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Fact Sheet: Small Business Procurement

Key Takeaways:

  • Small businesses play a critical role as contractors providing government goods and services. Yet there has been a 38% decline in the number of small businesses participating as federal contractors since 2010.
  • Reversing this and other trends by expanding small business participation in government procurement can strengthen economic recovery.
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By the Numbers

Federal agencies must also meet procurement goals for specific types of small businesses:

  • Women-owned small businesses

  • Small disadvantaged businesses

  • Service-disabled, veteran-owned small businesses (SDVOSB)

  • Small businesses located in HUBZones (historically underutilized business zones)

BUT:

  • Even as the federal government has met the top-line 23% goal, the number of small businesses participating in federal contracts has significantly declined over the last decade.


What’s Going On?

Since 2005, the federal government has sought greater efficiency in procurement. Through the Federal Strategic Sourcing Initiative and, beginning in 2016, Category Management, reforms have reduced duplication and saved taxpayers money.

  • It worked: from 2016 to 2020, the federal government saved roughly $27 billion. Cost savings for taxpayers is a good thing.

BUT:

  • There are tradeoffs:

Efficiency gains in Category Management rely heavily on “bestin-class” (BIC) contracts that promote standardization and consolidated purchasing.

  • For small businesses, BIC contracts require more resources and upfront costs.

Even before Category Management, it was getting harder and more expensive for small businesses to win federal contracts.

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