The SBA is focused on both increasing both the proportion of federal contract spending for small businesses and actively boosting the number of small businesses receiving government contracts.

Despite consistent annual growth in federal contracting dollars spent, the Small Business Administration (“SBA”) is struggling with the dual problems of the decline in the number of small businesses active within the federal marketplace and the decline in award dollar distribution to those small businesses registered to do business with the government in the System for Award Management (“SAM”) and the Dynamic Small Business System (“DSBS”).

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The SBA is now geared towards reversing these trends, with a focus on both increasing the proportion of federal contract spending across more small businesses and actively boosting the number of small businesses receiving government contracts.

Federal contracts awarded to small businesses in Fiscal 2021 amounted to a whopping $154 billion, equivalent to 27% of all government contract spending that year. The administration, aligning with its equity agenda, has further raised the bar to ensure a larger chunk of federal contract spending across small businesses in general and minority-owned small businesses in particular.

While this shift in spending trends is encouraging, the reduction in the number of small businesses participating in government contracts is a cause for concern. The decline has been particularly steep among new or recent entrants into the federal marketplace.

Despite more opportunities being available, fewer small businesses are participating. Since 2010, agencies have witnessed an alarming 40% decrease in the number of small businesses receiving prime contract awards. Over the same period, first-time small businesses working with the federal government have plummeted by about 60%.

This decline poses a threat to both the willingness of private companies to engage with the government and the government’s ability to source new services and innovative products. The SBA is now making concerted efforts to encourage small businesses to compete for federal contracts.

One of the strategies involves enrolling more companies in the SBA’s Small Business Certification Programs. Companies involved in these programs are more likely to continue in federal contracting, providing a reliable base for the government’s contracting needs.

Businesses can become certified based on a socio-economic category. These include small businesses certified in programs on the federal and state level such as:

Women-Owned Small Business (“WOSB”)
8(a) Business Development (“8(a)”)
HUBZone (“HUBZone”)
Service-Disabled Veteran and Veteran-Owned Small Business (“SDVOSB/VOSB”)
Minority Business Enterprise (“MBE”)
Women Business Enterprise (“WBE”)
Disadvantaged Business Enterprise (“DBE”)

As an example, the administration has pushed for all federal agencies to increase their contract spending with small disadvantaged businesses to at least 15% of their total contracting dollars by 2025, up from 11% in Fiscal 2022.

This is just part of the broader small business policies to create more award opportunities for small business. Executive Order 13985 – Advancing Racial Equity and Support for Underserved Communities through the Federal Government aims to promote equity for underserved communities by making Federal contracting and procurement opportunities more readily available to all eligible vendors in impacted communities.

To support this effort, the Office of Management and Budget (“OMB”) issued memo M-22-03 – Advancing Equity in Federal Procurement that, in part, requires the development of data tools to support achievement of government-wide goals related to equity in Federal procurement.

OMB and the General Services Administration (“GSA”) have created two tools to support this effort: the Supplier Base Dashboard and the Government-Wide Procurement Equity Tool.

The Supplier Base Dashboard allows the public to monitor the size and composition of the Federal supplier base, as well as track progress in attracting new small business entities to the Federal marketplace.

The Government-Wide Procurement Equity Tool is a market research tool for Federal users to find available vendors and view obligation data.

Small businesses are considered the backbone of the American economy, and the SBA goal is to increase their participation in government contracts, which is vital for the government to meet its missions and stimulate the economy.

Despite the challenges, the SBA’s dual approach of expanding contract spending for small businesses and increasing their number in the federal marketplace is a promising initiative. These efforts, coupled with policy support, can help to revitalize small business participation in federal contracting, ensuring a robust, diverse, and innovative industrial base for the nation’s future.

FedBiz Access (“FedBiz”) has an experienced team that works with small businesses and takes the time to get to know their business and ask questions to ensure they have a solid contracting plan. FedBiz is a leading government contracting business development and marketing firm that provides engagement strategy coaching, as well as SAM & DSBS registration, set-aside certification registrations, GSA Schedules, as well as targeted market research.

FedBiz has over 22 years of experience working with thousands of companies worldwide to help them win over $35.7 billion in awards. From registration to award, FedBiz helps businesses succeed in the government marketplace.

Your Government Registration Level (“GRL”) is your roadmap from registration to award.

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