Primes Are Falling Short When it Comes to Subcontracting Goals — But Just How Short?

• According to a Fiscal Year (FY) 2023 report issued by the U.S. Small Business Administration to Congress issued by the U.S. Small Business Administration to Congress, prime contractors operating under individual subcontracting plans met a mere 64.4% of their goals.

• It’s estimated this failure to meet subcontracting goals resulted in small businesses missing out on over $1.5 billion in additional subcontracting awards.

• The failure rate of primes to meet subcontracting goals soared even higher among veteran-owned small businesses, service-disabled veteran-owned small businesses, HUBZone small businesses, small disadvantaged businesses and women-owned small businesses.

• In order to make a sustainable impact in bridging the gap between subcontracting goals and actual delivery on their plans, primes should seek out long-term partnerships with businesses who meet certain socio-economic statuses recognized by the SBA, especially in the most underrepresented areas.

In a Fiscal Year (FY) 2023 report issued by the U.S. Small Business Administration to Congress, it was estimated that prime contractors failed to meet more than 35% of their small business subcontracting goals. The report goes on to highlight just how massive of a missed opportunity—to the tune of more than $1.5 billion—this was for small businesses, who lost out due to primes’ failure to meet said goals.

But if only FY 2023 were an anomaly. The unfortunate truth is both the SBA’s FY 2022 and FY 2021 reports show a blatant pattern of primes overpromising and underdelivering on their small business subcontracting plans.

In addition to falling short overall, primes took the largest hits with two very distinct small business classifications: Service-Disabled Veteran-Owned small businesses (60% failed to meet their goal) and HUBZone small businesses (58.3% failed to meet their goal).

But Why?

There are certainly plenty of regulations in place to deter primes from not making good (or at least making a good faith effort) on meeting the goals established in their subcontracting plans. Consequences can range from a prime being exposed to liquidated damages, adverse past performance ratings and additional sanctions, which could lead to present and even future losses.

Yet how often do we hear of primes facing any actual, tangible consequences for failing to meet those goals? While the SBA’s reports don’t include any data regarding the enforcement of primes consistently missing their subcontracting goals, it stands to reason that many primes are (or should be) actively seeking available small business partners that fit the bill for helping them meet their goals.

How can we help?

First, we can offer you a team that is extremely proud to have built VSS Logistics from the ground (or more accurately from our founder’s garage) up. Coming from humble beginnings keeps us humble and keeps us focused.

But being proud of what we’ve built, as well as passionate about the work our team does to serve the U.S. government, its contractors and its missions—even if it is from behind the scenes—allows us the right to humble brag a little too, because logistics is vital to operational and mission success.

We are a company that excels at what we do. There’s not really room for error in this business. Which is why we’re adamant about having a strong quality program—both ISO 9001:2015 and AS9120B quality certified annually—we’re not only zealous about what we do, but the quality with which we do it.

We’ve also been doing this a while, nearly 20 years, so we’ve learned what we must do (and not do) to be successful in the long game. And we also have an infantry combat veteran steering the ship, so we mean it when we say we support the mission and take pride in everything we do.

So What Do We Do?

Here are a few things we’re all-in on: supply chain management, performance monitoring and enhancements, risk mitigation, data-driven decisions and process-driven efficiencies. In simple terms, we excel at thinking everything through, to the point of avoiding risks before they’re even a risk. Or if we absolutely can’t avoid something happening, we take care of it.

Just one example of what we’ve done earned VSS the distinction of Elite Supplier to Lockheed Martin on the U.S. Air Force IPV contract providing pivotal service in our nation’s defense. We offer fully-capable, award-winning Third-Party Logistics (3PL), Fourth-Party Logistics (4PL) and Industrial Product-Support Vendor (IPV) services to keep products moving on time.

Additionally, we’ve also earned acclaim for our work in Warehousing and Strategic Sourcing Support as well as Tailored Logistic Services and Specialized Kitting Services.

Our turn-key solutions can offer you a one-stop location—and a long-term partnership that meets your SBA subcontracting goals—for effective and timely services that ensure you’re meeting the needs of your customers. A wide range of federal agencies and commercial customers already rely on VSS to provide an assortment of innovative services and agile and timely solutions.

And Did We Mention?

VSS Logistics is both a Service-Disabled Veteran-Owned and HUBZone certified small business with nearly 20 years of experience. We’ve successfully delivered products and services as a prime contractor and as a subcontractor for a series of other contractors supporting the U.S. government and its various missions, most notably our long-term partnerships with the Departments of Defense and Veteran Affairs. Additionally, we are both ISO 9001:2015 and AS9120B annually by PRI Registrar, a not-for-profit affiliate of SAE International.

Ready to learn more about VSS Logistics? Download our full capability statement or reach out to our team today.