Small Business Contracting
How the times have changed. Fifteen years ago, small business contracting was a hot area of government contracting. Agencies sought out companies certified to participate in the Small Business Administration's 8(a) program for socially and economically disadvantaged businesses because it was much easier and faster to procure goods and services through an SBA 8(a) company than using full and open competition. Agencies would often direct large businesses to use small disadvantaged business partners. The dollar and percentage of federal business awarded to small businesses grew.
Things began to change when some non-disadvantaged small businesses challenged the constitutionality of the SBA 8(a) program and similar affirmative action programs. Agencies became wary that an award to an SBA 8(a) contractor could be held up in court. Suddenly, using an SBA 8(a) contractor became less attractive. When the GSA Schedule program's Price Reductions clause and the Maximum Order were relaxed and the program was enlarged to included services, small business contracting fell even more out of favor.
Congressional reports in 2000 show the dollar and percentage awards to small, woman owned, and small disadvantaged businesses is down. And outside of the relative shelter of small business programs, it's become even harder for small businesses to compete with large businesses when the size of your marketing budget has become so important.
All that being said, small business contracting (and subcontracting) is not about to go away. The government has established small business goals of not less than 23 percent of the total value of all prime contracts awarded each fiscal year. Additional classifications of small businesses such as veteran-owned and HUBZone small businesses have been introduced into the government procurement system.
The government is starting to crack down on large businesses that don't meet their subcontracting plan goals. Thus, large contractors still need to know how and when to contract and subcontract with small businesses. Agencies still set aside procurements in whole or in part for small businesses, and certainly push large prime contractors to subcontract with as many small businesses as possible. Small businesses able to use their nimbleness to their advantage can succeed in the federal marketplace.