Bloomberg Government recently released a report titled, Mid-Tier Paradox, Too Small to Compete, Too Big to Survive, in which they studied mid-tier successes in federal contracting. It was found that mid-tier performance was steady over the past five fiscal years (FY11-FY15), though they attribute this finding not to remedies in federal procurement policies, but rather, to other various trends that could account for such.

Included in these trends are mid-tiers that continue to perform set-aside contracts for which they obtained when still classified as a small business. Note: it is only at the end of a contract, task order, or active option period before businesses are required to re-certify their size. Moreover, some small businesses (ANCs and tribally-owned contractors) are permitted to grow well into the mid-tier sector and even beyond, while still being considered small.

Bloomberg Gov. also cites certain government acquisition practices as a possible threat to mid-tier company growth. There are currently record levels of set-aside spending (especially on ANCs/tribally-owned companies). Strict past performance quantifications are being used as an evaluation tool on contracts like OASIS and Alliant, which prevents mid-tiers from bidding as prime vendors, thus withholding key growth opportunities for years. Mid-tiers are also locked out of flexible teaming arrangements that are only offered to small businesses. And as overall federal spending declines, market competition will only further intensify.

In light of these problematic trends plaguing mid-tier businesses, the report does offer possible avenues of hope, citing agency and legislative support options including:

  • extending the flexible teaming arrangements to mid-sized companies that recognize aggregate as well as individual team member performance
  • allowing mid-tier companies to grow their commercial revenues while still being considered small businesses for the purpose of government contracting
  • limiting the use of quantitative past performance evaluations, or making their terms more flexible to include smaller mid-tier companies.

Mid-Tier Advocacy recognizes the above suggestions as viable options that would help foster healthy economic competition for mid-tier firms in federal procurement, and continues to advocate on behalf of our stakeholders.

[You can download the Bloomberg Gov. report mentioned above: here]

This entry was written by Dylan Garcia, an intern with the Washington Premier Group. He is currently a rising second year at the University of Virginia, and is planning on majoring in either Government or Marketing.

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