Monday, August 4, 2014

SBA Meets its Fiscal Year 2013 Small Business Contracting Target

The U.S. Small Business Administration (SBA) announced last Friday that in fiscal year 2013, the Federal Government met its small business contracting goals. This was the first time in the past eight year that it had met, or exceeded its small business contracting goal. The goal is set at 23 percent of Federal contracts and has been since at least 2007. In fiscal year 2013, the contracting with small businesses totaled 23.4 percent. In 2012, that percentage was 22.25 and the year before is was 21.65. So it seems evident that progress is being made.

Prime contractors, on the other hand, did not meet their small business subcontracting goals. Their goals are understandably higher than the Government's. You won't find small businesses building fighter jets and aircraft carriers. However, contractors building fighter jets and aircraft carriers should have plenty of opportunities to subcontract some of that work to small businesses. For prime contractors, the small business subcontracting goal is 36 percent. In fiscal year 2013, prime contractors achieved a 34 percent factor. This was up slightly from 33.6 percent from fiscal year 2012 but down from 35 percent in fiscal year 2011.

In terms of dollars, the 23 percent represented about $83 billion going to small businesses. That's a significant amount of money by any measure. If you add the subcontracting piece, the number jumps to around $160 billion.

We do have to wonder however whether the ever-shifting thresholds for small business size standards has anything to do with the Government meeting its goals. As thresholds rise (sales and numbers of employees) for various NAICS codes, more and more firms will qualify as small businesses. Contracts (and subcontracts) awarded to those firms, might now fall in the "small business" bucket whereas before, awards to those firms were not considered as awards to small businesses.

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