An Overview of Small Business Contracting

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An Overview of Small Business Contracting
~~February 12~~June 24, 2021 , 2021
Congress has broad authority to impose requirements upon the federal procurement process, that Congress has broad authority to impose requirements upon the federal procurement process, that
is, the process whereby agencies obtain goods and services from the private sector. One way in is, the process whereby agencies obtain goods and services from the private sector. One way in
Robert Jay Dilger
which Congress has exercised this authority is by adopting measures to promote contracting and which Congress has exercised this authority is by adopting measures to promote contracting and
Senior Specialist in Senior Specialist in
subcontracting between “small businesses” and federal agencies. subcontracting between “small businesses” and federal agencies.
American National American National
Government Government
These measures, among other things, are designed to ensure that a “fair proportion” of federal These measures, among other things, are designed to ensure that a “fair proportion” of federal

contract and subcontract dollars is awarded to small businesses; establish government-wide and contract and subcontract dollars is awarded to small businesses; establish government-wide and
agency-specific goals for the percentage of federal contract and subcontract dollars awarded to agency-specific goals for the percentage of federal contract and subcontract dollars awarded to

small businesses; establish an annual Small Business Goaling Report to measure progress in small businesses; establish an annual Small Business Goaling Report to measure progress in
meeting these goals; generally require federal agencies, under specified circumstances, to reserve contracts that have an meeting these goals; generally require federal agencies, under specified circumstances, to reserve contracts that have an
anticipated value greater than the micro-purchase threshold (currently $10,000), but not greater than the simplified anticipated value greater than the micro-purchase threshold (currently $10,000), but not greater than the simplified
acquisition threshold (currently $250,000) exclusively for small businesses; authorize federal agencies, under specified acquisition threshold (currently $250,000) exclusively for small businesses; authorize federal agencies, under specified
circumstances, to set aside contracts that have an anticipated value greater than the simplified acquisition threshold circumstances, to set aside contracts that have an anticipated value greater than the simplified acquisition threshold
exclusively for small businesses; authorize federal agencies to make sole-source awards to small businesses when the award exclusively for small businesses; authorize federal agencies to make sole-source awards to small businesses when the award
could not otherwise be made (e.g., only a single source is available, under urgent and compelling circumstances); authorize could not otherwise be made (e.g., only a single source is available, under urgent and compelling circumstances); authorize
federal agencies to set aside contracts for, or grant other contracting preference to, specific types of small businesses (e.g., federal agencies to set aside contracts for, or grant other contracting preference to, specific types of small businesses (e.g.,
8(a) small businesses, HUBZone small businesses, women-owned small businesses (WOSBs), and service-disabled veteran-8(a) small businesses, HUBZone small businesses, women-owned small businesses (WOSBs), and service-disabled veteran-
owned small businesses (SDVOSBs)); and task the Small Business Administration (SBA) and other federal procurement owned small businesses (SDVOSBs)); and task the Small Business Administration (SBA) and other federal procurement
officers with reviewing and restructuring proposed procurements to maximize opportunities for small business participation. officers with reviewing and restructuring proposed procurements to maximize opportunities for small business participation.
Small business contracting programs generally have strong bipartisan support. However, that does not mean that these Small business contracting programs generally have strong bipartisan support. However, that does not mean that these
programs face no opposition, or that issues have not been raised concerning the impact and operations of specific programs. programs face no opposition, or that issues have not been raised concerning the impact and operations of specific programs.
For example, small business advocates note that implementing regulations in the Federal Acquisition Regulation (FAR) For example, small business advocates note that implementing regulations in the Federal Acquisition Regulation (FAR)
narrow the reach (and impact) of some small business contracting preferences by excluding specific types of contracts, such narrow the reach (and impact) of some small business contracting preferences by excluding specific types of contracts, such
as those listed in the Federal Supply Schedules, from FAR requirements pertaining to small business contracting. Advocates as those listed in the Federal Supply Schedules, from FAR requirements pertaining to small business contracting. Advocates
want the federal government to enact policies that reduce or eliminate such exclusions. Critics have questioned some of these want the federal government to enact policies that reduce or eliminate such exclusions. Critics have questioned some of these
programs’ effectiveness, in terms of both promoting small business opportunities to win federal contracts and promoting a programs’ effectiveness, in terms of both promoting small business opportunities to win federal contracts and promoting a
more diversified, robust economy. more diversified, robust economy.
Many observers judge the relative success or failure of federal efforts to enhance small business contracting opportunities by Many observers judge the relative success or failure of federal efforts to enhance small business contracting opportunities by
whether the federal government and individual federal agencies meet the predetermined procurement goals in the annual whether the federal government and individual federal agencies meet the predetermined procurement goals in the annual
Small Business Goaling Report. In recent years, the federal government has generally succeeded in meeting the government-Small Business Goaling Report. In recent years, the federal government has generally succeeded in meeting the government-
wide goals of awarding 23% of the total value of all small business eligible prime contract awards to small businesses, 5% to wide goals of awarding 23% of the total value of all small business eligible prime contract awards to small businesses, 5% to
small disadvantaged businesses (SDBs), and 3% to SDVOSBs. It has had difficulty meeting the goals of 5% to WOSBs and small disadvantaged businesses (SDBs), and 3% to SDVOSBs. It has had difficulty meeting the goals of 5% to WOSBs and
3% to HUBZone small businesses. 3% to HUBZone small businesses.
The Small Business Goaling Report is the most convenient measure available to compare federal small business contracting The Small Business Goaling Report is the most convenient measure available to compare federal small business contracting
performance over time, but it has limitations. For example, the SBA excludes some contracts from the report in its performance over time, but it has limitations. For example, the SBA excludes some contracts from the report in its
determination of what is “small business eligible” and some federal procurement activities are not included because they are determination of what is “small business eligible” and some federal procurement activities are not included because they are
not recorded in the Federal Procurement Data System—Next Generation. It also does not evaluate the effect these contracts not recorded in the Federal Procurement Data System—Next Generation. It also does not evaluate the effect these contracts
have on small businesses, industry competitiveness, or the overall economy. have on small businesses, industry competitiveness, or the overall economy.
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An Overview of Small Business Contracting

Introduction
During World War II and then again after the outbreak of fighting in Korea, Congress found that During World War II and then again after the outbreak of fighting in Korea, Congress found that
the existence of thousands of small business concerns was being threatened by war-induced the existence of thousands of small business concerns was being threatened by war-induced
shortages of materials coupled with an inability to obtain defense contracts or financial shortages of materials coupled with an inability to obtain defense contracts or financial
assistance.1 Concerned that many small businesses might fail without government assistance, in assistance.1 Concerned that many small businesses might fail without government assistance, in
1953, Congress passed and President Dwight Eisenhower signed into law the Small Business Act 1953, Congress passed and President Dwight Eisenhower signed into law the Small Business Act
(P.L. 83-163), which authorized the Small Business Administration (SBA).2 The act specifies that (P.L. 83-163), which authorized the Small Business Administration (SBA).2 The act specifies that
it is the declared policy of Congress to promote the interests of small businesses to “preserve free it is the declared policy of Congress to promote the interests of small businesses to “preserve free
competitive enterprise.” Congress specified that one of the ways to preserve free competitive competitive enterprise.” Congress specified that one of the ways to preserve free competitive
enterprise was to insure that small businesses received a “fair proportion” of federal contracts and enterprise was to insure that small businesses received a “fair proportion” of federal contracts and
subcontracts: subcontracts:
It is the declared policy of the Congress that the Government should aid, counsel, assist, It is the declared policy of the Congress that the Government should aid, counsel, assist,
and protect, insofar as is possible, the interests of small-business concerns in order to and protect, insofar as is possible, the interests of small-business concerns in order to
preserve free competitive enterprise, to insure that a fair proportion of the total purchases preserve free competitive enterprise, to insure that a fair proportion of the total purchases
and contracts or subcontracts for property and services for the Government (including but and contracts or subcontracts for property and services for the Government (including but
not limited to contracts or subcontracts for maintenance, repair, and construction) be placed not limited to contracts or subcontracts for maintenance, repair, and construction) be placed
with small-business enterprises, to insure that a fair proportion of the total sales of with small-business enterprises, to insure that a fair proportion of the total sales of
Government property be made to such enterprises, and to maintain and strengthen the Government property be made to such enterprises, and to maintain and strengthen the
overall economy of the Nation.3 overall economy of the Nation.3
Congress indicated that its intent in supporting small businesses was not to “favor small business Congress indicated that its intent in supporting small businesses was not to “favor small business
at the expense of its larger competitors. Our only purpose in supporting the creation and effective at the expense of its larger competitors. Our only purpose in supporting the creation and effective
operation of the SBA is to equalize the scales when necessary to guarantee the continued vigor of operation of the SBA is to equalize the scales when necessary to guarantee the continued vigor of
our competitive free enterprise system.”4 our competitive free enterprise system.”4
More recently, a House committee report indicated that the primary rationale for small business More recently, a House committee report indicated that the primary rationale for small business
contracting programs contracting programs
is the positive economic benefits they provide, as well as assisting small businesses is the positive economic benefits they provide, as well as assisting small businesses
overcome the complexities of the system. The economic benefits of these programs can be overcome the complexities of the system. The economic benefits of these programs can be
seen inseen in two primary areas—market competition andtwo primary areas—market competition and local economiclocal economic development. First, development. First,
[these] programs … are designed to increase and diversify small contractors with the intent [these] programs … are designed to increase and diversify small contractors with the intent
of expanding the federal supplier base. This leads to increased competition, which results of expanding the federal supplier base. This leads to increased competition, which results
in higher quality, greater product variety, and lower prices. Second, these contracting in higher quality, greater product variety, and lower prices. Second, these contracting
initiatives lower barriers to entry in a wide range of markets for small businesses. This initiatives lower barriers to entry in a wide range of markets for small businesses. This

