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Chief Visionary's Blog, FEATURED ARTICLES, Industry News, Op-Ed/Blog

If a Tree Falls In a Forest, Does ‘Rule of Two’ Matter?

If Congress passes legislation that adds billions of ‘reserved’ dollars to benefit small federal contractors, but no one shows up to take advantage of it, does it matter?

For those that understand the current and potential impact, there’s quite a bit of buzz in the small business community on the news of a proposed increase to the Simplified Acquisition Threshold. Coupled with that is the buzz that arose when many more learned I’m not in favor of the proposed increase. Yep, the ‘Guy’ who’s been evangelizing for something like this to occur for the last ten years (or more) has had a change of heart. Not because the language drafted by the U.S. House of Representatives to raise the bar from $150,000 to a whopping $500,000 per action wouldn’t have great benefit to the small business community if it were 14048332_limplemented, it would. And it’s not because Simplified Acquisitions don’t present a tremendous door-opener or opportunity for shorter life-cycle opportunities for small federal contractors, they do.

So what’s the deal with me coming out against what appears to be a great benefit for small business concerns? Simply put, I don’t believe small federal contractors will recognize nor capitalize on the opportunity.

Why? Consider this.

Over the last five completed fiscal years, federal agencies have obligated $83 billion using the Simplified Acquisition Procedures with $45 billion going to small business concerns. This averages out to 54 percent of dollars that for 8230212_ml fruit dollarsthe most part are ‘reserved exclusively for small business concerns.’  Of the dollars small business did not capture, the majority was the result of full and open competition. In fact,during FY13 and FY14, ‘other than small’ companies took more than $5 billion each fiscal year, competitively.

Keep in mind, the FAR states that buys made within the Simplified Acquisition Threshold of $3,000 to $150,000 are ‘reserved exclusively for small business concerns and shall be set-aside.’ However, this only works if we, the small business community engaged in government contracting, decide to show up.

I’m sure the conspiracy theory contingent will chime in about contracting officers and the ‘fix being in’ to award these to whom they wish, to which I say pish-posh. The real issue here is small federal contractors generally ignoring these buys for a variety of reasons and not giving agencies the leverage needed to set the buys aside.

Consider this, too. Of the Simplified Acquisition dollars obligated to small business concerns last fiscal year, 20537555_l dont knowmore occured without the use of set-aside procedures than were actually set-aside. Imagine that. By the way, Simplified Acquisition isn’t the only place this happens, the balance of dollars obligated to small business I mean.

So my point is, even if Congress does increase how much agencies can spend via this streamlined purchasing method that favors small business concerns, will it matter? Making this change count requires a fundamental behavioral change within the small business community pertaining to Simplified Acquisitions. For starters, a great number of small companies don’t see Simplified Acquisitions as worth their time because many of them a) confuse them with Micropurchases, b) believe the threshold is $25,000, c) think all of the buys are for products, and d) believe they need a GSA Schedule to pursue these opportunities.  Then there’s the segment that believes they can’t accrue enough dollars to have substantive impact on their business. These Featured Image -- 4853are the one’s that need to read my article showing how many more thousands of small business concerns did $250,000 and $500,000 in a fiscal year via Simplified Acquisitions, than did small business concerns on the GSA Schedule.

Still not feeling love for these streamlined buys?

How’s this for believability? Dollars obligated via Simplified Acquisitions have increased an average of one billion dollars per year from FY2010 through FY2014. From just under $14 billion in FY10 to just over $19 billion in FY14.

If you lead or work for a small business pursuing federal contracts, please give these a serious look. Civilian, Defense and Intelligence agencies leverage this procurement method.

As far as the House proposal, I would prefer to see something meaningful occur such as changing the current language for the current threshold to read:

‘Acquisitions of supplies or services that have an anticipated dollar value exceeding
$3,000 but not exceeding $150,000 are set-aside exclusively for small business concerns.’

Based on FY13 and FY14 obligations that would almost immediately result in $5 billion in the coffers of American Small Businesses. Let’s call that change I could believe in.

27080785_ml keep it simpleRepresentatives Thornberry and Chabot: I’m more than happy to provide you the ammo needed to put this revised change to FAR Part 13 in place. For added incentive, consider how many small businesses in your backyard would be impacted by this if that $5 billion was divvied up in allotments of $500,000 or $250,000 each to interested small federal contractors. How many of your colleagues constituents would be impacted? How would your communities as a whole benefit from this?

Of course, you could always stay the current course which (in my humble opinion) will result in much unwanted attention from the lobbies of mid-tier and large companies as they proceed quash efforts to pass this part of the H.R. 1735, leaving us exactly where we are today.

As always, it’s your call and our dime.

Peace!

Guy Timberlake, The Chief Visionary
http://www.theasbc.org/visionary

“The person who says it cannot be done should not interrupt the person doing it.”

About Editor-in-Chief Visionary

Go-To-Guy Timberlake is the Editor-in-Chief Visionary of GovConChannel and oversees the creation and curation of relevant and timely 'News And Information That Matters To Small Government Contractors.'

Discussion

3 thoughts on “If a Tree Falls In a Forest, Does ‘Rule of Two’ Matter?

  1. Hi Dave and thanks for your comment. Let’s make sure we’re talking apples-to-apples. The proposal specifically impacts streamlined purchases under the Simplified Acquisition Procedures (FAR Part 13). The set-asides you’ve seen may have come as a result of buys made under 8.4 or 15 which are different types of procurement.

    That said, if the percentages hold the course of what is currently happening (should the proposal be implemented) there could be an exponential increase in dollars to small business. My issue is two-fold. First, as written, the proposal will likely be scuttled by the efforts of larger companies feeling the encroachment on their ‘turf’ and the lack of attention to these buys currently, by small federal contractors.

    The change I propose of making buys at the current threshold set-aside would effectively take $5 billion obligated via full and open competition to ‘other than small’ companies during each of the last two fiscal years, and put it in the hands of small business concerns. In lots of $250K, that’s a lot of economic impact for small business and the Nation.

    Like

    Posted by govconchannelchief | May 27, 2015, 14:05
  2. Guy – I’m not sure that the proposed change would have much of a direct effect, because many procurements >$150K are set aside for small businesses already – I have seen a total small business set-aside for a $33M project…. Where a likely benefit to small business might arise is the possibility that more “other than small” competitors would seek to team with small businesses to maintain their share of the shrinking pie. Combine this incentive to team with the incentives embodied in the proposed SBA mentor-protégé rules, and teaming arrangements favoring small businesses make experience a surge.

    Like

    Posted by Dave Pease | May 27, 2015, 13:52

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