|The U.S. Small Business Administration (SBA) released their FY2017 Small Business Procurement Scorecard this week, which shows that the federal government failed to meet the 5% goal of prime federal contracts awarded to woman-owned small businesses (WOSBs). Only 4.71% of prime contracts – down from 4.79% in FY2016 – went to women-owned small businesses, though the amount of contracting dollars slightly increased from $19.7 billion to $20.8 billion.
The Small Business Procurement Scorecard is released annually by SBA as a tool to measure how well federal agencies reach their small business and socio-economic prime contracting and subcontracting goals as well as report agency-specific progress. The only year the federal government met the 5% goal of prime contracts awarded to WOSBs was in FY2015.
On a positive note, SBA highlighted that the federal government overall met its 23% small business federal contracting goal for the fifth consecutive year, awarding 23.88% in federal contract dollars to small businesses totaling $105.7 billion. Additionally, the 5% goal on subcontracting to woman-owned small businesses was exceeded, with 6.2% of subcontracts going to WOSBs, up from 5.7% in FY2016.
“Grow – Don’t Grow”
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:
- 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.
- 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.
- 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.
The first quarter of 2016 was big for us. The Federal Government met its goal of awarding 5% of all contracts – $17.8 billion – to women-owned firms. This was only possible because of the Women-Owned Small Business (WOSB) procurement program which allows contracting officers to set aside contracts for women only to bid on.
In February, the FAR Council added sole source authority to the program. Now, contracting officers can use the program to award sole source contracts to women-owned businesses that are uniquely qualified to perform the work the government needs. All of the other small business procurement programs have sole source authority, so it was important to bring parity to the WOSB program.
In March, the WOSB program was expanded to include 113 industry codes. The same law that added sole source authority also called for SBA to update a study on participation in federal contracting by women-owned businesses. The last study was done in 2007. The new study found more industries where women are underrepresented and now those industries are part of the WOSB program – an expansion that will provide additional procurement opportunities.
While we have been making gains on that front, there is much more to do to open doors to federal agency contracts for women-owned companies. Never content to rest on our laurels, the WIPP policy team in Washington, DC is ready to tackle two new procurement issues.
First, we must increase access for women-owned firms to multiple-award contracts. The government increasingly buys its products/services through these ongoing contracts, like Indefinite Delivery, Indefinite Quantity (IDIQ) contracts, and other large contracts. Often, these contracts select vendors through an initial competitive process and then issue task orders to that group of vendors only. Some multiple-award contracts have a “track” for large businesses and a “track” for small businesses. Others, though, have different tracks within the small business track. For example, they may have a HUBZone track, an 8(a) track and a veteran’s track. In those instances, WOSBs should also have their own track. We will be asking for parity in these cases.
Second, there should be parity in sole source contract ceilings. Sole source contracts are capped – they are not unlimited. Every five years, the FAR Council adjusts the cap for inflation. In October, all the other small business programs’ caps were increased. The HUBZone program, for example, now has sole source awards capped at $4 million for most products/services and $7 million for manufacturing. Women did not get an increase — our manufacturing cap is a half a million less at $6.5 million. Again, the theme is parity. We will be pressing the FAR Council to adjust the WOSB sole source to match the increases of other programs.
WIPP’s advocacy is always in motion and in the federal contracting space, there is always much more to be done. So, join us in the effort. When talking to federal agencies or elected officials, echo our two asks. Everyone’s voice is important.
April 2016 WIPP National Partner of the Month
Roz Alford, Founder and Co-Principal of ASAP Solutions Group, LLC – Atlanta, GA
WIPP sat down with Roz to hear a little more about her business and relationship with WIPP…
Tell us a little about your company.
I am the founding principal of Asap Solutions Group LLC. I founded the company in 1989 and together with my business partner Nancy Williams we lead the organization. We are a global company and have offices in Georgia, New Jersey, Texas and India. We employ over 700 people.
The ASAP family of companies is a multi-faceted business solutions brand. We leverage decades of experience and knowledge and our exceptional teamwork to enable our clients’ success. From business consulting services to top-notch talent acquisition within the competitive technology market. We partner with our clients to help them achieve their vision and growth for success. Meaningful technology and business solutions are our home and terrain.
Have you always been an entrepreneur? If not, what inspired you to take the leap?
Yes. I have always been an entrepreneur.
What is your biggest lesson learned working with the Federal Government?
Patience, patience, patience. Know your facts.
