Tag Archives: federal government contracting

House Small Business Committee on a Roll, Passing Eight Bipartisan Bills

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The House Small Business Committee continued its streak as one of the most productive and bipartisan committees in Congress, with the passage of eight bills after they held a markup.  A number of the bills addressed issue impacting government contracting.  Below highlights some of the bills of importance to women business owners:

This bill gets rid of the requirement that the sole source award can only be $4 million for the life of the contract, allowing sole source awards to now be $4 and $7 million per year. Additionally, for WOSBs and SDVOBs, the bill implements a new eligibility determination process for sole source awards. In addition to the current requirement that contracting officers must verify eligibility before awarding the contract, this bill requires SBA to also verify eligibility.

There was an amendment to the legislation that extends elimination of option years to the 8(a) program as well and will get rid of WOSB eligibility verification once SBA comes up with their own process to verify, which is in the works.

  • Incentivizing Fairness in Subcontracting Act of 2018 (R. 6367) – introduced by Rep. Al Lawson (D-FL) and Rep. Trent Kelly (R-MS)

This bill creates incentives for prime contractors to reach their subcontracting goals by receiving credit. Prime contractors will be required to keep records of subcontracting credit claimed at lower tiers. It also designates the OSDBUs in agencies to resolve issues of non-payment of subcontractors.

One amendment was made to this bill requiring subcontractors to tell the primes that they are doing dispute process for non-payment and if primes want to get credit, they have to report on what work is actually going to the small businesses.

  • Clarity on Small Business Participation in Category Management Act of 2018 (R. 6382) – introduced by Rep. Alma Adams (D- NC) and Chairman Steve Chabot (R-OH)

This bill creates a reporting requirement on small business participation on Best in Class (BIC) vehicles.  An amendment added to this legislation puts an effective date that the data must be reported, which is once it is available in SAM.

  • Small Business Runway Extension Act of 2018 (R. 6330) – introduced by Rep. Steve Knight (R-CA) and Rep. Yvette Clarke (D-NY)

This bill would modify the SBA reporting requirements to have businesses report their average earnings over the last five years, rather than three which will provide more certainty to small businesses as they ramp up their operations and grow over time. This is important for growing businesses who may slow their growth to avoid being pushed out of the “small” category before they have the capacity to compete with larger businesses.

  • Encouraging Small Business Innovators Act (R. 6368) – introduced by Rep. Adriano Espaillat (D-NY) and Rep. Ralph Norman (R-SC)

This bill makes a series of changes to the Small Business Innovation Research and Small Business Technology Transfer programs, making them easier for small firms to use and allowing experienced firms in the SBIR/STTR programs to mentor younger companies.

For the full list of bills passed, click here.

WIPP Works in Washington – May 2018

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“Grow – Don’t Grow”

Ann Sullivan, WIPP Chief Advocate

We’ve all experienced a difficult friend or boss who tells you “do this” and then when you do it, they say “no I didn’t mean it that way.”  Then you spend the next hour trying to undo the thing they told you to do in the first place. Frustrating, right? 

That is largely what the federal government has been telling small businesses who enter public sector contracting.  The message to small businesses is “grow.”  The SBA and its stakeholders pour significant resources into helping small businesses succeed.  Those range from SBA District offices in every state, lending and counseling programs and support for programs like ChallengeHER that WIPP sponsors.

Organizations like WIPP encourage their members to think about federal contracting as a complement to commercial business.  We have spent an inordinate amount of resources promoting policies such as the women-owned small business contracting program, subcontracting and acquisition strategies designed to provide more opportunities for the government to buy from women-owned firms.

But then, the government says “wait don’t grow” by implementing a pretty rigid system of determining when a company is too big to be small.  SBA determines this by a system called size standards.  The government determines the average size of business revenue in industry categories and sets a size that a business cannot exceed in order to take advantage of small business contracting programs.  The SBA then takes the average of the last three years of your revenue, deciding whether you are small or have exceeded the size standard, bumping you into being a midsize company.  Ouch.

This is exactly the position WIPP Chair, Lisa Firestone finds herself in.  She testified at a House Small Business Committee hearing on the challenges larger small businesses face when approaching the top of their size standard. Lisa testified on behalf of WIPP, telling her story of watching her company, Managed Care Advisors go from a small boutique healthcare consulting company to the leading provider of Federal Workers’ Compensation Case Management Services. She grew a four-person company to facing a daunting dilemma of growing beyond the $15 million size standard for her industry.

Witnesses at the hearing, “No Man’s Land: Middle-Market Challenges for Small Business Graduates,” discussed the issue of options available to small businesses who reach the top of their size standard.  Should they stay small, sell their business or venture into a midsize company that has to compete for government business with the 110 very large companies? According to Bloomberg Government’s recent report, Mid-Tier Market Report: 2018, only 325 companies have made the decision to be a midsize vendor to the federal government.  This is in contrast to the 118,000 small businesses who sell to the federal government.

How can this trend be reversed?  The Montgomery County Chamber of Commerce, a WIPP partner in the initiative, “Pathway to Growth” proposes the following recommendations:

  1. Agency: Bring Multiple Award Contracts (MAC) requirements in line with the capabilities of midsize firms. It is essential to sustain midsize businesses participation on these MACs to diversify the types of businesses engaging in the federal market.
  2. Regulatory: Require a five-year look-back for the purpose of Small Business Administration (SBA) size determination. Due to the long contract award process and significant size of task orders, small businesses can quickly outgrow their size standard without having the time and resources to invest in firm infrastructure. This change would allow businesses a smoother transition by changing the receipt calculation by using the lowest three of these preceding five years of receipts, to determine the average.
  3. Legislative: Deduct research and development (R&D) expenses and expenditures from total revenue for size determination. This recommendation supports the government’s initiative to stimulate innovation and allows companies to pursue and develop new products and processes, without undue penalty.

The execution of these proposals would set the record straight: small business owners should grow their business – and those that do should not be penalized for that growth but supported by our federal government. It’s time to end the mixed signals.