Fuzzy Metrics are Crap

When the SBA size guidelines come out, we pay attention. We look at agencies grade poorly as targets with the thought they might want to increase their scores. We look at agencies performing well as targets because they are friendly to small and diverse companies.

Thanks to Women Impacting Public Policy for the link to the House Small Business Committee testimony from November 18. I watched the testimony with RAPT attention. Our company is obsessed with recording date and using it to measure. The information we capture in our database leads us to improved capture decisions and better bid responses. Information is powerful.

As a result of our reporting obsession, we are particularly sensitive about how metrics are reported. What I heard today made me feel naïve regarding our use of the SBA scorecards.

Very important note: The federal small business contracting goal – for prime contracts – is 23%. This goal was set by Congress.

During the House Small Business Committee testimony, it was reported that SBA scorecards don’t include the entire contract portfolio of the federal government. They exclude nearly 20% of the contracts before they figure out if they met their goals.

According to comments made during the committee, in some cases, the exclusions are significant.

  • The Department of Transportation (DOT) reported that more than 45% of contracts were awarded to small business; however, they excluded more than 70% of their contracts from these numbers, because they consider those contracts “unsuitable” for small businesses. The actual total? It was only 13%.
  • The General Services Administration (GSA) has similar numbers. They reported that small businesses received 40% of GSA contract awards; however, they only considered 44% of their contracts when they measured their results. The truth is that only 17% of GSA contracts were awarded to small businesses.

According to Congressman Hanna (@RepRichardHanna), “This fuzzy math costs small businesses around $11 billion a year.” More information regarding the testimony can be found here.

I haven’t seen an SBA response to the measurement and reporting protocols. They deserve to be heard, but they need to speak up. Small businesses shouldn’t tolerate lip service regarding this issue.