SBA program to funnel contracts to smallest businesses

The Small Business Administration announced last week a new pilot program that will make it easier for businesses that have 15 or fewer employees to win federal contracts by giving the businesses the first chance to bid on some procurements.

SBA designed its Very Small Business Set-Aside Pilot Program specifically for small businesses that have 15 or fewer employees and less than $1 million in annual revenue. Under the pilot, very small businesses (VSBs), with some exceptions, will get the first shot to compete for contracts ranging from $2,500 to $50,000.

"The goal is to give these companies access," said Judith Roussel, associate administrator for government contracting at SBA. "The federal procurement arena is becoming more competitive, and procurements are much larger in scope. The VSBs are those that would have the greatest challenge in competing, so the pilot program focuses on giving them the first shot at a certain segment of those procurements."

In fiscal 1997, the government awarded 247,381 contracts worth less than $50,000, a total of almost $5.2 billion.

The pilot, mandated by the Small Business Administration Reauthorization and Amendments Act of 1994, will start Oct. 1 and will run through Sept. 30, 2000. Under the program, contracts worth $2,500 to $50,000 must be set aside for VSBs if the contract activity takes place in one of the 10 regions included in the pilot and there is reasonable expectation of obtaining competitive bids from two or more responsible VSBs with headquarters in that geographical area.

If a contracting officer finds that proposals from VSBs do not represent the best value to the government, then an award to a VSB does not have to be made. A contracting officer also has the option of setting aside contracts within the $2,500 to $50,000 range for 8(a) companies, but that decision must be made before the solicitation is released. Teresa McBride, chief executive at McBride and Associates Inc., a former 8(a) company, said the SBA program was positive, but she pointed out that SBA must be careful not to help VSBs at the expense of small or large businesses. "You don't want to be in a position where you take from one company to get another off the ground," she said.

Although the pilot program may funnel more government business to VSBs, these businesses still face fierce competition in the federal marketplace. "I think it is an uphill battle with the current trend in looking for companies with qualifications and good past performance. Both of those will be difficult to come by at the level the government is expecting," said Bob Dornan, a senior vice president at Federal Sources Inc.

Dave Anderson, president of Key Group, a marketing, management and proposal consulting group for small businesses, said a $50,000 contract is small. "Fifty-thousand dollars isn't even a person-year for a technologist," Anderson said. "Unless you can see immediate follow-on business, then [the program] might not draw much attention."