Tag: SBA

Agencies have some new small business contracting goals for fiscal 2025 and they are more in line with traditional targets.

The Small Business Administration specifically reset the small disadvantaged business goals, requiring agencies to at least award 5% of all contracts to these firms.

The SBA updated these goals on Jan. 24 assigning every agency the same set of goals for all socioeconomic categories.

This reset specifically impacts agency focus on SDB program. The Biden administration set a govermentwide goal of 15% of all federal prime contracts going to these firms in fiscal 2025.

“The statutory small business prime contracting goals are floors, not ceilings. Thus, the statutory SDB goal is ‘not less than 5%.’ Consequently, the President has the authority to set higher prime contract goals for any small business category. The government historically met the 5% SDB goal,” said a former SBA official, who requested anonymity in order to talk about this now sensitive topic. “For example, in fiscal 2017 the government did 9% with SDBs. By gradually raising the governmentwide SDB goal to 15%, and negotiating individual SDB goals with each agency, governmentwide SDB performance increased to 12% in 2024.”

Individual agency SDBs goals are gone

The former official said lowering agency expectations for SDB contracts will mostly impact companies in the 8(a) program, since that is the only way to target these SDBs.

“By lowering the SDB goal, agencies will likely turn their focus away from 8(a) concerns to other areas where they struggle, such as HUBZone, where the government has never met the 3% prime contract goal,” the former official said.

Over the last four years, agencies have consistently increased prime contract awards to small firms, particularly SDBs. To do that, SBA set individual and specific SDB goals for each agency. In fiscal 2024, agency goals for SDBs ranged from SBA’s 60.5% to the Energy Department’s 8.15% and then everything in between including 11.55% for the Defense Department and 12.25% for the Department of Veterans Affairs to the Labor Department’s 30%.

In fiscal 2023, agencies awarded $76.2 billion to small disadvantaged businesses, the most ever, surpassing the Biden administration’s goal of 12%.

Overall, agencies awarded an all-time high of 28.4% of all eligible federal contract dollars to small businesses. This means small firms received $178.6 billion in total contracts, which was an increase of $15.7 billion from 2022. The governmentwide small business contracting goal is 23%.

SBA is expected to provide 2024 data in the spring time.

Trump ends DEI programs

SBA’s decision to lower the governmentwide goals seemingly is directly related to the new administration’s policy to remove all diversity, equity and inclusion requirements in contracts.

President Donald Trump issued an executive order on Jan. 20 ending diversity, equity and inclusion programs. As part of that order, agencies were told to terminate any DEI or equity programs or initiatives.

John Shoraka, a former associate administrator of Government Contracting and Business Development at the SBA and now CEO of Strategic Growth Partners, said it seems that the small business set-aside program got caught up in the “anti-DEI” wave.

He said there also are proposed bills in Congress that would gut the 8(a) program.

“The 8(a) program has gone through changes as a result of court decisions two summers ago, and the program was revised to eliminate any reference to race as a qualification factor,” he said. “The 8(a) program is often the quick acquisition model for agencies, especially as they enter the fourth quarter and need to quickly execute contract actions before the end of the fiscal year. Significant spend goes through the 8(a) program at the end of the year, mostly because the government has continuing resolutions through most of the fiscal year and doesn’t have the ability to fully commit funds until a final budget is approved. If we continue to see continuing resolutions and agencies are left scrambling to execute contract actions at the end of the year and are simultaneously being encouraged not to use the 8(a) program you are going to see bottlenecks which will result in the government not being able to procure the products and services it needs to function properly.”

Cy Alba, a partner with the law firm PilieroMazza , said reversing the goals isn’t uncommon for new administrations.

“My understanding from speaking with representatives of the new administration and the new Congress, there is bipartisan support for small businesses and helping small businesses to grow and develop. This includes continued support for small businesses in the federal market by ensuring compliance with the Small Business Act and the regulations promulgated consistent therewith,” he said. “Thus, I believe these changes are merely a reversion to the status quo as the goals have been stated for many years prior to the specific increases put in place by the Biden administration.”

Tony Franco, a managing partner with PilieroMazza, added he can’t recall ever seeing any administration change the goals downward.

“With the Trump Administration focused on restoring so called merit-based opportunities, it is arguably viewed as in-keeping with those goals,” he said.

SBA’s new goals for every CFO Act agency in socioeconomic categories are:

• SDB 5%
• Women-owned small business 5%
• Service disabled veteran-owned small business 5%
• HUBZone 3%

It looks like the agency small business overall goal remained the same to what the agency negotiated with SBA for 2025.

An email to SBA seeking comment on the decision to reset goals was not immediately returned.

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