After professional qualifications, "capability" is, according to our review of federal A/E contracts awarded over a two-year period, the second most important factor in determining who gets the work. What's the difference between being "qualified" and being "capable?" As the government defines it, capability has nothing to do with your experience and everything to do with how many people are in your office. A firm has sufficient "capability" if, in the eyes of federal contracting personnel, it has enough people to tackle the project at hand. How many are enough? It's never mentioned in any solicitation, and the people handling the contract won't tell you until the contract is awarded. So how do you avoid wasting time preparing a response for a project for which you aren't "capable?" Well, if, like 86% of all U.S. architectural practices, you have nine or fewer people in your office, assume you're probably not capable. Out of the 145 contract awards we reviewed, only 27 went to firms with nine or fewer employees. Solo practitioners, which comprise 31% of the profession, received none.
You might ask "What about the fact that some contracts are designated as 'small business set-asides?'" But there again, the way most architects define the term "small business" is not how the government defines it. A professional firm is considered a "small business" (SB) if and only if it has posted $2.5 million or less in average annual earnings over the past three years. An "emerging small business" (ESB) is one whose average annual earnings did not exceed $1.25 million over the same period. This definition of "small business" allows even the very largest architectural practices, those with more than twenty employees, which comprise only 6% of the profession, to qualify for small business set-aside contracts so long as the maximum income figures are not exceeded. Firms with ten or more employees were awarded seven out of the ten ESB set-aside awards we reviewed, and were awarded 80% of the SB set-asides, with 38% of these going to firms with twenty or more employees.
How did the government arrive at this definition of small business? "By evaluating architectural firms across the country, census data, data from various publications..." we were told. We were also told that 98% of all businesses are "small businesses." So what's the point of having small business set-asides? No one could provide a satisfactory answer. More importantly, why does the government disproportionately award contracts to large firms when firm size is plays a much smaller role in determining who gets work in the private sector? The answers, which will be featured in the next article in this series, may surprise you.