long as the appeal is filed within 60 days of the Court’s decision."

Stories in the December 15 2018 issue of Set-Aside Alert:

• Longer runway for small business
• Year-end rush of regulations
• How to reach HUBZ goals
• Bill to improve online service
• End of self-cert SDVOSBs?
• GAO protests up by 1%
• Column: Make these New Year's Resolutions for 2019
• Washington Insider:
• GSA schedule consolidation to take 2 years
• IG: GSA has many challenges in procurement
• OASIS on-ramp traps
• $750B for defense

Set-Aside Alert is published by Business Research Services, Bethesda MD. Since 1991, Set-Aside Alert has provided focused news and contract opportunities for Federal government marketers. Visit www.setasidealert.com to learn about our service.

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     Frankly, I am concerned about federal contract spending this fiscal year, and in particular, about federal contracting with small businesses.

      The data show a 6% decrease in small business opportunities posted to FedBizOpps.gov from Oct. 1, 2017 to June 30, 2018, in comparison to the same period the year before.

      We have kept records of the number of small business opportunities of various types posted on FedBizOpps.gov for the last three years.

      So far this fiscal year, there have been 22,921 such opportunities, which is a 6.3% reduction in comparison to the number of opportunities from the same period in fiscal 2017 (24,463 opportunities). That is a substantial year-over-year decrease.

      The current total of opportunities at this point in the fiscal year is not much higher than it was two years ago, in fiscal 2016. We counted 20,031 opportunities for the first three quarters of fiscal 2016.

The busy season?

      As of June, we have moved into what is typically the “busy season” of the federal fiscal year.

      But, examining postings of FedBizOpps small business opportunities for just the month of June alone, showed a reduction of 10% in comparison to June 2017.

      My concern is whether this drop in posted opportunities is the “canary in the coal mine.”

      Is the decline of FedBizOpps notices foretelling a less-than-anticipated fourth-quarter spending spree?

      Fourth quarter contract awards generally amount to about 40% of the year’s spending. No doubt fourth quarter will be big this year too. But there’s a serious question in my mind about whether Uncle Sam can spend all the money appropriated for fiscal 2018 in the short three months that remain.

      When Congress passed funding bills for fiscal 2018, we were led to expect a substantial increase in new spending--$80 billion in additional funds for defense and $63 billion in additional money for civilian agencies.

      Contracts take time to be awarded. Usually an opportunity must be posted for a reasonable period. When proposals are received they take time to evaluate. There may be a discussion period and then a call for “best and final.” Offers are then evaluated and an award is made. This may require anywhere from one to three months.

      Since the fiscal year ends on Sept. 30th, Requests For Proposals should be appearing now in FedBizOpps, but we are not yet seeing the expected increase in the procurement stream.

What’s going on here?

      I am skeptical that the fourth-quarter spending spree will be as large as expected. There simply may not be enough time to spend the huge amount of funding that has been appropriated.

      One reason for this is that numerous unfilled executive and managerial slots may be making it difficult for agencies to focus, plan and execute acquisitions in a timely fashion. Agencies may be awaiting more guidance on objectives and priorities.

      Another possibility--and I realize this is contrarian--is that the Administration may be actively trying to reduce the government’s civilian spending, and may see a means to do so despite a substantial piggybank provided by Congress. Just because Congress appropriated monies usually doesn’t require that agencies spend it. At the end of the fiscal year, most unobligated and unspent funds expire. There may be strategic meaning to the absence of an uptick in solicitations at this point in time.

      Having said all that, there surely will be a fourth-quarter surge this year, as there is every year. My prediction is that it will not meet the forecasted bounty.

What strategy will serve small business?

      We know that the number of filled procurement slots is down substantially over the last few years. It is also acknowledged that a number of recent hires into those openings are relatively new to procurement and that training has not continued at prior levels. Consequently, a portion of today’s contract specialists lack the experience and knowledge to successfully manage large procurements. The result appears to be increased use of multiple award term contracts and IDIQ situations.

      Government-wide acquisition contracts (GWACs), including GSA schedule contracts, are ways for time-constrained contracting personnel to make awards with companies already vetted for the job. In the construction field, the US Army Corps of Engineers uses multiple-award task order contracts (MATOCs) in the same fashion. It makes sense: make awards for three or five years and parcel out tasks as needed.

      With this in mind, small businesses need to look intensively at (a) using GSA schedules, GWACs (SEWP, STARS II, VETS, Alliant, CIO-SP) and agency-wide contracts (FirstSource, NETCENTS), (b) pursuing MATOC contracts, and (c) teaming with other businesses, including large businesses.

      Being a prime enables you to manage and control contracts after they are awarded, but also involves the risk of spending significant time and effort getting an award and then failing to win tasks.

      Joining as a subcontractor, or engaging in a joint venture, means you share the cost and effort of winning the initial award and subsequent task orders. This may enable you to bring your special knowledge and expertise to the table, supported by other subs and the prime for skills or expertise you may not have.

Conclusion

      Seba Smith once wrote that “there are more ways than one to skin a cat.” This conclusion applies today, as much as it did in the Gold Rush days of the 1850s. Think outside the box this year to win in the federal market.

(Editor's Note - this story originally was originally published in the July 6, 2018 edition of Set-Aside Alert.

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      The Small Business Administration on May 22 announced that the government met its 23% small business contracting goal for the fifth year in a row.

      The Trump Administration awarded 23.88% of the value of contracts to small businesses in fiscal 2017, down from 24.34% the prior year.

      Total dollars going to small firms rose to $105.7 billion, up from $100 billion in fiscal 2016.

Our annual Small Business Goals scorecard documents agency-by-agency achievement of government-wide socioeconomic goals. Download a copy here.

      The Trump Administration gave itself an "A" overall.

      Goal achievement was down slightly in all the socio-economic goals except for service-disabled veterans, where achievement rose to 4.05%, up from 3.98% the year before. The goal was met in both years.

      The small disadvantaged goal was met, but achievement dropped slightly to 9.1%, down from 9.53%.

      Goals for women-owned and HUBZone small firms were not met. WOSB achievement dipped to 4.71%, down from 4.79%, and for HUBZones, to 1.66%, from 1.67%.

      A new feature this year was to show how many small business contractors were in the market.

      The SBA reported that the number of small business firms dropped 2% to 117,500, down from 120,000, from fiscal 2016 to fiscal 2017. Women-owned firms also dropped by 2%, down to 26,100.

      Ken Dodds, acting deputy associate administrator for government contracting and business development, said in a press call that the SBA is continuing to work on certification. Asked why achievement is down for women-owned, he said “there are some challenges with NAICS codes,” including “confusion” about eligible NAICS codes.

      During the same period, however, the number of service-disabled veteran-owned small firms increased by 7%, to 12,100 and HUBZone firms increased by 5% to 6,300.

      Eight agencies--Commerce, Homeland Security, HUD, Interior, Labor, Nuclear Regulatory Commission, Office of Personnel Management and SBA--received “A+” grades.

      In addition, 12 agencies received a grade of "A", three received a "B" grade and one received a "C" grade.

(Editor's Note - this story originally was originally published in the May 25, 2018 edition of Set-Aside Alert.

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      Small businesses certified as 8(a) Business Development Program participants by the Small Business Administration now have a greater choice of mentor-protege programs.

      The 8(a) companies can choose from either the SBA’s longstanding 8(a) Mentor Protege Program or its newer All Small Mentor-Protege Program, John W. Klein, associate general counsel for procurement law at the SBA, confirmed to Set-Aside Alert in an email.

      And while having more options could be beneficial, it also may be creating challenges.

8(a) Mentor-Protege Program

      For many years, the SBA offered only one mentoring program, which was exclusively for 8(a)s. The SBA’s 8(a) mentoring program was designed to give those disadvantaged firms a leg up in forming partnerships with larger companies.

      The 8(a) mentor-protege program was the most robust among civilian agencies. SBA officials have said in recent months that about 400 to 450 mentor-protege agreements are in effect in the 8(a) Mentor-Protege Program.

All Small Mentor-Protege

      In the defense authorization bill of 2013, Congress granted authority for, but did not order, the creation of a governmentwide mentor-protege program open to all small businesses.

      The SBA launched the All Small Mentor Protege Program in October 2016. It has been very popular, with 250 mentor-protege agreements approved thus far, according to the SBA website.

8(a) choices

      The 8(a)s now must choose between the two mentorship programs.

      “8(a)s have a choice. They can choose either option or both, but each program has different attributes. It is too early to tell which one is more advantageous,” Jon M. DeVore, government contracting attorney with Birch, Horton, Bittner and Cherot PC, told Set-Aside Alert.

8(a) joint ventures

      One major difference is that in the 8(a) Mentor-Protege Program, any 8(a) joint venture with its mentor requires SBA District Office “involvement and approval,” according to Klein.

      That means any joint ventures formed in the 8(a) mentoring program need to be individually approved by the SBA district office assigned to that 8(a).

      That is not the case for the All Small mentoring program. Joint ventures formed by 8(a)s or any other small business under the All Small program do not require any SBA approvals.

      There may be some benefits to the 8(a) companies in having their joint venture agreements reviewed and approved by the SBA district office, DeVore said.

      “It can assure that the small business is not agreeing to egregious terms,” DeVore said.

      At the same time, requiring SBA district office approval for each joint venture has the potential to slow down the process significantly, delaying the ability to win contracts, according to Brad Reaves, government contracting attorney with Reaves Coley PLLC.

      Gaining SBA district office approvals “is a much more bureaucratic and drawn-out process,” Reaves told Set-Aside Alert in an interview.

      “It would be difficult (to get a joint venture approved) with any speed,” he said.

      Another potential difficulty is that with the popularity of the All Small program, and its ease of creating joint ventures, it potentially creates competition with the 8(a) Mentor-Protege program, Reaves said.

      By allowing all types of small businesses to form joint ventures it may “dilute” the appeal of joint ventures with 8(a)s, Reaves added.

8(a) exemption from affiliation

      In both mentorship programs, the 8(a) joint venture with its larger business partner would get an exclusion from the prohibition on affiliation, according to Klein.

      That means that a joint venture is considered “small” if the protégé “qualifies as small individually under the size standard corresponding to the NAICS code assigned to the contract, and (if) the joint venture meets SBA's rules requiring control in the protégé,” Klein says.

      Such a joint venture is then eligible to perform any contract for which the protégé is eligible to perform, Klein wrote.

      In other words, if an 8(a) forms a joint venture under either mentorship program, the joint venture can perform an 8(a) contract.

(Editor's Note - this story originally was originally published in the Aug. 18, 2017 edition of Set-Aside Alert.

     The Supreme Court ruled against the Veterans Affairs Dept. and in favor of a veteran-owned small business in the landmark Kingdomware Technologies case. The decision is being viewed as a major victory for veteran-owned small business federal contractors.

     The court unanimously supported a decision written by Judge Clarence Thomas.

     The court concluded that when Congress writes the word "shall" into a law, it intends to establish a mandatory obligation.

     The Supreme Court applied that interpretation to the 2006 law, the Veterans Benefits, Health Care, and Information Technology Act, which created strong preferences for veterans in VA contracting.

     The 2006 law states that, if certain conditions are met, the VA "shall award" contracts to small businesses owned by veterans. While the VA had sought to exempt Federal Supply Schedule contracts, the Supreme Court rejected that argument.

     "Congress used the word "'shall'...as a command," Thomas wrote in the decision.

     Jon Williams, partner with Piliero Mazza PLLC, called the decision a "big win" for veteran small businesses.

     "In a fairly straight-forward ruling, the Supreme Court found that the Veterans First law did not contain any exceptions for FSS orders," Williams wrote in a blog entry. "The Supreme Court also rejected the VA's argument that an order under the FSS is not a contract; the Court found such orders are clearly contracts. And, in overturning the lower-court's analysis, the Supreme Court held that the required use of veterans' preferences applies to all VA acquisitions, and regardless of whether the VA has met its annual veteran contracting goals."

     Read Set-Aside Alert’s full analysis of the new regulations in the upcoming June 24 2016 edition of Set-Aside Alert.

      The Small Business Administration has announced good news for women-owned small businesses in federal contracting—there are now more industries in which women small business owners can be awarded federal set-aside contracts in the SBA’s Women-Owned Small Business (WOSB) Program.

      However, one category of women-owned small businesses now has access to fewer industries for a specific type of set-aside under the new regulations, according to a Set-Aside Alert analysis. Women who gained an additional designation as economically disadvantaged are losing some of the benefit of that additional designation under the new regulations, Set-Aside Alert has found.

      Under the SBA’s new regulations, effective March 3, women business owners now have access to additional industries in which they may be awarded set-aside and sole-source federal contracts.

      A dramatic showdown is shaping up before the U.S. Supreme Court that will decide to what degree the Veterans Affairs Department is obligated to give priority to veteran-owned small businesses to fulfill tens of thousands of its mission requirements.

      The case is one of very few cases ever considered by the Supreme Court on the issue of federal small business contracting. Supporters of Kingdomware say if they prevail there will be many more opportunities for veteran-owned small firms, while the VA says a Kingdomware win would result in significant delays and increased costs for providing care to eight million veterans.

      Under a 2006 law, the VA must put veteran-owned small businesses first in line in its contracting. The VA’s implementing regulations further set a first preference for service-disabled veterans and a second preference for veterans who are not service-disabled.

      Since the law took effect, the VA has more than quadrupled its contracting with service-disabled veteran-owned small businesses (SDVOSBs) in recent years: from $830 million in fiscal 2007 to $3.6 billion in fiscal 2014.

      The percentage of VA contracting with SDVOSBs also rose sharply, from 7% to nearly 19% during the period, far exceeding the government’s 3% goal.

      However, Kingdomware Technologies Inc. has challenged the VA’s interpretation of its duties. In its brief before the Supreme Court, Kingdomware contends that Congress meant for the VA to perform research, and apply the Rule of Two, on every single contract, to determine if there are two or more veteran-owned small firms that are capable and eligible to fulfill the requirement. If there are, then the VA must set aside that contract for the vet-owned firms, its brief to the court states.

      The VA, in its Sept. 29 brief to the court, disagreed with that interpretation. The VA asserts that Congress meant for Federal Supply Schedule orders to be exempted.

      If the court backs Kingdomware’s approach, that change could “seriously impede” and “seriously disrupt” the VA’s ability to care for veterans, the VA claimed in its brief.

      “Petitioner’s expansive interpretation of Section 8127(d) would mark a radical departure from past practice and could seriously impede the VA’s effort to provide high-quality care to veterans,” the VA wrote.

      “If the VA needs more angioplasty stents, laparoscopes, critical-care beds or surgical scrubs; if a mortuary freezer for preserving deceased veterans’ remains is broken; if a VA hospital needs more laboratory analysis services; or if a VA hospital needs to fill temporary vacancies for cardiologists or nurses; then the VA can open a GSA website, check three listings or review three quotes, and select the one that provides the best value,” the VA brief stated.

      But, if the court rules for Kingdomware, the VA said it would be required to perform market research and do a Rule of Two determination for about 130,000 FSS contracts each year, among others.

      “That approach would seriously disrupt the VA’s operations,” the VA continued in its brief. “Adding new obstacles to tens of thousands of procurements annually would significantly increase the VA’s burden, likely force the VA to hire many more contracting officers and delay the VA’s acquisition of important medical supplies and services.”

      In those cases where two SDVOSBs were found and set-asides are required, the VA said it likely would lose millions of dollars in savings in comparison to its current high-volume FSS contracts, the agency added.

      On the face of it, having to perform additional research on potentially 130,000 transactions each year would appear to be a significant new burden for the VA. But Thomas Saunders, attorney for Kingdomware, is skeptical of those concerns.

      The government has “greatly exaggerated the consequences of complying with the Rule of Two,” Saunders told Set-Aside Alert. He claims VA already has “a lot of options for streamlining the procurement process while still favoring veterans. And Congress determined that the administrative costs are far outweighed by the important goals that Congress passed the law to accomplish.”

      Among the ways VA can reduce the burden and avoid the Rule of Two is by awarding sole-source contracts to SDVOSBs and VOSBs of up to $5 million, government contracting attorney Steven Koprince told Set-Aside Alert. And for situations involving unusual and compelling urgency, the VA can award non-competitive contracts under FAR 6.302-2, said Koprince, who also wrote a brief supporting Kingdomware.

      However, the VA said that sole-source and noncompetitive contracts also create delays and waste and increase the risks of paying inflated prices and of obtaining inferior products or services.

      Another government contracting specialist told Set-Aside Alert that market research under the Rule of Two can be very time-consuming, especially for complex procurements.

      “If you do a NAICS code search to find SDVOSB firms it can yield an extremely large number of responses. Going through that large number to find the companies that can meet the specific requirements can be an arduous process, particularly if the requirements are complex. If you have 500 company names, how do you find the ones who are qualified?” the specialist said.

      Notwithstanding those potential impacts, supporters of Kingdomware believe that a win would provide a huge boost for veteran small business contractors.

      “We are excited about this case,” Scott Denniston, executive director of the National Veteran Small Business Coalition, told Set-Aside Alert. A Kingdomware win “would bring an influx of new businesses into the market. SDVOSB contracting at the VA is 19% now, but I think it could go to 30%,” he said.

      Are there enough SDVOSBs to make that realistically possible? It is difficult to know, but Denniston said he believes the current group of SDVOSBs have room to grow. The VA says there are 7,350 verified firms in its Vets First database.

      But VA officials say it’s not certain that vet-owned firms would benefit by a Kingdomware win because some veterans with existing FSS contracts may be displaced.

      Regardless of the outcome, the Kingdomware case is likely to be a landmark. The case began with the company’s protest to the Government Accountability Office. GAO upheld the protest, but the VA did not follow GAO’s recommendations. The protest moved to the Court of Federal Claims and the US Court of Appeals, and both agreed with the VA. VA officials declined further comment.

More information:
Briefs on the case, courtesy of SCOTUS blog: http://goo.gl/LPuHiu
Kingdomware reply brief: http://goo.gl/f1CFjt

      UPDATE - NOV. 19, 2015 - The Supreme Court case on the Veterans Affairs Department’s obligations to service-disabled veteran contractors has taken a surprising turn.

      Previously, the court was preparing to hear oral arguments in a petition brought by Kingdomware Technologies Inc., which asserts that the VA has not fully complied with a 2006 law compelling it to prioritize contracting with service-disabled veterans.

