DOE Earns Failing Score From SBA In FY’13
Kenneth Fletcher
WC Monitor
6/13/2014
It may once again be hard for the Department of Energy to earn a passing grade from the Small Business Administration this fiscal year, as DOE and the SBA continue to work out details on a new law allowing some subcontracts to be counted towards DOE small business goals. The Department earned a failing grade from the SBA in FY’13 and FY’12, falling far below goals for small business prime contracting. However, a new rule cleared Congress early this year that would allow first tier subcontracts awarded by DOE management-and-operating contractors to be counted toward overall small business goals. “But SBA is not going to let us do it this year,” DOE Director of the Office of Acquisition and Project Management Paul Bosco said this week at a meeting the Energy Facility Contractors Group held at DOE headquarters. He added later, “Fiscal Year ‘15 is when we are going to be looking at rolling in for M&O contractors the first-tier subcontracts that are small business.”
DOE again got a failing score in the FY’13 SBA procurement scorecard, Bosco said, though the Administration has not yet posted the details. In FY’12 DOE failed to meet its SBA goal of 10 percent of prime contracts to small business—in that year they made up only 5.15 percent of DOE primes. But DOE nearly reached its small business subcontracting goal of 52 percent that year. The failing grade “reflects, in large part, the unique structure of the Department and its management and operating (M&O) contracts with the national labs,” according to comments on the FY’12 scorecard. “While the Department did not make the 10% prime contract goal, as noted above, DOE did obligate over a quarter of our procurement dollars to small businesses.” While the bulk of the Department’s M&O contracts are at the national labs, the Office of Environmental Management also has M&O contracts in place at the Savannah River Site and the Waste Isolation Pilot Plant.
DOE and SBA Working on ‘Mechanical’ Issues
The SBA and DOE already established small business prime contracting goal of 6.59 percent for FY’14 before the legislation came out, meaning DOE will likely wait until ‘15 to implement the switch, Bosco said. There are also a number of “mechanical” issues that need to be worked out, according to John Hale, Director of DOE’s Office of Small and Disadvantaged Business Utilization. Part of that is accounting for the total small business subcontracts through the M&Os given that there are two different procurement data systems used by DOE, one that focuses on primes and the other on subcontracts. “They don’t necessarily talk. So it’s more mechanical, how do you make this process work,” Hale told WC Monitor this week on the sidelines of the DOE Small Business Conference in Tampa, Fla.
New Rule ‘Caught Everybody by Surprise’
The new rule “caught everybody by surprise,” according to Hale. “It’s not like we knew this was coming so we could have pre-conversations. So now that it’s here, how do you work with it?” he said. “We have been having those conversations with the SBA since shortly after this law was changed and the budget was enacted back in January. We are trying to figure out from a mechanical standpoint how you’re going to do it right now.”
While the Department’s small business contracting goal stands at 6.59 percent for FY’14, DOE and the SBA may negotiate a new goal given the change that allows subcontracts to be counted. “The issue is what should that number be now that the law has changed. Should our goal go up?” Hale said. He noted that the SBA “will look at it a little differently in terms of what should that number be with the change in the law and how do you measure that, how do you assess that, how do you validate that. So those are going to all be part and parcel of the same conversation.” Hale emphasized that “irrespective of the SBA goals, the vision is building sustainable small businesses to help the Department to achieve our mission in utilizing the innovation, creativity, agility and niche capabilities of small companies.”
