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  • Post date 11/08/2024

Small Business Government Contracting

The U.S. Small Business Administration (SBA) annually celebrates National Small Business Week, which acknowledges the contributions of America’s entrepreneurs and small business owners. This year, National Small Business Week took place April 28 – May 4, 2024.  An SBA press release coinciding with National Small Business Week indicates that the Biden-Harris Administration exceeded its FY 2023 small business contracting goal of 23%, awarding 28.4% of federal contract dollars amounting to $178.6 billion.   This was an increase of increase of $15.7 billion from the previous fiscal year generating an estimated one million jobs in manufacturing, construction, research & development, technology, and defense for small veteran-owned, women-owned, and disadvantaged businesses. 

Small Business Administration (SBA) and Government Contracting

The SBA “empowers entrepreneurs and small business owners with the resources and support they need to start, grow, or expand their businesses through an extensive network of SBA field offices and partnerships with public and private organizations.”   

President Joe Biden announced in June 2021  a goal for 15% of all federal contracting spending to go to small, disadvantaged businesses by FY 2025 with an interim goal of 11% for  FY 2022.  This was followed by the White House’s Investing in America agenda which championed efforts to ensure fair competition so that small businesses can access investments through federal contracting.

An article from Federal News Network reported that the although the total number of federal contracting dollars going to small businesses keeps going up year over year the SBA’s Office of Government Contracting and Business Development tracked a 40% decrease since 2010 of the number of small businesses that receive prime government contracts.  Also, over the past 15 years new entrants to federal contracting had dropped by approximately 80%. 

SBA took steps to reverse that trend and get new small businesses to compete for federal contracts by:

  • Enrolling more companies into its small business certification programs.
  • Releasing new guidance, “Creating a More Diverse and Resilient Federal Marketplace through Increased Participation of New and Recent Entrants.” This executive action includes several new initiatives for encouraging new entrants to the federal contracting space.
  • Expanding access for small businesses to multiple-award contracts, which account for over 20% of government contracts. In January, the Office of Federal Procurement Policy directed agencies to structure those contracts with small-business participation in mind and instructed agencies to apply the small-business Rule of Two—the rule that a small business must receive a purchase if two or more small businesses are able to do the work—when using those contracts. 
  • Launching an enhanced training program, “Empower to Grow,” to strengthen Small Disadvantaged Businesses’ contract readiness. This revitalization of the popular 7(j) Management and Technical Assistance program includes improved coaching, training, and technology tools to get more disadvantaged businesses contract-ready and build a diversified supplier base.
  • Creating special contract procedures for 8(a) participants using the GSA’s Multiple Award Schedule. The new procedures increase contracting opportunities for 8(a)-certified SDBs to ensure more equitable access to federal contracting dollars.
  • Reviewing and revising size standards to allow 78,000 additional small businesses to qualify for SBA’s programs.

The SBA sets contracting goals for each agency and collaborates closely with government buyers to emphasize the prioritization of small businesses in the procurement process.  The SBA generates an annual Fiscal Year (FY) federal procurement “Scorecard” which measure how well federal agencies meet their small business contracting goals each year.  Ten federal agencies received A+ grades (SBA, Agriculture, Housing & Urban Development, Interior, Homeland Security, National Science Foundation, General Services Administration, Commerce, Nuclear Regulatory Commission, and Office of Personnel Management) and an additional 12 agencies received an A grade.   

The federal government achieved its small business subcontracting goals, awarding 33.34%, or $86.4 billion, to small business subcontractors:

  • Small Disadvantaged Business (SDB) spending exceeded its enhanced annual goal, set at 12% in FY 2023, with the federal government awarding $76.2 billion.  SDBs are on track to receive 15% by FY 2025.
  • Sometimes referred to as the 8(a) program, SDB is a business assistance program for small disadvantaged businesses owned by socially and economically disadvantaged individuals. Deltek reports that as of FY 2024, the government aims to award at least 13% of federal contracting dollars to qualified small disadvantaged businesses. This percentage will gradually increase until it reaches 15%.
  • Service-disabled veteran-owned small business (SDVOSB) spending exceeded its 3% goal, reaching 5% or $31.9 billion in procurement.
  • SDVOSB is a small business that is 51% owned and controlled by one or more service-disabled veterans (who must have a service-connected disability), and that has one or more service-disabled veterans managing day-to-day operations. The government aims to award at least 3% of all federal prime and subcontracting dollars to qualifying SDVOSBs firms every year.
  • Historically Underutilized Business Zone (HUBZone) small businesses were awarded $17.5 billion in federal contract awards. 
  • SBA’s HUBZone program provides contracting assistance to small businesses located in economically distressed communities to spark economic activity such as job creation, referred to as Historically Underutilized Business Zones, or HUBZones. The government aims to award at least 3% of federal contracting dollars to HUBZone-certified small businesses every year. HUBZone is not focused on the ownership of the business, but rather the location of the business and its employees.
  • Women-owned Small Businesses (WOSB) received $30.9 billion in federal contracting dollars in FY 2023, up from $28.1 billion in FY 2022 and accounting for nearly 5% of the FY 2023 total eligible dollars.
  • The SBA defines a WOSB as a small business in which women manage the day-to-day operations and make long-term decisions. The business must be at least 51% controlled and owned by women who are U.S. citizens. The government aims to award at least 5% of federal contracting dollars to qualifying WOSBs every year.

Federal News Network provides a table tracking FY 2021 through FY 2023 Prime Contracting by Dollars and Percentages for All Categories.

Winning Government Contracts for Your Small Business

A March 2024 research paper from Penn State, Bridging the Gap Between Small Businesses and Federal Contracts, noted may small businesses surveyed are often unaware of federal contracting opportunities.  The paper said, “Small businesses often think ‘local’ because their business opportunities emerge from locally-acquired customers.  Small businesses should consider targeting federal contracts as the contracts can be for ‘local’ work.”  The paper also says, “The SBA publishes guides on federal contracting, types of contracts, and contracting assistance programs.  Small business can also seek assistance from the SBA’s Small Business Development Centers (SBDC) across the country which have consultants, mentors, and others who can advise on federal contracts and other hurdles.” 

Other steps your business can take to gain experience in government contracting and find more small business contracting opportunities include:

·         Visit the SBA’s Federal Contracting website

·         Visit the Department of Defense Office of Small Business Programs website

  • Seek out subcontracting partnerships serving as a member of a prime contractor’s team as a way to gain experience
  • Seek business development coaching and mentoring from an experienced government contractor through the SBA’s Mentor-Protégé Program (MPP).
  • Networking – reach out to a government agency’s small business office to learn about their small business goals

Small businesses must comply with the rules and regulations outlined by the Federal Acquisition Regulation (FAR) andCost Accounting Standards (CAS). The FAR is a set of consistent, uniform policies and procedures within the federal acquisition process. The CAS are meant to create consistency in pricing and accounting practices.