      However, on Nov. 4, the court canceled the upcoming hearing and issued an order instructing the lawyers involved to file new briefs on whether the case has become “moot.” If the court deems the case to be moot, then the court will dismiss the case.

      Generally, if a legal question is considered moot, that means it has little or no relevance or significance.

      The new briefs are due on Nov. 20, and each side may reply to the other side’s brief by Dec. 1.

      Under the court’s new order, the court asked whether the disputed contracts in the case have been “fully performed,” and if so, whether the case is “moot,” according to a report by SCOTUS Blog (http://goo.gl/16VJt2).

      If the court judges the case to be moot, then the Kingdomware case would be dismissed and the decision of the U.S. Court of Appeals for the Federal Circuit would stand. That court upheld the VA’s position.

      If the court decides the case is not moot, then oral arguments likely will be rescheduled for February, according to SCOTUS Blog.

     BREAKING NEWS - The Veterans Affairs Department recently made an “important concession” in its upcoming federal contracting dispute coming before the Supreme Court, the lead attorney for the petitioner told Set-Aside Alert in an exclusive interview today.

     The longstanding Kingdomware Technologies Inc. vs. United States case involves a dispute over the extent of the VA’s obligations, under a 2006 law, to give first priority to veteran-owned small businesses to fulfill tens of thousands of its mission requirements. The court will hear oral arguments on Nov. 9.

     According to Thomas Saunders, counsel of record for Kingdomware, the VA in previous legal proceedings argued “that the VA-specific Rule of Two is tied to the VA's annual goals and is mandatory only when the government decides that using the Rule of Two would help meet those goals,” Saunders told Set-Aside Alert.

     “The government has now abandoned that position and concedes that the VA must apply § 8127(d)s Rule of Two to all open-market (contracting),” Saunders told Set-Aside Alert . “Despite making that important concession, the government contends that the Rule of Two does not apply to Federal Supply Schedule orders,” Saunders continued.

     In the 2006 law, under the Rule of Two, the VA must research whether there are two or more capable service-disabled veteran-owned firms or other veteran-owned firms to fulfill the mission requirement. If there are, then the VA must set aside that contract for the veterans. In fiscal 2014 the VA awarded nearly 19% of its contracts to small firms owned by service-disabled veterans.

     The VA outlined its arguments in a brief to the court on Sept. 29. The VA also warned that its ability to care for eight million veterans would suffer if the department was forced to research and possibly create set-asides for veterans on every single contract, including FSS contracts.

     Kingdomware has filed a new brief with the court to respond to the VA’s modified stance, Saunders said.

     VA officials were not immediately available. VA officials previously told Set-Aside Alert they declined to comment further on Kingdomware.

     More details and a full analysis of the Kingdomware case will be published in the Nov. 6 issue of Set-Aside Alert.

More information:
VA brief: www.setasidealert.com/kingdomware14-916bsunitedstates.pdf
Kingdomware brief: http://www.setasidealert.com/kingdomware14-916bsreply.pdf

     Federal agencies awarded more than 10,000 contracts totaling $1.1 billion for desktop and laptop computers in fiscal 2014--contracts that the White House believes are inefficient and do not offer insight into prices paid.

     To address that concern, the Office of Management and Budget has banned most new contracts for laptop and desktop computers, effective immediately, and ordered that all agencies take steps to standardize and consolidate their contracts for laptops and desktops.

     Civilian agencies now must make at least 80% of all new computer purchases on three existing governmentwide acquisition vehicles: NASA’s SEWP, General Services Administration’s Schedule 70 or the National Institutes of Health’s CIO-CS.

     Those three contract vehicles currently account for about a third of what the civilian agencies annually spend on new computers. The other two-thirds comprise more than 2,000 contracts.

     The three vehicles fit the government’s category management approach and also support small business goals, Federal CIO Tony Scott and Office of Federal Procurement Policy Administrator Anne Rung wrote in a blog post on the Web on Oct. 14. They also issued a memo detailing the new policy on Oct. 16.

     “These solutions support the government’s goals of increasing opportunities for small businesses as small business participation rates on these three solutions exceed the overall small business participation on all other laptop and desktop vehicles across government,” Scott and Rung wrote.

     OMB said its previous research showed that laptop prices varied from $450 to $1,300 for the same configuration.

     The government’s Workstation Category Team, led by NASA under the category management initiative, developed two standard configurations and three upgraded configurations that it said could meet nearly 80% of all agencies’ desktop or laptop needs. Those configurations are being posted in the General Services Administration’s Acquisition Gateway website.

     “Effective immediately, CIOs shall ensure that at least 80% of their agency’s new basic laptop and desktop requirements are satisfied with one of these standard configurations, unless an exception is consistent with an approved IT acquisition strategy or plan, as required by OMB’s FITARA implementation guidance, and approved in writing by the agency CIO,” Scott and Rung’s memo stated.

     Additional configurations for laptops and desktops are to be developed as well.

     The new policy allows agencies to continue to use existing contracts through the current base year or option period. Six months prior to the new option period, they must analyze terms and conditions, pricing, performance, fees and savings and present their findings to OMB for approval.

     In addition, 18 months before a recompete, the agency must report on how it will transition.

      More information: OMB memo: http://www.setasidealert.com/OMB_M-16-02.pdf
OMB blog: https://goo.gl/TDOa79

      The Obama Administration recently announced it had reached 24.99% in small business procurement, exceeding the government’s 23% goal for the second year in a row. But instead of cheers, they got jeers.

      The Small Business Administration’s celebratory news was met with a stunningly negative response in some quarters.

      “The SBA is robbing small businesses,” Rep. Steve Chabot, R-OH, who chairs the House Small Business Committee, said in his official statement in response to the announcement. “The reason Congress asks for these numbers is so we can use them, not so that the Administration can pat itself on the back once a year.”

      Chabot, who objects to the SBA’s accounting methods, was not the only critic this year. While conservative gadfly Lloyd Chapman has been accusing the SBA of “fraud” in its small business goal achievement for several years, this year a consumer watchdog group, Public Citizen, also jumped into the fray, citing several of Chapman’s allegations almost verbatim.

      “Accounting tricks create false impression that small businesses are getting their share of federal procurement money,” Public Citizen claimed in its May 6 report (http://goo.gl/FVjjcM).

      Perhaps it should have been expected that once the small business goals were met in fiscal 2013 and in fiscal 2014, after years of effort, the tables turned. Suddenly, the rules surrounding the goals are being harshly questioned.

      But are these valid criticisms, sour grapes, or just sourness? And even if alleged “accounting tricks” are a factor, are the problems significant enough to affect the goal achievement? Set-Aside Alert is looking for answers.

Watchdog allegations

      To start, we examined the main allegations contained in Public Citizen’s recent report. Their claim is that the SBA is wrongly counting some large businesses as small. The government’s success in small business contracting “relies on methodologies that present a false impression,” the Public Citizen report claimed. “For example, the list of contracts the government counted toward meeting its small business contracting goals in 2013 included some held by the largest companies with which the government does business.”

      Seven of the 10 largest contractors received at least one contract that the SBA counted toward small business goals that year, the report said. It named Lockheed Martin Corp., Raytheon Co., General Dynamics Corp., Northrop Grumman Corp. and several others as large contractors with small business awards counted toward the government’s goals. The report did not show the value of those awards.

Set-Aside Alert’s research

      Set-Aside Alert decided to compile our own list--not just of the 10 largest--but of the 100 largest federal contractors in fiscal 2014 and their small business awards, if any.

      Our goal was to independently estimate the value of the small business awards going to the 100 largest contractors, to see if it is large enough to affect goal achievement. Our secondary goal was to further examine whether Public Citizen’s allegations were valid.

      Of those top 100 contractors, 57 had small business contract actions in fiscal 2014 (presumed to have been reported for small business goal achievement). Those small business awards totaled $289 million. That included $293 million in 45 awards minus $4 million in 12 negative awards (values below zero).

      At the same time, those top 100 contractors received $236 billion in contract awards in fiscal 2014. Their small business awards totaled about 1/10 of 1%.

      In the context of small business contracting, the $289 million was less than a third of 1% of all small business contract value and 7/100ths of 1% of total eligible contract value available to small firms.

      Based on Set-Aside Alert’s review, there was no indication that the top 100 contractors in fiscal 2014 were receiving small business awards at a level that would have materially affected small business goal achievement.

Public Citizen’s response

      When we shared those findings with Public Citizen, Taylor Lincoln, author of the study, said while it’s clear some awards to large businesses are being included in SBA’s small business goal achievement,total dollars involved might be low.

      “It warrants further research,” Lincoln told Set-Aside Alert. “It is possible that the totals (of large businesses receiving small business awards) do not materially affect the goals,” he said.

      Public Citizen also cited the SBA inspector general’s 2014 finding of $400 million in “ineligible” 8(a) and HUBZone set-aside contracts. However, the IG previously told Set-Aside Alert that while the firms were ineligible under those set-aside programs they still may have been eligible for credit as small businesses.

More research details

      Set-Aside Alert’s list of the top 100 contractors with small business actions had these top 10:

• Lockheed: $2 million (15 actions)
• Boeing: $-41,000 net (33 actions)
• General Dynamics: $2.6 million (43 actions)
• Raytheon: $2.6 million (56 actions)
• Northrop: $48,000 (6 actions)
• McKesson: $554,000 (32 actions)
• United Tech: $442,000 (42 actions)
• L-3: $8.2 million (39 actions)
• BAE Systems: $17,000 (9 actions)
• Huntington Ingalls: $23 million (56 actions)

      However, when Set-Aside Alert asked the SBA and other legal specialists whether those small business awards to these “other than small” firms were improperly awarded or were improperly counted toward goal achievement, or both, they said it could not be known without further research.

      “There are a lot of misunderstandings about small business procurement data. You cannot just make a list of Fortune 500 companies getting small business contracts. Some of those contracts are legitimate,” Isaias Alba IV, partner with Piliero Mazza PLLC, told Set-Aside Alert.

Current regulations

      Under current regulations, if a small business is acquired by an “other than small” business, it must report to the SAM.gov database and contracting officers the change in its size status to “other than small” within 30 days.

      From that point forward, the contractor may continue to perform on its existing small business set-asides until expiration; however, under SBA rules the agency cannot “take credit” for those awards toward meeting its small business procurement goals.

      A possible legitimate explanation for some of the small business actions for large businesses such as Lockheed and Raytheon is the 30-day period for reporting changes in size status after an acquisition, suggested Alba. Awards during that 30-day post-acquisition period would be counted as small under the current rules, he told Set-Aside Alert.

      Also, depending on how the acquisition is legally structured, there are types of acquisitions that would trigger a change in size status but would not trigger the SBA rule regarding agencies not taking credit toward goals, Alba said.

      In addition, SBA officials have acknowledged that reporting errors are made by agency contracting officers.

      There also are few specialists that can offer insight into how multiple agency reporting systems and forms are structured. When a small business changes its size status, can agencies relabel the contractor as “other than small” within a day? Do they have that flexibility? Stay tuned for more research on this topic.

      In a future issue we also will examine Chabot’s claim that the SBA is wrongly shrinking the pool of “eligible” contracts for small businesses, thus inflating the small business share.

      The number of federal agency Sources Sought Notices for small businesses appears to have increased dramatically in recent years.

      Sources Sought notices for small businesses referenced on the Federal Business Opportunities website FBO.gov rose to 2,610 in fiscal 2014, more than quadruple the 565 counted in fiscal 2004, according to an analysis by Set-Aside Alert.

      That is good news for small business owners, because they are often advised to search for, and respond to, Sources Sought Notices that match their capabilities in order to get a foot in the door early in the process as opportunities are developing.

      “We are seeing an explosion in Sources Sought Notices,” Gloria Larkin, government contracting consultant and president of TargetGov, said at a recent industry conference for small business federal contractors.

      She credited the Obama administration for promoting the sources sought notices to stimulate more buys from small firms. The administration met the 23% small business procurement goal in fiscal 2013 for the first time in eight years.

Numbers trending up

      The upward trend in Sources Sought notices and related announcements on FBO.gov has been consistent over the last 10 fiscal years, with a boost in the number every year, according to Set-Aside Alert’s analysis. Our review counted all references to the notices, including modifications and cancellations. The cancellations were relatively few in number.

      Sources sought references on FBO.gov grew steadily from 565 in fiscal 2004 to reach 1,297 in fiscal 2008, and continued the upward trend: to 1,639 in fiscal 2009; 1,640 in fiscal 2010; 1,746 in fiscal 2011; 1,864 in fiscal 2012; 2,325 in fiscal 2013 and 2,610 in fiscal 2015.

      With 1,865 such notices referenced on FBO.gov in the first five months of fiscal 2015 year, the government is on track to possibly hit 3,000 or more such notices this fiscal year.

What are Sources Sought Notices?

      Sources Sought Notices, sometimes called Requests for Information, are not solicitations; they are a means for federal agencies to gather information about the market to prepare to meet a mission requirement.

      Federal agencies publish Sources Sought Notices on the FBO.gov website and other sites to determine if there are two or more small businesses that are capable of meeting the requirement. If two or more capable small businesses respond, then the agency often will create a small business set-aside contract for that requirement.

      If no small businesses respond, it may go to “full and open” competition, for large and small businesses. If only one small business responds, the solicitation may go to full and open competition, or less commonly, the single small vendor who responded may win a sole-source contract.

How many Sources Sought Notices are there?

      Set-Aside Alert tabulated references to such notices on the FBO.gov website. We looked at the fiscal year totals for fiscal 2004 through 2014, and the monthly totals for the most recent years. The monthly totals ranged from 103 to 355.

      In the last three fiscal years, the monthly totals generally rose steadily from October through March, increased more rapidly in April and May, and hit highs in June, July and August, before dropping in September, according to Set-Aside Alert’s analysis.

      Peak months in fiscal 2014 were July, with 355 references; June, with 318; and April, with 303.

Tips for responding to Sources Sought Notices

      Generally, the notices ask that firms respond by sending in a capability statement and other documentation addressing the specific requirement.

      The Naval Surface Warfare Center in Port Huename, CA issued this advice on responding to Sources Sought notices: http://goo.gl/G6PTi9

Should you expect a response?

      Some business owners complain that after they respond to the Sources Sought Notice, they receive no phone calls in return. But Larkin said that’s normal and you should not expect a callback.

      Sometimes the solicitation is months away, or the agency may change direction and abandon that particular requirement. But other times, you might get a call quickly because the requirement needs to be filled as soon as possible.

      That may be especially true in the final quarter of the fiscal year as agencies strain to meet their small business goals with additional year-end buys.

Bethesda, MD--- Dozens of U.S. government set-aside contracts to women-owned small businesses totaling tens of millions of dollars may have been awarded in ineligible industries, according to an investigation by Set-Aside Alert news service for small business federal contractors.

     Set-Aside Alert initiated its review of the Small Business Administration’s Women-Owned Small Business (WOSB) Program after downloading official program data from the Federal Procurement Data System. The program data is sourced from multiple federal agencies.

      We found significant errors suggesting that federal agencies may have awarded numerous set-aside contracts to WOSBs and Economically-Disadvantaged WOSBs (EDWOSBs) improperly.

      Set-Aside Alert identified $69 million in set-aside contracts to women-owned small firms reported to have been awarded in industries that are ineligible for the specific type of set-aside contract used. That is about half of the value of all the current set-aside contracts awarded through the SBA’s WOSB program.

The WOSB program

      The WOSB program was authorized by Congress in 2000 and established by the SBA in 2011 to spur federal contracting with women-owned small companies. There are 59,567 women-owned small businesses registered in the SBA’s Dynamic Small Business Search database, of which nearly 37,000 are women-owned firms in the SBA’s WOSB program and 13,000 are EDWOSBs in the program.

      Under the program, federal agencies are permitted to designate contracts specifically for women-owned small firms. But there are restrictions. For example, the only industries in which such set-asides are allowed are those in which women are underrepresented. In addition, some industries are reserved strictly for the economically-disadvantaged women only.

The Set-Aside Alert investigation

      Set-Aside Alert downloaded a data set of approximately 400 WOSB and EDWOSB federal set-aside contracts made through the SBA’s WOSB program totaling $139 million that expire in calendar 2015 or beyond. That represents nearly all current set-aside contracts designated for women-owned small firms through the program.

      In our exclusive new report, “Women-owned Woes,” we identified 87 set-aside contracts totaling $62 million made through the SBA’s WOSB program in industries reserved strictly for EDWOSBs that were reported to have been awarded as WOSB set-asides. Those contracts may have been improper and may have deprived the disadvantaged women of opportunities to which they were entitled.

      Set-Aside Alert also identified 89 WOSB and EDWOSB set-aside contracts made through the same SBA program reported to have been awarded in 31 industries in which women are not underrepresented. Under SBA regulations, set-asides for women-owned firms are not allowed in those industries. Those erroneous contracts totaled $7 million.

      The $69 million in questionable contracts we identified represented half of the total value of the current contracts in the SBA WOSB program.

      The contracts flagged as erroneous or improper were awarded by multiple federal agencies, including the Patent and Trademark Office, Air Force, Army, Navy and Veterans Affairs Department.

      The patterns of errors we found suggest that the problems are not just random data errors or mislabeled data that could be corrected with a simple change in the record, according to industry specialists. It suggests that dozens of set-aside contracts may have been misdirected in reality, the specialists said. SBA sources have agreed with that opinion, speaking on background.

      Set-Aside Alert did not review individual contracts to determine if specific contracts were improper. Presumably any WOSB and EDWOSB set-aside contracts that were awarded erroneously would have been made void if they had been protested in a timely fashion.

      Set-Aside Alert published its findings in a series of articles for subscribers in April and May 2015.

      Set-Aside Alert also published a list of the Top 100 WOSB and EDWOSB set-aside opportunities anticipated in 2015 and 2016, along with list of the best and worst states for women-owned federal set-asides and the top federal agencies for women-owned small business set-asides.

See the full series at www.setasidealertnews.com

     For the first time, the White House’s online Small Business Dashboard dynamic database is showing that a record 25% of eligible U.S. government contracts were awarded to small businesses in a fiscal year.

      That amount surpasses the government’s 23% goal, which was met in fiscal 2013 for the first time in eight years. If the dashboard's 25% small business participation figure for fiscal 2014 is upheld in official tallies it would be a historic first.

