Your Friendly Neighborhood OSDBU

by John Hale III, founder and CEO, The Cornerstone Group LLC, and former director, U.S. Dept. of Energy Office of Small and Disadvantaged Business Utilization

This is the first column in a series on strategies for engaging and leveraging the Office of Small & Disadvantaged Business Utilization (OSDBU).

In the beginning……

In 1978, President Carter signed Public Law 95-507, which amended the Small Business Act and the Small Business Investment Act of 1958 to make federal procurement more readily accessible to all small businesses.

It states that “it is the policy of the government to provide maximum practicable opportunities in its acquisitions to small businesses,” and it applies to both prime contracting and subcontracting.

The Office of Federal Procurement Policy (OFPP) Letter No. 79- 1, implemented Section 15(k), which required agencies with contracting authority to establish an OSDBU and appoint a director. Congress progressively established statutory goals for eight of the ten small business goals (prime and subcontract) and various socioeconomic categories.

The small business prime and subcontract goals of each agency are negotiated each year with the Small Business Administration. The SBA annually issues each agency’s small business scorecard, which is the primary metric and tool used to evaluate the agencies’ small business goal achievement and programs, resulting in a letter grade.

OSDBU directors maintain a friendly competition based upon who earns the highest grade on their respective scorecards.

Contractors should be aware that HUBZone is the hardest goal for agencies to achieve. Therefore, in pursuit of competitive awards and “all things being equal,” partnering with HUBZone firms is a good idea.

A day in the life of an OSDBU

Every OSDBU is responsible for executing a set of federal statutory and regulatory defined functions. However, each OSDBU must execute them consistent with its agency’s mission and culture.

OSDBU activities can broadly be described in two categories – inreach (within the agency) and outreach (external engagement of stakeholders). Significant effort is focused developing and maintaining relationships with colleagues in the acquisition and program offices.

The OSDBUs neither execute the contract warrant (contract officer) nor possess the funds (program office) to spend on agency priorities.

The acquisition process starts with the program office. The process is always a “give and take.” To be effective, the OSDBU must engage at the onset of an acquisition and small businesses must respond to market research (sources sought notices).

In most instances, the issue is not a shortage of capable small businesses, but a lack of focus on ensuring a sufficient number of small-business eligible contract opportunities.

OSDBU outreach is a highly visible function. However, it expands beyond direct interaction with the business community. Other primary activities include engagement with stakeholders such as Congress, trade associations, media outlets, etc.

Federal agencies prefer to contract with firms they know and trust who will assist them in executing their respective missions. Likewise, contractors desire a transparent acquisition process that affords access to agency personnel and contracts. The OSDBU is an influencer, connector and enabler of businesses winning government contracts.

Small business set-asides can be a friend to large businesses

The OSDBU is charged with the responsibility to maximize small business contract actions. Therefore, what is the purpose of large businesses engaging the OSDBU? It appears counter-productive. To the contrary, small business is a team sport.

Large business survival (in some cases), sustainability and growth can be enhanced by partnering with the OSDBU. That is especially true for mid-tier firms and for advanced small businesses that have outgrown their small business designation but remain significantly smaller than Fortune 500 firms. Partnership with the OSDBU, and by extension with the small business community, will increase the number of small-business eligible contract actions.

This is achieved through 1) reducing the risk profile of small businesses and 2) increasing the contract value of small business eligible contracts. A win-win situation is realized, whereby federal agencies can increase, in number and value, their small business contract awards and large businesses can gain access to additional contract opportunities. However, this strategy is most effectively executed in a scalable manner through leveraging professional expertise.

And the rest of the story . . . .

Next time we’ll address “Empowering the OSDBU to be your advocate without them knowing it”!