Federal Government To Award $20 Billion in Set-Aside Contracts

Federal dollars awarded to small businesses are expected to grow 43 percent compared to last year, according to a recent report from Reston, Va.-based research firm Input. Solution providers that can provide agencies with professional services stand the greatest chance of winning contracts, with 70 percent of total awards expected to fall into that category.

Set-asides are contract dollars allocated to specific would-be suppliers, including small businesses owned by minorities, women and service-disabled veterans. The Small Business Administration (SBA) sets annual-procurement preference goals for the federal government to follow. Specifically, 23 percent of the IT budget is to be set aside for small businesses overall, with 5 percent to minority-owned small businesses (known as 8(a) or small disadvantaged businesses), 5 percent for women-owned small businesses, 3 percent for HUBZones and 3 percent for service-disabled veteran-owned businesses (SDVOBs). According to Input, set-aside contracts will total more than $20 billion in fiscal year 2006.

"The standout here is government's commitment to reach these set-aside goals in the future, especially for service-disabled veteran-owned businesses," says Megan Gamse, manager of defense opportunities for Input.

That's thanks largely to the $5 billion Veteran Technology Services (VETS) government-wide acquisition contract (GWAC). In addition, the Army is expected to release a final solicitation for its $310 million small-business set-aside for business-process outsourcing in the second quarter; the Air Force will release set-asides for $960 million in professional acquisition and IT support services, as well as a $350 million advisory and assistance-services requirement for Tinker Air Force Base.

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Overall, $14 billion in contract awards will seek professional services, including configuration management, operations and support, planning and analysis, and project management, Gamse says.

"Of course, from an overall market perspective, we see on average about 45 percent [of dollars spent] in professional services," she says, "so although there is some diversification in the set-aside segment, it's not yet in line with our full and open market."