1 U.S. Congress, Senate Select Committee on Small Business, 1 U.S. Congress, Senate Select Committee on Small Business, Small Business Administration, committee print, 83rd , committee print, 83rd
Cong., 1st sess., August 10, 1953 (Washington: GPO, 1953), p. iii. Also, see U.S. Congress, House Committee on Cong., 1st sess., August 10, 1953 (Washington: GPO, 1953), p. iii. Also, see U.S. Congress, House Committee on
Banking and Currency, Banking and Currency, Small Business Act of 1953, report to accompany H.R. 5141, 83rd Cong., 1st sess., May 28, , report to accompany H.R. 5141, 83rd Cong., 1st sess., May 28,
1953, H.Rept. 83-494 (Washington: GPO, 1953). 1953, H.Rept. 83-494 (Washington: GPO, 1953).
2 On July 31, 1951, the Small Defense Plants Administration (SDPA) was created by an amendment to P.L. 81-774, the 2 On July 31, 1951, the Small Defense Plants Administration (SDPA) was created by an amendment to P.L. 81-774, the
Defense Production Act of 1950, and was given “primary responsibility in the field of channeling defense contracts to Defense Production Act of 1950, and was given “primary responsibility in the field of channeling defense contracts to
small producers.” As hostilities with Korea subsided, so did the perceived need for the SDPA. Congress granted the small producers.” As hostilities with Korea subsided, so did the perceived need for the SDPA. Congress granted the
Small Business Administration (SBA) similar authority to promote small business contracting with federal agencies, Small Business Administration (SBA) similar authority to promote small business contracting with federal agencies,
but with all federal agencies, as opposed to focusing on the Department of Defense. See U.S. Congress, Senate Select but with all federal agencies, as opposed to focusing on the Department of Defense. See U.S. Congress, Senate Select
Committee on Small Business, Committee on Small Business, Small Business Administration, committee print, 83rd Cong., 1st sess., August 10, 1953 , committee print, 83rd Cong., 1st sess., August 10, 1953
(Washington: GPO, 1953), p. iv. (Washington: GPO, 1953), p. iv.
3 15 U.S.C. §631(a); and P.L. 83-163, the Small Business Act of 1953 (as amended), see https://www.govinfo.gov/app/ 3 15 U.S.C. §631(a); and P.L. 83-163, the Small Business Act of 1953 (as amended), see https://www.govinfo.gov/app/
details/COMPS-1834. details/COMPS-1834.
4 U.S. Congress, Senate Select Committee on Small Business, 4 U.S. Congress, Senate Select Committee on Small Business, Small Business Administration, committee print, 83rd , committee print, 83rd
Cong., 1st sess., August 10, 1953 (Washington: GPO, 1953), p. v. Cong., 1st sess., August 10, 1953 (Washington: GPO, 1953), p. v.
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provides greater market access for small firms’ goods and services. From an economic provides greater market access for small firms’ goods and services. From an economic
perspective, such access is critical to generating positive macroeconomic benefits, perspective, such access is critical to generating positive macroeconomic benefits,
including higher job creation, wage growth, and greater income distribution.5 including higher job creation, wage growth, and greater income distribution.5
Over the years, Congress has approved legislation to support small business in various ways. For Over the years, Congress has approved legislation to support small business in various ways. For
example, the SBA administers several types of programs to support small businesses, including example, the SBA administers several types of programs to support small businesses, including
loan guaranty and venture capital programs to enhance small business access to capital; loan guaranty and venture capital programs to enhance small business access to capital;
contracting programs to increase small business opportunities in federal contracting; direct loan contracting programs to increase small business opportunities in federal contracting; direct loan
programs for businesses, homeowners, and renters to assist their recovery from natural disasters; programs for businesses, homeowners, and renters to assist their recovery from natural disasters;
and small business management and technical assistance training programs to assist business and small business management and technical assistance training programs to assist business
formation and expansion. formation and expansion.
In recent years, congressional interest in the SBA’s programs has become especially acute given In recent years, congressional interest in the SBA’s programs has become especially acute given
the Coronavirus Disease 2019 (COVID-19) pandemic’s widespread adverse economic impact on the Coronavirus Disease 2019 (COVID-19) pandemic’s widespread adverse economic impact on
the national economy generally and small businesses in particular. the national economy generally and small businesses in particular.
This report describes the various federal programs, requirements, procurement officers, and This report describes the various federal programs, requirements, procurement officers, and
procurement offices involved in promoting federal contracting and subcontracting with small procurement offices involved in promoting federal contracting and subcontracting with small
businesses, small disadvantaged businesses (SDBs), SDBs participating the SBA’s “8(a) businesses, small disadvantaged businesses (SDBs), SDBs participating the SBA’s “8(a)
Program,” Historically Underutilized Business Zone (HUBZone) small businesses, women-Program,” Historically Underutilized Business Zone (HUBZone) small businesses, women-
owned small businesses (WOSBs), and service-disabled veteran-owned small businesses owned small businesses (WOSBs), and service-disabled veteran-owned small businesses
(SDVOSBs). The SBA administers many, but not all, of these programs. (SDVOSBs). The SBA administers many, but not all, of these programs.
It examines the following federal requirements and authorities in promoting contracting and It examines the following federal requirements and authorities in promoting contracting and
subcontracting with small businesses: subcontracting with small businesses:
1. The requirement that federal agencies generally reserve contracts that have an 1. The requirement that federal agencies generally reserve contracts that have an
anticipated value greater than the micro-purchase threshold (currently $10,000) anticipated value greater than the micro-purchase threshold (currently $10,000)
but not greater than the simplified acquisition threshold (currently $250,000) but not greater than the simplified acquisition threshold (currently $250,000)
exclusively for small businesses unless the contracting officer is unable to obtain exclusively for small businesses unless the contracting officer is unable to obtain
offers from two or more small businesses that are competitive with market prices offers from two or more small businesses that are competitive with market prices
and the quality and delivery of the goods or services being purchased.6 and the quality and delivery of the goods or services being purchased.6
2. The establishment of small business procurement goals, both government-wide 2. The establishment of small business procurement goals, both government-wide
and agency specific, to promote the awarding of contracts to small businesses. and agency specific, to promote the awarding of contracts to small businesses.
3. The requirement that federal agencies generally set aside contracts that have an 3. The requirement that federal agencies generally set aside contracts that have an
anticipated value exceeding the simplified acquisition threshold exclusively for anticipated value exceeding the simplified acquisition threshold exclusively for
small businesses when there is a reasonable expectation that offers will be small businesses when there is a reasonable expectation that offers will be
obtained from at least two responsible small businesses offering the products of obtained from at least two responsible small businesses offering the products of
different small businesses (Rule of Two) and the award will be made at a fair different small businesses (Rule of Two) and the award will be made at a fair
market price.7 market price.7

5 U.S. Congress, House Committee on Small Business, 5 U.S. Congress, House Committee on Small Business, Small Business Contracting Program Improvements Act, report , report
to accompany H.R. 3867, 110th Cong., 1st sess., October 22, 2007, H.Rept. 110-400 (Washington: GPO, 2007), p. 4. to accompany H.R. 3867, 110th Cong., 1st sess., October 22, 2007, H.Rept. 110-400 (Washington: GPO, 2007), p. 4.
6 Federal Acquisition Regulation (FAR) §19.502-2. 6 Federal Acquisition Regulation (FAR) §19.502-2.
7 “For acquisitions of supplies or services that have an anticipated dollar value exceeding the simplified acquisition 7 “For acquisitions of supplies or services that have an anticipated dollar value exceeding the simplified acquisition
threshold … the contracting officer shall first consider an acquisition for the small business socioeconomic contracting threshold … the contracting officer shall first consider an acquisition for the small business socioeconomic contracting
programs (i.e., 8(a), HUBZone, SDVOSB, or WOSB programs) before considering a small business set-aside (see programs (i.e., 8(a), HUBZone, SDVOSB, or WOSB programs) before considering a small business set-aside (see
19.502-2(b)). However, if a requirement has been accepted by the Small Business Administration (SBA) under the 8(a) 19.502-2(b)). However, if a requirement has been accepted by the Small Business Administration (SBA) under the 8(a)
Program, it must remain in the 8(a) Program unless the SBA agrees to its release in accordance with 13 C.F.R. parts Program, it must remain in the 8(a) Program unless the SBA agrees to its release in accordance with 13 C.F.R. parts
124, 125, and 126.” FAR §19.203(c). 124, 125, and 126.” FAR §19.203(c).
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4. The authority provided federal agencies to make sole-source awards to small 4. The authority provided federal agencies to make sole-source awards to small
businesses when the award could not otherwise be made (e.g., only a single businesses when the award could not otherwise be made (e.g., only a single
source is available, under urgent and compelling circumstances). source is available, under urgent and compelling circumstances).
5. The authority provided federal agencies to set aside contracts for, or grant other 5. The authority provided federal agencies to set aside contracts for, or grant other
contracting preference to, specific types of small businesses (e.g., 8(a) small contracting preference to, specific types of small businesses (e.g., 8(a) small
businesses, HUBZone small businesses, WOSBs, and SDVOSBs) and to specific businesses, HUBZone small businesses, WOSBs, and SDVOSBs) and to specific
types of businesses generally (e.g., the Buy Indian Act). types of businesses generally (e.g., the Buy Indian Act).
It discusses the SBA’s oversight and responsibilities concerning the small business goaling It discusses the SBA’s oversight and responsibilities concerning the small business goaling
program, small business mentor-protégé programs, the 7(j) management and training program, program, small business mentor-protégé programs, the 7(j) management and training program,
and the surety bond guaranty program. and the surety bond guaranty program.
It also discusses the role of the Office of Small and Disadvantaged Business Utilization It also discusses the role of the Office of Small and Disadvantaged Business Utilization
(OSDBU), located in each federal agency, in promoting contracting with small businesses, and (OSDBU), located in each federal agency, in promoting contracting with small businesses, and
examines the role and responsibilities of various federal procurement officers, including examines the role and responsibilities of various federal procurement officers, including
procurement center representatives, commercial market representatives, and business opportunity procurement center representatives, commercial market representatives, and business opportunity
specialists, in promoting small business contracting opportunities. specialists, in promoting small business contracting opportunities.
This report concludes with a brief discussion of the strong bipartisan support for small business This report concludes with a brief discussion of the strong bipartisan support for small business
contracting programs. However, that does not mean that these programs face no opposition, or contracting programs. However, that does not mean that these programs face no opposition, or
that issues have not been raised concerning the impact and operations of specific programs. For that issues have not been raised concerning the impact and operations of specific programs. For
example, small business advocates note that implementing regulations in the Federal Acquisition example, small business advocates note that implementing regulations in the Federal Acquisition
Regulation (FAR) narrow the reach (and impact) of some small business contracting preferences Regulation (FAR) narrow the reach (and impact) of some small business contracting preferences
by excluding specific types of contracts, such as those listed in the Federal Supply Schedules, by excluding specific types of contracts, such as those listed in the Federal Supply Schedules,
from FAR requirements pertaining to small business contracting.8 Advocates want the federal from FAR requirements pertaining to small business contracting.8 Advocates want the federal
government to enact policies that reduce or eliminate exclusions that narrow the reach of small government to enact policies that reduce or eliminate exclusions that narrow the reach of small

8 FAR §8.405-5 indicates that the small business preference programs are not mandatory in this subpart (blanket 8 FAR §8.405-5 indicates that the small business preference programs are not mandatory in this subpart (blanket
purchase agreements and Federal Supply Schedules). Federal agencies may, at their discretion, set aside orders under purchase agreements and Federal Supply Schedules). Federal agencies may, at their discretion, set aside orders under
the Federal Supply Schedules and blanket purchase agreements for small businesses. the Federal Supply Schedules and blanket purchase agreements for small businesses.
The Federal Supply Schedule program “provides Federal agencies with a simplified process of acquiring commercial The Federal Supply Schedule program “provides Federal agencies with a simplified process of acquiring commercial
supplies and services in varying quantities while obtaining volume discounts. Indefinite-delivery contracts are awarded supplies and services in varying quantities while obtaining volume discounts. Indefinite-delivery contracts are awarded
using competitive procedures to firms. The firms provide supplies and services at stated prices for given periods of using competitive procedures to firms. The firms provide supplies and services at stated prices for given periods of
time, for delivery within a stated geographic area such as the 48 contiguous states, the District of Columbia, Alaska, time, for delivery within a stated geographic area such as the 48 contiguous states, the District of Columbia, Alaska,
Hawaii, and overseas. …Although GSA [General Services Administration] awards most Federal Supply Schedule Hawaii, and overseas. …Although GSA [General Services Administration] awards most Federal Supply Schedule
contracts, it may authorize other agencies to award schedule contracts and publish schedules. For example, the contracts, it may authorize other agencies to award schedule contracts and publish schedules. For example, the
Department of Veterans Affairs awards schedule contracts for certain medical and nonperishable subsistence items.” Department of Veterans Affairs awards schedule contracts for certain medical and nonperishable subsistence items.”
FAR §38.101. FAR §38.101.
A blanket purchase agreement (BPA) is “a simplified method of filling anticipated repetitive needs for supplies or A blanket purchase agreement (BPA) is “a simplified method of filling anticipated repetitive needs for supplies or
services by establishing “charge accounts” with qualified sources of supply. …BPAs should be established for use by services by establishing “charge accounts” with qualified sources of supply. …BPAs should be established for use by
an organization responsible for providing supplies for its own operations or for other offices, installations, projects, or an organization responsible for providing supplies for its own operations or for other offices, installations, projects, or
functions. Such organizations, for example, may be organized supply points, separate independent or detached field functions. Such organizations, for example, may be organized supply points, separate independent or detached field
parties, or one-person posts or activities. …The use of BPAs does not exempt an agency from the responsibility for parties, or one-person posts or activities. …The use of BPAs does not exempt an agency from the responsibility for
keeping obligations and expenditures within available funds.” FAR §13.303-1. keeping obligations and expenditures within available funds.” FAR §13.303-1.
For an argument advocating regulatory changes that might require the mandatory application of set-asides to orders in For an argument advocating regulatory changes that might require the mandatory application of set-asides to orders in
the same manner that law and regulation currently require for contracts, see Interagency Task Force on Federal the same manner that law and regulation currently require for contracts, see Interagency Task Force on Federal
Contracting Opportunities for Small Businesses, Contracting Opportunities for Small Businesses, Report, September 2010, pp. 8-10, at https://www.sba.gov/sites/, September 2010, pp. 8-10, at https://www.sba.gov/sites/
default/files/2018-02/contracting_task_force_report_0.pdf. default/files/2018-02/contracting_task_force_report_0.pdf.
The U.S. Supreme Court ruled in 2016, in The U.S. Supreme Court ruled in 2016, in Kingdomware Technologies, Inc. v. United States, that the Department of , that the Department of
Veterans Affairs (VA) cannot continue its former practice of making purchases through the Federal Supply Schedules Veterans Affairs (VA) cannot continue its former practice of making purchases through the Federal Supply Schedules
without first considering whether the contract could be set aside for veteran-owned small businesses (VSOBs) due to without first considering whether the contract could be set aside for veteran-owned small businesses (VSOBs) due to
language in P.L. 109-461, the Veterans Benefits, Health Care, and Information Technology Act of 2006, that required language in P.L. 109-461, the Veterans Benefits, Health Care, and Information Technology Act of 2006, that required
VA specifically to promote contract awards to VOSBs. VA specifically to promote contract awards to VOSBs.
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business contracting preferences. Critics have questioned some of these programs’ effectiveness, business contracting preferences. Critics have questioned some of these programs’ effectiveness,
in terms of promoting both small business opportunities to win federal contracts and a more in terms of promoting both small business opportunities to win federal contracts and a more
diversified, robust economy.9 diversified, robust economy.9
Basic Contracting Requirements
Federal Contractors
With a few exceptions, businesses interested in bidding on a federal contract must obtain a Dun & With a few exceptions, businesses interested in bidding on a federal contract must obtain a Dun &
Bradstreet Data Universal Numbering System (DUNS) number (i.e., a unique nine-digit Bradstreet Data Universal Numbering System (DUNS) number (i.e., a unique nine-digit
identification number) for each of the business’s physical locations, and register with the federal identification number) for each of the business’s physical locations, and register with the federal
government’s System for Award Management (SAM).10 SAM is used by government agencies for government’s System for Award Management (SAM).10 SAM is used by government agencies for
several purposes, including to find contractors.11 several purposes, including to find contractors.11
Businesses also must match their products and services to a North American Industry Businesses also must match their products and services to a North American Industry
Classification System (NAICS) code. Businesses generally have a primary NAICS code, and may Classification System (NAICS) code. Businesses generally have a primary NAICS code, and may
have multiple NAICS codes if they sell multiple products and services.12 have multiple NAICS codes if they sell multiple products and services.12
Businesses that identify themselves as a small business in SAM must (1) meet the Small Business Businesses that identify themselves as a small business in SAM must (1) meet the Small Business
Act’s definition of a small business and (2) not exceed size standards established, and updated Act’s definition of a small business and (2) not exceed size standards established, and updated
periodically, by the SBA.13 periodically, by the SBA.13
The Small Business Act defines a small business as one that The Small Business Act defines a small business as one that
 is organized for profit;  is organized for profit;
 has a place of business in the United States;  has a place of business in the United States;
 operates primarily within the United States or makes a significant contribution to  operates primarily within the United States or makes a significant contribution to
the U.S. economy through payment of taxes or use of American products, the U.S. economy through payment of taxes or use of American products,
materials, or labor; materials, or labor;
 is independently owned and operated; and  is independently owned and operated; and
 is not dominant in its field on a national basis.14  is not dominant in its field on a national basis.14

