I thought with all of the "doom and gloom" news lately that we should focus on some good news for a change. There are still opportunities for small business in the Federal Government contract space. I did just read today that China is increasing their defense budget a modest 10.7% this year. While this seems large compared to the decline in the US defense budget, China's total budget for defense is about 1/6th the US budget, even after Sequestration. As they are the 2nd largest defense spender world-wide, and growing, this will serve as a "caution" flag for continued reductions by Congress of the US budget. In contrast, India's defense budget has steadily seen smaller and smaller increases over the last 3 years from 17.6% two years ago, to 11.6% last year to 5.3% this year. Clearly they are seeing a slowing in defense spending too. Clearly there is a world-wide trend to spend less on defense budgets.
But in the smaller budgets, there are also some reason for optimism for small business in the United States. I just saw today several IDIQ contract awards by NASA:
- Wyle wins $2 Billion NASA Health Contract to support human spaceflight
- Radiance, Wyle & Lockheed win IDIQ Contracts from Marshall Spaceflight center totalling $350 Million
In addition, there are several Navy contracts recently awarded:
- Lockheed wins $697 Million to build 2 Littoral Combat Ships
- Lockheed wins $100 Million to to update combat systems on ships
So you can see there are some very large contracts. The good news for small business is that the government seems more focused under President Obama to make sure that the agency meets their small business goals. This would include a Small Business Subcontract plan from each of these agencies to spend at least 23% with Small Business concerns. Further good news for small business contractors may come from the 2013 National Defense Authorization Act (NDAA). There are several provisions in this bill that can help small business including:
- Creating a mentor-protege program for all small businesses (not just 8(a) firms as in the past) - this could be very attractive to large business to open them up to contracts normally that would be a set-aside and it will benefit small business as they will be able to partner with big business. It is not a mandatory program but is encouraging right now
- Enforcement of Small Business Subcontracting Plans - the NDAA provides a requirement that large business must notify small businesses that they are being included in bids. This should help solidify small business participation in a lot of bids
- Requires SBA to establish a reporting mechanism form subcontractors to report fraud or "bad faith" by a prime contractor related to a Small Business Subcontract Plan
- Authorize agencies to evaluate contractor compliance to Small Business Subcontracting thru past performance evaluations
- Broadens the ability of an agency to disbar or suspend a contractor that misrepresents itself as a small business
So my advice to small business right now is to pursue relationships with larger primes that are getting some awards. You may want to become well known by the Small Business Liaison Officers at these Primes and get included on some of the bids as part of their subcontracting plan. There is a definite bias to get small business involvement from the Executive Branch of the government, we just need to follow a slightly different path than we did in the past. Please share with me your view on this or give me a call and I would be happy to discuss it with you.