The Intelligence Community and Small Business Contracting – Small Business Set-Asides

The Role of Small Business in Government Contracting

Contracting for the Federal Government is a major industry and small contractors play an important part. Because smallcontractors tend to be more innovative and agile, they provide goods and services that the Government requires on a cost effective basis. Small companies contract directly with the Government (usually under set aside programs) or as subcontractors through large prime contractors. When subcontracting, small contractors are relied on to provide unique technical expertise, knowledge of a particular customer or recruiting capabilities as added value to the efforts of a prime contractor.

In addition, as a matter of policy and to further encourage competition specific small business guidelines have been put for the by administration since the end of World War II. The Small Business Administration (SBA) was created to help small companies to grow their Federal Contracting business.

Included in the many SBA programs are loans to small firms, contracting set aside programs and monitoring of federal Contract Goals for prime contracting and subcontracting. The programs and goals served to stimulate a robust small enterprise contracting environment and many experts believe benefited Federal Government Agencies.

Recently however, small contractors have suffered as a result of a number of factors. Based upon reduced contracting budgets, a general mistrust of the contracting community, increased expansion of government hires and general growth of the federal and state governments, contracting activity was significantly reduced. Direct contracts to small firms were replaced by insourcing (bringing work back into Federal Agencies to create work for newly hired government employees) and the resulting cancellation of large prime contracts has caused a disproportionate reduction of the small business work force. When prime contracts were cut, small contractors suffered most.

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An addition problem that small companies face was the change in the award protest rule. Protest threshold levels were reduce to $ 10 million and protests of task orders under existing multiple award contracts were allowed. This practice significantly reduced the number and amount of contract awards as losing bidders gained advantage by slowing down the award process.

Recent Administration Guidelines – Policy Issues

In April 2010, perhaps realizing that an innovative and agile small contracting community was a national asset to be preserved, the Obama Administration concluded that small business contracting goals were being missed by a wide margin and commissioned a special panel to review the problem and develop solutions . The impact of this move should prove to rejuvenate the policy of encouraging small business contracting and hopefully will improve the business environment for small contractors.

Small Business Contracting and the Intelligence Community

Presently, only Intelligence Agencies associated with the Department of Defense (NSA, DIA, NGA and the services) have small business programs and contracting goals. The goals are estimated to be about 23% of all contracting business set aside for small business. Civilian Intelligence Agencies like CIA and NRO do not have small business contracting goals or programs.

How the National Security Agency is Different from Other Intelligence Agencies

The National Security Agency has proved to be the most aggressive Intelligence Agency in developing programs to meet contracting goals, although the agency still has its own style of contracting and buying patterns. The NSA faces unique technical demands and its research and development focus coupled with agency size and increasing flow of raw intelligence, offers excellent contracting opportunity for small business contractors.

by John M. Stout

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