      The dashboard has the latest current data, which is considered unofficial and may be updated at any time. Since fiscal year 2014 ended more than six months ago, additional data is unlikely to change the figures substantially.

      As of May 13, the dashboard showed 25.05% of eligible federal contracts were awarded to small businesses in fiscal 2014. The dashboard initially reached the 23% goal several months ago, and climbed over 25% several weeks ago.

      The Small Business Administration compiles a snapshot of official data for public release in its annual Small Business Procurement Scorecard. SBA officials recently said they are preparing to release the scorecard for fiscal 2014 within weeks.

      The dashboard, as of May 13, indicated that total small business awards rose to $92 billion in fiscal 2014, up from 83.7 billion the year before.

      The percentage of awards, and the total value of awards, going to disadvantaged small businesses and service-disabled veteran-owned businesses also are likely to meet their goals of 5% and 3%, respectively, for fiscal 2014, based on the dashboard figures. The dashboard showed 9.52% for small disadvantaged firms, up from 8.58% the year before, and showed 3.67% for the disabled veteran-owned firms, up from 3.39%, as of May 13.

      The dollar value of the awards rose from $30.6 billion to $35 billion for the small disadvantaged vendors. The value increased from $12 million to $13.5 million for the disabled veterans.

      Women-owned small firms and HUBZone firms also saw rising percentages and awards, but not enough to meet the goals, according to the dashboard.

      The women-owned firms won 4.68% of eligible contracts, up from 4.34% in fiscal 2013, the dashboard said as of May 13. The goal is 5%. Total dollars going to those firms went up from $15.5 billion to $17.2 billion.

      HUBZone firm contracts increased to 1.82%, up from 1.75%, but that did not achieve the 3% goal, the dashboard showed. More information: Dashboard http://smallbusiness.data.gov/

(Editor's note: This story originally was published in the May 1, 2015 edition of Set-Aside Alert. It has been updated.)

     Two months after Rep. Steve Chabot, R-OH, took office as the new chairman of the House Small Business Committee, the panel’s official website displays the names and photographs of only its Republican members.

      It is one of only two House committee websites--out of 21 reviewed by Set-Aside Alert--that portrays neither the names nor photographs of Democrats among its members. Only one other committee-- House Education & Labor--also does not show any Democrats on its membership Web page.

      Democratic lawmakers do serve on the small business panel and have their own website managed by senior Democrat Rep. Nydia Velazquez, D-NY.

      However, until a few days ago, the committee’s official website had only a single inconspicuous link to “Minority site” at the bottom of the home page to locate the missing Democrats.

      Chabot’s office declined to comment when Set-Aside Alert inquired about the absence of Democrats on March 27. However, a source in Chabot’s office said there were delays in obtaining the full roster of Democratic members of the committee. The most recent member, Rep. Seth Moulton, D-MA, was added within recent weeks, the source said.

      Later in the day on March 27, a new link appeared at the very bottom of the committee’s “members” Web page, directing visitors to the Democrats’ website.

      Even so, as of press time, there was no list of Democratic members’ names and none of their photos were displayed on the committee’s official website.

      For the record, the Democratic committee members are Reps. Velázquez,D-NY; Yvette Clarke D-NY; Judy Chu, D-CA; Janice Hahn, D-CA; Donald Payne Jr., D-NJ; Grace Meng, D-NY; Brenda Lawrence, D-MI; Alma Adams, D-NC; and Seth Moulton, D-MA.

     Velazquez did not respond to a request for comment.

UPDATE: As of April 22, the House Committee on Small Business did not show photographs or names of its Democratic members. In addition, as of April 22, the House Small Business Committee Democrats’ website also did not show photographs or list the names of the committee’s Democratic members.

More information: Small Business Committee: http://smallbusiness.house.gov
     Small Business Democrats: http://democrats.smallbusiness.house.gov

     A coalition of HUBZone and service-disabled veteran small business owners is urging Congress to allow them to compete for the Transportation Department’s (DOT) Disadvantaged Business Enterprise (DBE) contracts for highway, bridge, airport and mass transit construction.

     The DOT’s DBE program was created in 1982 to funnel a portion of federal highway construction dollars to socially and economically disadvantaged small firms, currently including 8(a) companies and women-owned small businesses.

     While some HUBZone and veteran-owned firms also may qualify as DBEs under the current program, most do not. But the coalition spearheaded by the HUBZone Council and VET-Force aims to change that.

     Saying they want “a level playing field,” the coalition wants to expand the pool of DBEs to include HUBZone firms and SDVOSBs (service-disabled veteran-owned small businesses.)

     Mark Crowley, executive director of the HUBZone Contractors National Council, told Set-Aside Alert that increasing the number of small businesses in the DBE program could result in more small business awards overall, because the law allows states to raise DBE participation goals based in part on the greater availability of eligible small businesses. Results would vary by state, depending on the proportion of DBEs, HUBZone firms and SDVOSBs, he said.

     Congress set up the DBE program as a civil rights program in 1982. The DOT sends billions in highway money to the states with goals of awarding a percentage of the funds as contracts to DBEs. Some groups are presumed to be disadvantaged, including minority groups and women.

     The coalition wants Congress to expand the definition of DBEs to include the SDVOSBs and HUBZone firms. “By excluding SDVOSBs and HUBZone firms, the pool of eligible small businesses is limited, depressing the number of small business awards,” the coalition wrote in a “Call to Action.”

     DBEs received about 9.5% of the federal highway awards in fiscal 2012, Crowley said, and he contends the awards could go much higher if the pool of DBEs was enlarged by thousands of HUBZone and SDVOSB firms.

     The coalition is urging vendors to contact Congress to ask them to insert language to change the definition of DBE in the upcoming reauthorization of the highway funds. No lawmaker has sponsored such a provision to date, Crowley told Set-Aside Alert, but he is hopeful of support shortly.

     Even so, Crowley acknowledged there may be hurdles in winning over elected officials who emphasize the civil rights origins of the DBE program, because many of the HUBZone and SDVOSB firms to be included are not minority-owned.

     DOT has not commented on the coalition’s efforts, but the department recently started a pilot program that might have a similar impact.

     DOT announced it was open to considering state and local requirements for geographic- and economic-based hiring preferences (presumably similar to those in HUBZones), and preferences for veterans, in a year-long pilot program it has initiated for the highway construction program (link to Federal Register posting). The DOT said such preferences may help benefits go to disadvantaged workers.

     But the DOT said it would not approve any projects that would seek to “alter the requirements of the DBE program.”

     The General Services Administration’s Multiple-Award Schedules program is quietly shrinking.

     Total awards made through GSA schedules have dropped by 15% in value in five years, from $39 billion in fiscal 2010 to $33 billion in fiscal 2014, according to the latest data from the GSA’s Schedule Sales Query website.

     The schedules program generally flies under the radar, so awareness of the trend may have been slow to develop. But industry concern is now growing and could lead to more public debate on the schedules’ future.

     The timing of such a discussion could be apt as GSA is preparing another round of initiatives affecting the schedules, including category management and “hallways,” and also preparing for new leadership following Administrator Dan Tangherlini’s departure on Feb. 13.

     The schedules reduced spending trend mirrored the decrease in federal contract spending overall from fiscal 2010 to fiscal 2013 due to severe budget cuts.

     But some forms of federal contracting rebounded last year. For example, small business federal contracting rose by 9.4% in fiscal 2014 in comparison to fiscal 2013, according to the latest White House Small Business Dashboard figures as of Jan. 19.

     However, GSA schedules sales did not bounce back in fiscal 2014, but rather continued to diminish, the GSA sales data indicates. The schedules’ aggregate dollar value has fallen each year through fiscal 2014.

     The reductions have hit most of the schedules.

     The largest schedule, Schedule 70, for sales of information technology, fell by 12% during the period, from $16 billion in fiscal 2010 to $14 billion in fiscal 2014.

     The second largest schedule, Schedule 874 (MOBIS), for mission-oriented business solutions, lost 23% of its value during the period, going from $5.2 billion in sales to $4 billion.

     Other schedule sales reductions were even more dramatic during the five-year-period, including Schedule 874V (logistics), down 50%; Schedule 56 (building materials), down 48%; Schedule 84 (law enforcement solutions), down 44%; and Schedule 72 (furnishings and floor coverings), down 42%.

     A few schedules bucked the downward trend. Schedule 599 for travel agent services rose by 60%, and Schedule 03FAC for facilities management rose by 47%, during the five years, GSA sales data shows.

     The latest data suggest that recent procurement trends and modernization initiatives may have contributed to dampened sales on the schedules.

     In addition to the impact of budget cuts, industry leaders have pointed to the growth in large governmentwide acquisition vehicles, such as NASA’s “SEWP” and GSA’s “OASIS,” as possible factors in reduced schedules sales.

     In the last two years, GSA modernization initiatives including strategic sourcing vehicles, reverse auctions, “Lowest Price Technically Acceptable” terms in contracts, an upcoming consolidated professional services schedule, and a new prices-paid Web portal for sharing pricing information all have been named as possible contributors to the schedules sales slump.

     Roger Waldron, president of the Coalition for Government Procurement, wrote in a recent blog that strategic sourcing and the prices-paid portal have hurt the schedules (http://goo.gl/JM930s).

     “To date, the experiences with (Federal Strategic Sourcing Initiative) and GSA regarding the prices paid data is that of an agency seeking to drive down prices at all costs,” Waldron wrote. “For example, GSA is using historical, horizontal price comparisons to drive down pricing in the Multiple Award Schedules. Price comparisons that too often ignore differing terms and conditions, commitment and market conditions—even ignoring such basic price drivers as unit of issue!! It is ‘Lowest Price Regardless’ on steroids.”

     Jennifer Aubel, principal consultant with Fed Nexus Law, also is sounding an alarm.

     “Schedules modernization or MAS extinction event?” Aubel wrote in a recent blog entry (http://goo.gl/pQLsVw). “It is starting to seem to me that ‘modernization’ might just be a code word for ‘elimination.’ After all, GSA appears hellbent on driving contractors and ordering agencies off the Schedules and onto other contract vehicles (SEWP anyone?).”

     As of late 2014, GSA Administrator Tangherlini was leading the charge to consider even more changes to the schedules. “Everything should be on the table with schedules,” Tangherlini said at an industry event in November, according to Federal Times (http://goo.gl/XUdpWy).

     “We can really even ask some bigger meta questions about what is the role of the schedule in an environment in which you can have digital access to multiple-award vehicles across the government,” Tangherlini said.

     With Tangherlini’s departure, it’s not immediately clear how the new chief will view those priorities.

     GSA officials have described their motivation as a need to reduce redundancy, increase efficiency and lower prices. For the upcoming consolidation of several professional services schedules, for example, one of the goals is to reduce the costs of managing more than 500 contractors who hold multiple schedules contracts.GSA officials were not immediately available to comment further.

     President Obama’s fiscal 2016 budget request for the Small Business Administration is $701.3 million. That includes $206.3 million for entrepreneurial development programs.

     A full description of the SBA budget request can be accessed by clicking here.

     Overall, the president has submitted a $3.99 trillion budget to Congress that begins the process of negotiation over each agency’s budget. Congress has the authority to authorize and appropriate funds for the federal government.

     The White House budget documents can be found here: http://www.whitehouse.gov/omb/budget/Overview

and here.

     Set-Aside Alert is developing a full analysis of the president’s budget request for the 2/20/15 issue of Set-Aside Alert.

    For companies in the Small Business Administration's 8(a) Business Development Program, one of the best ways to scout for new opportunities is to look for 8(a) set-aside contracts expiring in the coming months.

    Under current rules, if a contract was designated as an 8(a) set-aside, it generally must remain an 8(a) set-aside if it is recompeted. That presents a huge opportunity for 8(a) firms willing and able to compete for the contracts.

    Anyone can find those expiring contracts in the Federal Procurement Data System, but we wanted to make it even easier.

    Set-Aside Alert did the work and applied a few other research tools to identify the largest upcoming 8(a) set-aside opportunities for each of the top federal agencies in 2015.

    Click here for the list of the Top 77 8(a) Set-Aside Opportunities of 2015. All have completion dates in calendar 2015. Many are ongoing requirements likely to be recompeted. We focused on large contracts and contracts not held by Alaska Native Corporations, which have special authorities.

     The end of the year is an excellent time to check up on your government contracting systems, reports and processes in federal databases. Here are some checks and updates you can perform now, before the start of a new year.

Confirm your NAICS Codes

     Before you do anything else, go back over your NAICS (North American Industry Classification System) codes and confirm every one of them.

     Review whether you have too many NAICS codes. If you’ve got disparate NAICS codes for too broad of a variety of industries, your listing may become suspect.

Confirm product/service codes

     Next, do a similar check on your Product/Service Codes. These codes are frequently used by contracting personnel looking for prospective small business suppliers. The full list is at http://www.fpdsng.com/downloads/service_product_codes.pdf .

DSBS listing

     To make changes in your listings in federal databases, we recommend starting with Dynamic Small Business Search (DSBS).

     Go to http://dsbs.sba.gov and search your company by name and by telephone number. Is your listing up to date? Have you included past contracts in the performance history section? Are your keywords comprehensive? Have you noted your professional and industry certifications?

     Take note of all items that are missing or need updating. You will need to go to another website to actually make the corrections, which will be explained shortly. Address changes must be made through the Dun & Bradstreet website, noted below. But before you leave DSBS, take a moment for the next step.

Compare with competitors

     Compare your DSBS listing with those of a couple of your competitors. If a contracting specialist is looking for bidders, will you be included? Or does your company fade away against the competition? Consider improvements to your listing.

Address change

     If your business has changed addresses, go to your Dun & Bradstreet DUNS number listing to make the appropriate changes at http://goo.gl/rjEvjC . Follow through a few days later to make sure the changes were passed on into SAM and DSBS.

SAM.gov listing

     Now that you have noted any information that needs to be updated and corrected in your DSBS listing, it is time to go to the System for Award Management www.sam.gov, which enables access to the editing functions of the dynamic small business database.

     Check your SAM registration listing. Look for inaccurate data, old contact information, missing NAICS codes and other gaps. Make the necessary changes, and confirm at the end.

     As you finish your updates on SAM.gov, you will have access to a link to your SBA Profile, which takes you to the editing functions for DSBS.

Edit your DSBS listing

     Make the necessary updates to your DSBS listing, using the editing function. During your update of your DSBS listing, be sure to add certifications, keywords, past contracts, website URLs, email and export interests.

Past performance

     Review your Past Performance grades in CPARS (Contractor Performance Assessment Reporting) , PPIRS (Past Performance Information Retrieval System) , FAPIS (Federal Awardee Performance and Integrity Information System) and other sites.

     You may need assistance from your contracting officer to get access to internal sites where your performance on past contracts has been graded.

     Make sure you don’t have any unanswered negative comments. You may not be able to get negative comments removed, but you should be able to record your side of the story.

EEO-1 form

     File your EEO-1 (Equal Employment Opportunity-1) form at http://www.eeoc.gov/employers/eeo1survey. The EEO-1 report was due Sept. 30. Companies with more than 100 employees are required to file the report annually.

VETS-100

     File your VETS-100 form with the Labor Department at https://vets100.dol.gov/vets100. Companies with federal contracts valued at $25,000 or more are required to file this form by Sept. 30 each year.

FBO.gov review

     Review the process you use to monitor the Federal Business Opportunities website FBO.gov. Have you set up regular searches? Are you covering all possible NAICS codes for your products/services? Are you searching by PSC codes as well as NAICS? Are you looking at all small business set-asides, not just special categories such as 8(a), HUBZone, or women-owned?

Training & networking

     Have you budgeted time and resources to participate in national and local conferences, networking and training opportunities? Keep up to date with your industry and with government contracting rules, regulations, programs, legislation, technology and legal decisions.

Conclusion

     December is often a slow month. The pace at which new solicitations are issued is at a low point. Use the opportunity to sharpen your processes and check to make sure your company is displayed at its best in the government databases.

    Tom Johnson is the publisher of Set-Aside Alert and owner of Business Research Services in Bethesda, MD.

     Fall typically is not golden for small federal contractors. As autumn leaves fall, so does the level of activity in small business federal contracting.

     The month of November was the slowest month for small business federal contract activity in four of the last five fiscal years, according to new research by Set-Aside Alert.

     The months of October and December were just barely more active than November in those fiscal years. December was slowest in fiscal 2013.

     With the federal fiscal year starting on Oct. 1, the autumn months of October, November and December together ranked as the most sluggish of the year for all five fiscal years reviewed.

     The noticeable trend each year was for a work slowdown from October through December, with contract actions picking up from January to June and peaking in July, August and September at the fiscal year’s end.

     At the same time, there is a possibility that this fall season may buck the trend: there was an unusual increase in activity for October this year.

     The activity for small business federal contracting observed for October 2014 was 19% higher than for October 2013, as of data collected on Oct. 30, 2014. If that pattern continues, this year’s slump maybe milder than in previous years.

     Even so, overall, there was a slump in small business contract actions in October, November and December in each of the last five fiscal years.

     Set-Aside Alert examined small business federal contracting activity for each month for fiscal 2010 to the present on the FBO.gov federal website.

     We measured activity by the number of contract actions involving small businesses (including 8(a), HUBZone, women-owned, economically-disadvantaged women-owned and service-disabled veteran-owned) recorded on FBO.gov in those months. The contract actions comprised solicitations, presolicitations, sources-sought notices and award notices.

     For the most recent fiscal year, the low was 3,277 contract actions in November 2013 vs. a high of 9,793 contract actions in August 2014.

     For fiscal 2014 on the whole, there were 3,589 actions in October; 3,277 in November; 3,317 in December; 3,818 in January; 4,247 in February; 5,161 in March; 5,991 in April; 6,133 in May; 6,624 in June; 8,093 in July; 9,793 in August; and 9,760 in September.

     Activity in each of the three autumn months was about 51% of the activity in the average month and only about 35% of the activity in the peak month.

     October, November and December together accounted for only 13% of the activity of the fiscal 2014 year. By contrast, July, August and September accounted for 35%.

     Similar patterns were observed in each of the five fiscal years.

     The lows for each fiscal year were 3,534 in December for fiscal 2013; 2,330 in November for fiscal 2012; 2,868 in November for fiscal 2011; and 3,092 in November for fiscal 2010.

     This year’s figures suggest the trend may be changing. Initial figures for activity in October 2014 appear to show a big increase, with 4,283 contract actions reported as of Oct. 30. Set-Aside Alert will continue to monitor the data to see if the trend continues to shift.

