Dive Brief:

• The federal government under the Biden administration beat its goal for procuring from small businesses, according to a release from the Small Business Administration last week.
• For fiscal 2022, 26.5% of prime federal contracts went to small businesses, above the year’s goal of 23%. In total, that represents $162.9 billion in direct spending, up $8.7 billion over the previous fiscal year.
• The federal government also beat its target for subcontracting, with 31.1% going to small businesses on a goal of 29.4%.

Dive Insight:

The U.S. federal government is a procurement behemoth — the largest single customer in the world, as the Small Business Administration notes. 

Agencies are required to set aside a certain share of contracts for small businesses. This is to “ensure that large businesses don’t ‘muscle out’ small businesses,” as well as bring in new ideas, capitalize on small firms as an engine of economic growth and give opportunities to disadvantaged groups, according to the SBA.

SBA Administrator Isabella Casillas Guzman said in a statement that the Biden administration’s contracts with small businesses supported one million “good-paying jobs” in manufacturing, construction, research and development and other industries.

Across the government, 20 agencies earned a score from the SBA in the A range for their small business contracting, with half of those getting A+ scores, including the Department of Commerce, Department of Homeland Security and Department of Labor. The worst performers in the government were the Department of Veteran Affairs (which earned a D), the Department of Health and Human Services (C), Department of Defense (B) and Department of Treasury (B). 

While the administration hits its goals on small business contracting overall, it missed others.

At 4.6% of prime contracts, the administration missed its goal of 5% direct spending on women-owned small businesses, while surpassing goals for spending with veteran-owned and disadvantaged small businesses. It also fell short of its Historically Underutilized Business Zone contracting goal, which sets aside contracts for businesses in designated geographies in urban and rural areas, including American Indian reservations. 

The SBA touted recent efforts to further expand access to contracting, including an executive action that created a Supplier Base Dashboard to track an agency's mix of new entrants and recent entrants, and established vendors. The agency also pointed to reforms directing agencies to track progress on socioeconomic-related small business goals, among other initiatives.