Small Businesses Excelling in Government Contracting: Record Setting 2023
In an era marked by economic fluctuations and uncertainties, the steadfast growth and participation of small businesses in government contracting provide a beacon of stability and opportunity. The fiscal year 2023 stands out as a record-breaking year for small business involvement in federal contracts, with government agencies surpassing previous benchmarks and setting new standards for inclusivity and economic engagement. This article explores the unprecedented achievements in small business contracting for FY23 and highlights how companies can position themselves to leverage these opportunities effectively.
Record-Breaking Achievements in FY23
The Small Business Administration (SBA) reports that in fiscal year 2023, federal agencies awarded an all-time high of 28.4% of all eligible federal contract dollars to small businesses. This translates to an impressive $178.6 billion in federal contracts awarded to small businesses, an increase of $15.7 billion from the previous year. The government-wide small business contracting goal, set at 23%, was significantly surpassed, marking a new milestone in government procurement.
Furthermore, the SBA’s small business scorecard data shows that agencies met or exceeded government-wide goals in three of five socio-economic categories, including service-disabled veteran-owned small businesses. This achievement underscores the federal commitment to supporting small enterprises and promoting economic diversity.
Highlights of Socio-Economic Achievements
The FY23 scorecard reveals significant progress in contracting with businesses owned by historically underrepresented groups. Agencies awarded $76.2 billion to small disadvantaged businesses (SDBs), surpassing the Biden administration’s goal of 12% and setting a strong trajectory towards the 15% goal for 2025. This represents the third consecutive year of record-breaking awards to SDBs under President Biden, highlighting a continuous push towards inclusivity and economic empowerment.
For instance, African-American-owned businesses received $10.2 billion in federal contracts, an increase of $800 million from 2022. Similarly, Hispanic-owned businesses saw their contract dollars rise by $943 million to $10.9 billion. These gains reflect a concerted effort to support minority-owned businesses and ensure they have ample opportunities to compete in the federal marketplace.
Agencies also exceeded their goals for service-disabled veteran-owned small businesses, awarding $31.9 billion, or 5.07% of all contracts, to these firms. This marks a significant achievement beyond the 3% target, demonstrating robust support for veteran entrepreneurs.
Additionally, agencies made notable strides in contracting with women-owned small businesses, awarding $30.9 billion, though narrowly missing the set goal by less than 1%. Despite this, the progress indicates a growing recognition and support for women entrepreneurs in federal procurement.
Subcontracting Success
Not only did small businesses excel in securing prime contracts, but they also surpassed goals in subcontracting. In FY23, 33.34% of all subcontract dollars went to small companies, exceeding the target by more than 2%, for a total of $86.4 billion. However, challenges remain in achieving socio-economic goals for subcontracts, except for women-owned small businesses, where the goal was exceeded with 5.65%.
Legislative Push for Accountability
Amidst these successes, there is ongoing legislative pressure to ensure greater accountability and transparency in small business contracting. The Accountability and Clarity in Contracts to Engage Small Suppliers and Small Businesses (ACCESS) Act, introduced by Sen. Joni Ernst, aims to revamp the goaling structure and enhance clarity in federal procurement processes. Additionally, House Small Business Committee lawmakers have passed bills to ensure plain language in contracts and increased transparency in decision-making processes.
Expediting Socio-Economic Certifications
For small businesses aiming to compete effectively in this vibrant marketplace, obtaining the necessary socio-economic certifications is crucial. Certifications such as WOSB, MBE, DBE, 8(a), HUBZone, VOSB, and SDVOSB can open doors to set-aside contracts and provide a competitive edge. FedBiz Access specializes in expediting these certifications, ensuring that small businesses are well-prepared to take advantage of the opportunities available.
Spending Breakdown by Certification
| Category | Goal (%) | 2021 Spending ($B) | 2021 % | 2022 Spending ($B) | 2022 % | 2023 Spending ($B) | 2023 % |
| Small Business | 26.02% | $154.20 | 27.23% | $162.90 | 26.50% | $178.60 | 28.35% |
| Small Disadvantaged Business | 10.54% | $62.40 | 11.01% | $69.90 | 11.38% | $76.20 | 12.10% |
| Service-Disabled Veteran Owned Small Business | 4.28% | $25.00 | 4.41% | $28.10 | 4.57% | $31.90 | 5.07% |
| Women-Owned Small Business | 4.85% | $26.20 | 4.63% | $28.10 | 4.57% | $30.90 | 4.91% |
| HUBZone | 2.44% | $14.30 | 2.53% | $16.30 | 2.65% | $17.50 | 2.78% |
Federal Contracting Dollars to Minority-Owned Small Businesses
| Demographic | FY20 | FY21 | FY22 | FY23 | Spending increase under Biden-Harris Admin (FY20 to FY23) |
| Black American | $9.4 billion | $9 billion | $9.5 billion | $10.2 billion | $800 million |
| Hispanic American | $10 billion | $10.3 billion | $10.6 billion | $10.9 billion | $943 million |
| Asian Americans | $6.9 billion | $7 billion | $7.5 billion | $9 billion | $2.1 billion |
| Subcontinent Asian American | $8.7 billion | $9.5 billion | $10.2 billion | $11.5 billion | $2.8 billion |
| Native American | $15.1 billion | $17.4 billion | $19 billion | $23.3 billion | $8.2 billion |
How FedBiz Access Can Help
For over 23 years, FedBiz Access has been the leading government business development firm, assisting small businesses in navigating the complexities of the government marketplace. Our comprehensive services include:
- Expediting Socio-Economic Certifications: Helping businesses obtain and leverage certifications like WOSB, MBE, DBE, 8(a), HUBZone, VOSB, and SDVOSB.
- Optimizing Profiles: Ensuring business profiles, including those in the Dynamic Small Business Search (DSBS) database, are optimized to highlight their strengths and competitive advantages.
- Market Research: Providing in-depth market research and insights through our Market Intel Database, which offers a deeper dive than SAM.gov and provides actionable data.
- Direct Marketing: Connecting businesses with the right government buyers through our Federal Connections Package and MatchMaker services, providing the contact information needed to start meaningful dialogues and stay top of mind when contract opportunities arise.
Conclusion
The record-setting achievements in small business contracting for FY23 underscore the significant opportunities available to small enterprises in the federal marketplace. By understanding the landscape, obtaining necessary certifications, and leveraging expert support, small businesses can position themselves for success and contribute to a more inclusive and dynamic economy.
If you’re ready to explore the vast opportunities in government contracting, schedule a complimentary consultation with a FedBiz Specialist today. Let us help you unlock the potential of government contracts and achieve long-term success in the government marketplace.