9 For example, see Henry Beale and Nicola Deas, “The HUBZone Report,” prepared for the SBA, Office of Advocacy, 9 For example, see Henry Beale and Nicola Deas, “The HUBZone Report,” prepared for the SBA, Office of Advocacy,
May 2008, pp. i, ii, 124-131, at https://www.sba.gov/sites/default/files/rs325tot.pdf; and Clifford A. Grammich, May 2008, pp. i, ii, 124-131, at https://www.sba.gov/sites/default/files/rs325tot.pdf; and Clifford A. Grammich,
Thomas R. Edison Jr., Nancy Young Moore, and Edward G. Keating, Thomas R. Edison Jr., Nancy Young Moore, and Edward G. Keating, Small Business and Defense Acquisitions: A
Review of Policies and Current Practices (Santa Monica, CA: RAND, 2011), pp. xii, 15, 16, at https://www.rand.org/ (Santa Monica, CA: RAND, 2011), pp. xii, 15, 16, at https://www.rand.org/
content/dam/rand/pubs/monographs/2011/RAND_MG443.pdf. content/dam/rand/pubs/monographs/2011/RAND_MG443.pdf.
10 SBA, “Federal Contracting Guide: Basic Requirements,” at https://www.sba.gov/federal-contracting/contracting- 10 SBA, “Federal Contracting Guide: Basic Requirements,” at https://www.sba.gov/federal-contracting/contracting-
guide/basic-requirements. For additional information and analysis, see CRS Report R44490, guide/basic-requirements. For additional information and analysis, see CRS Report R44490, Unique Identification
Codes for Federal Contractors: DUNS Numbers and CAGE Codes, by L. Elaine Halchin; and CRS Report RS22536, , by L. Elaine Halchin; and CRS Report RS22536,
Overview of the Federal Procurement Process and Resources, by L. Elaine Halchin. , by L. Elaine Halchin.
11 SBA, “Register with SAM,” at https://www.sba.gov/federal-contracting/contracting-guide/basic- 11 SBA, “Register with SAM,” at https://www.sba.gov/federal-contracting/contracting-guide/basic-
requirements#section-header-8. requirements#section-header-8.
12 U.S. Bureau of the Census, “North American Industry Classification System,” at https://www.census.gov/eos/www/ 12 U.S. Bureau of the Census, “North American Industry Classification System,” at https://www.census.gov/eos/www/
naics/. naics/.
13 P.L. 111-240, the Small Business Jobs Act of 2010, requires the SBA to conduct a detailed review of not less than 13 P.L. 111-240, the Small Business Jobs Act of 2010, requires the SBA to conduct a detailed review of not less than
one-third of the SBA’s industry size standards every 18 months beginning on the new law’s date of enactment one-third of the SBA’s industry size standards every 18 months beginning on the new law’s date of enactment
(September 27, 2010) and ensure that each size standard is reviewed at least once every five years. (September 27, 2010) and ensure that each size standard is reviewed at least once every five years.
14 15 U.S.C. §632(a); and 13 C.F.R. §121.105. Affiliations between businesses, or relationships allowing one party 14 15 U.S.C. §632(a); and 13 C.F.R. §121.105. Affiliations between businesses, or relationships allowing one party
control or the power of control over another, generally count in size determinations. Businesses can thus be determined control or the power of control over another, generally count in size determinations. Businesses can thus be determined
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The business may be a sole proprietorship, partnership, corporation, or any other legal form.15 The business may be a sole proprietorship, partnership, corporation, or any other legal form.15
The Small Business Act authorizes the SBA to establish size standards to ensure that only small The Small Business Act authorizes the SBA to establish size standards to ensure that only small
businesses are provided SBA assistance. The SBA currently uses two types of size standards to businesses are provided SBA assistance. The SBA currently uses two types of size standards to
determine SBA program eligibility: determine SBA program eligibility: industry-specific size standards and and alternative size
standards, for some lending and venture capital investment programs based on the applicant’s , for some lending and venture capital investment programs based on the applicant’s
maximum tangible net worth and average net income after federal taxes.16 The SBA’s industry-maximum tangible net worth and average net income after federal taxes.16 The SBA’s industry-
specific size standards are used to determine eligibility for federal small business contracting specific size standards are used to determine eligibility for federal small business contracting
purposes. purposes.
The SBA determines if a business is small by comparing that business’s economic characteristics The SBA determines if a business is small by comparing that business’s economic characteristics
(typically number of employees or average annual receipts) to size standards listed in the SBA’s (typically number of employees or average annual receipts) to size standards listed in the SBA’s
Table of Small Business Size Standards. The table has size standards for 1,036 industrial Table of Small Business Size Standards. The table has size standards for 1,036 industrial
classifications in the North American Industrial Classification System. Businesses that exceed the classifications in the North American Industrial Classification System. Businesses that exceed the
applicable size standard for their primary industry do not meet the requirement of being small. applicable size standard for their primary industry do not meet the requirement of being small.
The SBA’s size standards are designed to (1) encourage competition within each industry and The SBA’s size standards are designed to (1) encourage competition within each industry and
(2) ensure that SBA assistance is provided only to firms that are not dominant in their field on a (2) ensure that SBA assistance is provided only to firms that are not dominant in their field on a
national basis. The size standards are derived through an assessment of four economic factors: national basis. The size standards are derived through an assessment of four economic factors:
(1) the average firm size, (2) the average assets size as a proxy of start-up costs and entry barriers, (1) the average firm size, (2) the average assets size as a proxy of start-up costs and entry barriers,
(3) the four-firm concentration ratio (the cumulative share of total industry receipts of that (3) the four-firm concentration ratio (the cumulative share of total industry receipts of that
industry’s four biggest firms) as a measure of industry competition, and (4) the size distribution industry’s four biggest firms) as a measure of industry competition, and (4) the size distribution
of firms.17 The SBA also considers the ability of small businesses to compete for federal of firms.17 The SBA also considers the ability of small businesses to compete for federal
contracting opportunities and, when necessary, several secondary factors “as they are relevant to contracting opportunities and, when necessary, several secondary factors “as they are relevant to
the industries and the interests of small businesses, including technological change, competition the industries and the interests of small businesses, including technological change, competition
among industries, industry growth trends, and impacts of size standard revisions on small among industries, industry growth trends, and impacts of size standard revisions on small
businesses.”18 businesses.”18

to be other than small because of their involvement in joint ventures, subcontracting arrangements, or franchise or to be other than small because of their involvement in joint ventures, subcontracting arrangements, or franchise or
license agreements, among other things, provided that their employment or income, plus those of their affiliate(s), license agreements, among other things, provided that their employment or income, plus those of their affiliate(s),
exceed the pertinent size threshold. See 13 C.F.R. §121.103. exceed the pertinent size threshold. See 13 C.F.R. §121.103.
15 For additional information and analysis of the SBA’s size standards, see CRS Report R40860, 15 For additional information and analysis of the SBA’s size standards, see CRS Report R40860, Small Business Size
Standards: A Historical Analysis of Contemporary Issues, by Robert Jay Dilger. , by Robert Jay Dilger.
16 The SBA’s 7(a) loan guarantee program allows businesses to qualify as small if they meet the SBA’s size standard 16 The SBA’s 7(a) loan guarantee program allows businesses to qualify as small if they meet the SBA’s size standard
for the industry in which the applicant is primarily engaged, or a maximum tangible net worth of not more than $15 for the industry in which the applicant is primarily engaged, or a maximum tangible net worth of not more than $15
million and average after-tax net income after federal taxes (excluding any carry-over losses) of not more than $5 million and average after-tax net income after federal taxes (excluding any carry-over losses) of not more than $5
million for two full fiscal years before the date of application. 15 U.S.C. §632(a)(2-3) and 15 U.S.C. §632(a)(5)(B). million for two full fiscal years before the date of application. 15 U.S.C. §632(a)(2-3) and 15 U.S.C. §632(a)(5)(B).
Businesses participating in the SBA’s 504/Certified Development Company (504/CDC) loan guaranty program are Businesses participating in the SBA’s 504/Certified Development Company (504/CDC) loan guaranty program are
deemed small if they did not have a tangible net worth in excess of $15 million and did not have an average net income deemed small if they did not have a tangible net worth in excess of $15 million and did not have an average net income
in excess of $5 million after taxes (excluding any carry-over losses) for the preceding two years before the date of in excess of $5 million after taxes (excluding any carry-over losses) for the preceding two years before the date of
application. 15 U.S.C. §632(a)(5)(B). application. 15 U.S.C. §632(a)(5)(B).
The SBA’s Small Business Investment Company (SBIC) program allows businesses to qualify as small if they meet the The SBA’s Small Business Investment Company (SBIC) program allows businesses to qualify as small if they meet the
SBA’s size standard for the industry in which the applicant is primarily engaged, or a maximum tangible net worth of SBA’s size standard for the industry in which the applicant is primarily engaged, or a maximum tangible net worth of
not more than $19.5 million and average after-tax net income for the preceding two years of not more than $6.5 not more than $19.5 million and average after-tax net income for the preceding two years of not more than $6.5
million. 15 U.S.C. §662(12)(A-B); and SBA, “Small Business Size Standards: Inflation Adjustment to Monetary Based million. 15 U.S.C. §662(12)(A-B); and SBA, “Small Business Size Standards: Inflation Adjustment to Monetary Based
Size Standards,” 79 Size Standards,” 79 Federal Register 33647-33669, June 12, 2014. 33647-33669, June 12, 2014.
17 SBA, Office of Government Contracting and Business Development, 17 SBA, Office of Government Contracting and Business Development, SBA Size Standards Methodology, April 2019, , April 2019,
pp. 29, 30, at https://www.sba.gov/sites/default/files/2019-04/pp. 29, 30, at https://www.sba.gov/sites/default/files/2019-04/
SBA%20Size%20Standards%20Methodology%20April%2011%2C%202019.pdf (hereinafter SBA, Office of SBA%20Size%20Standards%20Methodology%20April%2011%2C%202019.pdf (hereinafter SBA, Office of
Government Contracting and Business Development, Government Contracting and Business Development, SBA Size Standards Methodology, April 2019). , April 2019).
18 SBA, Office of Government Contracting and Business Development, 18 SBA, Office of Government Contracting and Business Development, SBA Size Standards Methodology, April 2019, , April 2019,
p. 1. Any changes to size standards must follow the rulemaking procedures of the Administrative Procedure Act. A p. 1. Any changes to size standards must follow the rulemaking procedures of the Administrative Procedure Act. A
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Historically, the SBA has used the number of employees to determine if manufacturing and Historically, the SBA has used the number of employees to determine if manufacturing and
mining companies are small (ranging from fewer than 50 employees for some industries to fewer mining companies are small (ranging from fewer than 50 employees for some industries to fewer
than 1,500 employees for others) and average annual receipts for most other industries (ranging than 1,500 employees for others) and average annual receipts for most other industries (ranging
from no more than $1 million for some industries to no more than $40 million for others).19 from no more than $1 million for some industries to no more than $40 million for others).19
Federal Agencies
To make it easier to determine if an offeror meets the SBA’s definition of a small business, prior To make it easier to determine if an offeror meets the SBA’s definition of a small business, prior
to soliciting bids, federal agencies are required to classify a product or service being acquired in to soliciting bids, federal agencies are required to classify a product or service being acquired in
only one (NAICS code) industry, “whose definition best describes the principal nature of the only one (NAICS code) industry, “whose definition best describes the principal nature of the
product or service being acquired even though for other purposes it could be classified in more product or service being acquired even though for other purposes it could be classified in more
than one.”20 When acquiring a product or service that could be classified in two or more than one.”20 When acquiring a product or service that could be classified in two or more
industries with different size standards, contracting officers must “apply the size standard for the industries with different size standards, contracting officers must “apply the size standard for the
industry accounting for the greatest percentage of the contract price.”21 If a solicitation calls for industry accounting for the greatest percentage of the contract price.”21 If a solicitation calls for
more than one item and allows offers to be submitted on any or all of the items, “an offeror must more than one item and allows offers to be submitted on any or all of the items, “an offeror must
meet the size standard for each item it offers to furnish.”22 If a solicitation calling for more than meet the size standard for each item it offers to furnish.”22 If a solicitation calling for more than
one item requires offers on all or none of the items, “an offeror may qualify as a small business one item requires offers on all or none of the items, “an offeror may qualify as a small business
by meeting the size standard for the item accounting for the greatest percentage of the total by meeting the size standard for the item accounting for the greatest percentage of the total
contract price.”23 contract price.”23
With several notable exceptions (e.g., HUBZone small businesses, SBA 8(a) program With several notable exceptions (e.g., HUBZone small businesses, SBA 8(a) program
participants, and veteran-owned small businesses [VOSBs] and SDVOSBs seeking contracts with participants, and veteran-owned small businesses [VOSBs] and SDVOSBs seeking contracts with
the Department of Veterans Affairs), businesses generally self-certify their status as small when the Department of Veterans Affairs), businesses generally self-certify their status as small when
they register their business in the SAM database. they register their business in the SAM database.
The contracting officer is required to accept an offeror’s representation in a specific bid or The contracting officer is required to accept an offeror’s representation in a specific bid or
proposal that it is a small business unless “(1) another offeror or interested party challenges the proposal that it is a small business unless “(1) another offeror or interested party challenges the
concern’s small business representation or (2) the contracting officer has a reason to question the concern’s small business representation or (2) the contracting officer has a reason to question the
representation.”24 representation.”24
If an offeror’s small business status is challenged, the contracting officer is generally not allowed If an offeror’s small business status is challenged, the contracting officer is generally not allowed
to award the contract until the SBA has made a size determination or 15 business days after the to award the contract until the SBA has made a size determination or 15 business days after the
SBA receives the protest, whichever occurs first.25 The SBA’s Office of Government Contracting SBA receives the protest, whichever occurs first.25 The SBA’s Office of Government Contracting
Area Office (Area Office) serving the area in which the headquarters of the offeror is located Area Office (Area Office) serving the area in which the headquarters of the offeror is located
initially reviews the protest.26 The Area Office is required, by regulation, to determine the initially reviews the protest.26 The Area Office is required, by regulation, to determine the

