Small Business Administration COVID-19 Contracting is Mission Focused

Key Takeaways

• Congress has appropriated more than $760 billion to the SBA for small business assistance during the COVID-19 pandemic, of which hundreds of millions of dollars or more are intended for program and administrative support that may include contracted services and products.
• To date, the SBA has obligated more than $462 million in COVID-19-related contracts for goods and services it needs to meet its mission imperatives under the national pandemic response.
• SBA contract spending to date is very concentrated. Financial Management Support Services contracts account for $350 million of the $462 million the SBA has awarded so far – presumably to help get small business assistance dollars disbursed quickly and effectively. That $350 million in contracts has been awarded to one firm. Another nine companies account for about 21% of award dollars to date, spread across various services and product areas.

COVID-19 Response Funding for the Small Business Administration

The U.S. Congress has passed several economic stimulus packages in an effort to both fund federal coronavirus response efforts and provide inducements and other financial aid to vulnerable U.S. populations. So far, the Small Business Administration (SBA) has received over $760 billion in supplemental funding, most of which is for loans, grants and other aid to small businesses. However, hundreds of millions of dollars are also included to support the implementation and related administrative expenses of administering the additional activities of the SBA Business Loans Program, the SBA Disaster Loans Program and the Office of Inspector General for oversight activities.

SBA COVID-19 Contract Spending

When Congress began passing this legislation to address the pandemic response they required contracted coronavirus response activities to be flagged under the COVID-19 National Interest Action (NIA) identifier in the Federal Procurement Data System. That allows some visibility and oversight into how federal response dollars are being spent.

Taking a snapshot of what the SBA has reported for their contract obligations to date gives an idea of the kinds of contracts they have awarded so far, for what types of goods and services and with which companies.  To date, the SBA has obligated $462 million over the last couple of months, with more than 80% of that coming in April, the first full month of COVID-19 contracting so far under the NIA as the federal response gained momentum. (See chart below.)

For the Primary Requirement for these contracts – the main type(s) of products and/or services being procured – the spending data shows that the SBA has been focusing more than 85% of their COVID-19 spending to date on Professional Services contracts and another 10% centering on Information Technology, all of which makes sense given the additional efforts required by the SBA to administer additional loans and provide surge services under the pandemic response. The remaining dollars have gone toward Machinery, Equipment & Tools and Electric and Electronic Components & Parts. (See chart below.)

In line with the concentration of dollars around the kinds of services and goods that the SBA has procured to date, the number of awardees is highly concentrated – with one firm, RER Solutions, accounting for $350 million of the $462 million the SBA has awarded to date. The remaining “top 10” awardees account for about 21% of award dollars, with the remaining 30 firms that have received awards accounting for 3.5%. The $350 million awarded to RER Solutions is for Financial Management Support Services spread across two awards. The next largest contract with Liveops Agent Services is for call/contact center and telecommunications services. (See chart below.)

The Place of Performance where the SBA has been spending its COVID-19-related dollars is also extremely concentrated, with Virginia accounting for more than 90% of obligations to date. (See chart below.) The RER Solutions and the Liveops Agent Services awards are based in Virginia and Arizona respectively, so that explains the geographic concentration of obligation dollars.

Given that the SBA’s mission is to support and serve U.S. small businesses I thought it might be interesting to see how they are awarding their COVID-19-related contract dollars across the various Preference Programs. So far, the SBA has awarded nearly 77% of these contract dollars via Small Business Set Asides, with another 6% spread across the other Preference Program types. The remaining 17% either did not use set-asides or was unreported. (See chart below.)

As the pandemic continues, and with it federal response efforts, Congress may consider additional economic stimulus, including federal small business aid funding. (A new stimulus bill is under consideration in the House, but it is too early to know whether it will gain traction in the Senate.) Depending on the direction that goes – and how much more aid, if any, is provided – the SBA may look to industry partners for additional support, and that could mean additional contract spending. Time will tell.