     Meanwhile, small business contracting specialists suggest that the autumn slump may be a good time of year to refresh technologies and training, update marketing plans, network with officials and develop long-term business plans.

     With Republicans favored to win majorities in the House and Senate in the midterm elections on Nov. 4, major changes are likely in the leadership of the small business committees in Congress.

     Small business owners are facing the strong likelihood of two lawmakers recently ranked as “Most Conservative” in the House and Senate, respectively, becoming chairmen of the House and Senate small business panels.

     In the House, Rep. Steve Chabot, R-OH, is the senior GOP committee member most likely next in line for the chairmanship of the House Small Business Committee, while in the Senate, Sen. James Risch, R-ID, is the likely next chairman of the Senate Small Business and Entrepreneurship Committee.

     Coincidentally, the National Journal recently ranked Chabot as the #1 “Most Conservative” lawmaker in the House and Risch as the #1 “Most Conservative” lawmaker in the Senate in February 2014, based on votes in 2013.

     Chabot voted against the Ryan-Murray bipartisan budget agreement in 2013, among other votes.

     Risch’s voting record was judged by the National Journal to be more conservative than those of Minority Leader Sen. Mitch McConnell, R-KY (ranked #25) and of Tea Party leaders Sen. Ted Cruz, R-TX (#4), Sen. Rand Paul, R-KY (#19) and Sen. Marco Rubio, R-FL (#17).

     Both Chabot and Risch are staunch supporters of reducing federal regulation and limiting federal spending.

     In the House, the small business committee chairmanship is available due to the GOP’s self-imposed term-limit rule dating from 1994. It limits chairmanship of a committee to three terms, or six years. That rule will force leadership changes at up to 11 committees.

     That rule would mean the loss of the small business chairmanship for term-limited Rep. Sam Graves, R-MO. During his term, Graves has focused on repealing Obamacare, reducing regulation and on increasing the small business federal contracting goal to 25%, from the current 23%.

     Other senior Republicans on the small business committee, including Reps. Scott Tipton, R-CO, Chris Collins, R-NY, and Richard Hanna, R-NY, also reportedly have expressed interest in the chairmanship.

     Republican leaders are expected to vote on chairmanships in secret ballots in a lame duck session starting Nov. 12.

     In the Senate, if the Republicans gain the majority of seats, that would mean Sen. Maria Cantwell, D-WA, would lose the chairmanship of the Senate small business panel.

     More information: National Journal 2013 vote ratings: http://www.nationaljournal.com/2013-vote-ratings

     Federal contractors have been pushing back against President Obama’s executive order in July requiring them to disclose previous violations of labor laws before obtaining a contract award.

     However, Obama’s executive order actually may end up doing the contractors a bit of a favor.

     That is because the executive order may have taken the steam out of a fast-moving “Wage Theft” campaign in Congress that would have barred outright federal contractors with previous labor violations from receiving new contracts for at least a year.

     The president issued the order in July just as the anti-wage-theft campaign was gaining momentum in federal agency appropriations bills. The floor amendment written by Rep. Keith Ellison, D-MN, with bipartisan support and backing from labor groups, would ban federal contractors with previous labor law violations from any new contracts from the affected agency in each spending bill.

     As of early July, the Ellison amendment had been approved by the House in three appropriations bills for fiscal 2015: Defense, Transportation-Housing, and Energy and Water. Support had been growing in the summer months and included at least 25 House Republicans.

     Contractors were vigorously opposed to that proposal, which they referred to as an “automatic debarment” because it disallowed any appropriations for the fiscal year for that agency to be applied to contracts for companies with labor violations.

     So, by comparison, the president’s order, released in late July, may appear to be less onerous.

     The president’s order requires companies to disclose any violations of 14 labor laws for the previous three years before they can get a federal contract.

     It applies to federal contracts valued at $500,000 or more, and will take effect in phases in 2016.

     Under the executive order, federal agencies will evaluate the violations to determine if they are serious enough to warrant suspensions or debarments.

     The goal of the order is to make it easier for federal agencies to determine whether vendors are complying with federal and state laws addressing wages and hours, safety and health, collective bargaining, family and medical leave and civil rights protections, according to a White House Fact Sheet.

     Nearly 30% of the top violators of federal wage and safety laws are current federal contractors, according to a 2013 report from the Senate Health, Education, Labor and Pensions Committee.

     “Our tax dollars shouldn’t go to companies that violate workplace laws,” Obama said.

     The White House said it would issue guidance to agencies on how to evaluate whether specific violations should bar a firm from receiving a federal contract.

     “Contracting officers will take into account only the most egregious violations, and each agency will designate a senior official as a Labor Compliance Advisor to provide consistent guidance on whether contractors’ actions rise to the level of a lack of integrity or business ethics,” the White House Fact Sheet states.

     The government estimates that the “overwhelming majority” of the 24,000 existing federal contractors have no federal labor law violations in the past three years and would not be affected by the order.

     Supporters say it’s important to hold federal contractors accountable for breaking labor laws. But contractors are fighting back.

     Geoff Burr, vice president of government for Associated Builders and Contractors, recently told The Hill newspaper that he believes the order threatens due process rights and that he and other contractors “are prepared to fight the order in the courts and in Congress.”

     “The executive order imposes multiple new obligations on government contractors and greatly increases the risks that such contractors will confront,” according to Littler Mendelson law firm.

     At the same time, Ellison’s campaign also was inspired in part by the report from the Senate committee. That report also listed 49 contractors with multiple labor law violations.

     Ellison’s amendment targets violators of the Fair Labor Standards Act (FLSA) covering wages and hours.

     “Contractors pocket taxpayer money and then commit wage theft by denying workers overtime pay or forcing them to work off the clock,” Ellison said in a statement. “A recent National Employment Law Project survey found that 21% of federal contract workers surveyed were not paid overtime and 11% have been forced to work ‘off the clock.’”

     Contractor groups worry that the Ellison amendment is too broad in its scope and infringes upon their dueprocess rights.

     A coalition led by the Professional Services Council sounded an alarm about the potential devastating effects of the amendment on affected contractors, both large and small.

     The amendment could serve as an “automatic, de-facto, multi-year debarment” that circumvents the existing contractor suspension and debarment procedures in government, the council contended.

     “The effect is so deleterious to contractors,” Alan Chvotkin, executive vice president of the council, told Set-Aside Alert. “We view this effort as being designed to punish contractors, even for past behaviors that have been rectified and corrected.”

     The Ellison amendment would have severe impacts on affected contractors, large or small, barring them from receiving any funding from the affected agencies. “There is no exemption for small businesses,” Chvotkin said.

     Furthermore, it applies whether the FLSA violation was a “mistake” or a deliberate pattern of action, Chvotkin said.

     “We want to address wage-theft violations,” Chvotkin said. “But we think this goes too far.”

     The council joined with other organizations in the Acquisition Reform Working Group in writing a letter to members of Congress on July 9 opposing the amendment.

     The Ellison amendment refers to “Prohibition of Funds for Contractors that have Dispositions related to the FLSA,” according to an analysis by Littler Mendelson PC.

     It states: “None of the funds made available in this Act may be used to enter into a contract with any person whose disclosures of a proceeding with a disposition listed in section 2313(c)(1) of title 41, U.S. Code, in the Federal Awardee Performance and Integrity Information System (FAPIS) include the term ``Fair Labor Standards Act.''

     The affected contractors are those who have had certain criminal, civil or administrative dispositions, or decisions, regarding FLSA violations.

     The dispositions could be criminal convictions, or findings of fault and liability in a civil proceeding or administrative proceeding that resulted in financial penalties at certain levels.

     Or it could be a consent agreement or settlement with an acknowledgement of fault that “could have” led to the same levels of penalties or to a criminal conviction.

     Under the “could have” standards, “contractors would be severely and negatively impacted for any FLSA investigation even if there is ultimately no finding of fault or liability,” the council claims.

     The council also predicted the amendment is likely to lead to additional litigation regarding alleged FLSA violations.

     An aide to Ellison said the Labor Department, which oversees FLSA enforcement, provides due process to contractors. In addition, he said there was no reason to exempt any contractors: “In our experience, if you have FLSA violations, it’s usually not an honest mistake.”

     The Ellison amendment apparently won’t be considered again in the House for at least a few weeks. Congress in September passed a continuing resolution to fund the government through Dec. 11. More information:
White House Fact Sheet: http://goo.gl/6bpfih
Senate committee report: http://goo.gl/PhbEKD
PSC/ARWG letter: http://goo.gl/p37FFw
Language of the amendment: Littler Mendelson PC analysis http://goo.gl/wtbiHz

    The effort to extend sole-source set-asides to the Small Business Administration’s program for women-owned small businesses is getting an extra boost with the support of the new SBA Administrator Maria Contreras-Sweet.

     “Another important tool for federal agencies is sole-source authority. I'm encouraging Congress to give federal agencies this tool to level the playing field for women-owned businesses,” Contreras-Sweet said at an event at the Center for American Progress on June 10.

     Her support is timely because the Senate soon will be considering a bill that allows registered participants in the SBA’s Women-Owned Small Business (WOSB) program to receive sole-source contracts.

     The House recently approved a similar amendment submitted by Rep. Jackie Speier, D-CA, in the fiscal 2015 national defense authorization legislation.

     The Senate bill was introduced last week by Sen. Jeanne Shaheen, D-NH.

     The push for sole-sourcing highlights some of the recent challenges faced by the SBA’s WOSB program. The program was initiated in 2011 after a decade-long campaign, with the goal of assisting women-owned small firms in industries in which they are underrepresented. That currently consists of 83 industries. In fiscal 2013, Congress lifted caps on awards to WOSBs in several of those industries.

     While there currently are 23,000 registered WOSBs in the SBA program, those women-owned companies won only $100 million in federal contracts through the program in fiscal 2013, according to SBA spokeswoman Tiffani Clements.

     Total SBA WOSB contract awards to date equal $225 million, she said.

     But those numbers alone do not tell the whole story. While the SBA’s WOSB program is growing rapidly, there are many women-owned companies that are winning federal contracts awarded separately from the SBA WOSB program.

     According to the White House Small Business Dashboard, a dynamic display of frequently-updated data, women-owned small businesses won $15.4 billion out of $356 billion in eligible contracts in fiscal 2013, or a 4.3% share. The goal is 5%.

     There also is the broader pool of about 55,000 women-owned firms, large and small, who won $20 billion in federal contract prime awards out of a total of $462 billion in such awards in fiscal 2013, according to USASpending.gov and the Federal Procurement Data System. That also was 4.3% of the total..

     Those award figures together suggest about $4.6 billion won by women-owned vendors that were “other than small” in fiscal 2013.

     While the SBA WOSB program was established to create set-asides for women-owned vendors to give them a leg up on contracts, there have been difficulties for agencies in meeting the preconditions needed for a WOSB competitive set-aside to be created, according to advocates. One of those preconditions is to identify two or more women-owned small businesses that are capable of doing the work.

     Allowing non-competitive sole-sourcing for the SBA WOSBs would address that problem, and would put the SBA WOSB program on par with the other SBA small business programs that have sole-sourcing and set-asides, including programs for firms that are 8(a) certified, HUBZone or service-disabled veteran-owned (SDVOSBs).

     “Currently, agencies must find multiple women-owned small businesses interested and capable of competing for a contract before the WOSB program can be used. Sole-source authority removes this burden, making it easier for agencies to award contracts to women through the program. All other small business contracting programs have this ability, so making this change is about fairness,” the Women Impacting Public Policy (WIPP) group said in a recent statement.

     The amount of prime contracts awarded through sole-sourcing currently is substantial.

     “Of the $50 billion set aside for small businesses in fiscal 2013, 16% ($7.9 billion) was awarded through sole-source contracts,” Clements, the SBA spokeswoman, wrote to Set-Aside Alert in an email.

     “That is an advantage for the other programs that the women-owned firms do not have,” Anne Sullivan, government relations manager for WIPP, told Set-Aside Alert. “It is an uneven playing field.”

     Set-Aside Alert’s own analysis of data from USASpending.gov also uncovered gaps in noncompetitive contracts awarded to women-owned firms vs. other groups.

     Here is what we found:

• Women-owned firms (large and small) won $4 billion in non-competed contracts in fiscal 2013, which was 20% of their total contracts. About 2,100 of the women-owned firms also are 8(a)s, among other overlaps.
• 8(a) firms won $8.9 billion noncompetitively, which was 40% of total 8(a) contracts that year.
• Native-American-owned firms won $3.8 billion noncompetitively (primarily through 8(a) and HUBZone programs), which was 40% of their total.
• HUBZone firms won $1.1 billion noncompetitively, which was 17% of their total.
• and SDVOSBs (service-disabled veteran-owned small businesses) won $1.9 billion noncompetitively, which was 14% of their total.

    The Small Business Administration is expected to release its official Procurement Scorecard for fiscal 2013 within days--and it is likely to show that “SDVOSB” contract spending attained the government’s 3% goal.

     But interpreting the annual small business goal achievement report may be more difficult this year.

     That’s because, for the first time, the government’s new dynamic data flow displays recently made it evident that small business contracting goals may be met at a point in time, then later lost.

     That is what happened with the fiscal 2012 goal achievement for contracting with SDVOSBs (service-disabled veteran-owned small businesses), according to Set-Aside Alert’s analysis of the SBA’s scorecard and the White House’s Small Business Dashboard on Data.gov. The dashboard is frequently updated with new data.

     In July 2013, the SBA released its official scorecard showing that the SDVOSB percentage of federal contract spending for fiscal 2012 was 3.03%, exceeding the 3% goal for the first time.

     Veterans groups and media outlets cheered, with one publication featuring a huge “3%!” on its cover with colorful confetti.

     But the achievement began to slip as additional data came in, according to the dashboard. Within several months, SDVOSB achievement dipped below 3% on the dashboard.

     As of July 8, the dashboard was reporting 2.93% goal achievement for SDVOSB contracting in fiscal 2012.

     The episode potentially could repeat itself this year.

     Set-Aside Alert reported in late February that the dashboard showed SDVOSBs exceeding the 3% goal for fiscal 2013.

     As of July 7, the dashboard was reporting that SDVOSB contracting comprised 3.39% of eligible contracts in fiscal 2013.

     However, considering what happened last year, when additional data apparently resulted in SDVOSB achievement dropping below the goal at a later date, the enthusiasm about goal attainment may be tempered this year.

     The experience of SDVOSBs in first attaining the goal, and then dropping back below it, has affected some expectations for this year’s SBA scorecard, Scott Dennison, executive director of the National Veterans Small Business Coalition, told Set-Aside Alert.

     “The SDVOSBs will be happy, but it won’t be fireworks,” Denniston said.

     In addition to the uncertainty about whether the achievement will hold up over time, there also is ongoing discouragement about the federal agencies that have not met the SDVOSB goal, he said.

     “There is frustration that it is taking so long to get to 3%,” Denniston said. “It’s been years since that goal was set.”

     “There’s been no real change in the status quo,” Joseph Whitcomb, contracting attorney and a service-disabled veteran. “The problem is there is no real penalty for not hitting the goal.”

     SBA officials said the fiscal 2012 scorecard was based on data collected from the Federal Procurement Data System (FPDS) as of March 15, 2013. There are no plans to revise the fiscal 2012 scorecard to reflect the change in SDVOSB data since that time, Tiffani Clements, SBA spokeswoman, told Set-Aside Alert.

     Meanwhile, the dashboard is updated frequently with new FPDS data. Agencies also may change historical information “if the details of a contract have changed,” the dashboard states.

     The data flow issues most likely have existed for years, but until recently would not have been easily recognized because there was no publicly-available display of the dynamic data. The Obama administration created Data.gov and the small business online dashboard in the last four years.

     Previously, a data analyst would have had to download and analyze the data to observe that goals might be hit but later rolled back.

     In theory, with dynamic data, a goal could be met for the annual scorecard, then later lost, and then possibly regained. Or, the government may fall short, then attain the goal later.

     Either way, the meaning of the annual scorecard may alter if new spending data continues to flow in, raising or lowering achievement many months after the fiscal year closes. And goal achievement may diminish in impact if it is seen as fluctuating over time.

     The data inflow issues potentially also could affect achievement of the government’s overall 23% goal for small business contracting.

     That goal also is expected to be met for fiscal 2013. As of July 7, the dashboard was reporting achievement of 23.43%.

     Set-Aside Alert will be tracking whether that level of achievement will hold up over time.

More information: SBA Procurement Scorecards: http://www.sba.gov/content/small-business-procurement-scorecards-0
Small Business Dashboard http://smallbusiness.data.gov/

    A new and independent report commissioned by the Small Business Administration’s Office of Advocacy advises a more nuanced approach in setting goals for federal small business contracting.

     The new approach should take into account the large disparities that exist in small business federal contracting by industry, the report recommends.

     For example, manufacturing made up about $197 billion in federal contracts in fiscal 2012, about 40% of all federal procurement. But the small business share was only $23 billion, or 12%, the report said. That is far short of the government’s overall 23% goal.

     Other industries in which small business is lagging in federal contracting are finance and insurance, 2.4%; utilities, 6%; management of companies and enterprises, 10%; and transportation and warehousing, 18%.

     On the other hand, small firms scored high in construction, winning about $16 billion (45%) in the $35 billion federal construction contracting industry.

     Small vendors also did well in federal contracting for agriculture, forestry, fishing and hunting, in which small firms won 70% of the contract dollars; arts, entertainment and recreation, 69%; mining, quarrying, and oil & gas extraction, 42%; retail trade, 41%; real estate rental and leasing, 32%; and health care and social assistance, 32%.

     Of the largest industry sectors in federal contracting, small firms did fairly well in Professional, Scientific & Technical Services, with a 23% share; Administration and Support, Waste Management and Remediation, 21%; and Wholesale Trade, 28%.

     The report was written by Henry Beale, principal economist of Microeconomic Applications Inc. in Washington. While the SBA and Pentagon provided input, the report was developed independently, without seeking or obtaining clearance from those agencies.

     The 103-page report was produced to comply with a provision of the National Defense Authorization Act of fiscal 2013.

     The author cautions that goal-setting for small business procurement is complex.

     Procurement goals are defined in both conceptual terms, as “maximum practicable opportunity,” and in quantitative terms (23% goal), and “the two definitions often do not coincide,” the report said. A single goal does not take into account the great variations in different industries.

