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Subcontracts Counted as Set-Asides Will Hurt

GTIf “Counting of major defense acquisition program subcontracts toward small business goals” becomes reality in the 2017 NDAA or at anytime, the pain small federal contractors experience will be significant and it will be based on Congress cheating America’s Small Businesses. Plain and simple.37626431 - mma fighter or boxer losing and getting hit in the face

Since DoD is the biggest spender, the impact would be felt throughout the community, making small business the biggest loser when DoD is allowed to count first tier and second tier subcontract dollars towards the goal currently established for competitive and non-competitive set-aside awards to small business. It will permit DoD to avoid making as many awards to small business concerns because subcontract dollars would replace dollars being awarded to small contractors today.

To offer some perspective on the potential impact of this change, let’s look at the Department of Defense FY2016 funding request published in February 2015 by the OUSD Comptroller/CFO. The publication indicates Major Defense Acquisition Programs (MDAPs) and Major Automated Information Systems (MAIS) accounted for 43% of the requested $177.7B. If DoD required its primes to subcontract 23% of the $77.2B, that would result in nearly $18B in first tier subcontract dollars that would replace $18B in obligations that might otherwise be awarded to small business through competitive or non-competitive set-asides. Don’t forget, we still need to ante up the affect of counting the second tier subcontracts.fy2016-mdap-budget-dod-requestHere’s the rub. During FY2015, DoD exceeded its small business goal by obligating $53B to small business concerns. Based on the new math coming from the 2017 NDAA, they could award $18B less to small business and still hit the mark based on first tier subcontracts alone.


Along with agencies being able to count multiple small business designations per obligation and that this ‘new math’  rule trickles down to the socioeconomic designations, are there any questions regarding how screwed small businesses are if this goes through? How long before it’s adopted governmentwide?

21156790 - screwdriver handle in an american flag pattern isolated on white background



Guy Timberlake, The Chief Visionary (bio)
http://www.theasbc.org | @theasbcguy | @govconguy

“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.'


4 thoughts on “Subcontracts Counted as Set-Asides Will Hurt

  1. Guy, what are you proposing as a solution?


    Posted by Rudy Sutherland | October 3, 2016, 16:59
    • Rudy, perhaps subk dollars could count towards the goal at a lower ratio such as 5 subk dollars equal 1 set-aside dollar. Maybe raising the small business goal proportional to the impact of subk dollars. Primary objective is not reducing opportunities for small businesses in having privity of contract.


      Posted by Editor-in-Chief Visionary | October 3, 2016, 21:44


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