• Joshua Duvall

GAO Report: Awards to Mid-Sized Businesses and Options for Increasing Their Opportunities

On September 19, the U.S. Government Accountability Office ("GAO") publicly released a 54-page report on federal contracting opportunities for mid-sized government contractors. [1]  The report was requested by the House Committee on Small Business after it learned that there is minimal data on what happens to contractors in the federal marketplace after they exceed their small business size standards

.

Based on the Committee's request, GAO principally researched the following objectives:


  • the extent to which small businesses grew to mid-sized and continued to receive federal contracts; and

  • options for increasing contracting opportunities for mid-sized businesses.


To accomplish this task, GAO analyzed Federal Procurement Data System-Next Generation ("FPDS-NG") data for fiscal years 2008 through 2017. Through this research, GAO found that very few small businesses that were awarded set-aside contracts grew to be mid-sized contractors and then continued to flourish in the federal marketplace.


Below are some findings from the GAO's report:


  • "Of the 5,339 small businesses awarded set-aside contracts in fiscal year 2008 and awarded any sort of federal contract (including set-aside or competed) in 2013, 104 became mid-sized by fiscal year 2013."

  • "Of those 104 businesses, 23 remained mid-sized through 2017 and won 75 contracts. Another three businesses became large and won six contracts."


GAO also found that between FY2008–FY2017 "[about 2.5% of small businesses] grew to mid-size and continued to receive some type of federal contract."  Interestingly, GAO also found that "more than 93 percent of the businesses that were awarded only set-aside contracts in fiscal year 2008 and received any federal contract (including a set-aside or competed contract) in fiscal year 2017 remained small."


Regarding solutions to help increase contracting opportunities for mid-sized contractors, GAO  grouped options into four categories:


  1. establishing a set-aside for mid-sized businesses;

  2. modifying the rules for multiple-award contracts;

  3. changing how past performance is considered when evaluating bid proposals; and

  4. modifying SBA’s size standards.


Notably, under the first option, GAO found that creating a mid-sized set-aside category would probably reduce the number of federal contracting opportunities for small business concerns.


The GAO report can be found here:  GAO Report: Awards to Mid-Sized Businesses and Options for Increasing Their Opportunities 


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[1]  In the report, GAO defined mid-sized contractors as "having revenue or employees up to five times above the small business size standard."  For example, NAICS code 541511 carries a size standard of $30 million; therefore, a mid-sized contractor under that NAICS code could have revenues as high as $150 million.


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