The total amount of federal contracting dollars going to small businesses has been rising, but federal agencies have observed a significant drop in the number of small businesses receiving government contracts. The SBA is working hard to reverse this trend.

The Small Business Administration (“SBA”) expects the federal government to meet its target for increasing contract spending dollars that go to small businesses. However, there has been a concerning decline in the number of small businesses winning contracts in the federal marketplace.

In fiscal year 2021, more than $154 billion in federal contracts went to small businesses, accounting for approximately 27% of all government contract spending. The administration, as part of its equity agenda, aims to ensure that a larger share of federal contract spending goes to small businesses.

Even though there is a significant push to increase the dollar spending with small businesses in general, agencies continue to see a decline in the number of small businesses participating in the federal marketplace, particularly among new entrants.

Since 2010, agencies have seen an approximate 40% drop in the number of small businesses receiving prime contract awards.
Over the same period, the number of small businesses winning contract awards for the first time has decreased by approximately 60%.
In addition, over the past 15 years new small businesses entering into the government contracting marketplace has dropped by approximately 80%.

To address the decline in both first time small businesses winning government awards and new businesses entering government contracting, the SBA is taking active steps to reverse the trend and encourage more small businesses to compete for federal contracts.

1. The SBA’s goal is to enroll more companies into its small business certification programs.

Businesses that participate in SBA’s Small Business Certification Programs are more likely to win awards and remain engaged in federal contracting. The SBA collaborates with each agency to establish minimum reasonable goals for small business contracting.

Small business set-aside and sole source contracts are based on certain socio-economic criteria. These programs include small businesses certified in programs on the federal level such as:

SBA Women-Owned Small Business (“WOSB”)
SBA 8(a) Business Development (“8(a)”)
SBA HUBZone (“HUBZone”)
SBA Service-Disabled Veteran and Veteran-Owned Small Business (“SDVOSB/VOSB”)

For example, the SBA is on track to meet the administration’s target of 15% of contracting dollars awarded to small disadvantaged businesses, including women-owned, African American-owned, and Hispanic-owned small businesses, by FY 2025.

2. The SBA is working closely with federal agencies to find small businesses that can meet agencies’ contracting needs.

The SBA works closely with each agency’s Office of Small and Disadvantaged Business Utilization (“OSDBU”) to promote small business utilization and ensure that small businesses have a fair opportunity to compete for federal contracts.

The job of an OSDBU is to help small businesses succeed in federal contracting. The OSDBU develops rules, policies, procedures, and guidelines for the effective administration of their agency’s small business program by providing advocacy, guidance, networking opportunities, and access to contracting opportunities for small businesses.

In addition, OSDBUs ensure that purchases not exceeding the Simplified Acquisition Threshold ($250,000) are reserved exclusively for small businesses.

Recently, during National Small Business Week, the administration highlighted the importance of small businesses as one of the best investments America can make. The President emphasized that small businesses employ nearly half of all private-sector workers and are innovative across various industries.

Learn More about the ‘MatchMaker’

3. The SBA is working with the Office of Management and Budget (“OMB”) and the General Services Administration (“GSA”) to introduce governmentwide procurement equity tools and a supplier base dashboard.

These tools help agencies track the allocation of contract spending to small businesses that are new or recent entrants in federal contracting. It is also essential for businesses to market themselves to the government and take advantage of programs such as the MatchMaker and Market Intel Database platforms to help build relationships and find contracts.

4. The SBA is creating training programs to help small businesses compete for federal, state, and local government contracts.

For example, the SBA’s 7(j) Management and Technical Assistance Program works with small disadvantaged businesses providing a wide range of benefits and including free training and educational programs to help improve their competitiveness in government contracting.

The success of small businesses is crucial for the government to fulfill its missions and remain competitive.

The SBA recognizes that small businesses are the backbone of the American economy, providing essential services and innovative solutions. By fostering collaboration and providing support, the SBA aims to ensure that small businesses thrive in the government contracting marketplace.

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