Impacts and Projections for Small Business Contractors in 2021
A Happy Good-Bye to 2020
Well Meridian West friends, 2020 has been a doozy! At a minimum, it has been a challenge for everybody, and for some, it has been life-altering. Let’s all agree that 2020 has made us practice our patience. We have patiently waited for a lot of things…for COVID-19 to magically disappear, to see our families and friends, to return to school or the office, to watch our favorite teams return to their sports, to sing our hearts out at a live concert and the election results.
While we wait…we wonder, a new president always leaves federal contractors speculating what government and defense spending will look like during the next four-year term. We do have some insights from GovWin from Deltek that provide a promising 2021.
COVID-19 Impacts on Small Business Contractors
“Signs of a healthy contracting market are sustained, although the full impact of the COVID-19 pandemic on the contracting run rates and new acquisitions are still unfolding. The speed of COVID response procurement may set the stage for future acquisition flexibilities.” Says GovWin from Deltek in their Federal Acquisition Landscape, 2021 report.
Acquisition Process Reform
COVID-19 has made every industry and company think outside the box and develop new ways to do business. In the past few years, the federal government has been reforming the acquisition process, but this pandemic helped fast-track their goals and accomplishments. The reform includes assessing, streamlining and improving multiple components of the process.
One major reform benefit for contractors is the decrease in the average number of days from RFP submission to award. The average number of days to award has been decreasing steadily the past several years, but with the most recent reforms, we are experiencing the quickest turn-times.
Additionally, virtual and remote acquisition engagement has ramped up with agencies adjusting to teleworking and restricted access to facilities. The virtual and remote engagement in areas like Industry Days, Interviews and Virtual Inspections eases the burden of travel expenses for small business contractors.
Finally, contractors are benefiting from proposal submissions going (mostly) electronic, saving a lot of printing time, print and shipping costs or travel costs for hand deliveries. All these reforms will continue to improve and benefit our industry as a whole.
Changes to the Small Business Size Standards Methodology by the SBA
COVID-19 has impacted small businesses in a variety of ways, from profit to technology, we are all trying to adapt in new directions. The Small Business Administration (SBA) understands the financial impacts this can have, which is why they have changed its Small Business Size Standards Methodology. GovWin from Deltek says in their Federal Acquisition Landscape, 2021 report “SBA modified its methodology for calculating business revenues used to determine small business size standards. Effective back in January 2020 (with a 2-year transition period), the SBA standardized the timeframe used to calculate receipts from 3 years to 5 years for industries subject to receipt-based size standards. The new method assigns a separate size standard for each NAICS-based industry classification, rather than from a limited number of fixed size standards.”
The SBA says, “when annual revenues are declining, the 5-year average may be higher than the 3-year average. This would cause small businesses near the size thresholds to lose their small business status sooner under the 5-year average than under the 3-year average. This is more likely to happen during economic downturns. The transition period is critical because SBA will allow companies to CHOOSE whether to use the 3-year or 5-year average. Companies that lose their small business status under the 5-year average will have to wait several years to requalify.”
FY 2021 Small Business Opportunity Projections
“The FY 2021 Top 10 small business opportunities total contract value is more than $51.9 billion, consisting of prime contract opportunities from a variety of agencies and industry segments,” states GovWin from Deltek in their Top 10 Federal Set-Aside Opportunities for FY 2021 report. This is a decrease of 29% from FY 2020. The Research and Development (R&D) industry appeared on the Top Small Business List for the first time since FY 2012. Here is a breakdown of the top five industries making Deltek’s FY 2021 Small Business Federal Opportunities List.
· Information Technology (IT) – $25.85 Billion
· Operations and Maintenance (O&M) – $20.26 Billion
· Professional Services – $3.30 Billion
· Architecture, Engineering and Construction (AEC) – $1.54 Billion
· R&D – $0.95 Billion
The largest AEC multiple-award acquisition anticipated to be issued in February 2021 is the Air Force’s General Construction Multiple Award Construction Contract (GC-MACC) with a value of $900 million, a five-year base period and one three-year option period. The competition type is currently undetermined; however, the incumbent contractors are 8(a)s and have provided services at Beale Air Force Base (AFB).
The Vertical Construction 8(a) Set-aside Southwestern Region is a new requirement anticipated to be released soon from the Fort Worth District. This 8(a) set-aside solicitation is valued at $641 million and will utilize a design-build and design-bid-build process for scopes including new construction, maintenance, repairs and alterations.
Virtual Cheers to 2021
Meridian West believes that despite this tough year, we have some positive trends happening within the federal acquisitions’ arena. It may take a few years to finalize reforms or increase spending again, but we are confident that the nation can get through this tough time together and come out on top. With a very happy good-bye to 2020 and great appreciation to our clients, teaming partners and associates, we are sending you all a VIRTUAL CHEERS to 2021.