proposed rule changing a size standard is first published in the proposed rule changing a size standard is first published in the Federal Register, allowing for public comment. It must , allowing for public comment. It must
include documentation establishing that a significant problem exists that requires a revision of the size standard, plus an include documentation establishing that a significant problem exists that requires a revision of the size standard, plus an
economic analysis of the change. Comments from the public, plus any other new information, are reviewed and economic analysis of the change. Comments from the public, plus any other new information, are reviewed and
evaluated before a final rule is promulgated establishing a new size standard. evaluated before a final rule is promulgated establishing a new size standard.
19 SBA, Office of Government Contracting and Business Development, 19 SBA, Office of Government Contracting and Business Development, SBA Size Standards Methodology, April 2019, , April 2019,
p. 28. p. 28.
20 FAR §19.102(c). 20 FAR §19.102(c).
21 FAR §19.102(d). 21 FAR §19.102(d).
22 FAR §19.102(e). 22 FAR §19.102(e).
23 FAR §19.102(e). 23 FAR §19.102(e).
24 FAR §19.301-1(b). 24 FAR §19.301-1(b).
25 The contracting officer may award the contract if he or she “determines in writing that an award must be made to 25 The contracting officer may award the contract if he or she “determines in writing that an award must be made to
protect the public interest.” FAR §19.302(g)(1). protect the public interest.” FAR §19.302(g)(1).
26 FAR §19.302(c)(1). “An offeror, the SBA, or another interested party may protest the small business representation 26 FAR §19.302(c)(1). “An offeror, the SBA, or another interested party may protest the small business representation
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offeror’s size status within 15 business days after receipt of the protest, or “within any extension offeror’s size status within 15 business days after receipt of the protest, or “within any extension
of time granted by the contracting officer.”27 If the SBA does not make a determination within the of time granted by the contracting officer.”27 If the SBA does not make a determination within the
required time, the contracting officer “may award the contract after determining in writing that required time, the contracting officer “may award the contract after determining in writing that
there is an immediate need to award the contract and that waiting until SBA makes its there is an immediate need to award the contract and that waiting until SBA makes its
determination will be disadvantageous to the government.”28 determination will be disadvantageous to the government.”28
An appeal of the Area Office’s decision may be filed with the SBA’s Office of Hearings and An appeal of the Area Office’s decision may be filed with the SBA’s Office of Hearings and
Appeals (OHA). If the OHA accepts the appeal for consideration and finds the protested concern Appeals (OHA). If the OHA accepts the appeal for consideration and finds the protested concern
to be ineligible for award, the contracting officer must “terminate the contract unless termination to be ineligible for award, the contracting officer must “terminate the contract unless termination
is not in the best interests of the government, in keeping with the circumstances described in the is not in the best interests of the government, in keeping with the circumstances described in the
[aforementioned] written determination. However, the contracting officer shall not exercise any [aforementioned] written determination. However, the contracting officer shall not exercise any
options or award further task or delivery orders.”29 Furthermore, a concern cannot become options or award further task or delivery orders.”29 Furthermore, a concern cannot become
eligible for a specific award after the SBA has determined that it is not a small business, even if eligible for a specific award after the SBA has determined that it is not a small business, even if
the concern takes action to meet the definition of a small business.30 the concern takes action to meet the definition of a small business.30
The SBA or the federal agency may suspend or debar a firm from future government contracts for The SBA or the federal agency may suspend or debar a firm from future government contracts for
misrepresenting its size status. In addition, individuals that knowingly misrepresent a business’s misrepresenting its size status. In addition, individuals that knowingly misrepresent a business’s
size to secure a federal contract can be subject to civil and criminal penalties.31 size to secure a federal contract can be subject to civil and criminal penalties.31
The Pre-Award Process
Federal Agency Requirements
15 U.S.C. §644(e)(1) states, “To the maximum extent practicable, procurement strategies used by 15 U.S.C. §644(e)(1) states, “To the maximum extent practicable, procurement strategies used by
a Federal department or agency having contracting authority shall facilitate the maximum a Federal department or agency having contracting authority shall facilitate the maximum
participation of small business concerns as prime contractors, subcontractors, and suppliers.” To participation of small business concerns as prime contractors, subcontractors, and suppliers.” To
accomplish this goal, FAR regulations (FAR §19.202-1) require contracting officers, when accomplish this goal, FAR regulations (FAR §19.202-1) require contracting officers, when
applicable, to take the following actions prior to awarding a federal contract: applicable, to take the following actions prior to awarding a federal contract:

of an offeror in a specific offer. However, for competitive 8(a) contracts, the filing of a protest is limited to an offeror, of an offeror in a specific offer. However, for competitive 8(a) contracts, the filing of a protest is limited to an offeror,
the contracting officer, or the SBA.” FAR §19.302(a)(2). “The protest, or confirmation if the protest was initiated the contracting officer, or the SBA.” FAR §19.302(a)(2). “The protest, or confirmation if the protest was initiated
orally, shall be in writing and shall contain the basis for the protest with specific, detailed evidence to support the orally, shall be in writing and shall contain the basis for the protest with specific, detailed evidence to support the
allegation that the offeror is not small. The SBA will dismiss any protest that does not contain specific grounds for the allegation that the offeror is not small. The SBA will dismiss any protest that does not contain specific grounds for the
protest.” FAR §19.302(c)(2). “The protest shall include a referral letter written by the contracting officer with protest.” FAR §19.302(c)(2). “The protest shall include a referral letter written by the contracting officer with
information pertaining to the solicitation.” FAR §19.302(c)(3). “In order to affect a specific solicitation, a protest must information pertaining to the solicitation.” FAR §19.302(c)(3). “In order to affect a specific solicitation, a protest must
be timely.” FAR §19.302(d). “To be timely, a protest … must be received … by the close of business of the fifth be timely.” FAR §19.302(d). “To be timely, a protest … must be received … by the close of business of the fifth
business day after bid opening (in sealed bid acquisitions) or receipt of the special notification from the contracting business day after bid opening (in sealed bid acquisitions) or receipt of the special notification from the contracting
officer that identifies the apparently successful offeror (in negotiated acquisitions).” FAR §19.302(d)(1). “…a protest officer that identifies the apparently successful offeror (in negotiated acquisitions).” FAR §19.302(d)(1). “…a protest
filed by the contracting officer or the SBA is generally always considered timely whether filed before or after award.” filed by the contracting officer or the SBA is generally always considered timely whether filed before or after award.”
FAR §19.302(d)(2). FAR §19.302(d)(2).
27 FAR §19.302(f)(1). 27 FAR §19.302(f)(1).
28 FAR §19.302(g)(2). 28 FAR §19.302(g)(2).
29 FAR §19.302(h). 29 FAR §19.302(h).
30 FAR §19.301-1(c). 30 FAR §19.301-1(c).
31 13 C.F.R. §121.108; 18 U.S.C. §287; and 18 U.S.C. §1001. For additional information and analysis, see CRS Report 31 13 C.F.R. §121.108; 18 U.S.C. §287; and 18 U.S.C. §1001. For additional information and analysis, see CRS Report
R45322, R45322, Selected Legal Tools for Maintaining Government Contractor Accountability, by David H. Carpenter and , by David H. Carpenter and
Kathleen Ann Ruane. Kathleen Ann Ruane.
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1. “Divide proposed acquisitions of supplies and services (except construction) into 1. “Divide proposed acquisitions of supplies and services (except construction) into
reasonably small lots (not less than economic production runs) to permit offers reasonably small lots (not less than economic production runs) to permit offers
on quantities less than the total requirement.” on quantities less than the total requirement.”
2. “Plan acquisitions such that, if practicable, more than one small business concern 2. “Plan acquisitions such that, if practicable, more than one small business concern
may perform the work, if the work exceeds the amount for which a surety may be may perform the work, if the work exceeds the amount for which a surety may be
guaranteed by the SBA against loss under 15 U.S.C. §694b [generally $6.5 guaranteed by the SBA against loss under 15 U.S.C. §694b [generally $6.5
million, or $10 million if the contracting officer certifies that the higher amount million, or $10 million if the contracting officer certifies that the higher amount
is necessary].” is necessary].”
3. “Ensure that delivery schedules are established on a realistic basis that will 3. “Ensure that delivery schedules are established on a realistic basis that will
encourage small business participation to the extent consistent with the actual encourage small business participation to the extent consistent with the actual
requirements of the Government.” requirements of the Government.”
4. “Encourage prime contractors to subcontract with small business concerns 4. “Encourage prime contractors to subcontract with small business concerns
[primarily through the agency’s role in negotiating an acceptable small business [primarily through the agency’s role in negotiating an acceptable small business
subcontracting plan with prime contractors on contracts anticipated to exceed subcontracting plan with prime contractors on contracts anticipated to exceed
$700,000 or $1.5 million for construction contracts].”32 $700,000 or $1.5 million for construction contracts].”32
5. “Provide a copy of the proposed acquisition package to the SBA procurement 5. “Provide a copy of the proposed acquisition package to the SBA procurement
center representative [PCR, duties are described later]” for his or her review, center representative [PCR, duties are described later]” for his or her review,
comment and recommendation, or, if a PCR is not assigned, to the SBA Area comment and recommendation, or, if a PCR is not assigned, to the SBA Area
Office serving the area in which the procuring activity is located “at least 30 days Office serving the area in which the procuring activity is located “at least 30 days
prior to the issuance of the solicitation if (i) The proposed acquisition is for prior to the issuance of the solicitation if (i) The proposed acquisition is for
supplies or services currently being provided by a small business and the supplies or services currently being provided by a small business and the
proposed acquisition is of a quantity or estimated dollar value, the magnitude of proposed acquisition is of a quantity or estimated dollar value, the magnitude of
which makes it unlikely that small businesses can compete for the prime contract; which makes it unlikely that small businesses can compete for the prime contract;
(ii) The proposed acquisition is for construction and seeks to package or (ii) The proposed acquisition is for construction and seeks to package or
consolidate discrete construction projects and the magnitude of this consolidation consolidate discrete construction projects and the magnitude of this consolidation
makes it unlikely that small businesses can compete for the prime contract; or makes it unlikely that small businesses can compete for the prime contract; or
(iii) The proposed acquisition is for a consolidated or bundled requirement.… (iii) The proposed acquisition is for a consolidated or bundled requirement.…
The contracting officer shall provide all information relative to the justification The contracting officer shall provide all information relative to the justification
for the consolidation or bundling, including the acquisition plan or strategy and if for the consolidation or bundling, including the acquisition plan or strategy and if
the acquisition involves substantial bundling, the information identified in [FAR] the acquisition involves substantial bundling, the information identified in [FAR]
7.107-4.33 The contracting officer shall also provide the same information to the 7.107-4.33 The contracting officer shall also provide the same information to the