Tell us about your experience as a WIPP member? What resources/value has WIPP provided that has been helpful to you and your company?
I have been a member and supporter of WIPP for over twenty years. I have always believed that women business owners have a huge impact on our government policies and through WIPP our voice can be heard and make a difference in giving women business owners the opportunity to work and grow in the federal contracting space.
Click here to read Roz’s full bio.
By: Ann Sullivan, WIPP Chief Advocate
A landmark week for women entrepreneurs just got better. Just a day after announcing that federal government had finally met their goal of awarding 5% of contracts to Women-Owned Small Businesses (WOSBs), the Small Business Administration (SBA) announced a significant expansion of the WOSB procurement program. When the last disparity study was completed in 2007, women were found to be underrepresented in federal contracting in 83 industries, thus making them eligible for participation in the WOSB program. In addition to pressing for sole source contracts, WIPP advocated for a new study to update eligible NAICS codes for the program. The study, completed by the Department of Commerce earlier this year, found that 113 industries and their corresponding NAICS codes are now eligible for the program. The changes take place immediately.
The study, The Utilization of Women-Owned Businesses in Federal Prime Contracting, found two very disturbing facts. One, that women are 21% less likely to get a government contract after solving for factors such as age and size of the business. Second, the industries in which WOSBs are less likely to win contracts account for about 85% of both total contracts and dollars awarded.
Find out whether or not your business is eligible for participation in the WOSB procurement program by checking your NAICS codes. Even though the program has quadrupled since 2011, expansion of the NAICS codes will result in even greater gains for women-owned businesses to participate in the public sector.
Budgets are usually just about the numbers, but, every so often, they take respite from tables, spreadsheets, and account balances to acknowledge successful partnerships. Anyone taking a look at the President’s budget, released on February 9, found out who is working on behalf of women business owners when the Small Business Administration (SBA) highlighted the success of WIPP’s ChallengeHER initiative at bringing women-owned businesses into the federal marketplace. Having SBA acknowledge WIPP’s efforts demonstrates just how strong WIPP advocates have been.
Securing a contract with the federal government can double the revenue for a women-owned business and the ChallengeHER program has been providing education to women business owners on how to do just that. In 2013, WIPP partnered with American Express OPEN and SBA to offer events, workshops with access to an online curriculum, and mentoring opportunities that provide women entrepreneurs with knowledge and connections to help them successfully compete for federal contracts.
This year, WIPP is planning 18 ChallengeHER events across the country. For more information and to find the ChallengeHER event closest to you, please visit WIPP’s ChallengeHER site.
By: Jake Clabaugh, WIPP Government Relations
Women Impacting Public Policy (WIPP) recently submitted comments on the interim rule implementing sole source authority into the Federal Acquisition Regulation (FAR). For more details please read WIPP’s full comment here.
WIPP’s 15-year effort to expand contracting opportunities for women entrepreneurs cleared an important hurdle with sole source authority finalized in the government’s contracting rulebook. The Federal Acquisition Regulation (FAR) is the government’s official source for rules when it comes to awarding contracts. Implementing sole source authority into the FAR means that women entrepreneurs wll now be competing on a level playing with other small business contracting programs.
WIPP’s comment on this rule acknowledged the FAR Council for recognizing the “urgent and compelling need” to grant contracting officers this authority. Their recognition is the culmination of years of hard work and advocacy to bring parity for women-owned contracting firms.
Although the Small Business Administration (SBA) published sole source rules last fall, some contracting officers had been waiting for official language to be put into the FAR before they would use sole source authority. WIPP members have experienced this inconsistency firsthand and WIPP’s comment highlighted how important it is for the FAR to eliminate the conflict.
The FAR Council’s rule became effective on December 31, 2015 – a great way to start the New Year. Contracting officers now have official instructions to award sole source contracts through the WOSB Procurement Program. We encourage women business owners to comment on this important victory for our community. If you wish to echo WIPP’s comments, you can submit them electronically using Regulations.gov and search for “FAR Case 2015-032.” Please use the “Comment Now” option, which will provide instructions for uploading your document and ensure that your voice is heard.
By: Jake Clabaugh WIPP Government Relations
The House Small Business Committee is leading off 2016 by continuing its
efforts to make federal contracting more accessible to small businesses. Committee Chair Steve Chabot’s (R-OH) legislation, Defending America’s Small Contractors Act of 2016, makes an array of changes to procurement policy.
