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8(a) Competitive Awards Exceeded 8(a) Sole Source in Fiscal 2017

Competition is heating up inside the 8(a) program, which sets aside federal contracts for socially disadvantaged vendors. In fiscal 2017, for the first time, federal spending on competitively awarded 8(a) contracts exceeded spending on sole-source 8(a) contracts.

In fiscal 2017, 8(a) sole-source obligations totaled $8.55 billion, the 9th lowest sum in the last 10 years, while 8(a) competitive contracting reached $8.56 billion, its second-highest annual total ever. Although the difference is vanishingly small, it is an historic inflection point for the government’s oldest set-aside program for disadvantaged business owners.

The convergence of congressionally imposed restrictions on large 8(a) sole-source contracts and government efficiency initiatives such as Category Management has driven 8(a) dollars toward competition and away from sole source.

Spending on large, sole-source awards to 8(a) businesses has given way to set-asides competed between companies that hold slots on multiple-award contracts, such as 8(a) STARS II; Chief Information Officer Solutions and Partners 3 Small Business (CIO-SP3 SB); and the General Services Administration’s IT Schedule 70.

Concerns over allegations of abuse in the 8(a) program led Congress to impose a new rule in the fiscal 2010 National Defense Authorization Act that required agencies to issue a Justification and Approval (J&A) document before awarding an 8(a) sole source contract with an estimated worth of more than $20 million. The rule went into effect in March 2011.

Bloomberg Government’s 8(a) Recompete Opportunities dashboard lets users create lists of highly qualified 8(a) recompete opportunities with a quick series of clicks. To see the dashboard in action, please contact us.

In 2014 momentum began building around Office of Management and Budget efficiency initiatives, such as Category Management and Best-in-Class contracting, which established standardized requirements and mandatory contracting solutions and provided incentives for agencies to use contracts meeting rigorous OMB contracting guidelines.

Restrictions Increased 8(a) Spending

In fiscal 2017, 8(a) sole-source contracting totaled $8.55 billion, a decline of 18 percent since fiscal 2011. But rather than reduce overall 8(a) spending, Congress’s restrictions had the effect of shifting 8(a) spending to competitively awarded contracts and task orders. This led to 24 percent growth in competitive 8(a) awards since fiscal 2011, putting fiscal 2017 competitive spending just 0.3 percent below its 10-year peak in fiscal 2016.

Spending on both types of 8(a) set-asides was $17.1 billion in fiscal 2017, the sixth-highest total in the last 10 years and 9 percent lower than the fiscal 2010 wartime spending peak.

Average 8(a) Award Value

The average value of a sole-source 8(a) contract was $397,000 in fiscal 2017, up 10 percent from its nadir in fiscal 2013, but down since fiscal 2008. Since 2013, the average value of a competitive 8(a) contract grew 23 percent to $2.3 million in fiscal 2017, after rising 21 percent from fiscal 2008 to fiscal 2013.

With efficiency initiatives such as Category Management and Best-In-Class contracting now embedded in agency contracting practice, and as a growing number of 8(a) vendors become familiar with task-order bidding practices, watch for continued growth in 8(a) competitions and a decline in sole-source awards.

The post 8(a) Competitive Awards Exceeded 8(a) Sole Source in Fiscal 2017 appeared first on Bloomberg Government.

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