     Furthermore, small business procurement will tend to rise just by raising the size standards; for that reason, the author recommends the SBA make no changes to size standards unless “changes are required to reflect market conditions.”

     The government’s establishment of an overall 23% goal is problematic, the author believes: “The government-wide small-business procurement goal was set and raised without apparent consideration of these complexities,” he wrote.

     But change could be on the way. According to the author, SBA has developed an “innovative methodology for estimating agency procurement goals based on breaking down agency procurement by industry, which addresses key issues.”

     Meanwhile, the author recommends not raising the overall 23% goal at this time. “An increase in the government-wide goal should not be considered until the current goal has been achieved more than once,” the author wrote.

     The House recently approved an amendment to the defense authorization bill to raise the small business goal to 25%.

     Overall, the report found:

• federal procurement is highly concentrated in a few industries, and the small business procurement rate is relatively low in some of these industries.
• Some industries with very low small-business procurement rates nonetheless have many small firms registered in those industries in SAM.gov.
• The most serious underutilization of small businesses is... “the relatively low levels of dollars awarded to small contractors.”
• While veteran-owned small businesses have above-average SAM registration rates in Transportation and Housing and in Information; those firms have below-average procurement rates in those industries.
• Similarly, while service-disabled veteran-owned small businesses have above-average SAM registration rates in Wholesale Trade and in Information, they have below-average procurement rates in these industries.

    While the numbers still are not official, the Obama Administration appears nearly certain to meet three out of five of its small business contracting goals for fiscal 2013, despite the deep budget cuts of sequestration.

     The milestones likely to be reached are the 23% goal for overall small business contracting, 5% goal for small disadvantaged contracting and the 3% goal for contracting with service-disabled veteran-owned small businesses (SDVOSBs), according to the White House’s online Small Business Dashboard, as of May 7.

     Once the numbers are made official, it would be the first time the governmentwide 23% goal has been reached since at least fiscal 2005. It also would be the first time the SDVOSB goal has been attained since the program was established in 2003, according to the dashboard.

     Those results are surprising in light of the estimated 11% cut in federal contracting dollars in fiscal 2013, according to Kevin Plexico, vice president of Deltek Inc. market research firm.

     “Given the economic challenges of late and the budget cuts, agencies have been under increasing pressure from the Obama administration to ensure that the impact on small businesses is minimized,” Plexico wrote in a recent column. “In response, they seem to have increased their efforts to maximize their contracting with small businesses.”

     The amount of eligible dollars for small businesses shrunk from $406 billion in fiscal 2012 to $356 billion in fiscal 2013, a 12% drop, the dashboard shows. While percentages going to small vendors rose, the total value of the awards to small businesses decreased from $90 billion in fiscal 2012 to $83 billion in fiscal 2013.

     In addition to the government meeting the overall 23% goal, 14 of the 18 largest agencies met their negotiated small business goal, which varied from 7% to 54%. The agencies with the highest percentages were Interior, Agriculture, Transportation, and EPA.

     Agencies that fell short included the Energy and Defense departments.

     Also surprising is the strong expansion trend for SDVOSBs, the dashboards for recent years indicate.

     The percentage of federal contracts going to SDVOSBs has more than doubled since fiscal 2008, when it was 1.4%, increasing to 3.38% in fiscal 2013.

     At the same time, the dollar value of awards to SDVOSBs nearly doubled during the same period, from $6.5 billion in fiscal 2008 to $12 billion in fiscal 2013, rising every year.

     During the same period, the number of large federal agencies meeting the SDVOSB goal increase dramatically.

     In fiscal 2008, only three of the 18 largest agencies met the 3% goal for SDVOSB contracting: Veterans Affairs, with 13%; Labor Department, 4%; and EPA, 4%. The VA and the EPA are the only large federal agencies that have met the SDVOSB goal each year for the past six years.

     By fiscal 2013, 12 out of the 18 largest agencies met the SDVOSB goal.

     The six large agencies that did not meet the SDVOSB goal were Energy, Education, NASA, Health & Human Services, Justice, Defense and Agriculture.

     While the government did not reach the 5% goal for contracting with women-owned small businesses (WOSBs), 13 of the 18 largest federal agencies met that benchmark in fiscal 2013, the dashboard stated.

     The five large agencies that did not meet the benchmark for women-owned small businesses were the Defense, Energy, Veterans Affairs, NASA and Justice departments.

     The large agencies that met the WOSB goal and had the highest proportion of women-owned contracting were the Commerce, HUD, Interior, Transportation and Treasury departments, in that order.

     Not all the dashboard news was good for small businesses.

     The government achieved only 1.75% in HUBZone small business contracting, falling short of the 3% HUBZone goal. (Editor’s note: For more details on HUBZones, see Set-Aside Alert issue of April 18).

     Only six of the largest 18 agencies attained their HUBZone goal in fiscal 2013: Transportation, Interior, Treasury, Agriculture, Homeland Security and Labor departments, the dashboard indicated.

     The dashboard is an online system that displays the latest federal procurement data, which is updated frequently. The fiscal 2013 is presumed to be more than 90% complete to date. The official figures for the 2013 fiscal year are expected to be released shortly by the Small Business Administration.

More information:
White House’s Small Business Dashboard http://smallbusiness.data.gov/
Kevin Plexico column http://goo.gl/Pq0qQw

     The HUBZone program has been struggling for a while now, and the latest data suggest the hard times may be lingering.

     After peaking five years ago, the Small Business Administration’s HUBZone program has been falling further behind in meeting its goals each year. Awards have fallen for four years in a row.

     A Set-Aside Alert exclusive survey of 370 HUBZone vendors shows many signs of discontent: “Costly waste of time” and “made to fail” were among the many negative comments received about the program.

     But there are a few bright spots, and the HUBZone firms are not giving up yet: three-quarters of the respondents planned to renew their certifications for another three years.

     The program was established by Congress in 1998 to help lift impoverished geographic areas into prosperity, with tools including set-asides for federal work. Certified HUBZone firms must be located in a designated zone and 35% of their employees must live in the zone.

     From a high of $12 billion in federal contracts to HUBZone firms in fiscal 2009, awards have dropped each year since then, totaling about $6.2 billion for fiscal 2013. That figure was obtained on April 15 from the White House’s Small Business Dashboard, a dynamic database updated frequently. Official statistics will be announced soon.

     Correspondingly, the dashboard reports that the percentage of federal contracts going to HUBZone firms peaked at 2.71% in fiscal 2009 and has fallen each year, down to 1.75% in fiscal 2013. The goal is 3%.

     Set-Aside Alert’s survey of the 370 HUBZone-certified firms points to some specific areas of dissatisfaction. For example, 68% of the respondents reported they had won no federal contracts yet.

     The lack of work was not due to inexperience, as 65% of those surveyed said they had been in the HUBZone program for three years or longer.

     Many HUBZone vendors still hope for a rebound: While 56% of the HUBZone companies surveyed said they are not optimistic about HUBZones, 75% plan to renew their certifications when they expire.

     Asked what the greatest problem was for HUBZones, the largest number of respondents-- 67%--cited a lack of HUBZone set-asides to bid on. The second most difficult was finding federal opportunities, named by 44%.

     Preliminary data collected by Set-Aside Alert from FBO.gov seems to support those concerns.

     According to the website, the number of HUBZone set-asides and references to such set-asides has dropped sharply from a peak of 2,402 in fiscal 2009, to less than half that number in fiscal 2013.

     The number fell to 2,288 in fiscal 2010; 1,336 in fiscal 2011; 1,034 in fiscal 2012 and 1,037 in fiscal 2013, according to FBO.gov.

     That data includes solicitations for HUBZone set-asides as well as modifications and other notices about such set-asides. Even so, the overall trend is steeply downward.

     During the same period, references to generic small business set-asides increased from 41,099 in fiscal 2009 to 48,529 in fiscal 2013, according to FBO.gov.

     References to set-asides for 8(a) firms and to companies owned by service-disabled veterans increased from approximately 4,000 a year to 5,600 per year, combined, during the same period.

     In addition to coping with apparently fewer set-asides, HUBZones also took a major hit with the release of the 2010 Census, which caused many HUBZone geographic areas to be disqualified from certification as they flourished economically. From about 7,600 HUBZone firms in April 2010, the number of firms dropped to 5,600 in January 2013, according to a December 2013 report from the Congressional Research Service.

     There has been a partial rebound since then, with 5,799 active HUBZone firms as of December 2013, the report said.

     But the threat of ongoing decertifications due to HUBZone geographic areas becoming ineligible is substantial. The HUBZone Contractors National Council says about 1,250 of the 13,000 HUBZone-eligible census tracts will become ineligible in 2015.

     “The HUBZone maps are shrinking--which in one sense is a measure of the program’s success,” Mark Crowley, executive director of HCNC, told Set-Aside Alert. “But at the same time, each time the map shrinks, the program has to struggle to regroup and to maintain a viable portfolio to meet the needs.”

Are HUBZone awards diminishing because of a “chicken and egg” situation?

     But are HUBZone awards diminishing because there are fewer HUBZone firms able to bid on specific types of work, or because there are too few HUBZone set-asides? The answer is probably both.

     It is a “chicken and egg” situation,” Steven Koprince, government contracts attorney, told Set-Aside Alert. As HUBZone companies leave the program due to census changes or other reasons, federal contracting officers may become more reluctant to set aside contracts for HUBZones, possibly causing more HUBZone contractors to become discouraged and leave, he said.

     “The government’s inability to reach the HUBZone goals suggests it is not finding enough HUBZone firms to do the work,” Koprince said.

     The SBA said contracting officers make the final decisions about whether to create a HUBZone set-aside. “Many factors, including market research results and responses, past performance and history, and goals, go into a decision on whether to set aside a contract,” Tiffani Clements, an SBA spokeswoman, told Set-Aside Alert. “Ultimately, it is up the contracting officer to make the decision in the best interests of the agency,” she said.

     Crowley cautions against thinking the HUBZone program is down and out. For one, there still is a 10% HUBZone price preference on contracts that are not set aside.

     And being a HUBZone “does give you a leg up in subcontracting,” Maria Panichelli, associate with Cohen Seglias law firm, told Set-Aside Alert.

     “We have seen a lot of positive activity,” Crowley said, including upticks in matchmaking and subcontracting. “One HUBZone company owner reported he wore a lapel pin that said ‘HUBZone’ to an event and he was inundated with requests to network on projects.”

     Crowley says some HUBZone vendors do not compete well. “They wait for the phone to ring,” he said.

     Even so, the requirements for employees living in the zone and the “shrinking HUBZone map” make it difficult to be successful as a HUBZone, Crowley said.

     “The regulations have not kept up with the times,” he said.

More information: HCNC website: http://www.hubzonecouncil.org
CRS report: http://www.fas.org/sgp/crs/misc/R41268.pdf
Small Business Dashboard: http://smallbusiness.data.gov

    Would you be surprised to find a federal agency hanging out online with fans of hot rap music artists like Kanye West, Drake and Kendrick Lamar?

     That essentially is what the General Services Administration is doing in its quest to get more innovative.

     The GSA just inked a deal with the founders of the popular Rap Genius rap music annotation website to allow federal agency use of the website’s extension, News Genius, to enable public annotation of federal government documents--including documents for small business contractors.

     And that is just one of the new initiatives that federal officials have launched in recent weeks offering innovative new resources for small federal contractors, small businesses and entrepreneurs.

     The federal officials are aiming to foster new ways of interacting with those communities, involving more information sharing and feedback.

     Agencies including the GSA, Small Business Administration and the Defense Intelligence Agency have debuted several new online applications intended to ease the path for small vendors seeking government work and also to build more cohesive and effective interaction between agencies and small and prospective contractors.

     Here are some of the initiatives highlighted in a recent Social Government forum hosted by the GSA of nearly 100 federal executives focused on digital innovation for entrepreneurs and small businesses:

• The SBA hosted its first live Twitter chat for young entrepreneurs in February that reached more than 1 million participants.
• The GSA announced the first fruit of its new “18F” program to generate innovation in government: the new application FBOpen (https://fbopen.gsa.gov/) was created to help small contractors search and find federal opportunities by keyword.
• The Defense Intelligence Agency reported on its new Needipedia project, in which it publicly invites white papers from any technology company that can meet its needs as described on the Needipedia website (see link below).
• The GSA announced its new partnership with Rap Genius online website to create News Genius, a platform for public crowdsourcing of annotations, images and comments on federal documents. Among the first documents the GSA uploaded onto the platform and made available for annotation were on the GSA’s mentor-protégé program.

     “These are tools to help small businesses look for work in the U.S. government,” Adam Neufeld, chief of staff at the GSA, said at the social government event.

     The White House and GSA are working on a very broad innovation agenda, including open government, open source software, APIs, open data, big data, data visualization, cloud computing, gitHUB, “IFTTT,” useability, mobility and the Internet of Things.

     Programs for small businesses, vendors and entrepreneurs, a subset of the whole, are proliferating.

SBA’s live Twitter chat

     For example, the SBA held its first live Twitter chat with young entrepreneurs on Feb. 19 with a huge turnout. Successful entrepreneurs, business leaaders, “SCORE” mentors and other specialists were on hand to help out.

     “It went really well. We had a reach of more than 1 million,” said Brittany Borg, entrepreneurship education coordinator with the SBA, said at the forum.

     Having that many people interacting at once posed some challenges. “Because the conversation was moving so quickly, the new tweets moved straight to the bottom of the feed,” Borg said.

     Another challenge for Borg was getting over the fear of being questioned on literally hundreds of topics, in real-time, in a highly public forum--but she got over it.

     “I realized that if I do not have the answer, then I engage, talk to the people, and tell them I will find out who has the answer and get back to them. We let them know we are real people,” Borg said.

     The chat was so successful that the SBA is planning to do more of them, she added.

GSA’s search engine

     The GSA last month introduced its “18F” innovation incubator and announced its first release--the FBOpen search engine tool to help small federal contractors find more opportunities from federal notices, as an alternative to FBO.gov.

     FBOpen consists of an open API server, data import tools and sample applications “to help small businesses search for opportunities to work with the U.S. government,” states the FBOpen site on gitHUB (https://github.com/18F/fbopen). GitHUB is an online exchange where software developers share information.

     The advantage of FBOpen is that it is easier to use simple keywords to find specific opportunities than it is on FBO.gov. For example, a user can enter “touchscreen” into FBOpen to find opportunities involving touchscreen technology.

DIA’s Needipedia

     Seeking to stay on the cutting edge of new technology, the DIA’s Office of Innovation last fall formed the Needipedia website to invite white papers on its most current wish list of needs.

     The Needipedia website (http://www.dia.mil/Business/Needipedia.aspx) currently lists more than 15 needs, including needs for better analysis, contingency response and human intelligence development.

     Innovators are invited to submit white paper responses, and the agency has held a number of meetings with the submitters to follow up. Ultimately, the goal is to use the white papers as the basis for contracts to fulfill the stated needs, said Chase Fahrner, small business specialist at the DIA.

     “If it’s a good idea, we’ll want you to submit a proposal,” Fahrner said. “Instead of using the normal acquisition processes, the DIA’s innovation office is trying to switch it around.”

GSA’s News Genius

     The GSA is now a verified user of the Rap Genius’ spinoff News Genius, which was created to allow for public annotation of government-related documents, including regulations, speeches and news announcements (http://goo.gl/zTjOFX).

     The GSA, U.S. Geological Survey and several other agencies are experimenting with the innovative crowdsourcing platform, which is open to the public.

     Federal specialists, outside experts and the public are allowed to annotate federal documents to help explain, clarify and further elucidate the meaning. For example, on a USGS document on amphibians, users have added pop-up images of the creatures being discussed (http://goo.gl/Bn0KHo).

     The GSA posted a document about its Mentor-Protege program which, to date, has 41 annotations that are accessed through pop-up links. The goal is to enhance open government, advance plain language and bring more clarity and ease of understanding to government regulations and communications, GSA officials said.

     “We think this is the next big thing for government,” Justin Herman, GSA’s digital government lead, said about News Genius at the recent forum.

    Federal government contracting communities are active and appear to be growing on Twitter and other social media, presenting new opportunities for small business vendors to interact and obtain key information online.

     Twitter currently is one of the fastest-growing social platforms. The company reported 241 million monthly active users in February 2014, up 76% from 138 million in March 2012.

     Nearly 1,000 federal agencies are using Twitter as well, according to Andrew Einhorn, co-founder of the OhMyGov government social media analytics software platform. There currently are 984 federal Twitter accounts, and the number is rising almost daily, he told Set-Aside Alert in an interview.

     “Definitely, Twitter has become more popular with federal agencies,” Einhorn said. “There is growth in use, in the number of postings and in the amount of engagement.”

     There also appears to be increasing federal contractor participation on Twitter, based on anecdotal evidence, Einhorn added, though there are no analytics yet available on that specific group.

     “The contractors are using Twitter for listening and monitoring for opportunities, looking for partners and gathering business intelligence,” Einhorn said.

     Even so, there is a learning curve for Twitter and other social media, and some vendors may be hanging back to avoid making a misstep. But at the same time, they may be missing significant benefits by not joining in, he added.

     About 180 of the larger federal agency Twitter accounts are listed here (http://goo.gl/lK623r). But those are just the tip of the iceberg.

     The General Services Administration alone has 36 Twitter accounts (http://goo.gl/QOFzTm). The Small Business Administration has at least 12. Even a relatively small agency, the US Geological Survey, has 65 Twitter accounts (http://goo.gl/Mn2GmD).

     The government’s use of Twitter has been expanding along with its uses of Facebook, LinkedIn, GooglePlus and other social media, along with websites and mobile applications and other online tools.

     They all are among digital government initiatives of the last several years. The U.S. now ranks sixth in the world for digital government performance, according to a February study by Accenture (http://goo.gl/YDwDBS).

     A 2013 survey of 3,900 federal decision-makers and influences by Market Connections Inc. explored the government’s use of social media.

     The Federal Media & Marketing Study found that 57% of those surveyed listed Facebook among their top social media sites; 46% listed YouTube; 36%, LinkedIn; 33%, GooglePlus (a new entry in 2013), and 16%, Twitter (marketconnectionsinc.com).

