Procurement Tweak Gives 33,000 More Small Firms Access to Bids

A recent procurement consolidation update allowed an additional 33,000 small women-owned and disadvantaged businesses access to government contract dollars, a Small Business Administration official said Thursday.

The new opportunities arose after the SBA made changes its category management program—redesignating women-owned, small disadvantaged, service-disabled veteran businesses, and others to “Tier 2,” SBA’s Office of Government Contracting and Business Development Associate Administrator Bibi Hidalgo told the House Small Business Committee.

Tier 2 is just under the General Services Administration’s top “best in class” designation and includes multi-agency and government-wide contracts, rather than just single agency opportunities at Tier 1.

Committee Chair Nydia Velázquez (D-N.Y.), who is fighting against shrinking small business contractor participation, said the government must do more to meet its own award goals for women-owned firms and contractors based in historically underutilized business zones, or HUBZones.

“While the government has met overall small business contracting goals in recent years, the goals for programs like HUBZone and the women-owned small business program were not,” Velázquez said. “In fact, the goal for the women-owned contracting program has only been made twice, and the HUBZone goal has never been met”

The number of small business has dropped 44% from 2010 to 2021, according to Bloomberg Government data, even as government spending on small businesses has shot up nearly 50%.

In memos and hearings, Velázquez and other committee members laid much of the blame on procurement practices like the category management initiative, an effort to buy goods and services consistently across government to save money. The practice makes bidding for contracting opportunities more complicated and expensive for small businesses.

A committee memo also calls out shortcomings in SBA initiatives meant to help women-owned and economically disadvantaged firms find adequate access to government spending.

SBA has added staff, reconfigured performance metrics, and reallocated resources to help small businesses navigate contracting processes and better engage with government buyers, Hidalgo said.

Hidalgo also pointed to recent anti-fraud efforts that redirected billions of dollars to small businesses after being initially allocated to companies that did not actually qualify.

It’s difficult to measure the impacts of these recent efforts, she said, although anecdotal and early data evidence is promising.

Challenges remain. Hidalgo said staffing levels at certain segments of the SBA are below historic levels, and the agency is looking to boost those numbers and requesting more resources from Congress.

Missed Goals

The Small Business Act of 1953 mandates that the government award 23% of contract dollars to small businesses, including 5% to women-owned and small disadvantaged businesses plus 3% on service-disabled veteran-owned small businesses and HUBZone certified small businesses.

The government has hit the 23% goal in recent years, getting to 26% in fiscal 2020, according to the committee. It’s missed other goals, including for women-owned businesses and other disadvantaged small contractors.

President Joe Biden asked the government in December to bump up that 5% goal to 11%, with a long-term goal of 15% by 2025.

Thursday’s testimony followed a June 14 hearing in which the committee heard from small businesses struggling with the contracting process.

To contact the reporter on this story: Caleb Harshberger at charshberger@bloombergindustry.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bloombergindustry.com