32 Subcontracting plans are not required from small businesses, for personal services contracts, for contracts or contract 32 Subcontracting plans are not required from small businesses, for personal services contracts, for contracts or contract
modifications that will be performed entirely outside of the United States and its outlying areas, or for modifications modifications that will be performed entirely outside of the United States and its outlying areas, or for modifications
that were within the scope of the contract. “[A]ny contractor or subcontractor failing to comply in good faith with the that were within the scope of the contract. “[A]ny contractor or subcontractor failing to comply in good faith with the
requirements of the subcontracting plan is in material breach of its contract.” FAR §19.702(c). In addition, “Any requirements of the subcontracting plan is in material breach of its contract.” FAR §19.702(c). In addition, “Any
contractor receiving a contract with a value greater than the simplified acquisition threshold must agree in the contract contractor receiving a contract with a value greater than the simplified acquisition threshold must agree in the contract
that small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small that small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small
business, small disadvantaged business, and women-owned small business concerns will have the maximum business, small disadvantaged business, and women-owned small business concerns will have the maximum
practicable opportunity to participate in contract performance consistent with its efficient performance.” FAR §19.702. practicable opportunity to participate in contract performance consistent with its efficient performance.” FAR §19.702.
33 FAR §7.017-4(2)(b) states “…when the proposed acquisition strategy involves substantial bundling, the agency shall 33 FAR §7.017-4(2)(b) states “…when the proposed acquisition strategy involves substantial bundling, the agency shall
document in its strategy—(1) The specific benefits anticipated to be derived from substantial bundling; (2) An document in its strategy—(1) The specific benefits anticipated to be derived from substantial bundling; (2) An
assessment of the specific impediments to participation by small business concerns as contractors that result from assessment of the specific impediments to participation by small business concerns as contractors that result from
substantial bundling; (3) Actions designed to maximize small business participation as contractors, including provisions substantial bundling; (3) Actions designed to maximize small business participation as contractors, including provisions
that encourage small business teaming; (4) Actions designed to maximize small business participation as subcontractors that encourage small business teaming; (4) Actions designed to maximize small business participation as subcontractors
(including suppliers) at any tier under the contract, or order, that may be awarded to meet the requirements; (5) The (including suppliers) at any tier under the contract, or order, that may be awarded to meet the requirements; (5) The
determination that the anticipated benefits of the proposed bundled contract or order justify its use; and (6) Alternative determination that the anticipated benefits of the proposed bundled contract or order justify its use; and (6) Alternative
strategies that would reduce or minimize the scope of the bundling, and the rationale for not choosing those strategies that would reduce or minimize the scope of the bundling, and the rationale for not choosing those
alternatives.” alternatives.”
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agency Office of Small and Disadvantaged Business Utilization [duties are agency Office of Small and Disadvantaged Business Utilization [duties are
described later].” described later].”
6. “Provide a statement explaining why the (i) Proposed acquisition cannot be 6. “Provide a statement explaining why the (i) Proposed acquisition cannot be
divided into reasonably small lots (not less than economic production runs) to divided into reasonably small lots (not less than economic production runs) to
permit offers on quantities less than the total requirement; (ii) Delivery schedules permit offers on quantities less than the total requirement; (ii) Delivery schedules
cannot be established on a realistic basis that will encourage small business cannot be established on a realistic basis that will encourage small business
participation to the extent consistent with the actual requirements of the participation to the extent consistent with the actual requirements of the
government; (iii) Proposed acquisition cannot be structured so as to make it government; (iii) Proposed acquisition cannot be structured so as to make it
likely that small businesses can compete for the prime contract; (iv) Consolidated likely that small businesses can compete for the prime contract; (iv) Consolidated
construction project cannot be acquired as separate discrete projects; or (v) construction project cannot be acquired as separate discrete projects; or (v)
Consolidation or bundling is necessary and justified.” Consolidation or bundling is necessary and justified.”
7. “Process the 30-day notification concurrently with other processing steps 7. “Process the 30-day notification concurrently with other processing steps
required prior to the issuance of the solicitation.” required prior to the issuance of the solicitation.”
8. “If the contracting officer rejects the SBA procurement center representative’s 8. “If the contracting officer rejects the SBA procurement center representative’s
recommendation … document the basis for the rejection and notify the SBA recommendation … document the basis for the rejection and notify the SBA
procurement center representative [who (as described later) may appeal the procurement center representative [who (as described later) may appeal the
rejection to the chief of the contracting office and, ultimately, to the agency rejection to the chief of the contracting office and, ultimately, to the agency
head].”34 head].”34
The Role of SBA Procurement Center Representatives
The SBA may assign one or more procurement center representatives (PCRs) to any contracting The SBA may assign one or more procurement center representatives (PCRs) to any contracting
activity or contract administration office to implement the SBA’s policies and programs. The activity or contract administration office to implement the SBA’s policies and programs. The
SBA currently has SBA currently has 4746 PCRs located in the SBA’s six Area Offices.35 PCRs are required to comply PCRs located in the SBA’s six Area Offices.35 PCRs are required to comply
with the contracting agency’s directives governing the conduct of contracting personnel and the with the contracting agency’s directives governing the conduct of contracting personnel and the
release of contract information.36 release of contract information.36
PCR duties include the following: PCR duties include the following:
 Review proposed acquisitions to recommend “the setting aside of selected  Review proposed acquisitions to recommend “the setting aside of selected
acquisitions not unilaterally set aside by the contracting officer;” new qualified acquisitions not unilaterally set aside by the contracting officer;” new qualified
small business sources; and the feasibility of breaking out components of the small business sources; and the feasibility of breaking out components of the
contract for competitive acquisitions.37 contract for competitive acquisitions.37
 Review proposed acquisition packages. If the PCR (or, if a PCR is not assigned,  Review proposed acquisition packages. If the PCR (or, if a PCR is not assigned,
the SBA Area Office serving the area in which the procuring activity is located) the SBA Area Office serving the area in which the procuring activity is located)
“believes that the acquisition, as proposed, makes it unlikely that small “believes that the acquisition, as proposed, makes it unlikely that small
businesses can compete for the prime contract,” the PCR can recommend any businesses can compete for the prime contract,” the PCR can recommend any
alternate contracting method that he or she “reasonably believes will increase alternate contracting method that he or she “reasonably believes will increase
small business prime contracting opportunities.” The recommendation must be small business prime contracting opportunities.” The recommendation must be
made to the contracting officer within 15 days after the package’s receipt.38 made to the contracting officer within 15 days after the package’s receipt.38

34 FAR §19.202-1. See FAR §19.505 for a description of the appeals process. 34 FAR §19.202-1. See FAR §19.505 for a description of the appeals process.
35 SBA, “Procurement Center Representative Directory,” 35 SBA, “Procurement Center Representative Directory,” ~~February 5~~June 24, 2021, at https://www.sba.gov/federal-contracting/, 2021, at https://www.sba.gov/federal-contracting/
counseling-help/procurement-center-representative-directory. There were two vacancies. counseling-help/procurement-center-representative-directory. There were two vacancies.
36 FAR §19.402(a)(1). 36 FAR §19.402(a)(1).
37 FAR §19.402(c)(1). 37 FAR §19.402(c)(1).
38 FAR §19.402(c)(2). 38 FAR §19.402(c)(2).
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 Recommend small businesses “for inclusion on a list of concerns to be solicited  Recommend small businesses “for inclusion on a list of concerns to be solicited
in a specific acquisition.”39 in a specific acquisition.”39
 Appeal to the contracting office’s chief “any contracting officer’s determination  Appeal to the contracting office’s chief “any contracting officer’s determination
not to solicit a concern recommended by the SBA for a particular acquisition, not to solicit a concern recommended by the SBA for a particular acquisition,
when not doing so results in no small business being solicited.” This appeal may when not doing so results in no small business being solicited.” This appeal may
be further appealed to the agency head.40 be further appealed to the agency head.40
 Conduct periodic reviews of the agency’s contracting activity, including the  Conduct periodic reviews of the agency’s contracting activity, including the
agency’s assessment of any required small business subcontracting plan, “to agency’s assessment of any required small business subcontracting plan, “to
ascertain whether the agency is complying with the small business policies in this ascertain whether the agency is complying with the small business policies in this
regulation.”41 regulation.”41
 Sponsor and participate in conferences and training “designed to increase small  Sponsor and participate in conferences and training “designed to increase small
business participation in the contracting activities of the office.”42 business participation in the contracting activities of the office.”42
The Role of the Office of Small and Disadvantaged Business
Utilization
Every federal agency (except the SBA) that has procurement powers is required to have an Every federal agency (except the SBA) that has procurement powers is required to have an
OSDBU, whose director, by statute, reports directly to the head of the agency and has supervisory OSDBU, whose director, by statute, reports directly to the head of the agency and has supervisory
authority over agency staff performing certain procurement functions.43 The OSDBU’s primary authority over agency staff performing certain procurement functions.43 The OSDBU’s primary
responsibility is to ensure that small businesses, SDBs, WOSBs, SDVOSBs, and HUBZone small responsibility is to ensure that small businesses, SDBs, WOSBs, SDVOSBs, and HUBZone small
businesses are treated fairly and that they have an opportunity to compete and be selected for a businesses are treated fairly and that they have an opportunity to compete and be selected for a
fair amount of the agency’s contract dollars. Among its statutory responsibilities are the fair amount of the agency’s contract dollars. Among its statutory responsibilities are the
following: following:
 “Identify proposed solicitations that involve significant bundling of contract  “Identify proposed solicitations that involve significant bundling of contract
requirements, and work with the agency acquisition officials and the requirements, and work with the agency acquisition officials and the
Administration to revise the procurement strategies for such proposed Administration to revise the procurement strategies for such proposed
solicitations where appropriate to increase the probability of participation by solicitations where appropriate to increase the probability of participation by
small businesses as prime contractors, or to facilitate small business participation small businesses as prime contractors, or to facilitate small business participation
as subcontractors and suppliers, if a solicitation for a bundled contract is to be as subcontractors and suppliers, if a solicitation for a bundled contract is to be
issued.”44 issued.”44
 Assist small businesses “to obtain payments, required late payment interest  Assist small businesses “to obtain payments, required late payment interest
penalties, or information regarding payments due to the concern from an penalties, or information regarding payments due to the concern from an
executive agency or a contractor.”45 executive agency or a contractor.”45
 Assign “a small business technical adviser to each office to which the SBA has  Assign “a small business technical adviser to each office to which the SBA has
assigned” a PCR. The small business technical advisor “shall be a full-time assigned” a PCR. The small business technical advisor “shall be a full-time

39 FAR §19.402(c)(3). 39 FAR §19.402(c)(3).
40 FAR §19.402(c)(4). See FAR §19.505 for a description of the appeals process. 40 FAR §19.402(c)(4). See FAR §19.505 for a description of the appeals process.
41 FAR §19.402(c)(5). 41 FAR §19.402(c)(5).
42 FAR §19.402(c)(6). 42 FAR §19.402(c)(6).
43 For a discussion of the extent to which Offices of Small and Disadvantaged Business Utilization have implemented 43 For a discussion of the extent to which Offices of Small and Disadvantaged Business Utilization have implemented
these statutory requirements, see U.S. Government Accountability Office (GAO), these statutory requirements, see U.S. Government Accountability Office (GAO), Small Business Contracting: Actions
Needed to Demonstrate and Better Review Compliance with Select Requirements for Small Business Advocates, GAO-, GAO-
17-675, August 25, 2017, pp. 1-4, at https://www.gao.gov/assets/690/686766.pdf. 17-675, August 25, 2017, pp. 1-4, at https://www.gao.gov/assets/690/686766.pdf.
44 15 U.S.C. §644(k)(5). 44 15 U.S.C. §644(k)(5).
45 15 U.S.C. §644(k)(6). 45 15 U.S.C. §644(k)(6).
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employee of the procuring activity, well qualified, technically trained and employee of the procuring activity, well qualified, technically trained and
familiar with the supplies or services purchased at the activity; and whose familiar with the supplies or services purchased at the activity; and whose
principal duty shall be to assist” the PCR.46 principal duty shall be to assist” the PCR.46
 Provide the agency’s “Chief Acquisition Officer and senior procurement  Provide the agency’s “Chief Acquisition Officer and senior procurement
executive … with advice and comments on acquisition strategies, market executive … with advice and comments on acquisition strategies, market
research, and justifications [related to limitations on the consolidation of research, and justifications [related to limitations on the consolidation of
contracts as a means to provide small businesses appropriate opportunities to contracts as a means to provide small businesses appropriate opportunities to
participate as prime contractors and subcontractors].”47 participate as prime contractors and subcontractors].”47
 Provide training to small businesses and contract specialists, provided that the  Provide training to small businesses and contract specialists, provided that the
training does not interfere with the director carrying out his or her other training does not interfere with the director carrying out his or her other
responsibilities.48 responsibilities.48
 Ensure that a small business that notifies the PCR prior to a contract’s award that  Ensure that a small business that notifies the PCR prior to a contract’s award that
“a solicitation, request for proposal, or request for quotation unduly restricts [its] “a solicitation, request for proposal, or request for quotation unduly restricts [its]
ability … to compete for the award … is aware of other resources and processes ability … to compete for the award … is aware of other resources and processes
available to address unduly restrictive provisions … even if such resources and available to address unduly restrictive provisions … even if such resources and
processes are provided by such agency, the Administration, the Comptroller processes are provided by such agency, the Administration, the Comptroller
General, or a Department of Defense (DOD) procurement technical assistance General, or a Department of Defense (DOD) procurement technical assistance
program [described below].”49 program [described below].”49
 Review all subcontracting plans “to ensure that the plan provides maximum  Review all subcontracting plans “to ensure that the plan provides maximum
practicable opportunity for small business concerns to participate in the practicable opportunity for small business concerns to participate in the
performance of the contract to which the plan applies.”50 performance of the contract to which the plan applies.”50
In accordance with P.L. 109-163, the National Defense Authorization Act of 2006, the DOD In accordance with P.L. 109-163, the National Defense Authorization Act of 2006, the DOD
renamed its OSDBU the Office of Small Business Programs (OSBP). The act also redesignated renamed its OSDBU the Office of Small Business Programs (OSBP). The act also redesignated
the Army, Navy, and Air Force’s OSDBUs to OSBPs of the Department of the Army, Navy, and the Army, Navy, and Air Force’s OSDBUs to OSBPs of the Department of the Army, Navy, and
Air Force, respectively. Air Force, respectively.
The Roles of Other Procurement Officers and Offices
At the agency level, procurement department heads (sometimes titled At the agency level, procurement department heads (sometimes titled senior procurement
executive) are responsible for implementing small business programs at their agencies, including ) are responsible for implementing small business programs at their agencies, including
achieving program goals. In general, procurement department staff who work on small business achieving program goals. In general, procurement department staff who work on small business
issues (often titled issues (often titled small business specialists) coordinate with OSDBU directors on their ) coordinate with OSDBU directors on their
agencies’ small business programs.51 agencies’ small business programs.51
Chief acquisition officers provide a focal point for acquisition in agency operations. Their key provide a focal point for acquisition in agency operations. Their key
functions include “monitoring and evaluating agency acquisition activities, increasing the use of functions include “monitoring and evaluating agency acquisition activities, increasing the use of
full and open competition, increasing performance-based contracting, making acquisition full and open competition, increasing performance-based contracting, making acquisition