     LinkedIn grew most rapidly two and three years ago, from 10% in 2010 nearly doubling to 18% in 2011, then nearly doubling again to 35% in 2012. But LinkedIn’s growth appeared to have leveled off in 2013, rising slightly to 36%. Similar trends occurred with Facebook and LinkedIn, which had little to no growth from 2012 to 2013.

     However, Twitter use grew most rapidly in 2013, from 11% to 16%, Market Connections said in the study. GovLoop usage also grew from 4% to 6%.

     As federal agencies have increasingly moved online, their participation in real-life conferences and travel has fallen, in a possibly related trend, also uncovered in the Market Connections study.

     In the 2013 survey, 41% attended one to three events, down from 52% in the 2011 survey. The percentage of respondents who attended no events rose from 38% in 2011 to 52% in 2013.

     With government agencies getting a larger footprint in social media, many large and small federal contractors, advocates, law firms and small business owners appear to be joining in.

     A recent review of tweets to Set-Aside Alert’s Twitter account showed about 300 incoming tweets per hour related to federal contracting--and that was during the relatively slow midday period. Set-Aside Alert currently follows more than 400 Twitter accounts related to federal contracting, including many run by government agencies and executives, contractor advocacy groups and business owners.

     While no recent public studies have been done specifically on federal contractors and social media, the general trends for small businesses most likely apply, to some degree.

     A recent survey of 998 small and medium-sized businesses found they are aggressively taking advantage of free social media tools.

     The study, released last month by LinkedIn, showed that 81% of small and medium-sized businesses are currently using social media to drive business growth. Of those users, 94% reported they are using social media to meet marketing objectives and 49% said they are using social media for learning, including accessing a network of peers and experts and obtaining insights and best practices (http://goo.gl/60c204).

     The LinkedIn study also found a high correlation between fast growth and social media spending: 73% of the fast-growing companies increased their social media spending in the last year, while only 42% of the non-growing companies did, LinkedIn said.

     Of the fast-growing companies, 90% said social media is effective for branding; 88% said it is effective to generate word-of-mouth publicity; 89% said it is effective for content marketing and 82% said it is effective for lead generation.

     Another study of 1,200 small business owners, published by Manta in August 2013, discovered that 49% of the companies had expanded their use of social media in the last year, while 32% reported no change (http://www.manta.com/media/q1_wellness_index_041613).

     Overall, 33% of the owners spent one to three hours a week on social media, while 10% spent more than 10 hours a week.

     Forty percent of the owners reported a positive return on their social media investment, and 30% said the return was $2,000 or more.

     But that survey and other studies also hint at the fact that effective social media participation, while having the potential to generate positive benefits, also has a learning curve and presents some challenges.

     In the Manta survey, 18% said maintaining an active account on Facebook was the most difficult; while 10% named LinkedIn and 9% listed Twitter as the most difficult.

    Despite sequestration and budget cuts in fiscal 2013, there might a bit of good news coming soon for small federal contractors.

    Fiscal 2013 could be the year that the federal government hit the 23% small business contracting goal for the first time in eight years, according to the latest data on the White House’s Small Business Dashboard. (http://smallbusiness.data.gov/)

    The dashboard is an online system that displays the latest federal procurement data, which is updated frequently. The official figures for the fiscal year won’t be released for several more months by the Small Business Administration.

    The dashboard shows that the Obama administration is likely to have hit the goal for the first time, for fiscal 2013.

    As of Jan. 31, the dashboard reported $82.7 billion in small business federal contract awards for fiscal 2013, which was 23.32% of all eligible contracts.

    The dashboard total for fiscal 2013 represents about 90% of contracts anticipated to be awarded for the year. In Fiscal 2012, the government awarded $89.8 billion in contracts to small businesses, which was 22.25% of the total, according to the SBA’s official tally in July 2013.

    The percentage of federal work going to small vendors has risen from year to year, even though the total value of eligible federal contracts dropped from $405.5 billion in fiscal 2012 to $354.8 billion in fiscal 2013, the dashboard indicated.

    The government on the whole has met the 23% goal only three times in the last 10 years – in fiscal 2003, 2004 and 2005. Many individual agencies, however, have met or exceeded the goal. For example, in fiscal 2012, the SBA procured 71% of its eligible contracts with small businesses; Interior Department, 56%; USDA, 53%; Environmental Protection Agency, 44%, Transportation Department, 44%; and Housing & Urban Development Department, 40%.

    Agencies must report their procurement information for the fiscal year to the Federal Procurement Data System-Next Generation (FPDS-NG) by Jan. 31. The SBA collects a “snapshot” of additional data in February and generally issues a goaling report in July.

    An SBA spokesperson declined to comment on whether the 23% goal is likely to be met for fiscal 2013, based on the dashboard figures.

    On the other hand, the Obama administration’s success in meeting the 3% goal for awards to service-disabled veteran-owned small businesses (SDVOSBs) in fiscal 2012 might be vulnerable to a revision, according to the dashboard.

    Last July, the SBA officially reported that 3.03% of eligible awards went to small firms owned by disabled veterans in fiscal 2012, the first time the goal had been achieved in at least six years. Awards for those companies were $12.6 billion for the year.

    However, on Jan. 31, the dashboard showed that the percentage going to service-disabled veteran-owned small businesses in fiscal 2012 has fallen to 2.93%, with $11.9 billion in awards.

    “FY2012 was the first year that the government-wide SDVOSB percentage exceeded the statutory SDVOSB goal of 3%,” SBA spokesperson Tiffani Clements told Set-Aside Alert in an emailed statement. “FPDS-NG is a dynamic, real-time database. Agency updates to the data, including new actions, modifications, and corrections are made on a regular basis, and these updates could result in changes to the FPDS-NG data.”

    Fiscal 2013 is looking brighter for the SDVOSB firms. As of Jan. 31, the dashboard showed 3.39% of eligible awards going to those firms.

    For the first time in four years, Congress has passed an appropriations bill without threat of a government shutdown and weeks of partisan obstruction. The $1.1 trillion discretionary budget package for fiscal 2014 now goes to President Barack Obama for his signature.

    The Senate approved the massive omnibus spending bill by a vote of 72-26 on Jan. 16. The bipartisan bill was written by Senate Appropriations Chair Sen. Barbara Mikulski, D-MD, and House counterpart Rep. Harold Rogers, R-KY.

    The 1500-page-plus spending agreement to fund all federal departments averts another shutdown and avoids about $28 billion in additional cuts that were to have kicked in this year under continued sequestration. It hikes funding for selected programs such as Head Start, cybersecurity and the FBI, but it also cuts selected programs including the Small Business Administration and tax assistance at the IRS.

    Even so, the new spending bill is about $85 billion below the fiscal 2013 pre-sequestration enacted level and $21 billion below the fiscal 2013 sequestration level, according to a chart distributed by the House appropriations committee. (http://goo.gl/j30fR0) But if sequestration had continued this year, the cuts would have been deeper.

    The bill provides the Defense Department with $572 billion, of which $487 billion is for the base budget and $85 billion is for overseas operations.

    The Pentagon would get $93 billion for procurement and $63 billion for research and development. The administration requested about $7 billion more for each of those accounts.

    Defense operations and maintenance accounts would be set at $160 billion.

    The House Appropriations Committee said in a news release that was $13.6 billion less than the enacted fiscal 2013 pre-sequestration level.

    Also in the bill, the Veterans Affairs Department would receive $63.2 billion, which is $2.3 billion over the fiscal 2013 pre-sequestration enacted level. There are increases for programs to reduce the disability processing backlog, updating information technology and integrating health records with DOD.

    The Homeland Security Department gets funded at $39.3 billion for the year, which is a $336 million reduction from the enacted 2013 pre-sequestration level. There are increases for border patrol, but a reduction for the Transportation Security Administration and for DHS’ new headquarters in the District of Columbia.

    The Small Business Administration’s budget would be $929 million, which is

    $116 million less than its pre-sequester level.

For more details on the budget, look for the next edition of Set-Aside Alert on Jan. 24.

     The Veterans Affairs Department is losing one of its key contractors this month, with a gap in service expected for several days at minimum. The contractor previously supported processing applications for verifications of veteran-owned small firms.

     A recent media report suggested the changeover could lengthen processing times after the experienced vendor left on Dec. 2. The new team was to be named on Dec. 6 and presumably may need time to get up to speed.

     But the VA says it is staffed to fill in the gaps to keep the work flow on schedule.

     According to a recent report from the Washington Business Journal (WBJ), the VA "abruptly" ended a three-year contract with Ardelle Associates of Alexandria, VA on Dec. 2.

     Ardelle had been assisting in processing those applications for the last three years, and its contract had been twice extended. From 10 workers initially, the support grew to 85 workers.

     However, a VA spokeswoman told Set-Aside Alert there was nothing abrupt about the end of the contract.

     "The last extension was scheduled to end on Dec. 2, 2013, which was well known. The program manager had hoped to extend the contract for another couple of weeks to enable a new contract to be put in place before the end of the Ardelle contract. Unfortunately, due to having had two previous extensions, VA was unable to provide another one," VA spokeswoman Josephine Schuda told Set-Aside Alert.

     The VA now is seeking a short-term contract. A solicitation was released in November under an existing blanket purchase agreement, with an award to be made Dec. 6.

     VA officials said they hoped to avoid or at least minimize any delays that might occur as the new support team learns the ropes.

     "The (VA's) Center for Verification and Evaluation is staffed to fill the gap of the week or so lapse between contracts. It will not have a major impact on verification application processing that would cause applications to exceed the 60-day regulatory time frame," Schuda told Set-Aside Alert.

     In addition, the VA is working to ease the way for hiring of experienced workers on the verifications, Tom Leney, VA's executive director of small business programs, told WBJ. He said the names of Ardelle employees were provided to the BPA contracting officer, who will determine if it is appropriate and legal to forward the names to the new contractor.

     It now takes 27 days for initial verification processing, down from 131 days in 2010, WBJ said.

More information: WBJ article http://goo.gl/7dndP7

     Finally, there may be some good news for small contractors on the federal budget.

     For the first time since sequestration became law two years ago, the House has approved a bipartisan budget plan that restores some of the scheduled cutbacks.

     It is not a done deal yet, because there appears to be GOP opposition growing in the Senate. But the House measure won broad support as at least a temporary stop to the intense partisan brinksmanship of the last four years.

     House lawmakers on Dec. 12 voted 333-94 to approve the spending and deficit-reduction blueprint put together by Rep. Paul Ryan, R-WI, and Sen. Patty Murray, D-WA. Sixty-two Republicans and 32 Democrats voted against it.

     The proposed budget would avoid another government shutdown and set spending levels through fiscal 2015.

     The package sets the federal budget at $1.012 trillion for fiscal 2014, with $63 billion in sequester relief for fiscal 2014 and 2015, split evenly between defense and non-defense budgets, according to the National Journal. There is a net deficit reduction of $23 billion over 10 years, obtained through new productivity savings and fees.

     Some policy observers are saying that for a bipartisan budget deal to pass the House with such a large majority could signal a softening of the ongoing partisan gridlock.

     It provides $45 billion in sequester relief in 2014 and $18 billion in sequester relief in 2015, split evenly between defense and non-defense discretionary accounts, according to Federal Times.

     Of those totals, the Defense Department would receive $22 billion in sequester relief in 2014 and $9 billion in 2015, according to Federal Times.

     Also in the deal are requirements for new federal employees to contribute more for their pensions and reductions in future pensions for currently working military officers.

More information: National Journal story: http://www.nationaljournal.com/budget/here-s-what-s-in-the-budget-deal-20131210

    Despite objections from contractors, the government’s push for procurements based on LPTA--lowest price, technically acceptable--criteria appears to be gathering momentum, with billions of dollars in LPTA contracts in the works, according to new research from Market Connections and Centurion Research.

    LPTA has been getting more popular among federal agencies in recent years, primarily at the Defense Department, which included it among several approaches in its Better Buying Initiative.

    But contractors, both large and small, warn that focusing primarily on price is likely to hurt quality and performance, as vendors “race to the bottom” with steep cuts in prices. Small vendors say they are most at risk, because their margins are already so thin.

    However, one consolation for small businesses is that LPTA set-asides appear to be fairly abundant as well.

    Looking ahead, Centurion said it has identified $27.7 billion in LPTA actionable opportunities from a pool of $4.3 trillion in pre-solicitation federal opportunities.

    Of the $27.7 billion, $7.7 billion are anticipated to be small business and socioeconomic category set-asides, the study said. The remaining $20 billion are expected to be full and open competition LPTA contracts. Another $745 billion in the pipeline are “best value” contracts.

    The estimated opportunities include $6.5 billion for DOD USTRANSCOM, $5.6 billion for the Navy, $4.3 billion for the Army, $4.2 billion for Veterans Affairs and $2.1 billion for the Air Force.

    About 56% of the LPTA opportunities are for construction, facilities operations/ maintenance and utilities/housekeeping. Professional and IT services are 22%.

    Centurion and Market Connections also surveyed 360 government acquisition professionals and 375 industry executives about LPTA.

    Respondents from both groups said they believe LPTA procurement use will rise in the next three years: 42% of the federal employees and 59% of the contractors agreed with that assessment.

    Of the federal specialists, 64% were very likely or somewhat likely to issue an LPTA solicitation, while 23% were unsure and 14% were unlikely. The main reason--cited by 46%--was that LPTA saves money in a time of limited budgets.

    Eighty-two percent of the vendors said they would bid on an LPTA contract, and 61% said it was because there were fewer opportunities available.

    At the same time, vendors have strong objections to LPTA.

    “Contractors feel that LPTA stifles their ability to innovate, propose and deliver the best solutions,” the report indicated. Nearly half of contractors (49%) said they felt pressured to offer a lower-price solution that may not be in the government’s best interest; 40% said LPTA made them less innovative and 30% said they had no chance to provide value-added solutions under an LPTA procurement.

    To cope with LPTA, 63% of the contractors said they are responding to the letter of the RFP; 53% are reducing indirect rates; 47% are relying on junior staff; 39% are reducing staff; 33% are freezing or capping salaries; and 26% are reducing salaries.

More information: Market Connections/Centurion survey http://goo.gl/cj1w61

Set-Aside Alert Exclusive Report:

    The Veterans Affairs Department is disputing the recent national news reports alleging that the agency had reclassified more than $1 billion in set-aside contracts meant for service-disabled veterans over the last 10 years. When such contracts are reclassified, contractors who are not disabled veterans become eligible to do the work.

    The actual value of those reclassified contracts was just $20 million, the VA told Set-Aside Alert.

    The $1 billion figure is “not correct,” the VA said in an emailed statement released by VA spokeswoman Genevieve Billia.

    “One billion dollars is grossly overstated. Our research indicates that there were approximately 242 actions worth a total of $20 million combined, for the VA, over the last 10 years,” the VA indicated.

    The allegations of $1 billion in reclassified work were prominently displayed in articles published by the Washington Post, NBC News and other major national news outlets in late August and early September. The articles portrayed the reclassifications as contributing to difficulties for veteran-owned companies seeking to sell to the VA. NBC News got more than 100 “likes” on Facebook for its story.

    The report originated from News21, a student journalism news service that operates at Arizona State University. Through sharing agreements, News21 stories are redistributed by major publications.

    “More than $1 billion in government contracts meant for small businesses owned by disabled veterans have been reclassified over the last 10 years by the Department of Veterans Affairs so that the work—and almost $150 million to date—could be given to non-veteran companies, a News21 analysis shows,” NBC News reported on Aug. 31.

    The stories also asserted that the reclassifications occurred partly as a result of a fraud crackdown that has made it more difficult for veteran business owners to obtain government work.

    “VA crackdown on fraud among applicants for business contracts squeezing out some vets,” the WashingtonPost headline read. “”VA’s fraud crackdown becomes a burden for legit veteran-owned businesses,” NBC News wrote.

    However, the alleged squeeze on veteran contracting at the VA may be much weaker than those headlines suggest.

    According to official government figures, overall VA contracting with service-disabled veterans has been reaching historic highs in recent years and was higher than any other federal agency last year.

    The VA awarded 20.05% of all its contracts to firms owned by service-disabled veterans in fiscal 2010, 18.22% in fiscal 2011 and 19.24% in fiscal 2012, according to Small Business Administration Procurement Scorecards for those years.

    The VA’s purchases from such firms totaled $3.4 billion last year.

    Overall, government-wide contracting with service-disabled veteran-owned small businesses (SDVOSBs) has been peaking as well, reaching the goal of 3% of all awards going to SDVOSBs in fiscal 2012 for the first time in at least seven years.

    For the federal government on the whole, the VA estimates that over the last 10 years, there have been 2,148 set-aside contracts for service-disabled veterans that were reclassified and subsequently not awarded to a service-disabled veteran-owned small businesses (SDVOSBs). Those contracts totaled $346 million, the VA told Set-Aside Alert.

    The VA also is disputing several of News21’s explanations for the alleged $1 billion in reclassifications.

    News21, NBC News and others asserted that the VA’s “more stringent enforcement” of anti-fraud measures is partially the reason for the large number of reclassifications.

    The VA is disputing that explanation, saying that its own data shows that the rate of reclassifications has fallen in recent years.

    The VA said its own data shows that the number of reclassification actions of SDVOSB set-asides, as a percentage of the number of total awards to SDVOSBs, has fallen in recent years, from a height of about 7.1% reclassified in fiscal 2007 to only .9% reclassified in fiscal 2013.

    Overall, that percentage was zero in fiscal 2005 and 2006, 7.1% in fiscal 2007, 4.8% in fiscal 2008, 3.8% in fiscal 2009, 1.4% in fiscal 2010, 1.7% in fiscal 2011, .7% in fiscal 2012 and .9% in fiscal 2013, the VA said.

    “More stringent enforcement is not a reason, and the increasing award data over the last 10 years shows that,” the VA told Set-Aside Alert.

    News21 also claimed that the alleged $1 billion in reclassifications at the VA was partly as a result of a lack of available small businesses owned by service-disabled veterans.

    But the VA was skeptical of that explanation.

    “It is highly unlikely that it would be the lack of eligible SDVOSBs, as the solicitations probably would not have been set aside if the contracting officer did not feel that there were two or more SDVOSBs that would submit proposals,” the VA told Set-Aside Alert.

    Steven Rich, the News21 reporter who wrote the story and is now investigative database editor at the Washington Post, did not respond to a request for comment. Jacqueline Petchel, executive editor of News 21, referred questions to Rich.

