Strengthening Small Business and the Economy Through Procurement Reform

Small businesses play a critically important role in helping the federal government procure goods and services. Federal purchasing from small businesses, which totals more than $130 billion each year, promotes competition, innovation, diversity, supply chain resilience, and national security.

Federal agencies have met the annual goal of spending 23% of procurement dollars with small businesses for seven consecutive years. The government has also consistently met other small business set-aside goals, such as for small disadvantaged businesses and service-disabled veteran-owned businesses.

The government has generally failed to meet procurement goals for women-owned small businesses and small businesses located in historically underutilized business zones.

Recent trends concerning the breadth of small business participation have raised concern among many that opportunities for small and young companies in procurement are diminishing.

One worrying trend is that the number of small businesses serving as federal contractors has been falling for a decade. Meanwhile, the number of new small business entrants into the federal procurement marketplace has fallen.

There are several improvements Congress should consider including in an infrastructure package, or other legislation, that would expand contracting opportunities for small businesses. This would not only support small businesses, but also advance other national priorities such as supply chain resilience, job creation, and competition.

Promoting and expanding small business participation in federal procurement has long been a bipartisan priority.