Revised contracting targets reshape the competitive landscape for small and underprivileged enterprises
The federal government's focus on small disadvantaged businesses, which aims to support socially and economically disadvantaged businesses, has seen a notable decrease in emphasis and contracting dollars, according to recent developments.
Under the Biden administration, the goal was to increase contracting for small disadvantaged businesses from the statutory 5% to 15% by 2025. However, this aim has been reversed under the Trump administration. The statutory requirements for small disadvantaged businesses, service-disabled veteran small businesses, woman-owned small businesses, and HUBZone businesses are set at 5%, 5%, 5%, and 3% respectively.
Interestingly, the overall small business contracting goal remains at 23%, which amounted to approximately 183 billion contracting dollars in 2024. Agencies are raising their overall small business goals, which could be seen as a silver lining.
The Small Business Administration (SBA) is currently auditing the 8(a) program, which is the most difficult to enter and has tightened up on the socially and economically disadvantaged requirement. No specific companies are identified as facing a decline in contract funds due to these changes, but the recent government initiatives aim to ease bureaucracy and facilitate participation of small and medium-sized enterprises in public procurement.
The SBA's Mentor-Protege program can provide small businesses with a plethora of benefits, including enhancing their past performance, a significant requirement to win federal government contracts. This program pairs large businesses with small businesses, including those in the socio-economic set-asides, to help them pursue contracts and improve past performance.
Stephanie Ellis, an attorney with Koprince McCall Pottroff, emphasises the value of small businesses in the U.S. economy. In a recent interview on The Federal Drive, she discussed the current state of small business contracting under the Trump administration.
Federal contractors are still showing interest in the 8(a) program, but the focus is shifting more towards small businesses in general. The SBA's Mentor-Protege program can help small, inexperienced businesses in the federal contracting industry "get its feet wet" and learn the differences between working on private and federal contracts.
As the SBA audits the 8(a) program, it remains to be seen how these changes will impact small disadvantaged businesses in the long run. However, the focus on easing bureaucracy and facilitating participation in public procurement could pave the way for more small and medium-sized enterprises to compete for federal contracts.