    The VA said its own research was based on data from the Federal Procurement Data System and from USASpending.gov.

More information: News21 report: http://goo.gl/XiGl4M
Washington Post report: http://goo.gl/JbGbCZ
NBC News report: http://goo.gl/g6IwY7

    The HUBZone (Historically Underutilized Business Zone) program was created in 1997 to provide government contracting incentives to small firms to establish themselves in places where unemployment is above the norm, to hire employees from areas of high unemployment, and to stimulate capital investment in those areas. The goals are laudable; the execution has fallen short. It’s time to take a look at this program and reengineer it for success.

    When the HUBZone program was created, federal agencies were assigned goals of placing 3% of their contracts with companies certified to be headquartered in designated HUBZones and employing residents of HUBZones. The government’s overall small business contracting goal was increased from 20% to 23% to assure that HUBZones would make their own contribution to the advancement of small business.

    In FY2012, the most recent figures available, HUBZone contracts amounted to 2.01%, down from 2.35% in FY2011. FY2010 was 2.77% and FY2009 was 2.81%. Where are we going here? What is causing the decline of this valuable program?

Historic vs. Annual

    The HUBZone program is intended to revitalize geographic areas that historically have faced elevated unemployment, yet the designation criteria can change annually the areas that qualify. Small business owners take on many risks in establishing and managing a small business. It takes a number of months to apply for and become certified as a HUBZone business. An interested firm faces the risk that a specific geographic area could be decertified a year or two after qualifying, or even while in the process of being certified.

    One would think that an area of historically-high unemployment or low income would require a number of years to recover. If the firms that come into that area to help it improve are successful, they should be rewarded with stability, especially if they have made a significant capital investment in permanent facilities such as factories and warehouses. After all, they took on the task that the government wanted accomplished, and succeeded. Further, if those firms pull up stakes and move their headquarters to another HUBZone, unemployment may return to the place they left.

Too Many Cooks

    Decisions as to whether an area is designated as a HUBZone are vested in the departments of Defense, Housing and Urban Development, Labor and Interior as well as the Census Bureau and the Internal Revenue Service. The Small Business Administration’s role is to meld these stovepipes into a comprehensive mapping tool. Yet each agency does its work and establishes its qualified areas on varying schedules. The HUBZone map tomorrow might look quite different than it did today. One would think that since the U.S. Census is done every ten years, at least that component would be stable, but that is not the case.

Excessive Granularity

    The prior government program, Labor Surplus Areas, used common, well-defined geographic boundaries, namely counties and independent cities. You could see the lines on most any map. But in today’s HUBZone program, most urban area designations are based on census tracts. You won’t find those lines in your local Rand McNally or Mapquest or even local street atlases. Census tracts are as small as 10 blocks. Why on earth must we use this micro-granular approach to area designations?

    Worse yet, this granular approach leads to appearances of arbitrariness, such as for the current HUBZone-designation for K Street NW, a popular location for lobbying firms and law offices in Washington DC. Or for the Southern Tower apartment complex in Alexandria VA, sitting as a HUBZone across the street from DOD’s busy new headquarters. Look for your nearest college campus and chances are good that it may be in a HUBZone.

PO Boxes and Rural Routes

    Despite the granularity noted above, when it comes to rural areas, you may have great difficulty getting qualified. The online mapping tool accepts traditional addresses containing house number, street, city and state. I grew up in a rural area of Northern Illinois. Half of my friends lived on farms and in small villages nearby, and they had rural route addresses. Indian reservations are a key target of the HUBZone program, and yet many tribal companies are thwarted when their headquarters and their employees’ homes are served by rural routes. While there is a provision on the online mapping tool for entering latitude-longitude designations, I am aware of companies well qualified and highly suited for the HUBZone program--even companies that previously have been certified--that are being denied certification or deterred from participation in the HUBZone program due to mapping issues for rural routes.

Call to Action

    It’s time to set this program right so that it can provide the benefits intended. Here is what is needed:
1. Return to designations at the county/independent city level – designations that are easy to understand, assess and evaluate.
2. Certify HUBZone firms for at least five and perhaps ten years, so that a firm is encouraged to apply and get certified, and is rewarded for sticking with the program long enough to establish the benefits in the designated community.
3. Fix the rural route/PO box conundrum.
4. Establish a fixed schedule of when areas are added/removed so that the HUBZone map remains stable and reliable for a reasonable period.

    Despite sequestration--and partly because of it--the forecast for the final quarter of fiscal 2013 appears to show the annual spending surge once again.

    Federal agencies typically spend a third or more of their annual contracting budgets in the final quarter that ends Sept. 30. Many contracts that had faced delays for one reason or another are pushed through to avoid expiration of existing funding.

    As of July 8, the government had reported $234 billion spent on prime contracts for fiscal 2013, USASpending.gov shows. Accounting for not-yet-reported Defense Department (DOD) obligations, it’s probably closer to $300 billion spent. That is about 60% of anticipated total prime contracting this year, with 40% left to go.

    Prime contracts totaled $517 billion in fiscal 2012. That fell from $539 billion a year before. This year’s total is not yet known, but most likely will be around $500 billion or less, due to sequestration.

    The sequester has not only impacted total funding, but also the timing of contracts. The prolonged uncertainty about budgets from October through March delayed many federal contracts until later in the year. Delayed work most likely will contribute to a fourth-quarter rush.

    Most of the pending contracts are in DOD. As of July 8 on USASpending.gov, DOD had reported $137 billion in prime contracts this fiscal year. That amount is 90 days late, suggesting a real-time total closer to $200 billion obligated. With $361 billion tallied for fiscal 2012 and a lower forecast for fiscal 2013, there could be $140 billion or so to be spent by DOD between now and Sept. 30.

    Other fourth-quarter spending forecasts include Health and Human Services, $9 billion; Veterans Affairs, $6 billion; NASA, $5 billion; and Homeland Security, $4 billion.

    Also, the White House’s Small Business Dashboard showed $36 billion in small business contracts for fiscal 2013, as of July 8. That compares with $90 billion in small business contracts for fiscal 2012.

    It’s too early to say how this year’s surge might compare to last year’s. In fiscal 2012, federal agencies awarded more than $138 billion in contracts from July 1 to Sept. 30, an increase from $90 billion in the third quarter, according to Deltek.

     For at least the seventh year in a row, the federal government fell short of meeting its goal of 23% of contracts awarded to small businesses. But it did better for service-disabled veteran-owned small businesses.

     Federal agencies awarded 22.25% of contracts to small vendors in fiscal 2012, totaling $89.9 billion in sales, the Small Business Administration announced in its annual procurement scorecard. That was an improvement over the fiscal 2011 total of 21.65%.

     The government has not met the 23% goal set by Congress since at least fiscal 2006.

     The results were brighter for service-disabled veteran-owned businesses.

     For the first time in at least eight years, the federal government exceeded its 3% goal for procurements from firms owned by service-disabled veterans. The percentage going to such firms was 3.03% in fiscal 2012, totaling $12.3 billion, the SBA said.

     In addition, awards to small disadvantaged firms totaled 8%, exceeding the 5% goal.

     Women-owned small businesses won 4% of federal contracts, which was short of the 5% goal, and HUBZone vendors were awarded 2.01%, failing to meet the 3% goal.

     Federal agencies awarding a high percentage of contracts to small businesses included the SBA, 71%; DOI, 56%; USDA, 53%; DOT, 45%; and HUD, 40%.

     On the opposite end, the agencies with relatively low percentages of awards to small firms included DOE, 5%; AID, 12%; NSF, 15%; Education, 20%; OPM, 20% and DOD, 20%.

(This breaking news story will be published in the July 12 edition of Set-Aside Alert.)

     The General Services Administration’s multiple-award schedules were in the headlines recently, and not in a good way.

     In response to a House committee investigation, the GSA said it owed $3 million to 1,281 small contractors it had removed from schedules due to lack of sales.

     The payments were due under the GSA’s minimum guaranteed payment clause, Federal Acquisition Service Commissioner Thomas Sharpe wrote.

     “It became clear that GSA was not adhering to its own contracts and had not paid the required termination costs to small businesses for at least five years,” Rep. Sam Graves, R-MO, chair of the House Small Business Committee, wrote in a news release on May 16.

     It was bad publicity for GSA, for sure. But something seemed missing; a fuller explanation was needed. Let’s take a closer look.

     The payments owed arose from schedules contract clause I-FSS-106 offering up to $2,500 to contractors cancelled for lack of sales.

     If small businesses were underpaid by $2,500 each, and this went on for five years, why was no one screaming about it?

     “I did not hear a single complaint about it,” said a longtime specialist in the field.

     “I am not sure the contractors realized they were owed money. Otherwise, they would have been yelling,” Scott Orbach, president of EZGSA consulting firm, told Set-Aside Alert.

     As Orbach explained, small business owners work hard to gain GSA schedules contracts, and most strive diligently to make sales. But if they fail to sell anything, they want to move on to the next thing, and might not realize they are owed money in the fine print, he said.

     But another procurement specialist felt the contractors should share some of the blame: “The minimum payments clause is in the contract and the contractor bears some responsibility for being aware of what is in their own contract.”

     Then there also are questions about how exactly the contractors were supposed to apply for and receive the payments.

     The I-FSS-106 clause states that for the contractors to be eligible for the minimum payment they must make a timely submission of GSA Form 72A and of their close-out sales report.

     GSA officials, in followup comments to the press, have suggested that eligible contractors also would need to explicitly request the guaranteed minimum payment due. That was the practice in place for many years, they suggested.

     “Because of policy dating back several years and several administrations, some businesses were not compensated because they had to request the guaranteed minimum payment to GSA,” Betsaida Alcantara, GSA communications director, told the Washington Post.

     The I-FSS-106 clause, as currently written, does not appear to specify exactly whether, or how, the contractors must apply for the guaranteed minimum payment.

     “There is no mechanism, or if there is a mechanism, it has not been highly publicized,” Orbach said.

     Still, some observers believe that it’s common sense that the contractors should have known to send an invoice or to make a request. “This is the federal government. You just don’t get paid for anything without an invoice,” a contractor said.

     Few or none of the 1,281 contractors owed payments had sent in an invoice or request, a committee source told Set-Aside Alert. The panel found 27 contractors who sent invoices under the clause, and who got paid, the source said.

     The GSA now has changed that practice and will no longer require the payments be requested or invoiced. Going forward, “GSA will not require contractors to request a guaranteed minimum payment,” Sharpe wrote in a May 6 letter to the House committee.

     A contributing factor to the lapse is that GSA, for years, apparently overlooked low sales. In recent months, with several strategic sourcing initiatives, the GSA has switched course and has been actively removing from the schedules contractors with little or no sales.

     Of 3,330 cancelled contracts that were reviewed by the House committee, the GSA said it owed the guaranteed minimum payments to 1,334 vendors, including 1,281 small vendors.

     More information: House Small Business Committee press release: http://goo.gl/lnSP1

     Thomas Sharpe letter: http://goo.gl/OoTqt

(This story was originally published in the May 31 edition of Set-Aside Alert.)

     The Homeland Security Department announced it has awarded 15 contracts to small businesses for EAGLE II Functional Category 2-Small Business Track.

     The $22 billion EAGLE II contract is a seven-year acquisition vehicle to provide information technology support services in three categories-service delivery, IT program support and independent test, validation, verification and evaluation.

     The 15 new contracts were announced on FBO.gov. Each contract has a five-year base with an option for two additional years.

     Here are the winners:

     Contract HSHQDC-13-D-E2015 was awarded to Ambit Group, LLC. (DUNS #103079443), 1902 Campus Commons Drive, Suite 300, Reston, VA 20191, with Core Team Members: Comter Systems, Inc., 9524-C Lee Highway, Fairfax, VA 22031; and Teracore, Inc., 3300 Holcomb Bridge Road, Suite 226, Norcross, GA 30092.

     Contract HSHQDC-13-D-E2016 was awarded to Arc Aspicio, LLC (DUNS #168719552), 3318 Lorcom Lane, Arlington, VA 22207, with Core Team Members: Data Tactics Corporation, 510 King Street, Suite 313, Alexandria, VA 22314; E3 Federal Solutions, LLC, 42606 Good Hope Lane, Ashburn, VA 20148; PPS InfoTech, LLC, 15200 Shady Grove Road, Suite 400, Rockville, MD 20854; and The Legacy Network, LLC, 2214 North Kenmore Street, Arlington, VA 22201.

     Contract HSHQDC-13-D-E2017 was awarded to CLMS, LLC (DUNS #060959744), 3923 S. 16th Street, Arlington, VA 22204, with Core Team Members: Savvee Consulting, Inc., 4100 Lafayette Center Drive, Suite 390, Chantilly, VA 20151; Consolidated Networks Corporation, 722 N. Broadway Avenue, #203, Oklahoma City, OK 73116; and Business Management Associates, Inc., 1940 Duke Street, Suite 200, Alexandria, VA 22314.

     Contract HSHQDC-13-D-E2018 was awarded to eGlobalTech (DUNS #171898732), 3865 Wilson Boulevard, Suite 500, Arlington, VA 22203, with Core Team Members: Everware-CBDI North America, Inc., 2750 Prosperity Avenue, Suite 210, Fairfax, VA 22031; MindPoint Group, LLC, 8078 Edinburgh Drive, Springfield, VA 22153; Nester Consulting, 8400 Braddock Way, Suite 218, Columbia, MD 21046; and TechSoft Group, 260 Peachtree Street, Suite 2200, Atlanta, GA 30303.

     Contract HSHQDC-13-D-E2019 was awarded to Federal Working Group, Inc. (DUNS #161745823), 508 Lincoln Avenue, Falls Church, VA 22046.

     Contract HSHQDC-13-D-E2020 was awarded to KeyLogic Systems, Inc. (DUNS #054303180), 8825 Stanford Boulevard, Suite 210, Columbia, MD 21045, with Core Team Members: Enterprise Solutions Group, 12500 Fair Lakes Circle, Suite 200, Fairfax, VA 22033; and Lumark Technologies, Inc., 4904 Tydfil Court, Suite 100, Fairfax, VA 22033.

     Contract HSHQDC-13-D-E2021 was awarded to LegalNet Works, Inc. (DUNS #965637424), 1100 N. Glebe Road, Suite 1050, Arlington, VA 22201, with Core Team Members: Alpha-Omega Change Engineering, Inc., 6 Manhattan Square, Suite 100, Hampton, VA 23666; HX5, 212 Eglin Parkway SE, Fort Walton Beach, FL 32548; and Zeichner Risk Analytics, 1100 N. Glebe Road, Suite 1010, Arlington, VA 22201.

     Contract HSHQDC-13-D-E2022 was awarded to MBC EAGLE II Joint Venture (DUNS #964405448), 1421 Jefferson Davis Highway, Suite 600, Arlington, VA 22202, with Core Team Members: Chevo Consulting, LLC, 2275 Research Boulevard, Suite 100, Rockville, MD 20850; Credence Management Solutions, LLC, 700 12th Street NW, Suite 700, Washington, DC 20005; Enterprise Resource Performance, Inc., 116K Edwards Ferry Road NE, Leesburg, VA 20176; and iPower, LLC, 1317 Gatesmeadow Way, Reston, VA 20194.

     Contract HSHQDC-13-D-E2023 was awarded to Quasars, Inc. (DUNS #969546621), 955 L'Enfant Plaza North SW, Suite 1201, Washington, DC 20024, with Core Team Members: Cirrus Technology, Inc., 4035 Chris Drive, Suite H, Huntsville, AL 35802; Data Systems & Technology, Inc., 4024 La Linda Way, Sierra Vista, AZ 85635; Galaxy Global Corporation, 2063 Winners Drive, Suite 202, Fairmont, WV 26554; and Trideum Corporation, 4946 Research Drive NW, Huntsville, AL 35805.

     Contract HSHQDC-13-D-E2024 was awarded to SiloSmashers, Inc. (DUNS #175955335), 2677 Prosperity Avenue, Suite 100, Fairfax, VA 22031, with Core Team Members: Pro-Sphere Tek, 11447 Washington Plaza West, Reston, VA 20190; Oak Grove Technologies, LLC, 7200 Stonehenge Drive, Suite 310, Raleigh, NC 27613; Barquin International, 1707 L Street, NW, Suite 1030, Washington, DC 22036; and G2SF, Inc., 2804 Winter Oaks Way, Oak Hill, VA 20171.

     Contract HSHQDC-13-D-E2025 was awarded to Strategic Enterprise Solutions, Inc. (DUNS #129148610), 11951 Freedom Drive, Suite 1300, Reston, VA 20190, with Core Team Members: Evolution Technologies, Inc., 2325 Dulles Corner Boulevard #500, Herndon, VA 20171; Hassett & Willis Associates, LLC, 1100 New York Avenue, NW, Suite 640E, Washington, DC 20005; Information Experts, Inc., 11425 Isaac Newton Square, Suite F1, Reston, VA 20190; and K2Share, LLC, 7607 Eastmark Drive, Suite 102, College Station, TX 77840.

     Contract HSHQDC-13-D-E2026 was awarded to Technical and Management Resources, Inc. (DUNS #041316519), 10511 Braddock Road, Suite 1B, Fairfax, VA 22032, with Core Team Members: Exceptional Software Strategies, Inc., 849 International Drive, Suite 310, Linthicum, MD 21090; Loch Harbour Group, Inc., 6212 Lincolnia Road, Suite 401, Alexandria, VA 22312; and Sterling Heritage, 10779 Riverscape Run, Great Falls, VA 22066.

     Contract HSHQDC-13-D-E2027 was awarded to Teracore, Inc. (DUNS #119514193), 2201 Cooperative Way, Suite 600, Herndon, VA 20171, with Core Team Members: Ambit Group, LLC, 1902 Campus Commons Drive, Suite 300, Reston, VA 20191; PG Public Services, LLC, 1069 W. Broad Street, #724, Falls Church, VA 22046; G&H International Services, Inc., 1100 New York Avenue, NW, Suite 250W, Washington, DC 20005; and eMentum, Inc., 6701 Democracy Boulevard, Suite 300, Bethesda, MD 20817.

     Contract HSHQDC-13-D-E2028 was awarded to Total Systems Technologies Corporation (DUNS #112085472), 458 Greenbrier Drive, Saltville, VA 24370.

