Did you know that goals are in place to ensure that small businesses have the maximum practicable opportunity to compete for contracts with the federal government? In fact, each federal agency must set annual goals for participation in its contracts by small businesses and specific groups of small businesses, including woman-owned small businesses (WOSBs) small-disadvantaged businesses (SDBs), HUBZone-certified small businesses and service-disabled, veteran-owned small businesses (SDVOSBs).
Dr. James Galvin, the Acting Director of DoD’s Office of Small Business Programs (OSBP), negotiates DoD-wide small business goals with the Small Business Administration (SBA). Dr. Galvin also assigns specific small business goals to DoD buying commands.
Government-wide Small Business Contracting Goals
The federal government has the following statutory goals for government-wide small business procurement:
- 23 percent of prime contracts for small businesses
- 5 percent of prime and subcontracts for WOSBs
- 5 percent of prime and subcontracts for SDBs
- 3 percent of prime and subcontracts for HUBZone-certified small businesses
- 3 percent of prime and subcontracts for SDVOSBs
How Agency Goals are Negotiated and Established
Every year, SBA works with federal agencies to establish small business contracting goals. SBA ensures that the sum total of all of the individual agency goals exceeds the 23 percent target established by Congress.
Here is how the process works:
- SBA negotiates with agencies, including DoD, to establish individual agency goals that, in the aggregate, constitute government-wide goals. SBA also negotiates a small business subcontracting goal based on recent achievement levels. SBA establishes the government-wide and agency socio-economic category goals at their statutory levels.
- Before the beginning of the fiscal year, SBA reviews agency year-to-date performance and agencies submit their proposed goals to SBA.
- SBA’s Office of Government Contracting determines if these individual agency goals, in the aggregate, meet or exceed the government-wide statutorily mandated goals in each small business category.
- SBA notifies the agencies of their final agency goals.
DoD Small Business Prime Contracting Goals
DoD’s fiscal year 2017 small business prime contracting goal is 22 percent. In other words, we aim to award at least 22 percent of small-business-eligible prime-contract spending to small businesses in fiscal year 2017. We also have prime contracting goals for WOSBs (5 percent), SDBs (5 percent), HUBZone-certified small businesses (3 percent) and SDVOSBs (3 percent).
In fiscal year 2016, DoD spent more than 60 percent of the federal procurement budget eligible for small businesses.
DoD Small Business Subcontracting Goals
In addition to prime contracting goals, DoD has goals for awarding subcontracting spending to small businesses. Our fiscal year 2017 subcontracting goal is 34 percent. In addition to the overall subcontracting goal, we have subcontracting goals for WOSBs (5 percent), SDBs (5 percent), HUBZone-certified small businesses (3 percent) and SDVOSBs (3 percent).
Component and Agency Small Business Prime Contracting Goals
DoD’s overall fiscal year 2017 small business prime contracting goal is 22 percent, but the Army’s fiscal year 2017 small business prime contracting goal is 26 percent. Because the Army buys a lot of products and services provided by small businesses, e.g., construction, its goal is higher than DoD’s overall goal. The Navy and Air Force have goals that are lower than DoD’s overall goal because they buy a lot of aircraft and ships, which are typically supplied by large businesses.
The chart below identifies the fiscal year 2017 prime contracting goals for 22 DoD buying commands.
Calculation of Achievements
At the end of every fiscal year, SBA measures DoD’s achievements against our goals. SBA requests a report from the Federal Procurement Data Center calculating the prime and subcontract statistical achievements. If we fail to achieve any proposed prime or subcontracting goal, we are required to submit a justification-and-corrective-action plan to SBA.
Small Business Procurement Scorecard
SBA releases an annual scorecard to measure how well federal agencies reach their small business and socio-economic prime contracting and subcontracting goals.
DoD’s fiscal year 2017 grade will be based on the following four factors:
- Prime contracting (50 percent)
- Subcontracting (20 percent)
- Compliance with the requirements of Section 15(k) of the Small Business Act (20 percent)
- Comparison of the number of prime contracts awarded to small businesses in fiscal year 2017 versus fiscal year 2016 (10 percent)
DoD Fiscal Year 2016 Scorecard Grade
In fiscal year 2016, DoD exceeded its small business prime contracting goal of 21.26 percent, achieving 22.94 percent. The SBA’s fiscal year 2016 small business procurement scorecard awarded DoD an “A.”
Civilian Agency Goals
In addition to DoD, SBA negotiates small business procurement goals with 23 civilian agencies. Click here to see the fiscal year 2017 goals for civilian agencies.