Federal Contracting
September 25, 2023

Federal Contractors Solve Government Workforce Challenges, but the Recent SBA Upheaval Could Put Many in Jeopardy

The federal government of the United States is a vast and complex organization responsible for a wide array of critical functions, ranging from national defense to healthcare and infrastructure development. To effectively carry out these responsibilities, the government relies on a dedicated and skilled workforce. However, in recent years, the federal government has faced a series of workforce challenges, including an aging workforce and difficulties in recruiting and retaining talent. Contractors play a crucial role in helping the government address these pressing issues. Yet after a federal judge declared the social disadvantage provision of the Small Business Administration (SBA) program unconstitutional, his decision throws into disarray a process that has served minority-owned small businesses for about five decades. Experts worry that a ripple effect will further imperil competitive and diverse federal contracting when the government needs it most.

Small Businesses Produce Big Results

Small businesses have generated 12.9 million net new jobs over the past 25 years, accounting for two out of every three jobs added to the economy, based on data from the Small Business Administration Office of Advocacy.  In fact, small businesses account for more than 99% of all businesses. 

As Martin Rowinski detailed in Forbes, “According to the U.S. Small Business Association (SBA), small businesses of 500 employees or fewer make up 99.9% of all U.S. businesses and 99.7% of firms with paid employees. Of the new jobs created between 1995 and 2020, small businesses accounted for 62%—12.7 million compared to 7.9 million by large enterprises. A 2019 SBA report found that small businesses accounted for 44% of U.S. economic activity. Without small businesses, the American economy and workforce would be a pretty wild landscape to imagine.”

SBA Contractors In Potential Jeopardy

These same organizations also play instrumental roles in the world of federal contracting. Approximately 4,800 businesses participate in the 8(a) program, and nearly 4,000 of them were certified under the presumption of social disadvantage, according to the SBA. That means about 83% of current 8(a) contractors could be at risk of removal from the program based on the recent ruling in Ultima Servs. Corp. v. Dep't of Ag.

As a result of the court’s July injunction, the SBA temporarily paused new 8(a) applications and began requiring businesses in the program that relied on the rebuttable presumption to prove social disadvantage in a narrative detailing past discrimination before they can accept new contract awards. 

“While the narratives will allow the SBA to keep things moving,” wrote Madison Alder in FedScoop, “they also stand to jeopardize both participants’ membership in the program and their future 8(a) contract opportunities, lawyers and experts said.”

Julian Mark of the Philadelphia Tribune spoke with Antonio Franco, managing partner at PilieroMazza, based in Washington, which works with government contractors to apply for the 8(a) program. Franco pointed out that the decision could lead to a slippery slope:

“Other government business programs meant to benefit disadvantaged groups may also be vulnerable, Franco added. He cited the Transportation Department's Disadvantaged Business Enterprise program, which dispenses transportation-related construction contracts to minority-owned businesses. Though different from the 8(a) program in some respects, it relies on the same social disadvantage presumption.”

Mark also referenced comments from Koprince McCall Pottroff, a government contracts lawyer in Kansas who helps businesses apply for the SBA program: “I am very concerned that the [8(a)] program itself is going to be on the chopping block at some point, and I think that is why SBA is swiftly implementing things and trying to appease the courts . . . because they don’t want the entire program to be on the chopping block.”

Federal Contractors Help Solve Federal Workforce Challenges

The federal government is confronting several workforce challenges, including an aging workforce and difficulties in recruiting and retaining talent. These challenges can have far-reaching implications for government operations and service delivery. Contractors, with their specialized expertise, flexibility, and innovation, offer a valuable solution to these challenges. By effectively leveraging contractors, government agencies can bridge talent gaps, enhance their capabilities, and improve the overall efficiency and effectiveness of their operations. 

According to the Small Business Administration's (SBA) FY2020 Disaggregated Contracting Data, 50% of federal contractors in the 8(a) program are staffing agencies. 

Staffing providers play an integral role in the federal contracting process by providing skilled workers to government agencies on a temporary or project basis. Staffing suppliers help government agencies meet their workforce needs quickly and efficiently, while helping to reduce the costs involved in hiring and training new employees. For this reason, it’s imperative that the federal government and the SBA find a solution that allows contractors, particularly smaller companies engaged in staffing and professional services, to continue delivering the competitive advantages, innovation, and solutions that keep government functioning smoothly. Let’s explore the current obstacles facing federal agencies and how workforce services contractors help overcome them.

The Aging Workforce in the Federal Government

One of the primary challenges facing the federal government is the aging of its workforce. Many federal employees are nearing retirement age, and there is a growing concern about the loss of institutional knowledge and experience that will occur when they retire. Here are some key factors contributing to the aging workforce challenge:

  • Baby Boomer Retirement Wave: The Baby Boomer generation, born between 1946 and 1964, makes up a significant portion of the federal workforce. As they reach retirement age, a substantial number of federal employees are expected to retire, leading to a potential talent gap.
  • Knowledge and Expertise Drain: These retiring employees often possess valuable knowledge and expertise that may not be easily transferable to younger generations. Losing this institutional knowledge can have detrimental effects on the efficiency and effectiveness of government operations.
  • Recruitment Challenges: The federal government faces difficulties in recruiting younger talent to replace retiring employees. Attracting younger professionals to government positions can be challenging due to factors like competitive salaries, bureaucracy, and limited opportunities for career advancement.