46 15 U.S.C. §644(k)(8). 46 15 U.S.C. §644(k)(8).
47 15 U.S.C. §644(k)(12). 47 15 U.S.C. §644(k)(12).
48 15 U.S.C. §644(k)(13). 48 15 U.S.C. §644(k)(13).
49 15 U.S.C. §644(k)(17). 49 15 U.S.C. §644(k)(17).
50 15 U.S.C. §644(k)(20). 50 15 U.S.C. §644(k)(20).
51 GAO, 51 GAO, Small Business Contracting: Actions Needed to Demonstrate and Better Review Compliance with Select
Requirements for Small Business Advocates, GAO-17-675, August 25, 2017, p. 7, at https://www.gao.gov/assets/690/, GAO-17-675, August 25, 2017, p. 7, at https://www.gao.gov/assets/690/
686766.pdf (hereinafter GAO, 686766.pdf (hereinafter GAO, Small Business Contracting: Actions Needed to Demonstrate and Better Review
Compliance with Select Requirements for Small Business Advocates). ).
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decisions, managing agency acquisition policy, acquisition career management, acquisition decisions, managing agency acquisition policy, acquisition career management, acquisition
resources planning, and conducting acquisition assessments.”52 resources planning, and conducting acquisition assessments.”52
The SBA must assign a The SBA must assign a breakout procurement center representative (breakout PCR) to each (breakout PCR) to each
major procurement center. A major procurement center is, in the opinion of the SBA major procurement center. A major procurement center is, in the opinion of the SBA
Administrator, a procurement center that purchases substantial dollar amounts of other than Administrator, a procurement center that purchases substantial dollar amounts of other than
commercial items, and has the potential to incur significant savings as a result of the placement of commercial items, and has the potential to incur significant savings as a result of the placement of
a breakout PCR.53 a breakout PCR.53
The breakout PCR advocates for (1) the appropriate use of full and open competition, and (2) the The breakout PCR advocates for (1) the appropriate use of full and open competition, and (2) the
breakout of items, “when appropriate and while maintaining the integrity of the system in which breakout of items, “when appropriate and while maintaining the integrity of the system in which
such items are used.”54 The breakout PCR is in addition to the PCR. such items are used.”54 The breakout PCR is in addition to the PCR.
When a breakout PCR is assigned, the SBA must assign at least two co-located small business When a breakout PCR is assigned, the SBA must assign at least two co-located small business
technical advisors. SBA breakout PCRs and technical advisors must comply with the contracting technical advisors. SBA breakout PCRs and technical advisors must comply with the contracting
agency’s directives governing the conduct of contracting personnel and the release of contract agency’s directives governing the conduct of contracting personnel and the release of contract
information. The SBA must obtain security clearances for its breakout PCRs and technical information. The SBA must obtain security clearances for its breakout PCRs and technical
advisors as required by the contracting agency.55 advisors as required by the contracting agency.55
The SBA has The SBA has commercial market representatives who, among other duties, help prime contractors who, among other duties, help prime contractors
find small businesses that are capable of performing subcontracts; provide counseling on the find small businesses that are capable of performing subcontracts; provide counseling on the
contractor’s responsibility to maximize subcontracting opportunities for small businesses; and contractor’s responsibility to maximize subcontracting opportunities for small businesses; and
conduct periodic reviews of contractors awarded contracts requiring an acceptable subcontracting conduct periodic reviews of contractors awarded contracts requiring an acceptable subcontracting
plan that provides small businesses “the maximum practicable opportunity to participate in plan that provides small businesses “the maximum practicable opportunity to participate in
contract performance consistent with its efficient performance” (generally any solicitation to contract performance consistent with its efficient performance” (generally any solicitation to
perform a contract that is expected to exceed $700,000 ($1.5 million for construction) and that perform a contract that is expected to exceed $700,000 ($1.5 million for construction) and that
has subcontracting possibilities).56 has subcontracting possibilities).56
The SBA’s 140 The SBA’s 140 business opportunity specialists provide, among other duties, guidance, provide, among other duties, guidance,
counseling, and referrals for assistance with technical, management, financial, or other matters counseling, and referrals for assistance with technical, management, financial, or other matters
intended to improve the competitive viability of SBA 8(a) program participants.57 They provide intended to improve the competitive viability of SBA 8(a) program participants.57 They provide
8(a) program participants comprehensive assessments of the firm’s strengths and weaknesses; 8(a) program participants comprehensive assessments of the firm’s strengths and weaknesses;
monitor and document their compliance with 8(a) program requirements; advise them on monitor and document their compliance with 8(a) program requirements; advise them on
compliance with contracting regulations after the award of a 8(a) program contract or compliance with contracting regulations after the award of a 8(a) program contract or
subcontract; review and monitor their compliance with mentor-protégé agreements; represent the subcontract; review and monitor their compliance with mentor-protégé agreements; represent the
interests of the SBA Administrator and small businesses in the award, modification, and interests of the SBA Administrator and small businesses in the award, modification, and

52 GAO, 52 GAO, Small Business Contracting: Actions Needed to Demonstrate and Better Review Compliance with Select
Requirements for Small Business Advocates, pp. 7-8. , pp. 7-8.
53 15 U.S.C. §644(l)(6); and FAR §19.403(a). 53 15 U.S.C. §644(l)(6); and FAR §19.403(a).
54 FAR §19.403(a). 54 FAR §19.403(a).
55 FAR §19.403(a). 55 FAR §19.403(a).
56 15 U.S.C. §633(h)(1). For additional information on subcontracting plan requirements, see FAR §19.702(a)(1); and 56 15 U.S.C. §633(h)(1). For additional information on subcontracting plan requirements, see FAR §19.702(a)(1); and
15 U.S.C. §637(d)(3). Also, see GAO, 15 U.S.C. §637(d)(3). Also, see GAO, Improvements Needed to Help Ensure Reliability of SBA’s Performance Data on
Procurement Center Representatives, GAO-11-549R, June 15, 2011, pp. 4-7, 30, at https://www.gao.gov/products/, GAO-11-549R, June 15, 2011, pp. 4-7, 30, at https://www.gao.gov/products/
GAO-11-549R. For additional information on CMR duties and responsibilities see SBA, “Subcontracting Assistance GAO-11-549R. For additional information on CMR duties and responsibilities see SBA, “Subcontracting Assistance
Program Post Award,” SOP 60 03 7, effective July 17, 2018, at https://www.sba.gov/sites/default/files/2018-07/2018-Program Post Award,” SOP 60 03 7, effective July 17, 2018, at https://www.sba.gov/sites/default/files/2018-07/2018-
07-17%20Final%20Subcontracting%20Program%20SOP_1.pdf. 07-17%20Final%20Subcontracting%20Program%20SOP_1.pdf.
57 U.S. Congress, House Committee on Small Business, Subcommittee on Contracting and Infrastructure, 57 U.S. Congress, House Committee on Small Business, Subcommittee on Contracting and Infrastructure, Oversight of
the SBA’s Women-Owned Small Business Federal Contract Program, hearing, 116th Cong., 1st sess., May 16, 2019, , hearing, 116th Cong., 1st sess., May 16, 2019,
H.Hrg. 116-021 (Washington: GPO, 2019), p. 39. H.Hrg. 116-021 (Washington: GPO, 2019), p. 39.
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administration of 8(a) program contracts and subcontracts; and report fraud or abuse involving administration of 8(a) program contracts and subcontracts; and report fraud or abuse involving
the 8(a) program.58 the 8(a) program.58
The The Small Business Procurement Advisory Council (SBPAC), whose members are composed of (SBPAC), whose members are composed of
the SBA Administrator (or his or her designee), the director of the Minority Business the SBA Administrator (or his or her designee), the director of the Minority Business
Development Agency, and the head of each OSDBU in each federal agency having procurement Development Agency, and the head of each OSDBU in each federal agency having procurement
powers, has the following statutory duties: powers, has the following statutory duties:
1. Develop positions on proposed procurement regulations affecting the small 1. Develop positions on proposed procurement regulations affecting the small
business community. business community.
2. Submit comments reflecting such positions to appropriate regulatory authorities. 2. Submit comments reflecting such positions to appropriate regulatory authorities.
3. Conduct reviews of each OSDBU to determine the office’s compliance with its 3. Conduct reviews of each OSDBU to determine the office’s compliance with its
statutory requirements. statutory requirements.
4. Identify best practices for maximizing small business utilization in federal 4. Identify best practices for maximizing small business utilization in federal
contracting that may be implemented by federal agencies having procurement contracting that may be implemented by federal agencies having procurement
powers. powers.
5. Submit annually, to the House Committee on Small Business and Senate 5. Submit annually, to the House Committee on Small Business and Senate
Committee on Small Business and Entrepreneurship, a report describing (1) the Committee on Small Business and Entrepreneurship, a report describing (1) the
comments submitted to appropriate regulatory authorities, including any comments submitted to appropriate regulatory authorities, including any
outcomes related to the comments; (2) the results of its review of each OSDBU; outcomes related to the comments; (2) the results of its review of each OSDBU;
and (3) best practices identified for maximizing small business contracting.59 and (3) best practices identified for maximizing small business contracting.59
The Defense Logistic Agency’s The Defense Logistic Agency’s Procurement Technical Assistance Program (PTAC) helps (PTAC) helps
“businesses pursue and perform under contracts with the Department of Defense, other federal “businesses pursue and perform under contracts with the Department of Defense, other federal
agencies, state and local governments and with government prime contractors. Most of the agencies, state and local governments and with government prime contractors. Most of the
assistance provided by the 97 PTACs and their more than 300 local offices is free.60 PTAC assistance provided by the 97 PTACs and their more than 300 local offices is free.60 PTAC
support to businesses includes registration in systems such as the System for Award Management support to businesses includes registration in systems such as the System for Award Management
(SAM), identification of contract opportunities, and help in understanding requirements and in (SAM), identification of contract opportunities, and help in understanding requirements and in
preparing and submitting bids.”61 preparing and submitting bids.”61
Set-Asides and Sole-Source Awards
The Competition in Contracting Act of 1984 generally requires “full and open competition” for The Competition in Contracting Act of 1984 generally requires “full and open competition” for
government procurement contracts.62 However, various provisions of the Small Business Act government procurement contracts.62 However, various provisions of the Small Business Act
authorize or, in some cases, require federal agencies to provide for other than “full and open authorize or, in some cases, require federal agencies to provide for other than “full and open
competition through the use of competitive procedures” when contracting with small businesses. competition through the use of competitive procedures” when contracting with small businesses.
For example, as mentioned previously, federal agencies are generally required to reserve contracts For example, as mentioned previously, federal agencies are generally required to reserve contracts
that have an anticipated value greater than the micro-purchase threshold (currently $10,000), but that have an anticipated value greater than the micro-purchase threshold (currently $10,000), but

