Most small businesses feel intimidated when competing with larger businesses. If you review the Top 100 Government Prime Contractors List, published by Washington Technology.com, majority of the companies are large businesses. If you are a small business reviewing a government solicitation, you may come to the conclusion that the requirement is tailored for a large business. You may ask yourself, why bid? In most cases, you would not bid. The truth is, the government encourages large and small business participation. The small business set-aside programs are not only used for small businesses to respond, but the subcontracting plans that mandate large businesses to respond to a solicitation also require a planned percentage to be subcontracted or set-aside for small businesses. This seems to be fair for the small businesses, but the question is, is it fair to large businesses? Why are they required to share a piece of their pie with small businesses?
The federal government has an overall goal of setting aside 23% of prime contracts flowing to small businesses. Every federal government purchase anticipated to be valued from $2500 to $100,000 is automatically set-aside for small businesses as long as there are at least 2 companies that can provide the product/service. Contracts over $100,000 can be set aside if enough small businesses are qualified to do the work. Contracts over $500,000 have to include a small business subcontracting plan ensuring small businesses an opportunity to obtain work under these large contracts.
Without these set-aside programs, large companies would continue to dominate the federal market and the small businesses would go out of business, never get off the ground, or never be created due to the lack of projected demand. For years, Lockheed Martin, Northrop Grumman, Raytheon, Boeing, and other prime contractors continued to capitalize on the federal marketplace. Without the small businesses set-aside programs, the small businesses would not be able to participate, gain financial stability, or grow into a medium to large size business. If the government had to choose between a Top 100 prime contractor and a small business, they would most likely pick the large prime. The set-aside programs ensure that the government gives the little guy a chance. This also benefits the government in the long run because the small guy is enabled and expanded to become a contender for other contract vehicles. This promotes efficient and effective competition. It also provides the government with competitive and responsible buying options.
The 8(a) program is a good example of a fair set-aside program, when properly executed. There is a certain time allotted for the small business to take advantage of set-aside contracts, learn the ropes, gain financial stability, capture commercial business to off-set the government revenue, and grow into a medium to large size company. This opens up a new slot for another small business, and enables your company to subcontract and help other small businesses. I guess you could call this the government’s small business circle of life. If rules are followed, it works for all parties involved.
Contact GovPartners to find out how your organization can join the government's circle of life.