Opportunities for small business contractors of all categories are growing, both in the U.S. and for OCONUS programs. In addition to international opportunities previously mentioned, some agencies with growing budgets, like Special Operations Command, historically prefer small businesses.
SOCOM will spend in excess of $3 billion with contractors in FY18… The Command’s emphasis on small business (historically a third of contracts) has led to the development of a strong lower middle market base of emerging, mission-focused solutions providers.
Aronson Capital Partners Summer 2018 Market Pulse
Despite clear growth opportunities, many retiring or transitioning owners looking to sell their small business contracting companies face limited exit opportunities for a few main reasons:
Of course, these small but highly capable mission-focused solution providers are extremely sensitive to reputation, legacy and potential disruptions to the ongoing business, given the important work they are doing in the public interest.
FRAMCOR is addressing this problem through its investment focus on designated small business professional services contractors. Learn more about our detailed strategy and investment criteria.
A recent analysis by consulting firm Wolf Den Associates shows the dramatic growth in U.S. Government contracting small business set-asides. From $20B total in 2008 to over $50B expected in 2018. Total small business contracting has grown to just over $100B in 2017.
Close to 70% of this spending will be for professional services, including information technology, engineering, and other technical services.
Originally proposed in 2016, it is expected in Q1-2019 the FAR will change to extend small business contracting fully to OCONUS contracts.
“In its final rule, SBA has clarified that, as a general matter, its small business contracting regulations apply regardless of the place of performance. In light of these changes, there is a need to amend the FAR both to bring its coverage into alignment with SBA’s regulation and to give agencies the tools they need especially the ability to use set-asides to maximize opportunities for small businesses overseas.”
(FAR Case 2016–002, Applicability of Small Business Regulations Outside the United States)
This is a great opportunity for all categories of small business, and a stronger mandate for large contractors to seek out capable small businesses on their OCONUS teams.