Government Misses HUBZone, WOSB Goals–But Gets “A” Grade Anyway

The government missed its Fiscal Year 2016 HUBZone goal by a country mile, and didn’t hit the 5% WOSB goal, either.  But according to the SBA, the government deserves an “A” for its FY 2016 small business achievements.

That’s some rather generous scoring, wouldn’t you say?

On May 18 ,the SBA issued a press release announcing that the government had exceeded its 23% small business goal for the fourth straight year.  The SBA’s report card gave the government an overall “A” grade for its achievements.  Among individual agencies, 18 received grades of “A+” or “A,” four received a “B,” and one earned a “C.”  No agency received a “D” or “F.”

Exceeding the 23% goal is a good thing, and something we shouldn’t take for granted.  It wasn’t that long ago that I was blogging about a string of failures in that regard.  But are the FY 2016 results really “A” level work?  Let’s take a look at some of the not-so-great specifics:

  • Overall small business achievement was down significantly: from 25.75% in FY 2015 to 24.34% in FY 2016.
  • Small disadvantaged achievement dropped too: from 10.06% in FY 2015 to 9.52% in FY 2016.
  • After hitting the 5% WOSB goal in FY 2015, the government backslid.  The FY 2016 result: 4.79%.
  • HUBZone awards took another step backward: from 1.81% in FY 2015 to 1.67% in 2015.  That’s right: the government barely exceeded half of the 3% HUBZone goal.

Of the five prime contract categories tracked (small business, SDB, SDVOSB, HUBZone, and WOSB), only SDVOSBs saw an increase, and it was tiny: 3.98% in FY 2016 versus 3.68% the prior year.

Things weren’t much better on the subcontracting side.  There, although overall subcontracting achievement was up slightly over the prior year, the government missed its overall 33.7% goal, and also missed the HUBZone and SDVOSB goals by wide margins.  The government exceeded its WOSB and SDB subcontracting goals, but achievement in both categories dropped versus FY 2015.

I could go on.  And you know what, I think I will.

The Department of Energy, for instance, earned an “A” for its small business achievement, despite the fact that it mustered a mere 0.38% for HUBZones, versus a 3% goal.  Oh, and the DOE also “achieved” 0.76% for SDVOSBs, versus a 3% goal.  The DoD got an “A” despite missing its HUBZone and WOSB goals by considerable margins.  The DOJ scored an “A” with a measly 1.05% to HUBZones.  The State Department earned a coveted “A+” despite missing its HUBZone goal.  And so on.

The SBA published its FY 2016 Scorecard Grade Calculation Methodology, and I’m sure someone smart at math can give me the ins and outs of how the numbers work.  But you don’t need a degree in statistics to think that a system is broken if it allows agencies (and the government as a whole) to earn high small business goaling scores for middling performance.

In a world with so many women-owned small businesses, it is downright embarrassing for the government to miss its meager 5% WOSB goal.  And with new tools available to make it much easier to contract with HUBZone firms (such as the ability to joint venture with non-HUBZones), it’s absurd that the government is moving backwards on its HUBZone achievement.

Here’s what I think: neither the government nor any agency should get an “A” if it doesn’t meet every single one of its prime contracting goals, and an “A+” should be awarded only if every prime contracting and subcontracting goal is met.  Additionally, the scoring methodology should take into account year-to-year performance; top scores should not be awarded if an agency is moving backwards.

This stuff matters.  If agencies can earn top scores despite missing major components of their goaling, why should they try to get any better?  Why should the DOE care if it improves on its 0.76% HUBZone achievement, if it can tout an “A”?  For that matter, what incentive is there for the government as a whole to hit its socioeconomic goals if it is awarded “A” grades for meeting only some of them?

There’s been a lot of talk in the media about the way the SBA calculates goaling achievement.  But the grades the SBA assigns are every bit as important as the numbers the SBA reports.  And if you ask me, the FY 2016 grades are way off the mark.