Although impossible to summarize all of the changes in a few paragraphs, which is why we have the link to the bill above, here are the highlights. The bill tackles transparency by rewriting – in plain English – the requirements for small business procurements. Since getting past performance is an obstacle for contractors getting started in federal contracting, the bill establishes a pilot program that enables them to get a past performance rating by submitting a request to the contracting officer and prime contractor. Offices of Small and Disadvantaged Business Utilization (OSDBUs) will now have increased authority to recommend which small business set-aside programs are most appropriate for each contract at their agency. The Act even touches the Department of Defense (DOD) by requiring that Mentor-Protégé plans in DOD’s program be approved by SBA – an update aimed at adding consistency to Mentor-Protégé Programs government-wide – but controversial since the last time we looked the Defense Department does not generally defer to SBA.
If some of these changes sound familiar, it’s because Anne Crossman, a member of WIPP’s Leadership Advisory Council, proposed several of these improvements during a Subcommittee hearing last fall. Specifically, Anne noted WIPP’s “if you list us, use us” policy for prime contractors’ subcontracting plans and in her testimony she advocated for prime contractors to be accountable to the subcontractors listed on their plans. This bill incorporates Anne’s recommendations by requiring commercial market representatives (CMRs) assist prime contractors in identifying small business subcontractors and assess the prime’s compliance with their subcontracting plans.
The intent of the legislation is to assist federal agencies in meeting their small business contracting goals. The goal for women owned companies of 5% has never been met. A continued push for data transparency surfaces in the bill as well, requiring agencies to do a better job of reporting the contracting dollars awarded to small businesses.
The Committee is expected to hold a markup to consider this legislation during the week of January 11. The WIPP Government Relations team will continue to provide updates as the bill moves through Congress.
Despite its official passage into law and SBA’s implementation, some contracting officers in federal agencies are waiting for the addition of official language to the Federal Acquisition Regulation (FAR) to use the new sole source authority in the women’s procurement program. We have seen first hand that regardless of SBA’s assurances that the law is ready to use, some agencies are reticent to use the new authority until the FAR has officially adopted the change in law. The Federal Acquisition Regulatory Council has already drafted the rule, which is currently in a review phase. And so we wait.
On October 14th, after many years of advocacy spearheaded by WIPP, sole-source authority for Women Owned Small Businesses (WOSB) officially went into effect. The Small Business Administration (SBA) fast-tracked its official rule authorizing WOSB sole-source, allowing Contracting Officers to cite the rule and award sole source contracts. SBA encouraged agencies to use the new law upon release—before the October 14 date.
How can women business owners speed the process and become an early pioneer in sole source contracts? Sharing key information with federal agencies is important. Small business offices as well as the contracting community need education on the program. Since this is the newest small business contracting program on the books, many acquisition officials are still getting used to it. The sole source piece, although mirroring the HUBZone program, is brand new and worthy of explanation.
Resources from WIPP such as the criteria for a WOSB sole source article, SBA’s final rule on sole source, and any future rulings by federal agencies reinforcing sole source awards for WOSBs, can help Contracting Officers support a sole source justification. ChallengeHER events now being held around the country are an excellent venue for learning about the WOSB program and recent changes.
And, it is important to dispel the myth that sole source justifications can only be used if your company is the only company in the universe that has a particular product or performs a specific service. Take a look at other sole source justifications found at FBO.gov. You will find that reasons such as close proximity to the buyer, employing the most highly skilled staff, and the ability to customize a product have all served as justifications for sole-source awards in other programs.
We are so close but every day that the FAR Council fails to act, some woman owned company stands to lose what could have been a contract award. WIPP, through its advocacy, will continue to do what it takes to get this final piece in place.
The House Small Business Committee hearing last week focused on one of WIPP’s key priorities: ongoing issues affecting small companies trying to do work with the federal government. Anne Crossman, a member of WIPP’s Leadership Advisory Council, used her expertise in subcontracting to testify before the Committee regarding the challenges faced by small subcontractors.
In particular, many WIPP members have questioned to what extent subcontracting plans are enforced. WIPP has long advocated for a policy of “if you list us, use us” and it is still unclear if prime contractors are being held to these plans.
Subcontracting is a staple of many small contractors and facilitates the flow of federal contract dollars into small businesses, which provide jobs and boosts local economies. Agencies have subcontracting goals to ensure that small firms get a fair shot at contracting dollars.
The Committee delved into these and many other challenges facing small subcontractors. The hearing can be found in full here.