Deltek: Opportunities from contractors leaving the 8(a) program

April 13, 2014

More than 1,100 companies are scheduled to exit — or have exited — the Small Business Administration’s 8(a) program by fiscal 2014. Between them, they hold nearly $5 billion in 8(a) set-aside contracts and task orders expiring in fiscal 2015 and 2016.

Once a contract or task order is awarded through the 8(a) program, most follow-on activity will also be set-aside for 8(a) companies. However, the current incumbent cannot be the prime contractor on any potential follow-on to these expiring contracts.

The more than 6,500 8(a) businesses with program exit dates in fiscal 2015 or later are in a strong position to chase the contract orders exiting 8(a) contractors will leave behind.

These 8(a) companies can go after these contracts as prime contractors, possibly even teaming with the previous incumbent to win the work.

Here are four characteristics of the expiring 8(a) contracts and task orders:

Top contracting agencies

The Army funded 16 percent (or $785 million) of these expiring contracts based on reported spending, more than half of which was through sole-source awards.

NASA was a close second, with 15 percent (or $749 million). Unlike the Army, the majority of NASA’s 8(a) contracts were awarded competitively.

The Navy, Air Force, and Health and Human Services’ Centers for Medicare and Medicaid Services rounded out the top five agencies, based on obligated contract dollars tied to expiring fiscal 2015 and 2016 contracts.

Maryland contractor eDaptive Systems exited the 8(a) program in March 2014. Two of its 8(a) contracts with the Centers for Medicare and Medicaid Services are scheduled to expire in fiscal 2016 and have a combined potential value of more than $200 million.

Professional services

One-third of the expiring contracts provide professional, administrative and management support.

Most of the work is specifically for engineering and technical services, such as NASA’s Software Engineering Support contract, scheduled to expire in 2016. Incumbent Columbus Technologies and Services exited the 8(a) program in 2012.

Deltek has learned that NASA’s contracting office is assessing market research to decide its acquisition strategy for the follow-on competition.

Local 8(a)s hold half of 2015-2016 contracts

One-half of reported federal spending for task orders and contracts expiring in fiscal 2015 and 2016 is held by exiting 8(a) companies headquartered in Maryland, the District and Virginia.

Opportunities exist for active and exiting 8(a)s

Deltek is tracking hundreds of 8(a) set-aside opportunities with solicitations expected in fiscal 2015 or later. These opportunities are held by exiting and current 8(a) companies and have a combined total contract value of almost $20 billion.

These 8(a) contracts are in addition to the thousands of small business set-aside and unrestricted opportunities expected in fiscal 2015 and beyond, which are open to both active and exiting 8(a) bidders.

Kathleen Sievers is a research manager at Herndon-based Deltek, which conducts analysis on the government contracting market and can be found at www.deltek.com.

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