The number of small businesses receiving government contracts dropped yet again in Fiscal Year 2020–and the four-year decline is 12.7%.
In its FY 2020 goaling scorecard, the SBA reported that 45,661 distinct small businesses received contracts in the top 100 NAICS codes. The previous fiscal year, 46,661 distinct small businesses received contracts. Four years ago, when SBA first started including this statistic in its annual reports, the number stood at 51,866. Clearly, the numbers are going in the wrong direction.
“Overpopulation crisis solved!” That’s the sort of headline I expect the SBA’s press team would write the day after a global thermonuclear war.
Obviously, I’m exaggerating a wee bit to make my point, but the SBA’s press release on FY 2020 small business goaling achievement follows a pattern I’ve seen across several Presidential administrations and SBA Administrators: when it comes to reporting on the small business goals, the SBA fervently emphasizes the good news while almost entirely ignoring the bad.
If you look past the headlines and examine the raw data, there is plenty of bad news to be found in the FY 2020 goaling report. So is the SBA doing a disservice to small businesses by pretending this bad news doesn’t exist?
The SBA released its annual Small Business Procurement Scorecard for fiscal year 2020 of how federal agencies are doing in meeting their small business goals. The SBA, in announcing the Scorecard, highlighted that small businesses received $145.7 billion in federal contracts , a $13 billion increase from the previous fiscal year. But looking beyond the headlines, not all of the trends are positive for small businesses. Let’s take a look at the numbers.
Earning federal contracts is a powerful tool to help small companies grow their business. To help make sure that small businesses have a seat at the table, the Small Business Act sets prime contracting goals for small businesses (along with each socio-economic category). 15 U.S.C. § 644(g). And each year, the SBA issues a scorecard grading the government’s compliance with those goals.
Just a couple days ago, the SBA released its scorecard for the 2018 fiscal year. All told, the scorecard paints a rosy picture of small business contracting.
Let’s take a look.
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.