     Contract HSHQDC-13-D-E2029 was awarded to Zenetex, LLC (DUNS #125368121), 950 Herndon Parkway, Suite 350, Herndon, VA 20170, with Core Team Members: Civitas Group, 1875 Eye Street, NW, Suite 400, Washington, DC 20006; K2 Consulting, 4330 East West Highway, Suite 320, Bethesda, MD 20814; Kilda Group, LLC, 1116 West Street, Suite A, Annapolis, MD 21401; and PMOLink Government Solutions, Inc., 2001 Lakeshore Drive, Mandeville, LA 70448.

(Originally released as a Set-Aside Alert EXTRA on May 22, 2013.)

     Federal contracting for women-owned small firms is getting a major push with a new campaign headed by the Small Business Administration along with two private-sector partners.

     The new ChallengeHer initiative is one of the most ambitious promotions in recent years focused on boosting federal contracts for women, primarily through set-asides.

     Set-asides under the SBA’s Women-Owned Small Business (WOSB) program are “a very significant tool” to increase contracting for women, Barbara Kasoff, president of Women Impacting Public Policy, one of the partners in ChallengeHer, along with American Express OPEN, told Set-Aside Alert.

     The recently-approved law authorizing lifting the caps on federal set-aside awards to women-owned contractors also is expected to have a large positive impact, once the results are made final later this year, Kasoff said. (Update: SBA issued an interim final rule lifting the caps immediately on May 7). Previously, the caps were either $4 million or $6.5 million, depending on the industry.

     The hope is that through free events sponsored by ChallengeHer to raise awareness and offer training and matchmaking opportunities, more female small business owners will add their names to the WOSB registry, now about 13,000 strong, and more federal procurement officers will create set-asides exclusively for WOSB companies.

     ChallengeHer will “bring more women-owned firms into the federal government’s supply chain,’ Marie Johns, deputy administrator for the SBA, said at the kickoff event for ChallengeHer.

     Since 2011, when the WOSB program debuted, there havs been about $150 million in set-aside contracts awarded under the program, Emily Murphy, senior counsel to the House Small Business Committee, said at the kickoff event.

     In addition to registering women in the WOSB program and urging federal agencies to set aside more contracts for WOSB firms, the campaign’s other primary aim is to help reach the SBA’s 5% goal for federal contracts going to women-owned firms.

     In the fiscal 2011 year, 4% was attained, according to the SBA’s latest-available official figures.

     The single percentage point difference represents about $5 billion in additional contracts.

     Overall, the SBA reported $16.8 billion in contracts to women-owned small firms in fiscal 2011, the latest official figure available.

     That broad category includes the relatively tiny amount of set-asides currently made through WOSB. It also includes contracts made through full and open competition and through other types of federal set-asides, such as those for small businesses, small disadvantaged businesses, veteran-owned or HUBZone firms. Women who own small federal contracting companies often can qualify in one or more of those categories as well.

     However, the WOSB program is the only federal set-aside targeted specifically to women-owned firms. It consists of 83 industry categories, including many types of construction and manufacturing, which women-owned firms are underrepresented.

     While women are competing effectively for many federal contracts even without a set-aside, having a set-aside targeted exclusively to women allows them to compete only against other women and increases their chance of success, Kenneth Dodds, director of the SBA’s Office of Government Contracting, told Set-Aside Alert.

     Achieving gains through WOSB hinges on convincing federal contracting officers to utilize the WOSB set-asides, which could be challenging, he added. “It is going to take education, and getting the word out,” Dodds said.

     “We need collaboration from government buyers,” agreed Benjamin Stone, director of small business and start-up development for American Express OPEN.

     Women-owned small business contracting has grown in recent years, according to the White House’s Small Business Dashboard.

     In fiscal 2000, $4.3 billion in contracts was awarded to female vendors. By fiscal 2008, that amount had risen to $14.3 billion.

     During the same period, total federal contracting more than doubled, from $206 billion to an all-time peak of $541 billion. The total has slipped each year since then, to $517 billion in fiscal 2012.

     Awards to women-owned small firms measured $15.7 billion in fiscal 2009, hit their highest point at $17 billion in fiscal 2010, and dipped to $16.6 billion in fiscal 2011 and $16.2 billion in fiscal 2012, the dashboard indicated. Details were not immediately available as to why the dashboard data for fiscal 2011 is slightly different from the SBA’s official data.

     The first ChallengeHer event is on May 23 – the U.S. Energy Department Opportunity Forum in Washington, DC. Additional events are scheduled on June 12 in Phoenix, AZ; June 17 in Seattle, WA; and July 16 in Denver, CO.

(Originally published on May 3, 2013 in Set-Aside Alert)

WOSB caps lifted

The Small Business Administration published an interim rule to lift the existing caps on federal contract awards for the Women-Owned Small Business program. The new interim rule is effective immediately, according to the Federal Register Notice.

The provision is expected to benefit women-owned small federal contractors. It was approved by Congress and the White House in the National Defense Authorization Act of 2013 (NDAA) signed by the president in January.

(Originally released as a Set-Aside Alert EXTRA on May 8, 2013.)

HUBZone counties: Gain some, lose some

There are more changes happening to HUBZones as a result of new unemployment data.

The SBA announced late yesterday that HUBZone eligibility has been modified for 74 counties as a result of the 2012 annual unemployment data released by the Bureau of Labor Statistics.

A total of 39 counties are newly qualified as HUBZones, enabling local companies to be certified for the program. A total of 35 counties, previously qualified as HUBZones based on their unemployment rates, are no longer qualified.

(Originally released as a Set-Aside Alert EXTRA on May 8, 2013.)

President Obama's proposed budget for the Small Business Administration in fiscal 2014 includes a boost for small federal contractors and a mix of new programs and reductions for small businesses overall.

The president wants to add personnel specifically aimed at increasing federal contracting for small firms. There also is new money for training veteran entrepreneurs and owners of mid-sized companies and for spurring innovation.

On the other hand, support for university-based small business general training programs and training for small disadvantaged firms would be cut.

To help small businesses win federal contracts, the president is seeking $4 million to pay for the hiring of 32 new procurement center representatives at the SBA.

The representatives would be "strategically embedded across the federal government to increase the small business share of federal procurement awards," according to a White House fiscal 2014 budget document. The personnel would help reserve procurements for competition among small business firms and provide small business sources to federal buying agents, the document said.

"This is a big deal," Joe Jordan, administrator of the Office of Federal Procurement Policy, said in announcing the $4 million initiative at a recent industry conference.

"The president wanted to ensure that we had more resources to facilitate collaboration. I was really happy about this," Jordan said at the event.

The SBA's procurement center representatives are located at area offices and major federal buying activity centers around the country. They help the buying offices to identify qualified small businesses eligible for awards and to initiate set-asides.

Some specialists have cited a need for more staff support at the SBA to facilitate set-asides for 8(a) certified companies and other small vendors.

The SBA also is proposing a $40 million new MBA-like intensive leadership program to help mid-sized entrepreneurs grow their workforces, SBA Administrator Karen Mills said at a recent hearing of the House Small Business Committee.

Asked why the SBA was seeking new funds at a time of budget austerity, Mills said the program would fill a gap by addressing medium-sized small businesses.

The agency also wants to add $7 million for the new Boots to Business program to train veterans to be entrepreneurs and $5 million for the new Growth Accelerator venture capital program. There would be a $1.7 million boost for Regional Innovation Clusters.

At the same time, the SBA is offering to cut $8 million from its budget for Small Business Development Centers in fiscal 2014.

The centers work with universities to train small businesses. There are 63 centers with 900 outreach locations.

The SBA spent $115 million on the small business development centers in fiscal 2012, and its budget is $113 million in fiscal 2013.

The 2014 budget request would reduce funding to $105 million.

The SBA also is looking to save $3.3 million by terminating the PRIME technical assistance program for micro-entrepreneurs; to trim $2 million from 7(j) technical assistance for small disadvantaged firms; and to cut $671,000 from Women's Business Centers.

Overall, the SBA would be funded at $810 million in the president's budget request, which is a decrease of $109 million from the fiscal 2012 enacted level. Most of the reduction is due to lower subsidy costs for the 7(a) Business Loan Guarantee Program, the White House indicated.

The budget also includes $159 million to support $1.1 billion in small business disaster loans.

Panelists at the recent House small business committee hearing were mostly critical of SBA's plans. Rep. Sam Graves, R-MO, chairman of the panel, was dismissive of the SBA's request for allocations for new programs.

The agency "has the audacity to request nearly $57 million in new funding for entrepreneurial development programs not authorized in the Small Business Act," he said in a statement.

(Originally published in the April 19, 2013 issue of Set-Aside Alert.)

The federal government's flagship 8(a) contracting program for small, disadvantaged businesses is shrinking.

The number of firms participating in the Small Business Administration's 8(a) program has been steadily falling over the past six years - a decline that shows no signs of reversal, according to figures provided by the SBA to Set-Aside Alert.

From a high of 9,667 companies with 8(a) certifications in fiscal 2006, the number dropped to 9,423 in fiscal 2007, rose slightly to 9,462 in fiscal 2008, and then fell to 8,827 in fiscal 2009, 8,444 in fiscal 2010 and 7,814 in fiscal 2011, the SBA figures indicate.

Overall, the program experienced a net loss of 1,853 firms during the six-year period, a drop of 19%.

The pattern of slow decline appears to be continuing. An unofficial check of SBA databases on Feb. 12 showed only 7,696 8(a) certified firms.

The 8(a) program is the SBA's premier business development program for small and disadvantaged firms. Originally established in 1958, and expanded and amended during the Civil Rights era, it offers unique benefits to eligible small vendors, including access to sole source federal contracts and set-asides.

Companies must show social or economic disadvantage to be eligible. The 8(a) certifications last for nine years.

The SBA's Darryl Hairston, associate administrator for the 8(a) business development office, has acknowledged that the 8(a) program is losing more members than it is gaining, resulting in a net loss over time.

"There are several factors to be considered in the rate of increase or decrease in the number of 8(a) Business Development program participants," Hairston told Set-Aside Alert in an emailed statement.

"Over the past three years, there have been a significant number of firms that have completed their nine-year terms and have voluntarily withdrawn from program participation," Hairston said.

"While we continue to see strong interest in the 8(a) program from across the country (averaging approximately 45 new applications per week), the number of applicants eligible for program participation has not kept pace with the number of program exits," Hairston added.

The SBA currently is engaging in "an aggressive outreach effort" to attract more applicants to the 8(a) program, he added.

While the number of 8(a) firms declined, the dollar amount and share of federal contracts going to small disadvantaged firms increased during the six-year period. That category includes 8(a) firms, among others.

Federal contracts with small disadvantaged firms rose from $23 billion, or 6.8% of the total, in fiscal 2006, to $32 billion, or 7.7% of the total, in fiscal 2011, according to the SBA.

Specialists familiar with the 8(a) program suggested several factors that may be contributing to the loss in participation, including changes in eligibility requirements and limited SBA support staff.

The SBA tightened up 8(a) eligibility requirements in 2011 to combat fraud. Specialists say it often costs about $3,500 to $10,000 in assistance to become 8(a) certified, and the process could take up to a year.

"They have really upped the scrutiny," said Richard Hernandez, principal at E-MBE.net consulting firm in Chicago. "The applications hardly ever come back clean. You always have to resubmit."

"They have changed the rules and made it a lot harder," Robert Ramos, president of The Gabriel Group consulting firm in Corpus Christi, TX, told Set-Aside Alert. "The SBA is being much more selective about who comes into the program."

At the same time, less assistance is available. In fiscal 2012, the SBA enacted a $10 million cut in support staff to its business development centers.

"The SBA has cut the resources down quite a bit," Ramos said. "They also have cut down on travel quite a bit."

"Support is not what it used to be," Hernandez agreed.

Overall, while there are still new companies eager to join 8(a), many get frustrated by the hurdles along the way, said Roger LaPlante, senior partner with Government Certification Specialists in Leesburg, VA.

"In our experience, SBA is challenging 100% of the new applications," LaPlante told Set-Aside Alert.

"This administration has focused on integrity, but that translates to being more stringent," LaPlante said.

(Originally published in March 8, 2013 issue of Set-Aside Alert.)

Federal agency purchases from small companies owned by service-disabled veterans have risen dramatically and appear to have reached the government's 3% goal for the first time in fiscal 2012, according to the latest figures released on the White House's Small Business Dashboard.

Procurements from service-disabled veteran-owned (SDVO) small businesses accounted for 3.04% of total federal procurements in fiscal 2012, the dashboard reported on Feb. 17.

The dashboard is part of the White House's Data.gov initiative. It allows users access to continuously updated data from the Federal Procurement Data System.

The value of SDVO purchases rose to $12.2 billion in fiscal 2012, the dashboard indicated, up from the Small Business Administration's official figure of $11.2 billion in fiscal 2011.

The dashboard also shows increased buys from small firms overall. However, HUBZone purchases have dropped.

The dashboard figures for fiscal 2012 still may change as more data is entered, and final official numbers for fiscal 2012 goal achievement will be released by the SBA this summer, John Shoraka, associate administrator for government contracting and business development, wrote in a statement to Set-Aside Alert.

Specialists have indicated that changes at this point are likely to be small.

SBA annual goaling reports show a strong upward trend in buys from SDVO firms-rising from .87% of total buys in fiscal 2006, to 1.01% in fiscal 2007, to 1.49% in fiscal 2008, to 1.98% in fiscal 2009 to 2.5% in fiscal 2010 and to 2.65% in fiscal 2011.

If the dashboard figure of 3.04% becomes official, it would continue the trend, and it would be the first time the federal government met its 3% goal for service-disabled firms for at least eight years.

In other news from the dashboard, the government appears to be edging closer to meeting the overall 23% goal for small business overall.

The dashboard on Feb. 17 showed the government made 22.24% of its acquisitions from small businesses in fiscal 2012, up from 21.67% in fiscal 2011 (SBA Procurement Scorecard).

About $90 billion in purchases from small firms in fiscal 2012 had been reported as of Feb. 17.

On the other hand, HUBZone (Historically Underutilized Business Zone) buys are shrinking, according to the latest dashboard figures.

Purchases from HUBZone firms fell to 2.02% in fiscal 2012, the dashboard showed, from 2.35% in fiscal 2011 in the SBA Procurement Scorecard.

The HUBZONE Contractors National Council said in a recent report that a major reason for the spending decline is the large decrease in the number of HUBZone-certified small businesses. Most of that reduction occurred through remapping of HUBZone areas under 2010 Census data in late 2011.

In addition, many council member companies have reported decreases in the number of HUBZone set-aside opportunities in the last year, the council said in its report.

Federal agencies that spent less than 1% on HUBZone contracts in fiscal 2012 included the Commerce, Education, Energy, Health and Human Services, Housing and Urban Development and Labor departments, as well as the Agency for International Development and NASA.

More information: Small Business Dashboard http://smallbusiness.data.gov/ and click on "FY 2012" in the upper right corner.

(Originally published in the February 22, 2013 issue of Set-Aside Alert.)

The Obama Administration's push for strategic bulk buying is about to expand to cover billions of dollars in professional services contracts with the goal of better management to reduce costs and improve efficiency.

But vendors have become increasingly agitated by the plans because they fear complex technical and management support services may be oversimplified in the process, possibly driving down performance as well as prices.

The General Services Administration is preparing to release a draft Request for Proposals within a month or so for its massive OASIS (One Acquisition Solution for Integrated Services) government-wide multiple-award contract, which it estimates could be worth up to $60 billion over 10 years. OASIS is expected to have two tracks: unrestricted and small-business only.

Executives from the GSA and from several vendor groups recently held a two-hour discussion on a number of critical questions about OASIS and how it will be structured. Participants from the Professional Services Council, TechAmerica, ACT-IAC and the Coalition for Government Procurement asked what the GSA is expected to gain from OASIS, how it will handle pricing and pricing data, and how OASIS fits within broader strategic sourcing plans.

The goal of OASIS is to better manage the purchase of engineering, IT, management consulting and other services under a single broad contract, which currently is not possible, said Jeff Koses, director of GSA's office of acquisition operations. Agencies generally create new contracts for each service they need. Under OASIS, there would be a single centralized contract all agencies can use. Presumably it would have standard prices or price ranges for various labor categories of professional services.

The government needs OASIS to reduce "repetitive" contracts, Koses said.

Currently, some vendors have up to 200 professional services contracts with the federal government, while some federal agencies have 20 or more services contracts with the same company, Koses said.

Meanwhile, prices for the same apparent service vary by 200% to 400%, he added, and the government appears to get no leverage from buying in bulk.

"It costs a lot to manage all that, so how do we reduce that?" Koses asked. "There is enormous savings potential."

In OASIS, the GSA intends to collect data on pricing to allow for comparisons of prices for essentially the same level of professional service, he said.

But how do you determine the right price? Jim Ghiloni, GSA director of business operations, suggested honing in on a common vocabulary and definitions for specific labor categories, obtaining pricing data for each category and plotting it on a graph. The pricing data for a particular service likely would resemble a Bell Curve, he said, with most prices falling in the middle and outliers at each end of the curve.

Making the pricing data widely available to contracting officers would enable smarter buying decisions, Ghiloni said. Vendors with prices at the high end "would have to justify their rates," Ghiloni said.

However, vendors at the meeting raised objections to OASIS and suggested it was too broad and oversimplified and potentially would have negative unintended consequences.

Trey Hodgins, senior vice president at TechAmerica, said it was hard to conceptualize the standardization of the most complex procurements of services. "Strategic sourcing works for paper clips," he said.

Roger Waldron, president of the procurement coalition, said standardized labor rates for services are contradictory to the government's push for excellence in performance-based contracts. In those deals, the government strives to link contractor pay to getting the best results.

"This undermines the whole point of doing performance-based contracting," Waldron said. Without flexibility on pricing to account for superior skills, those skills may become less available to the government, he added.

Stan Soloway, president of the services council, suggested that GSA may be inadvertently raising the costs of contracting by seeking large amounts of new data. "Those costs should be articulated and reported," he said. "Data is not a free good."

Despite the concerns, Joe Jordan, administrator of the Office of Federal Procurement Policy, said contractors have to be prepared for strategic buying.

"Mandatory is what we're moving toward," Jordan said. "There will be winners and losers, and not all who want to sell to the government can sell to the government."

Jordan hopes to apply strategic sourcing to about $150 billion in annual contracts.

(Originally released as a Set-Aside Alert EXTRA on February 15, 2013.)

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