It is always interesting to review the trends in government contracting. Service-Disabled Veteran-Owned Small Business (SDVOSB) trends surprised me. But before I spoil the blog let’s look at total contracting dollars spent over the last decade.
I started by computing the average contracting dollars spent over the last decade. Please refer to the chart labeled in Figure 1. Over the last ten years, the US has on average spent $492 Billion. By reviewing the chart, we can see that total procurement spending hit a high of $561 Billion in 2010. The US spending declined to a low in 2015. In 2015 of contract spending bottomed out at $409 Billion. Starting in 2015 procurement spending has increased until 2018. In 2018 contract spending was $523 Billion. In 2019 government contracts spending was around $510 Billion.
2019 Numbers will be finalized in January 2020.
The Department of Defense (DoD) has 90 days from the end of its fiscal year to get all its contracts entered into the Federal Procurement Data System (FPDS). Therefore, those numbers are not complete as of the date that we pulled the data (mid-December 2019). Also, we used USASpending.gov to obtain our data. USASpending pulls the data from FPDS.
Why Look at a Decade of Total Contract Spending?
As we have discussed in previous blogs knowing what the federal government spent in the past is a good indication of what they will spend in the future. By reviewing this data, we now know that on average the government spends $492B over the last ten years. In addition, we also know the 3% of all federal prime contracts are to be awarded to Service-Disabled Veteran-Owned Small Businesses. If we only reviewed the last five years of data, our numbers would show something completely different. We would be seeing an upward trend in total contract spending and then leveling out in 2019. We would not have seen the dip that occurred in 2013 through 2016. Also, our average total procurement spending would be lower.
By reviewing a longer period, it provides a better picture of procurement spending than a shorter time period. In theory, we could have gathered the data for twenty years. Unfortunately, USASpending only allows us to go back to 2008. Still, I believe we got a better picture and indication of government procurement spending by using a ten-year period. (2009-2019). Now let’s look at what transpired the last ten years for Service-Disabled Veteran-Owned Small Businesses. Please refer to Figure 2.
How Did Service-Disabled Veteran-Owned Small Businesses Do the Last Ten Years?
We would expect that SDVOSBs would trend along the same lines as total procurement dollars. See the chart (Figure 1). Much to my surprise, SDVOSBs received a greater increase in contracting dollars than total contracting dollars between 2009 and 2010. In fact, SDBOSB received a 19.46% increase over total contracting dollars increase of 3.79%.
SDVOSB Contracting Dollars Increased 19.46% in 2010
That is great news for our Veterans! But hold your horses. After 2010 SDVOSB contracting dollars flatlined with the very little variance until 2013. From the period 2013 through 2016 contracting dollars for our Service-Disabled Veterans increased while total government procurement spending decreased. This is also great news for our Veterans. 2015 through 2017 saw another significant increase than in 2018 started a significant drop. However, 2019 saw a slight increase in Service-Disabled Veteran-Owned Small Business Contracting Dollars. Now let’s see how our Service-Disabled Veteran-Owned Small Businesses compared with small businesses for the same time period.
Comparison of Small Business Contracting Dollars Versus Service-Disabled Veteran-Owned Small Business.
We can see from Figure 3 that Service-Disabled Veteran-Owned Small Businesses followed along with the same trend as small businesses. Now, remember that the small business contracting goal is 23% and Service-Disabled Veteran-Owned Small Businesses have a 3% goal. Over the last decade, small business contracting dollars have increased by only 2.92% compared to SDVOSBs that have had a 72.67% increase.
SDVOSB Contracting Dollars up 72.67% Over Last Ten Years
The charts do now show these increases. That is why it is a good idea to run your own numbers. The chart does show that small business contracting dollars and SDVOSB had a similar pattern over the last decade.
Summary for SDVOSB
Overall, SDVOSBs are doing very well. In fact, they are doing better than HUBZone Small Businesses and 8(a) Small business. HUBZone small business contracting dollars are down 71% over the same time period whereas 8(a) small businesses are down 48% over the same period.
All in all, it appears that the future is very bright for our Service Disabled Veteran Owned Small Businesses.
For more articles please click here.