58 15 U.S.C. §633(g)(1). 58 15 U.S.C. §633(g)(1).
59 15 U.S.C. §644a(b). 59 15 U.S.C. §644a(b).
60 DOD, Defense Logistics Agency, “Procurement Technical Assistance Centers: States and Territories,” at 60 DOD, Defense Logistics Agency, “Procurement Technical Assistance Centers: States and Territories,” at
https://www.dla.mil/SmallBusiness/PTAP/AllLocations/; and SBA, “Find Local Assistance: Procurement Technical https://www.dla.mil/SmallBusiness/PTAP/AllLocations/; and SBA, “Find Local Assistance: Procurement Technical
Assistance Centers,” at https://www.sba.gov/local-assistance/find/?type=Assistance Centers,” at https://www.sba.gov/local-assistance/find/?type=
Procurement%20Technical%20Assistance%20Center&pageNumber=2. Procurement%20Technical%20Assistance%20Center&pageNumber=2.
61 DOD, Defense Logistics Agency, “Procurement Technical Assistance Program,” at 61 DOD, Defense Logistics Agency, “Procurement Technical Assistance Program,” at
https://www.dla.mil/SmallBusiness/PTAP/. https://www.dla.mil/SmallBusiness/PTAP/.
62 41 U.S.C. §253(b)(1); 41 U.S.C. §259(b); and, the Deficit Reduction Act of 1984 (Title VII, the Competition in 62 41 U.S.C. §253(b)(1); 41 U.S.C. §259(b); and, the Deficit Reduction Act of 1984 (Title VII, the Competition in
Contracting Act). Contracting Act).
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not greater than the simplified acquisition threshold (currently $250,000) exclusively for small not greater than the simplified acquisition threshold (currently $250,000) exclusively for small
businesses unless the contracting officer is unable to obtain offers from two or more small businesses unless the contracting officer is unable to obtain offers from two or more small
businesses that are competitive with market prices and the quality and delivery of the goods or businesses that are competitive with market prices and the quality and delivery of the goods or
services being purchased.63 services being purchased.63
In addition, federal agencies In addition, federal agencies
 are generally required to set aside contracts that have an anticipated value  are generally required to set aside contracts that have an anticipated value
exceeding the simplified acquisition threshold exclusively for small businesses exceeding the simplified acquisition threshold exclusively for small businesses
when there is a reasonable expectation by the contracting officer that offers will when there is a reasonable expectation by the contracting officer that offers will
be obtained by at least two responsible small businesses offering the products of be obtained by at least two responsible small businesses offering the products of
different small businesses (Rule of Two) and the award will be made at a fair different small businesses (Rule of Two) and the award will be made at a fair
market price;64 market price;64
 may similarly set aside contracts exceeding the simplified acquisition threshold  may similarly set aside contracts exceeding the simplified acquisition threshold
for competition reserved for specific types of small businesses (e.g., 8(a) small for competition reserved for specific types of small businesses (e.g., 8(a) small
businesses, HUBZone small businesses, WOSBs and SDVOSBs);65 businesses, HUBZone small businesses, WOSBs and SDVOSBs);65
 may enter into negotiations directly with particular types of small businesses  may enter into negotiations directly with particular types of small businesses
(e.g., a sole-source award) when the award could not otherwise be made (e.g., (e.g., a sole-source award) when the award could not otherwise be made (e.g.,
only a single source is available or under urgent and compelling only a single source is available or under urgent and compelling
circumstances);66 and circumstances);66 and
 are required to grant HUBZone small businesses a price evaluation preference of  are required to grant HUBZone small businesses a price evaluation preference of
not more than 10% in open and unrestricted competitions.67 not more than 10% in open and unrestricted competitions.67
SBA Contracting Programs68
Several SBA programs assist small businesses in obtaining and performing federal contracts and Several SBA programs assist small businesses in obtaining and performing federal contracts and
subcontracts. These include various prime contracting programs; subcontracting programs; and subcontracts. These include various prime contracting programs; subcontracting programs; and
other assistance (e.g., contracting technical training assistance and oversight of the federal small other assistance (e.g., contracting technical training assistance and oversight of the federal small
business goaling program and the Surety Bond Guarantee program). business goaling program and the Surety Bond Guarantee program).

63 15 U.S.C. §644(j)(1). As mentioned previously, certain regulations implementing this provision of the Small 63 15 U.S.C. §644(j)(1). As mentioned previously, certain regulations implementing this provision of the Small
Business Act effectively narrows its scope. For example, certain small business contracts awarded or performed Business Act effectively narrows its scope. For example, certain small business contracts awarded or performed
overseas are not necessarily required to be set aside for small businesses, and the small business provisions contained in overseas are not necessarily required to be set aside for small businesses, and the small business provisions contained in
Part 19 of the FAR generally do not apply to blanket purchase agreements and orders placed against Federal Supply Part 19 of the FAR generally do not apply to blanket purchase agreements and orders placed against Federal Supply
Schedule contracts. Schedule contracts.
64 15 U.S.C. §644(a). A set-aside is commonly used to refer to a competition in which only small businesses may 64 15 U.S.C. §644(a). A set-aside is commonly used to refer to a competition in which only small businesses may
compete. However, some set-asides involve small purchases that may be made by means of simplified acquisition compete. However, some set-asides involve small purchases that may be made by means of simplified acquisition
procedures that entail less than “full and open competition,” and by sealed bidding or contracting by negotiation that is procedures that entail less than “full and open competition,” and by sealed bidding or contracting by negotiation that is
more commonly associated with set-asides of larger contracts. more commonly associated with set-asides of larger contracts.
65 15 U.S.C. §637(a) for 8(a) participants; 15 U.S.C. §657a for HUBZone small businesses; 15 U.S.C. §637(m) for 65 15 U.S.C. §637(a) for 8(a) participants; 15 U.S.C. §657a for HUBZone small businesses; 15 U.S.C. §637(m) for
WOSBs; and 15 U.S.C. §657f for SDVOSBs. WOSBs; and 15 U.S.C. §657f for SDVOSBs.
66 15 U.S.C. §637(a) for 8(a) participants; 15 U.S.C. §657a for HUBZone small businesses; 15 U.S.C. §637(m) for 66 15 U.S.C. §637(a) for 8(a) participants; 15 U.S.C. §657a for HUBZone small businesses; 15 U.S.C. §637(m) for
WOSBs; and 15 U.S.C. §657f for SDVOSBs. WOSBs; and 15 U.S.C. §657f for SDVOSBs.
67 15 U.S.C. §657a(b)(3). 67 15 U.S.C. §657a(b)(3).
68 These programs apply government-wide but are implemented under the authority of the Small Business Act, 68 These programs apply government-wide but are implemented under the authority of the Small Business Act,
pursuant to regulations promulgated by the SBA that determine, in part, eligibility for the programs. pursuant to regulations promulgated by the SBA that determine, in part, eligibility for the programs.
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Prime Contracting Programs
Several contracting programs allow small businesses to compete only with similar firms for Several contracting programs allow small businesses to compete only with similar firms for
government contracts or receive sole-source awards in circumstances in which such awards could government contracts or receive sole-source awards in circumstances in which such awards could
not be made to other firms. These programs provide small businesses an opportunity to win not be made to other firms. These programs provide small businesses an opportunity to win
government contracts without having to compete against larger and more experienced companies. government contracts without having to compete against larger and more experienced companies.
8(a) Program69
The 8(a) The 8(a) ~~Minority Small Business and Capital Ownership Development Program (named for the~~
~~section of the Small Business Act from which it derives its authority~~Business Development Program (commonly known as the 8(a) Program) provides business ) provides business
development assistance to businesses owned and controlled by persons who are socially and development assistance to businesses owned and controlled by persons who are socially and
economically disadvantaged, have good character, and demonstrate a potential for success.70 economically disadvantaged, have good character, and demonstrate a potential for success.70
Although the 8(a) Program was originally established for the benefit of disadvantaged Although the 8(a) Program was originally established for the benefit of disadvantaged
individuals, in the 1980s, Congress expanded the program to include small businesses owned by individuals, in the 1980s, Congress expanded the program to include small businesses owned by
four disadvantaged groups. Small businesses owned by Alaska Native Corporations (ANCs), four disadvantaged groups. Small businesses owned by Alaska Native Corporations (ANCs),
Community Development Corporations (CDCs), Indian tribes, and Native Hawaiian Community Development Corporations (CDCs), Indian tribes, and Native Hawaiian
Organizations (NHOs) are also eligible to participate in the 8(a) Program under somewhat Organizations (NHOs) are also eligible to participate in the 8(a) Program under somewhat
different requirements. different requirements.
For individually owned small businesses, African Americans, Hispanics, Native Americans For individually owned small businesses, African Americans, Hispanics, Native Americans
(including American Indians, Eskimos, Aleuts, and Native Hawaiians), Asian-Pacific Americans, (including American Indians, Eskimos, Aleuts, and Native Hawaiians), Asian-Pacific Americans,
and Subcontinent Asian Americans are presumed to be socially and economically and Subcontinent Asian Americans are presumed to be socially and economically
disadvantaged.71 Other individuals can also qualify as socially and economically disadvantaged disadvantaged.71 Other individuals can also qualify as socially and economically disadvantaged
on a case-by-case basis.on a case-by-case basis. ~~To be considered economically disadvantaged, an individual’s net worth,~~
~~excluding ownership interest in the 8(a) firm and equity in his or her primary personal residence,~~
~~must be less than $750,000 at the time of application to the 8(a) Program, and less than $750,000~~
~~for continuing eligibility.~~
~~For group-owned small businesses, by statute, ANCs are deemed to be economically~~
~~disadvantaged, and CDCs are similarly treated as economically disadvantaged. In contrast, Indian~~
~~tribes and NHOs must establish economic disadvantage.~~
~~Federal agencies are authorized to award contracts for goods or services, or to perform~~
~~construction work, to the SBA for subcontracting to 8(a) firms. The SBA is authorized to delegate~~
~~the function of executing contracts to the procuring agencies and often does so. Once the SBA has~~
~~accepted a contract for the 8(a) Program, the contract is awarded through either a set-aside or on a~~
~~sole-source basis, with the contract amount generally determining the acquisition method used.~~
~~For individually owned small businesses, when the contract’s anticipated total value, including~~

