Federal Agencies Set All-Time High For Small Business Awards In 2024

“FEDERAL NEWS NETWORK” By Jason Miller, Executive Editor

“For the 2nd year in a row, federal agencies awarded more than 28% of all eligible prime contracts to small businesses, spending $183.5 billion and topping the government’s record in 2023 by $5 billion. annual small business scorecard “

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“Agencies also spent a record $69.6 billion through small business set-aside contracts in 2024, again topping their previous all-time high of $66.6 billion in 2023.

In all, 21 out of 24 agencies received an “A” or “A+” on their individual scorecard, meaning they achieved at least 100% of their small business goals. Only NASA, the Department of Health and Human Services and the U.S. Agency for International Development didn’t meet their goals NASA and HHS received “B” grades and USAID earned a “C.”

While agencies achieved their goals for small business set-aside contracts, specific efforts around socio-economic groups remained mixed.

For example, the government reached its goal for awarding at least 5% of all contracts to veteran-owned service disabled small businesses but missed its goals for women-owned small businesses and for Historically Underutilized Business Zone (HUBZone) firms.

The Biden administration established a 13% goal for small disadvantaged businesses, as well as part of its effort to push the government-wide goal to 15% by 2025. Agencies came in at 12.3% for 2024, which was higher than what the government achieved in 2023. In total, SDBs received $78.3 billion in total obligations las year, up from $59 billion in 2020 and $76.2 billion in 2023.

The Trump administration reset some of the goals in January, reestablishing the SDB goal to 5%.

Despite missing government-wide goals, agencies awarded more total dollars to companies in all socio-economic categories last year.

Veteran-owned service-disabled small businesses not only won 5.14% of all eligible contracts, but the total dollars awarded to these firms increased by $900 million to $32.8 billion.

Congress required SBA to increase the government-wide goal from 3% to 5% for service-disabled small firms in the fiscal 2024 National Defense Authorization Act (NDAA).

Agencies achieved similar results for women-owned and HUBZone firms.

SBA says women-owned small businesses won $31.7 billion last year, an increase of $800 million over 2023.

“The women-owned small business set-asides and sole source award obligations increased from $1.70 billion in 2023 to $2 billion in 2024,” SBA said in its fact sheet. “The women-owned small business federal contract program grew to over 13,400 certified women-owned small businesses and economically-disadvantaged women-owned small businesses program participants.”

Steve Koprince, a retired federal contracts attorney, wrote on LinkedIn that while agencies spent $2.2 billion with women-owned small firms was “extremely underwhelming.”

“The bottom line seems to be that Contracting Officers, when operating under the socioeconomic parity of FAR 19.203, simply don’t choose women-owned small business contract vehicles nearly as often as they choose 8(a) and service disabled veteran-owned small business vehicles,” Koprince wrote. “Indeed, contracting officers even choose HUBZone vehicles more often, despite a seemingly common complaint, at least from some contracting officers, that they sometimes have trouble finding enough qualified and capable HUBZones for certain work. I can’t recall ever hearing that about WOSBs.”

HUBZone firms won $17.6 billion, which $100 million more than in 2023.

“Over 1,000 firms became certified, setting a record for the year with the highest number of approved applications in the program’s history,” SBA stated in its fact sheet. “Governors of 19 states added over 300 rural Governor-designated HUBZones to the HUBZone map.”

SBA also said the number of small business prime contractors dropped to 60,951 in 2024, which is down from 61,298 in 2023.

But the number of vendors increased across all socio-economic categories except for women-owned small businesses, which saw a slight drop of about 200 companies no longer considered prime contractors.

“The Office of Management and Budget (OMB) issued guidance on creating a more diverse and resilient federal marketplace through increased participation of new and recent entrants,” SBA said in its fact sheet. “This executive action included several new initiatives for encouraging new entrants to the federal contracting space, including a tool to better track federal agencies’ supplier base mix.”

An email to SBA seeking comment on the scorecard was not immediately returned.

SBA’s scorecard comes as hundreds of small firms expressed their support for the Protecting Small Business Competitions Act, sponsored by Rep. Nydia Velázquez (D-NY), ranking member of the Small Business Committee.

The bill would codify the Rule of Two, which requires agencies set aside contracts for small business only competitions when market research shows that there are at least two qualified bidders.

Velazquez said hundreds of small businesses say the bill is “timely and necessary.”

“Over the past 10 years, the number of small businesses winning federal contracts has decreased by 50percent. Additionally, nearly 60 percent fewer small businesses are entering the federal marketplace. The Rule of Two is critical to preserving the small business industrial base and efforts to reverse this decline, as well as America’s long-term economic resilience and competitiveness. We urge all Members of Congress to support its swift passage in both chambers,” the letter states.”

Agencies set all-time high for small business awards in 2024

ABOUT THE AUTHOR:

Jason Miller is executive editor of Federal News Network and directs news coverage on the people, policy and programs of the federal government.  Follow @jmillerWFED