[Federal Register Volume 87, Number 119 (Wednesday, June 22, 2022)]
[Notices]
[Pages 37371-37372]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-13287]


=======================================================================
-----------------------------------------------------------------------

SMALL BUSINESS ADMINISTRATION


Procurement Scorecard Program; Treatment of Deobligations

AGENCY: U.S. Small Business Administration.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: The U.S. Small Business Administration (SBA) publishes an 
annual procurement scorecard (Scorecard) that scores agencies on their 
performance in contracting with small businesses. This notice sets 
forth SBA's method for reflecting negative-dollar transactions (or 
``deobligations'') in the SBA scorecard starting with the Fiscal Year 
2022 (FY22) scorecard. For purposes of calculating prime contracting 
achievements, SBA will exclude deobligations associated with certain 
older awards.

FOR FURTHER INFORMATION CONTACT: Mihaela Ciorneiu, Goaling Manager, 
Office of Government Contracting and Business Development, 
[email protected], (202) 205-7716. The phone number above may 
also be reached by individuals who are deaf or hard of hearing, or who 
have speech disabilities, through the Federal Communications 
Commission's TTY-Based Telecommunications Relay Service teletype 
service at 711.

SUPPLEMENTARY INFORMATION: 

I. Background

    SBA issues an annual Scorecard to score Federal agencies on 
creating the maximum practicable opportunities for the award of prime 
contracts and subcontracts to small business concerns, small 
disadvantaged businesses (SDBs), women-owned small businesses (WOSBs), 
HUBZone small business concerns, and service-disabled veteran-owned 
small business concerns (SDVO SBCs). Sec. 868, Public Law 114-92, 129 
Stat. 933 (November 25, 2015). SBA bases an agency's score on several 
weighted factors, the most significant of which is the percentage of 
prime contracting dollars awarded to small businesses.
    SBA receives the prime contracting data for the annual Scorecard 
from the Federal Procurement Data System (FPDS), through a special data 
extract prepared by the Integrated Acquisition Environment (IAE), part 
of the U.S. General Services Administration (GSA). In recent years, it 
has become apparent to SBA that FPDS's method for recording 
deobligations skews certain agencies' prime contracting figures, and, 
by extension, the annual Scorecard inaccurately reports those agencies' 
small businesses dollars awarded in that fiscal year.
    A deobligation is an accounting transaction to reconcile an 
agency's obligations with its disbursements. When an agency awards a 
contract, the agency records an obligation in FPDS at the date of the 
award. FPDS does not reflect disbursements, however, so, in cases where 
the obligation exceeds the agency's disbursements, agencies will record 
a deobligation so that the total of obligations matches the total of 
disbursements. Deobligations appear in FPDS as a negative-dollar 
transaction in the fiscal year that the agency records its 
deobligation.
    Even though the deobligation appears as a negative-dollar 
transaction, the agency did not award a negative-dollar contract. The 
deobligation is for accounting purposes and is used to show that the 
agency disbursed less on the contract than had been originally 
obligated. However, as noted above, the deobligation is recorded in the 
year that deobligation occurred, which can be in

[[Page 37372]]

a different year from when the obligation was recorded.
    For the purposes of SBA's Scorecard, a problem arises when the 
agency records the deobligation in a fiscal year different from the 
year in which the agency recorded the obligation, particularly when the 
obligation was for a small-business award. The deobligation on a small-
business award (or WOSB, HUBZone, SDVO SBC, or SDB contract) is 
recorded in FPDS as a current-day negative-value transaction, even 
though the deobligation is an accounting transaction to offset the 
earlier contract award. This transaction decreases the agency's 
contracting dollars in FPDS for the current fiscal year, thus creating 
discrepancy on the agency's performance on that year's SBA Scorecard.
    SBA was alerted to this problem on September 10, 2020, via letter 
from the Chair of the Federal Office of Small and Disadvantaged 
Business Utilization Directors Interagency Council (OSDBU Council). SBA 
then received a letter from the Deputy Secretary of the U.S. Department 
of Housing and Urban Development (HUD) on September 30, 2020. Both 
sources expressed concern that deobligations make agencies' small-
business achievements unpredictable and uncertain.

