By Tom Gerbe – Defense Information Analyst, BidLink.net
Defense cuts are not bad for everybody. Recently, we analyzed sales statistics for a broad base of industries including aerospace, tubing and piping, fasteners, safety equipment and more, looking at companies who win the most business. Industry by industry there is a distinct pattern, where large companies are trouncing the little guy by winning the lions share of contracts. For example, in an analysis of the top 10 suppliers of Tubing and Piping to the defense department only two companies, Rudy & Associates and BB&G Enterprises are small businesses.
When a company registers to sell to the Government, they must declare the company size in number of employees and annual sales. The Government uses this number to classify companies as small or large business. According to the Small Business Administration, small businesses account for about 50% of GDP. As a result, they want to support small business as much as possible.
Cutting Defense Spending
Small business competition may help the Defense Department achieve their goal of $487 billion in cuts over the next 10 years. DOD is so dedicated to promoting small business development that many Government buying centers have their own SBA offices. The stated goal of the DOD small business representative is “To create maximum opportunities for small businesses within DoD acquisitions.” Many contracts are awarded to large corporations that are the sole suppliers of billions in parts and services to DOD. Competition from small businesses can help reduce the cost of acquisition.
To provide support for the small business community, the Defense Department sets aside a percentage of overall contracting opportunities to companies under certain size. These contracts are often called, “Small Business Set-Asides”, because they are reserved for companies under a certain size. The Department of Defense has a stated goal of awarding at least 22% of contracts to small businesses in 2012, with the intent to increase that number each subsequent year. Each solicitation will specify the small business size, often 500 or 1,000 employees, under which the company must qualify in order to win a small business set-aside contract.
Winning Small Business Contracts
If a solicitation is set-aside, small business are chosen over large businesses, even if the large business submits a lower bid. In the case where the solicitation does not explicitly state a small business requirement, contractors can request the solicitation be re-classified if they qualify. This can be accomplished by contacting the small business representative for the agency that offered the solicitation.
If a small business is competing against a large company, a little known regulation can be used to your advantage:
48 C.F.R. 19.502-2 Total small business set-asides. (a) Each acquisition of supplies or services that has an anticipated dollar value exceeding $3,000, but not over $100,000 is automatically reserved exclusively for small business concerns and shall be set aside for small business unless the contracting officer determines there is not a reasonable expectation of obtaining offers from two or more responsible small business concerns that are competitive in terms of market prices, quality, and delivery.
If the contracting officer receives only one acceptable offer from a responsible small business concern in response to a set-aside, the contracting officer should make an award to that firm. If the contracting officer receives no acceptable offers from responsible small business concerns, the set-aside shall be withdrawn and the requirement, if still valid, shall be resolicited on an unrestricted basis.
Essentially any small business could take contracts from a large business as long as two or more small businesses compete. It might be worth while to notify one of your small business competitors about a contract just to take it from a big fish. At least two small companies may be on equal footing, whereas the large company can buy huge, discounted quantities or open factories overseas.
Small businesses have quite a bit of leverage against large companies when competing for Government business. By locating the right resources and knowing the rules, prudent contractors can find opportunities and win contracts. Small business is the backbone of the American economy. With the right tools and talent there are opportunities everywhere.
BidLink.net is a provider of defense industry information for contractors worldwide. This data includes millions of defense contracts, procurement history, part numbers and vendor details. This unique combination of resources allows BidLink to monitor and extract important information for the defense contracting industry. BidLink.net, based in Washington, D.C., provides bid search and notification services, procurement history as well as part number (NSN) lookup to many military activities and thousands of private companies around the world.
Comments? Send them to news@bidlink.net.
Tweet