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Curious which departments have the biggest gaps to fill in meeting small business goals? Let’s look at the issues these government agencies are having.

After I posted this article about Bill H.R. 3850, the Government Efficiency Through Small Business Contracting Act of 2012, someone from a LinkedIn group asked, “Do you have any idea as to which departments have the biggest gaps to fill in relation to meeting small business goals?”

For the answer I went to Nick Pontius and his colleagues at GovWin (Deltek), who pointed me towards their free report SBA 2011 Small Business Goaling Report Analysis.

We already knew that Energy got an F on their scorecard of meeting the requirement to award 23% of contracts to small businesses. According to the GovWin report, the top 5 lagging agencies were:

  • Dept. of Homeland Security (awarded 3.8% less to small business contractors in 2011)
  • Dept. of Veterans Affairs (4.25% less)
  • Dept. of Defense (4.5% less)
  • Dept. of Justice (5.67% less)
  • Dept. of Energy (awarded a whopping 35% less to small businesses in 2010 than they did in 2011)

Let’s look more closely at why it’s been a problem for Defense and Energy, in particular, to meet their set-aside requirements. With the Dept. of Defense’s weapons program, the issue is that small businesses don’t typically manufacture weapons (although they do manufacture parts and sometimes specialty items).

Small businesses usually don’t run national energy labs either, those are left to big companies such as Sandia. When those labs are competed, that takes a big chunk of the Energy contracting budget, and thereby skews the percentage awarded to small businesses as the prime contractor.

So when departments have big program like this, they’re competed amongst big companies. Even if smaller companies are involved as sub-contractors, those do not count against their set-aside requirements.

And the converse is true – big businesses don’t even report their small business sub-contracting performance, and in fact many simply ignore the requirement, except when bidding. EVERY small business I’ve EVER met has a story about a contract they pinned their hopes on, which the big business won, but the small business got zero revenue from. (See my blog post, “Large Businesses Want Appliances, Not Sub-Contractors.”)

In a sense, the whole government has failed to meet the 23% goal. Why is this relevant? Well, in the 2013 National Defense Authorization Act, meeting these goals was tied more closely to senior executives in the agencies getting their performance and merit increases. This is a striking change, as small business goals have never been a critical issue, even though it was included in the old National Performance Review from back in the days of Al Gore’s Vice Presidency.

The current administration has made some legislative changes that hold the promise that SB goals and execution will be important and actually measured. But it’s just that, a promise, and we’ll need to see actions backing the promise.

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The All-Small Mentor-Protégé Program

SBA had a well-established mentor-protégé program (MPP) for SBA 8(a) certified firms but lacked an MPP program for other small business concerns and specifically, one for specialized certified concerns such as WOSB, EDWOSB, SDVOSB, & HubZone. The 2010 Jobs Act and 2013 NDAA gave SBA the authorization to address this by establishing an all-encompassing mentor-protégé program. Ms. Sandi Clifford, deputy director of the All Small Mentor-Protégé Program (ASMPP), visited the Mid-Tier Advocacy (MTA) earlier this year to discuss the program. Here are some of the highlights of this candid and informative discussion: As Ms. Clifford explained, mentor services to protégés include: • Management and technical assistance (internal business management systems) • Financial assistance (in the form of equity investments and/or loans) • Contracting assistance (contracting processes, capabilities acquisitions and performance) • International trade education (learn how to export, international trade business plan, finding markets) • Business development assistance (strategy, finding contracting and partnership opportunities) • General and/or administrative assistance (business processes and support) As administrators of the program, SBA provides: • Central HQ as opposed to 8(a) distributive model • Online application – certify.sba.gov • Online course tutorial requirement • Annual review and evaluation • Template agreements, i.e., MPA (Mentor-Protégé Agreement) Other All-Small Mentor-Protégé Program (ASMPP) details: • A protégé may generally only have one mentor at a time; SBA may approve a second (two is the maximum) where no competition exists, or if the protégé registers under a new NAICS or otherwise requires new mentor skills.  • Both protégé and mentor must be for-profit (with exception of protégé being an agriculture cooperative). • A mentor may have no more than three protégés at same time (no lifetime limit). • A participant can be both a protégé and mentor at the same time, if there is no competition or conflict. • The ASMPP is self-certifying and is open to businesses who qualify as small in their primary NAICS code, or who are seeking business development assistance in a secondary NAICs where they also qualify as small.  • SBA will not authorize MPAs in second NAICS in which firm has never performed any work; or where firm would only bring “small” status to Mentor and nothing else. • Existing 8(a) firms in last 6 months of the 8(a) program may transfer their MPA to the ASMPP via the online application process. Coordinate with 8(a) office to fine tune the process but there is no reapplication required. • Application requirements include upload of business plan, but no financial statements or tax returns. • JV agreements: ASMPP will not review and approve joint venture agreements. How to apply for the ASMPP: • Applicants are required to register in the System for Award Management (SAM) prior to submitting their mentor/protégé application. • Complete your business profile in certify.SBA.gov. • Evaluate and select your mentor prior to applying. This is not a matching program. SBA will not find a mentor for you. • Begin the ASMPP application process. • Protégés and mentors must complete the online tutorial and have their certificate of completion and all other required documents ready for upload Thank you to Sandi Clifford, Deputy Director, All Small Mentor-Protégé Program, for this helpful overview. TAPE has mentored several small businesses over it’s life as a large business (we’re large in some NAICS codes, though still small in others) and it has been gratifying, satisfying, and integral to our success. As protégés ourselves, we have benefitted from working with some really classy large businesses, and have also had the experience of being a protégé and really getting no tangible benefits. We are currently working with two small businesses, and negotiating ASMPP agreements. You can learn more about the ASMPP on the SBA site. To join MTA and attend future events like this one, please visit www.midtier.org.
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