Small businesses face upheaval under the acquisition overhaul and agency cuts

Few segments of the federal market have faced the amount of disruption that the small business community has under the Trump administration.

Certain small business sectors such as veteran-owned firms are expected to benefit from the government’s new posture, but others such as 8(a) and other socio-economic categories will suffer because of the rollback of policies and the dismantling of small business offices at many agencies.

Kitty Klaus, one of the volunteers working on the Professional Services Council’s annual Vision Conference forecast, laid out the challenges facing small business during her presentation on Monday in Arlington, Virginia.

The overhaul of the Federal Acquisition Regulation is de-emphasizing small business opportunities, particularly the 8(a) program and other socio-economic contracting programs.

Contracts in the 8(a) program usually stay there. That will no longer be the case, she said.

Contracting officers can now move those contracts to other socio-economic groups such as women-owned, HUBZone, or service-disabled/veteran-owned small businesses without going to the Small Business Administration for permission.

Traditionally, 8(a) companies could receive direct awards up to $5.5 million for services. But now the FAR overhaul directs contracting officers to hold a competition before going with a direct award.

“This is a huge change for the 8(a) program,” Klaus said. “Going on with all of this is an audit at (the Small Business Administration) of the 8(a) program, starting with their-high dollar programs and going back about 15 years.”

Also under pressure is the rule of two, which requires that agencies set aside work for small businesses if there are at least two qualified bidders.

“We’ve all received a lot of (requests for information) in the past because the agency is looking to see if two or more small businesses can do the work. They don’t need to do that any more at the task order level,” she said.

The rule of two will apply at the contract level, but the contracting officer has discretion over whether to apply it for a task order.

“It is important to note that you cannot protest this,” Klaus said. “We may actually see fewer RFIs because contracting officers don’t need to look for small business capabilities.”

On top of these changes is the erosion of the infrastructure that supports small businesses. SBA's staff has been reduced by 60%.

One result is that there are fewer SBA contracting staff to work with the agencies and look for small business opportunities.

“They would help smooth the way and negotiate with agencies to create these opportunities,” Klaus said.

At the agency level, Offices of Small and Disadvantaged Business Utilization have been decimated.

“Many agencies are down to a staff of one and we heard that Treasury has none,” she said. “There are fewer resources there to help small businesses.”

One bright spot in the changes are service-disabled, veteran-owned small businesses.

“More opportunities will be directed to these groups,” Klaus said.

Small businesses owned by Alaska Native Corporations and Native American tribes are being left along in the FAR overhaul.

“No one is taking them on,” she said.

But it looks bleak for other small businesses.

Between the changes in regulations and the decimated small business offices, “the net is that there are fewer people looking out for small businesses,” she said.