II. Data Analysis and Agency Collaboration

    After receiving the OSDBU Council and HUD letters, SBA analyzed the 
FPDS data to examine the effect of deobligations on agencies' prime 
contracting achievements on SBA Scorecard. SBA rejected the idea of 
excluding all deobligations from the Scorecard because it is quite 
common for an agency to obligate and deobligate funds on an award in 
the same fiscal year. SBA also considered but rejected the idea of 
excluding all deobligations associated with contracts awarded in prior 
fiscal years because doing so would present an opportunity to agencies 
to raise their Scorecard scores by obligating small-business dollars at 
the end of one fiscal year and then immediately deobligating in the 
next fiscal year.
    Furthermore, deobligations occur on all types of awards, including 
those held by other-than-small contractors. SBA found it incongruous to 
apply a treatment simply to deobligations of small-business awards.
    SBA thus analyzed what effect it would have to exclude 
deobligations that are associated with awards for which the last 
positive obligation occurred more than one fiscal year prior. The 
exclusion changed the governmentwide small-business prime-contracting 
percentage by less than a tenth of a percentage point. For certain 
agencies, however, the exclusion significantly impacted the agency's 
prime-contracting achievements.
    SBA shared these results with the Small Business Procurement 
Advisory Council (SBPAC) at the group's January 2022 meeting and 
solicited feedback from the SBPAC members. At the February 2022 meeting 
of the OSDBU Council, SBA further discussed the results and the 
proposal adopted below. SBA later updated the SBPAC at that body's 
February 2022 meeting.

III. Exclusion for Deobligations

    Starting in the Scorecard for FY 2022, SBA will interpret 
``awards'' for the purposes of the Scorecard program to exclude certain 
deobligations that, when included in the Scorecard, present a distorted 
view of the opportunities for small businesses to participate in 
Government contracts with Federal agencies. Specifically, SBA will 
exclude deobligations that are associated with prime awards for which 
the most recent positive-dollar obligation was from a year earlier than 
the most recent prior fiscal year.
    SBA will identify the deobligations to be excluded by determining 
whether the deobligation is on an award (defined by the combination of 
Procurement Instrument Identifier (PIID) Indefinite Delivery Vehicle 
PIID (IDV PIID)) that does not have a positive obligation in the 
current fiscal year or prior fiscal year. The deobligations identified 
for exclusion will be removed from the current-year Scorecard 
calculations regardless of whether the transaction was associated with 
a small business or an other-than-small business.
    The following examples illustrate this deobligations exclusions 
method:
    Example 1: Agency A awards Contract X for $1 million, obligating $1 
million in FY22 to a small business. Agency A deobligates $1 million on 
Contract X in FY22. The deobligation is not excluded, and the total 
obligation for Contract X is $0 for FY22.
    Example 2: Agency B awards Contract Y for $1 million, obligating $1 
million in FY17 to an other-than-small business. Agency B then 
obligates $1 million in each of FY18, FY19, FY20, and FY21 on Contract 
Y. Agency B then deobligates $1 million on Contract Y in FY22. The 
deobligation is not excluded as it has the same contract identifier as 
a contract that had a positive obligation not more than one fiscal year 
prior. The total obligation for Contract Y for FY22 is negative $1 
million.
    Example 3: Agency C awards Contract Z for $1 million, obligating $1 
million in FY11. Agency C then obligates $1 million in each of FY12, 
FY13, FY14, and FY15. Agency C then deobligates $1 million on Contract 
Z in FY22. The deobligation is excluded from the FY22 Scorecard 
calculations because the most recent positive obligation was from more 
than one fiscal year prior. The total obligation for Contract Z for 
FY22 is $0. This exclusion applies regardless of whether Contract Z was 
awarded to a small business or an other-than-small business.
    SBA will track excluded obligations for FY22 and beyond and will 
continue monitor and refine this methodology as necessary.

Antonio Doss,
Deputy Associate Administrator, Office of Government Contracting and 
Business Development.
[FR Doc. 2022-13287 Filed 6-21-22; 8:45 am]
BILLING CODE 8026-09-P