Recruitment and Retention Challenges

In addition to the aging workforce, the federal government faces significant recruitment and retention challenges. These challenges stem from various factors, including the following. 

  • Competitive Private Sector Salaries: Federal salaries often lag behind those in the private sector, making it difficult to attract top talent, particularly in fields such as technology and cybersecurity.
  • Lengthy Hiring Processes: The federal government's hiring processes are notoriously slow and complex. This can deter potential candidates who seek a quicker path to employment in the private sector.
  • Bureaucratic Red Tape: The bureaucratic nature of government operations can be a turn-off for some potential employees who value innovation and flexibility in their work environments.
  • Limited Career Advancement: The government's hierarchical structure can sometimes limit opportunities for career advancement, causing talented individuals to seek more dynamic career paths elsewhere.

How Contractors Address Workforce Challenges

Contractors play a vital role in helping the federal government address its workforce challenges. Here are several ways in which contractors contribute.

  • Specialized Expertise: Contractors often bring specialized skills and expertise to the table. Government agencies can tap into this expertise on a project-by-project basis, ensuring access to the latest industry knowledge and best practices.
  • Strategic Staff Augmentation: Contractors can provide temporary staff augmentation during peak workload periods or when specific expertise is needed for short-term projects. This flexibility can help government agencies manage fluctuations in workload more efficiently.
  • Bridging the Talent Gap: Contractors can fill gaps in talent caused by the retirement of experienced employees. They can step in to perform critical tasks while agencies work on recruiting and training new permanent staff.
  • Expediting Project Execution: Government contracting allows agencies to expedite project execution by leveraging the resources and capabilities of private-sector firms. Contractors often have established processes and infrastructure that can accelerate project timelines.
  • Innovation and Efficiency: Contractors often bring a fresh perspective and innovative approaches to problem-solving. They can introduce new technologies and methodologies that improve government operations.
  • Cost Savings: In some cases, contracting can be more cost-effective than hiring permanent government employees, especially for short-term or highly specialized projects.
  • Diverse Skill Sets: Government agencies can access a diverse pool of talent through contractors, enabling them to tackle a wide range of projects and challenges.

Case Studies: Successful Contractor Engagements

To illustrate the effectiveness of contractors in addressing workforce challenges, let's examine a few case studies from various government agencies.

  • Cybersecurity Enhancement: The Department of Homeland Security (DHS) faced a shortage of cybersecurity experts to protect critical infrastructure. By contracting with cybersecurity firms, DHS was able to quickly bolster its security capabilities, protecting vital systems from cyber threats.
  • IT Modernization: The General Services Administration (GSA) embarked on a mission to modernize its outdated IT infrastructure. By partnering with IT contractors, they were able to implement cutting-edge technologies and streamline their operations, improving efficiency and service delivery.
  • Healthcare Services: The Department of Veterans Affairs (VA) struggled to provide timely healthcare services to veterans. By contracting with healthcare providers, the VA expanded its network of care and reduced wait times for medical appointments, improving the overall quality of care for veterans.
  • Disaster Response: The Federal Emergency Management Agency (FEMA) frequently relies on contractors to provide disaster response and recovery services. Contractors assist with tasks such as debris removal, temporary housing, and infrastructure repair, ensuring a swift and effective response to natural disasters.

Best Practices for Leveraging Contractors

To make the most of contractor engagements, government agencies should follow several best practices.

  • Clearly Defined Contracts: Ensure that contracts with contractors have clear and specific objectives, deliverables, and timelines. This minimizes misunderstandings and scope creep.
  • Competitive Procurement: Use competitive procurement processes to select contractors. This helps agencies get the best value for their investments.
  • Effective Contract Management: Implement robust contract management practices to monitor contractor performance, ensure compliance with regulations, and address any issues promptly.
  • Knowledge Transfer: When using contractors to address workforce gaps, prioritize knowledge transfer to ensure that institutional knowledge and skills are retained within the agency.
  • Compliance and Accountability: Ensure that contractors adhere to all relevant laws, regulations, and ethical standards. Hold contractors accountable for their performance and outcomes.

Removing Setbacks from Set Asides

By effectively leveraging contractors, government agencies can bridge talent gaps, enhance their capabilities, and improve the overall efficiency and effectiveness of their operations. Contracting can be a strategic tool for government agencies to navigate the evolving workforce landscape and continue delivering essential services to the American people. But if a huge swath of contractors end up being removed from the program or denied upcoming 8(a) opportunities, federal agencies will be put in a position to rely on a much narrower supply chain. And when that happens, administrators and contracting officers must ask themselves if they are truly getting access to fresh perspectives, the most skilled labor in the market, ongoing innovation, different approaches to recurring problems, and new ideas.   

Photo by Ian Hutchinson on Unsplash

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