Let’s Replace SBA Small Business Goaling Grades with Participation Trophies

For Fiscal Year 2017, SBA’s small business goaling scorecard awarded 21 agencies grades of “A+” or “A” for their small business contracting and subcontracting.  Two agencies received a “B” and a single, lonely agency brought up the rear with a “C.”  Not one agency received a grade below “C,” even agencies that missed most of their small business goals.

It was a “record breaking” performance, to hear SBA tell it.  But these inflated grades do a disservice to the public and government alike.  So long as almost everyone is going to get a top grade anyway, I say we just replace next year’s SBA goaling grades with agency participation trophies.

Why do I think SBA’s goaling scores are a problem?  Let’s take a look at a few examples from the 2017 report card.

First up, the Department of Agriculture.  When it came to prime contracting goals, Ag was five-for-five: it exceeded its small business, WOSB, SDB, SDVOSB and HUBZone goals.  And the small business achievement was especially impressive: 58.05%, versus a 49% goal.  For its lofty achievements, Ag (appropriately, I think) earned an “A.”

Now let’s take a look at the Department of Energy.  DOE went just one-for-five on its prime contracting goals.  DOE exceeded its small business goal, but the raw numbers weren’t that exciting: DOE managed 13.79% for small businesses, versus a 10.2% goal.  DOE missed all four of its socioeconomic goals, whiffing particularly badly on HUBZone (3.00% goal, 0.62% achievement) and SDVOSB (3.00% goal, 0.98% achievement).  So SBA really let those bums at DOE have it!  SBA gave DOE… ummm, an “A.”

Now, I know DOE has some unique pressures in the small business world because of DOE’s extensive use of large M&O primes.  And it’s not like DOE isn’t trying–the annual DOE Small Business Conference is truly excellent.  But this isn’t a commentary on DOE, it’s a commentary on SBA: Ag and DOE got the very same letter grade even though Ag exceeded all five of its goals, and DOE missed four-of-five.  What kind of scoring system assigns the same grade for 100% success as 20% success?

Let’s look at an an agency that doesn’t share DOE’s unique contracting model (I know, I know, every agency is “unique” but DOE probably more than most).  The National Science Foundation went just two-for-five on its goals.  It exceeded its small business and SDB goals, the latter by a significant margin.  But NSF fell short on its WOSB, SDVOSB and HUBZone goals.  Its WOSB achievement was particularly disappointing–just 3.57% versus a 5.00% goal.  So what grade did NSF get?  An “A.”

Finally, let’s check in on the fine folks at the Department of Justice.  For FY 2017, DOJ missed its small business goal, although it came pretty close.  DOJ fared particularly badly with HUBZones, managing just 1.09% against a 3.00% goal.  But DOJ exceeded its WOSB, SDB and SDVOSB goals.  What grade did the SBA assign DOJ?  By now, you see where I am going with this–of course, the DOJ also got an “A.”

So here we have four agencies.  One of the four knocked it out of the park, exceeding all five of its prime contracting goals.  Another did relatively poorly, meeting only one of its goals.  The others fell in between, hitting two and three goals, respectively.  Some major differences, yet all four agencies get to tout identical “A” small business grades.

The SBA publishes the scoring methodology it uses to develop its scorecard grades.  The statistical formulas may be too complex for my little lawyer brain to fully process, with terms like “component weight” and “weighted performance.”  But you know what?  I don’t need to truly understand how the math works.  Because any methodology that produces the same grade for the four agencies I just discussed is bad methodology.  And bad methodology leads to bad public policy.

By handing out “A” grades like tootsie rolls on Halloween, the SBA provides a disincentive for under-performing agencies to get better. Why, for example, should a DOE Contracting Officer care about issuing HUBZone set-asides to improve on the agency’s abysmal HUBZone score when DOE is already A-rated?  If an agency can get top scores without meeting any of its socioeconomic goals, why worry about those goals at all?

And what about agencies like Ag, which exceeded all of its goals?  Sure, Ag gets to tout an “A”–but apparently it could have gotten that same grade with a lot less small business contracting.  So, what’s to stop Ag from looking at other agencies’ scorecards and saying, “why the heck are we trying so hard?”  An “A” grade ought to be something that sets an agency apart, a reward for truly outstanding work, something to really brag about.  Instead, it’s become run-of-the-mill.

Worst of all, the glut of “A” grades makes it seem as though the government is doing fantastically across the board when it comes to small business contracting.  Sure, some agencies are doing very well, and deserve kudos.  But does any small contractor really think that 21 out of 24 agencies truly are doing “A” level work when it comes to promoting small business?  Let’s keep in mind that one of the so-called “A” agencies achieved approximately zero percent of its socioeconomic goals.

When the SBA issues a press release touting 21 “A” grades and one lingering lonely “C,” the message that policymakers and the public get is that small business contracting couldn’t be better.  This has very real policy consequences.  After all, why should policymakers bother to question efforts like streamlining, consolidation, bundling, category management and the like, if almost the entire government is getting “A” grades from the very agency whose purpose is to protect and serve small businesses?

The SBA’s recent press release smacks of spin instead of unvarnished small business advocacy.  For instance, the SBA’s press release brags that the government exceeded its WOSB “subcontract goals.”  That’s nice, but subcontracts are awarded by prime contractors, not the feds.  The actual dollars the federal government spent on WOSB prime contracts in FY 2017?  A mere 4.7%, well short of the not-so-lofty 5% goal.

This inconvenient fact isn’t mentioned in the press release–nor is the fact that the government missed its HUBZone goal by a wide margin (3.00% goal, 1.65% achievement).  And while the SBA press release trumpets the government’s achievement of the 23% small business goal, it fails to note that small business achievement declined compared with the prior fiscal year: from 24.34% to 23.88%.  Indeed, the government’s prime contracting achievements declined in four of five categories; a slight increase in the SDVOSB category was the only exception.

Small businesses don’t need spin; they need advocacy.  Small businesses face very important policy challenges on the horizon, like the streamlining recommendations from the Section 809 Panel.  The last thing small businesses need is for policymakers to evaluate the future of federal contracting with a distorted view about how well the government is already doing when it comes to promoting small business contracting.

If the SBA is going to give everyone, or almost everyone, the same goaling grade, then I say we eliminate grading entirely.  Moving forward, the SBA’s policy on small business scorecards should be no different than the policy of a second-grade soccer coach at the season-end pizza party: everyone gets a participation trophy.

You heard me.  Starting next year, each agency will get a bright, shiny SBA-approved trophy.  But instead of trying to grade the agency’s performance, and risk sending policymakers rose-colored signals, the trophy will simply confirm that, yep, the agency procured some stuff in the last fiscal year.  Congratulations, agency!  You participated!  You just keep that nice trophy right there on the shelf and show it to your grandmother when she visits for Thanksgiving, okay?

Let’s face it, we’re pretty much heading in the participation trophy direction anyway, with “A” grades being devalued by how commonplace they’ve become–and how disconnected they are to agencies’ actual small business achievements.

So what do you say, SBA?  Let’s toss out the complicated weighted formulas and get started on those soon-to-be-coveted FY 2018 participation trophies.  At least now, when Ag and DOE get the same thing, it will make a little bit of sense.