Federal Government reaching even higher for Small Disadvantaged Businesses

Last year, small disadvantaged businesses received over 11% of federal contracting dollars. Now, the federal government aims to reach 13%. (Next Gov/FCW October 26, 2023)

The Office of Management and Budget recently issued a memo directing federal agencies to target awarding 13% of their contract spending to small disadvantaged businesses in fiscal year 2024. This objective aligns with a broader target set by an executive order earlier this year, which calls for the government to ultimately allocate 15% of federal procurement dollars to such businesses in fiscal year 2025. (ibid)

The executive order, focused on advancing racial equity and supporting underserved communities through federal government initiatives, also instructed the Small Business Administration to establish annual agency-specific goals in collaboration with other departments to further the government’s overall objectives for small disadvantaged businesses. (ibid)

In her October 18, 2023 memo, OMB director Shalanda Young emphasized that utilizing the federal government’s purchasing power to foster economic growth in underserved communities is a central element of the president’s equity agenda. It also aligns with the administration’s broader economic strategy to bolster small businesses and enhance the resilience of the nation’s supply chains. (ibid)

The memo states that federal agencies awarded small disadvantaged businesses a record-breaking $69.9 billion in fiscal year 2022, representing 11.4% of all contracting dollars and an increase of $7.5 billion compared to the previous year. (ibid)

While agencies also set records for spending on programs designed to improve access to contracts for historically underrepresented groups and small businesses in general, they fell short of the goals for the share of contracting dollars awarded to women-owned small businesses and historically underutilized business zone (HUBzone) small businesses, according to SBA data released earlier this year. (ibid)

Young also highlighted the significance of the 8(a) Business Development program at SBA, which serves as a gateway for expanding access to federal contracts for businesses that have faced past discrimination. She emphasized the need for agencies to continue promoting contract access for HUBZone businesses, women-owned small businesses, and service-disabled veteran-owned small businesses, as these often fall under the category of small disadvantaged businesses. (ibid)

In the past, the General Services Administration and SBA announced the establishment of a pool of small disadvantaged businesses in the 8(a) program to facilitate their access to contracts under GSA’s Multiple Award Schedule Program. (ibid)

Moving forward, OMB will collaborate with SBA, the Domestic Policy Council, National Economic Council, and other entities to advance efforts aimed at diversifying the government’s supplier base. This includes the adoption of innovative acquisition practices to reduce transaction costs for small businesses. (ibid)

Are you part of a small disadvantaged business seeking additional business opportunities with the government? Give us a call.