Did You Know…? Episode 1 The Worlds Largest Buyer

by | Aug 20, 2018

In this Episode of Did You Know…?

Episode 1 is a primer on The World’s Largest Buyer. We discuss the basics of the federal contracting landscape and the responsibility shouldered by federal contractors acting as civil servants.

The World’s Largest Buyer

In fiscal year 2017, our federal government spent $512 billion on goods and services. That’s a 6% increase despite uncertainty arising from the complex and divisive budget process. This trend is not just a product of recent years. Overall spending has been growing ever since the Truman administration, and current spending is exceeding 24% of GDP – something we haven’t seen in a long time.

“Spending on contracting grew between 2000 and 2012 more quickly than inflation and as a percentage of total federal spending, the fastest-growing category in dollars was contracts for professional, administrative, and management services.” – Congressional Budget Office Report 

The Changing Face of Civil Service

Because of this, the Federal government depends, more and more often, on contractors to shoulder the sacred responsibility of civil service. These contracted civil servants work across all Federal agencies, providing essential services to America’s diverse communities. Contractors vastly out number Federal employees, as evidenced by a Volker Alliance 2015 study. They found that contractor personnel outnumber federal employees by 1.7 million. Put in context of the total numbers, for every federal employee there are 1.5 contractor personnel serving our communities.

Diversity of Those Who Serve

America, as a nation, is incredibly diverse; our diversity is what makes America great. In order to encourage diversity in the massive contracting marketplace, congress mandates a portion of all dollars spent be set aside for small businesses owned and operated by people who meet certain requirements. These categories include several historically disenfranchised groups. A quick overview:

  • The 8(a) Business Development Program: helps provide “a level playing field” for small business owners from socially and economically disadvantaged people or entities. This most commonly applies to minority-owned businesses.
  • Women-Owned Small Business Federal Contracting Program: specifically designed for companies owned and operated by women (though significant fraud and abuse has recently been revealed)
  • Historically Underutilized Business Zone (HUBZone) Program: helps small businesses located in historically economically disadvantaged areas, both urban and rural, gain access to federal contracts
  • Service Disabled Veteran Owned Small Business (SDVOSB) Program: creates opportunity for veterans who have sacrificed in defense of our country

Just one of these categories, minority-owned small businesses providing services to the government, is estimated to provide more than 150,000 jobs in the US.

Barriers to Innovation and Diversity

While the set-aside programs exist to give small, disadvantaged businesses a “hand-up” into the Federal market, the barrier of entry is still exceptionally high. In fact, over the past five years, the same six large corporations have received the most contracting dollars. Meanwhile woman-owned businesses (large and small) received only 5% of federal contract dollars in 2017.

Constantly shifting policies, lack of centralized knowledge, out-dated processes, and onerous requirements all make it difficult to access the federal marketplace. These barriers, while in place to serve the best interest of the tax-payer, slow innovation and minimize the opportunities for representation of the historically disenfranchised in civil service.

Breaking Down the Barriers

These barriers do not need to be deterrents. The diversity of the communities served by the Federal government should be directly reflected in the civil servant workforce. A workforce that, as discussed previously, is mostly contractor personnel.

TWRG breaks down the barriers of the Federal marketplace, facilitating access to those who’s innovative and transformative products and services will improve the lives of under-served communities.

Want to Know More? Join us in The War Room

The barriers to entry for small disadvantaged businesses to access the Federal marketplace are high. TWRG would like to change that. To find our more about how joining us in The War Room can help you break through the barriers your business is facing please contact us.

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