SBA’s Shoraka expresses confidence that set-aside abuse by large firms is minimal.
The government’s success in meeting mandatory small business contracting goals two years running is due largely to White House focus and new requirements that program managers in the Senior Executive Service pay greater attention to the acquisition process, the Obama administration’s small-business development chief said on Tuesday.
Many call set-asides for small business “not a handout but a hand-up, but I say it’s a matter of survival for the federal government as a whole,” said John Shoraka, associate administrator of government contracting and business development at the Small Business Administration. He spoke to contractors gathered for American Express OPEN’s all-day summit with agency acquisition officials working with small businesses that are women- or minority owned or economically disadvantaged.
Outlining the government’s efforts to institutionalize the success of meeting the goal of steering 23 percent of contract dollars to small business, Shoraka said, “I’ve told my staff I could write a book saying that America’s secret weapon is small business procurement -- when small business is engaged, the industrial base is preserved. It’s win-win, because companies hire employees, which has impact on the economy.”
The industry veteran and political appointee said, “The government as a whole is interested in casting a broader net to make sure small businesses can play” in winning $80 billion or more of the $400 billion-plus annual purchase of goods and services, the world’s largest.
The SBA itself, Shoraka said, contributes through its “three C’s and one D,” meaning contracting, capital (through loan guarantees) and counseling (in partnership with academe and women’s centers), followed by direct loans in cases of disaster.
But he credited the White House for impressing upon program offices -- which weren’t putting special emphasis on small business goals -- that achieving the goals should be part of annual performance reviews and for requiring each agency’s Office of Small and Disadvantaged Business Utilization to report directly to deputy secretaries. “A real-time dashboard” of progress in contracting set-asides for qualified small businesses “is generating a lot of interest and elevating the OSDBU,” he said.
Shoraka said he also feels pressure from Capitol Hill to exceed goals and, for example, to clarify how small businesses owned by disabled veterans can work with the Veterans Affairs Department, which requires eligibility certification, and the rest of the agencies, which do not.
The small business set-aside program in the past few years has implemented several policy changes, including an end to caps on the size of contracts women-owned businesses can bid on; allowing small businesses to count small business subcontractors in their work percentage requirement; new third-party certification requirements for businesses billing themselves as woman-owned; and a new requirement that agencies such as the State Department be measured on the percentage of their overseas work that goes to small business.
Shoraka has sought to streamline the “bureaucratic” application process for some set-asides, reducing 57 elements on one form to 27.
He lauded the new mentor-protégé program in SBA’s 8A business development program. “A small firm may need a larger partner or management expertise, so they team up in a joint venture to go after larger projects,” Shoraka said of the program scheduled to take effect at the end of 2015.
Asked whether such a program might be abused by large companies seeking to poach some of the set-asides, he said, “SBA will do an annual review of this program, with lots of oversight, to make sure dollars are flowing to the intended recipients. If it’s a joint venture, we make sure they’re getting their fair share and is not a front,” he said. Congress is pressuring him for fast implementation, he said, but “we’re doing it methodically.”
Critics, such as the American Small Business League, regularly accuse large companies, particularly defense contractors, of horning in on small business turf. But Shoraka told Government Executive he “challenges that methodology. Data can be massaged a lot of different ways. If in a full and open contracting process, say, Raytheon gets the award but is coded as a small business or a set-aside for women or 8A,” that could be a clerical error, he said. Such mistakes “do happen,” he said. But that doesn’t happen with actual set-asides because “the second-ranked bidder would file a protest. We encourage protests,” Shoraka said. “Over the last two three years, we’ve had more suspension and debarments of contractors [who did abuse the system] than in the last decade.”
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