~~69 For additional information and analysis, see CRS Report R44844,~~ ~~SBA’s “8(a) Program”: Overview, History, and~~
~~Current Issues, by Robert Jay Dilger.~~
~~70 Section 8(a) of the Small Business Act, P.L. 85-536, as amended, can be found at 15 U.S.C. §637(a). Regulations are~~
~~in 13 C.F.R. §124.~~
~~71 Asian Pacific Americans are those whose country of origin is Burma, Thailand, Malaysia, Indonesia, Singapore,~~
~~Brunei, Japan, China (including Hong Kong), Taiwan, Laos, Cambodia, Vietnam, Korea, the Philippines, U.S. Trust~~
~~Territory of the Pacific Islands (Republic of Palau), Republic of the Marshall Islands, Federated States of Micronesia,~~
~~Commonwealth of the Northern Mariana Islands, Guam, Samoa, Macao, Fiji, Tonga, Kiribati, Tuvalu, or Nauru.~~
~~Subcontinent Asian Americans are those whose country of origin is India, Pakistan, Bangladesh, Sri Lanka, Bhutan, the~~
~~Maldives Islands, or Nepal. 13 C.F.R. §124.103(b).~~
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~~any options, is $4.5 million or less ($7.5 million or less for manufacturing contracts), the contract~~
~~is normally awarded without competition (as a sole-source award).72~~ The SBA uses a three-part test for determining economic disadvantage relating to the degree of applicant’s diminished credit and capital opportunities: 1. net worth of less than $750,000 (excluding ownership interest in the applicant’s business, equity in their primary personal residence, and funds invested in an official retirement account); 2. generally no more than $350,000 in average adjusted gross income over the preceding three years; and 69 For additional information and analysis, see CRS Report R44844, SBA’s “8(a) Program”: Overview, History, and Current Issues, by Robert Jay Dilger. 70 Section 8(a) of the Small Business Act, P.L. 85-536, as amended, can be found at 15 U.S.C. §637(a). Regulations are in 13 C.F.R. §124. The 8(a) Program takes its name from one of the sections of the Small Business Act that authorizes it. The program is also governed by Section 7(j) of the act. The Clinton Administration changed the program’s name from the Minority Small Business and Capital Ownership Development Program to the 8(a) Business Development program in 1988 “to emphasize that individuals need not be members of minority groups and to stress the importance of assisting participating firms in their overall business development.” See SBA, “Small Business Size Regulations: 8(a) Business Development/Small Disadvantaged Business Status Determinations; Rules of Procedure Governing Cases Before the Office of Hearings and Appeals,” 63 Federal Register 35727, June 30, 1998. 71 Asian Pacific Americans are those whose country of origin is Burma, Thailand, Malaysia, Indonesia, Singapore, Brunei, Japan, China (including Hong Kong), Taiwan, Laos, Cambodia, Vietnam, Korea, the Philippines, U.S. Trust Territory of the Pacific Islands (Republic of Palau), Republic of the Marshall Islands, Federated States of Micronesia, Commonwealth of the Northern Mariana Islands, Guam, Samoa, Macao, Fiji, Tonga, Kiribati, Tuvalu, or Nauru. Subcontinent Asian Americans are those whose country of origin is India, Pakistan, Bangladesh, Sri Lanka, Bhutan, the Maldives Islands, or Nepal. 13 C.F.R. §124.103(b). Congressional Research Service 15 An Overview of Small Business Contracting 3. no more than $6 million in assets (excluding funds invested in an official retirement account).72 For group-owned small businesses, by statute, ANCs are deemed to be economically disadvantaged, and CDCs are similarly treated as economically disadvantaged. In contrast, Indian tribes and NHOs must establish economic disadvantage. Federal agencies are authorized to award contracts for goods or services, or to perform construction work, to the SBA for subcontracting to 8(a) firms. The SBA is authorized to delegate the function of executing contracts to the procuring agencies and often does so. Once the SBA has accepted a contract for the 8(a) Program, the contract is awarded through either a set-aside or on a sole-source basis, with the contract amount generally determining the acquisition method used. For individually owned small businesses, when the contract’s anticipated total value, including any options, is $4.5 million or less ($7.5 million or less for manufacturing contracts), the contract is normally awarded without competition (as a sole-source award).73 In contrast, when the In contrast, when the
contract’s anticipated value exceeds these thresholds, the contract generally must be awarded via contract’s anticipated value exceeds these thresholds, the contract generally must be awarded via
a set-aside with competition limited to 8(a) firms so long as there is a reasonable expectation that a set-aside with competition limited to 8(a) firms so long as there is a reasonable expectation that
at least two eligible and responsible 8(a) firms will submit offers and the award can be made at at least two eligible and responsible 8(a) firms will submit offers and the award can be made at
fair market price.fair market price.7374
Similar to other participants, firms owned by ANCs, CDCs, NHOs, and Indian tribes are eligible Similar to other participants, firms owned by ANCs, CDCs, NHOs, and Indian tribes are eligible
for 8(a) set-asides and may receive sole-source awards valued at $4.5 million or less ($7.5 million for 8(a) set-asides and may receive sole-source awards valued at $4.5 million or less ($7.5 million
or less for manufacturing contracts). However, firms owned by ANCs and Indian tribes can also or less for manufacturing contracts). However, firms owned by ANCs and Indian tribes can also
receive sole-source awards in excess of $4.5 million ($7.5 million for manufacturing contracts) receive sole-source awards in excess of $4.5 million ($7.5 million for manufacturing contracts)
even when contracting officers reasonably expect that at least two eligible and responsible 8(a) even when contracting officers reasonably expect that at least two eligible and responsible 8(a)
firms will submit offers and the award can be made at fair market price.firms will submit offers and the award can be made at fair market price.7475 NHO-owned firms may NHO-owned firms may
receive sole-source awards from the Department of Defense under the same conditions.receive sole-source awards from the Department of Defense under the same conditions.7576
The SBA also provides technical assistance and training to 8(a) firms. Firms generally participate The SBA also provides technical assistance and training to 8(a) firms. Firms generally participate
in the 8(a) Program for no more than nine years. In an effort to assist small businesses adversely in the 8(a) Program for no more than nine years. In an effort to assist small businesses adversely
~~affected by the COVID-19 pandemic, P.L. 116-260, the Economic Aid to Hard-Hit Small~~
~~Businesses, Nonprofits, and Venues Act (Division N, Title III of the Consolidated Appropriations~~
~~Act of 2021), provides businesses participating in the 8(a) program on or before September 9,~~
~~2020, the option to extend their participation in the program for one year.~~
~~In FY2019, the federal government awarded $30.4 billion to 8(a) firms:~~
~~ $18.5 billion was awarded with an 8(a) preference ($8.6 billion through an 8(a)~~
~~set-aside and $9.9 billion through an 8(a) sole-source award);~~
~~ $5.4 billion was awarded to an 8(a) firm in open competition with other firms;~~
~~and~~
~~ $6.4 billion was awarded with another small business preference (e.g., set-asides~~
~~and sole-source awards for small businesses generally and for HUBZone firms,~~
~~women-owned small businesses, and service-disabled veteran-owned small~~
~~businesses).76~~

72 72 SBA, “Women-Owned Small Business and Economically Disadvantaged Women-Owned Small Business Certification,” 85 Federal Register 27650-27665, May 11, 2020. 73 The Federal Acquisition Regulatory Council has the responsibility of adjusting each acquisition-related dollar The Federal Acquisition Regulatory Council has the responsibility of adjusting each acquisition-related dollar
threshold (including those for the 8(a), HUBZone, Service-Disabled Veteran-Owned, and Women-Owned Small threshold (including those for the 8(a), HUBZone, Service-Disabled Veteran-Owned, and Women-Owned Small
Business contracting programs), on October 1, of each year that is evenly divisible by five. The next adjustment for Business contracting programs), on October 1, of each year that is evenly divisible by five. The next adjustment for
inflation will take place on October 1, 2025. See 13 C.F.R. §124.506(a); and 41 U.S.C. §1980. inflation will take place on October 1, 2025. See 13 C.F.R. §124.506(a); and 41 U.S.C. §1980.
7374 15 U.S.C. §637(a)(1)(D)(ii); and SBA, “Conforming Statutory Amendments and Technical Corrections to Small 15 U.S.C. §637(a)(1)(D)(ii); and SBA, “Conforming Statutory Amendments and Technical Corrections to Small
Business Government Contracting Regulations,” 83Business Government Contracting Regulations,” 83 Federal Register 12849, March 26, 2018. 12849, March 26, 2018.
7475 P.L. 100-656, §602(a), 102 Stat. 3887-88 (November 15, 1988) (codified at 15 U.S.C. §637 note); and 48 C.F.R. P.L. 100-656, §602(a), 102 Stat. 3887-88 (November 15, 1988) (codified at 15 U.S.C. §637 note); and 48 C.F.R.
§19.805-1(b)(2).§19.805-1(b)(2).
75 P.L. 111-84, the National Defense Authorization Act for Fiscal Year 2010, required federal contracting officers to execute written justifications and obtain approval for sole-source contracts in excess of $20 million awarded under the authority of §8(a) analogous to those required for sole-source contracts awarded under the general contracting authorities. The $20 million threshold was increased through a regulatory update to $22 million, effective October 1, 2015, to account for inflation and to $100 million by P.L. 116-92, the National Defense Authorization Act for Fiscal Year 2020. 76 DOD’s authority to make sole-source awards to NHO-owned firms of contracts exceeding $4.5 million ($7.5 million DOD’s authority to make sole-source awards to NHO-owned firms of contracts exceeding $4.5 million ($7.5 million
for manufacturing contracts) even if contracting officers reasonably expect that offers will be received from at least two for manufacturing contracts) even if contracting officers reasonably expect that offers will be received from at least two
responsible small businesses existed on a temporary basis in 2004-2006, and became permanent in 2006. See P.L. 109-responsible small businesses existed on a temporary basis in 2004-2006, and became permanent in 2006. See P.L. 109-
148, Department of Defense, Emergency Supplemental Appropriations to Address Hurricanes in the Gulf of Mexico, 148, Department of Defense, Emergency Supplemental Appropriations to Address Hurricanes in the Gulf of Mexico,
and Pandemic Influenza Act of 2006, §8020, 119 Stat. 2702-03 (December 30, 2005); 48 C.F.R. §219.805-1(b)(2)(A)-and Pandemic Influenza Act of 2006, §8020, 119 Stat. 2702-03 (December 30, 2005); 48 C.F.R. §219.805-1(b)(2)(A)-
(B).(B).
~~76 U.S. General Services Administration (GSA), Federal Procurement Data System—Next Generation, August 13,~~
~~2020, at https://www.fpds.gov/fpdsng/.~~
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~~Historically Underutilized Business Zone Program77~~ Congressional Research Service 16 An Overview of Small Business Contracting affected by the COVID-19 pandemic, P.L. 116-260, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Division N, Title III of the Consolidated Appropriations Act of 2021), provides businesses participating in the 8(a) program on or before September 9, 2020, the option to extend their participation in the program for one year. In FY2019, the federal government awarded $30.4 billion to 8(a) firms:  $18.5 billion was awarded with an 8(a) preference ($8.6 billion through an 8(a) set-aside and $9.9 billion through an 8(a) sole-source award);  $5.4 billion was awarded to an 8(a) firm in open competition with other firms; and  $6.4 billion was awarded with another small business preference (e.g., set-asides and sole-source awards for small businesses generally and for HUBZone firms, women-owned small businesses, and service-disabled veteran-owned small businesses).77 Historically Underutilized Business Zone Program78
This program assists small businesses located in Historically Underutilized Business Zones This program assists small businesses located in Historically Underutilized Business Zones
(HUBZones) through set-asides, sole-source awards (so long as the award can be made at a fair (HUBZones) through set-asides, sole-source awards (so long as the award can be made at a fair
and reasonable price, and the anticipated total value of the contract, including any options, is $4.5 and reasonable price, and the anticipated total value of the contract, including any options, is $4.5
million or less, or $7.5 million or less for manufacturing contracts) and price evaluation million or less, or $7.5 million or less for manufacturing contracts) and price evaluation
preferences (of up to 10%) in full and open competitions.preferences (of up to 10%) in full and open competitions.7879 The HUBZone program targets The HUBZone program targets
assistance to small businesses located in areas with low income, high poverty, or high assistance to small businesses located in areas with low income, high poverty, or high
unemployment.unemployment.7980 To be certified as a HUBZone small business, at least 35% of the small To be certified as a HUBZone small business, at least 35% of the small
business’s employees must generally reside in a HUBZone. business’s employees must generally reside in a HUBZone.
In FY2019, the federal government awarded $11.5 billion to HUBZone-certified small In FY2019, the federal government awarded $11.5 billion to HUBZone-certified small
businesses: businesses:
 $2.0 billion was awarded with a HUBZone preference ($1.9 billion through a  $2.0 billion was awarded with a HUBZone preference ($1.9 billion through a
HUBZone set-aside, $95.0 million through a HUBZone sole-source award and HUBZone set-aside, $95.0 million through a HUBZone sole-source award and
$72.5 million through a HUBZone price-evaluation preference); $72.5 million through a HUBZone price-evaluation preference);
 $2.8 billion was awarded to HUBZone-certified small businesses in open  $2.8 billion was awarded to HUBZone-certified small businesses in open
competition with other firms; and competition with other firms; and
 $6.7 billion was awarded with another small business preference (e.g., set-asides  $6.7 billion was awarded with another small business preference (e.g., set-asides
and sole-source awards for small businesses generally and for 8(a), women- and sole-source awards for small businesses generally and for 8(a), women-
owned, and service-disabled veteran-owned small businesses).owned, and service-disabled veteran-owned small businesses).8081 77 U.S. General Services Administration (GSA), Federal Procurement Data System—Next Generation, August 13, 2020, at https://www.fpds.gov/fpdsng/. 78 For additional information and analysis, see CRS Report R41268, Small Business Administration HUBZone Program, by Robert Jay Dilger. 79 15 U.S.C. §657a(b)(2-3); and 41 U.S.C. §1980. 80 For specific criteria, see 15 U.S.C. §632(p)(4); and 13 C.F.R. §126.103. 81 GSA, Federal Procurement Data System—Next Generation, August 13, 2020, at https://www.fpds.gov/fpdsng/. Congressional Research Service 17 An Overview of Small Business Contracting
Service-Disabled Veteran-Owned Small Business Program
This program allows agencies to set aside contracts for SDVOSBs. This program allows agencies to set aside contracts for SDVOSBs.82 Also, federal agencies may Also, federal agencies may
award sole-source contracts to SDVOSBs so long as the award can be made at a fair and award sole-source contracts to SDVOSBs so long as the award can be made at a fair and
reasonable price, and the anticipated total value of the contract, including any options, is $4 reasonable price, and the anticipated total value of the contract, including any options, is $4
million or less ($7 million or less for manufacturing contracts).million or less ($7 million or less for manufacturing contracts).8183 For purposes of this program, For purposes of this program,
veterans and service-related disabilities are defined as they are under the statutes governing veterans and service-related disabilities are defined as they are under the statutes governing
veterans affairs.veterans affairs.82
84 In FY2019, the federal government awarded $23.6 billion to SDVOSBs: In FY2019, the federal government awarded $23.6 billion to SDVOSBs:
 $9.0 billion was awarded with a SDVOSB preference ($8.8 billion through a  $9.0 billion was awarded with a SDVOSB preference ($8.8 billion through a
SDVOSB set-aside and $274.8 million through a SDVOSB sole-source award); SDVOSB set-aside and $274.8 million through a SDVOSB sole-source award);
 $6.9 billion was awarded to a SDVOSB in open competition with other firms;  $6.9 billion was awarded to a SDVOSB in open competition with other firms;
and and

~~77 For additional information and analysis, see CRS Report R41268,~~ ~~Small Business Administration HUBZone~~
~~Program, by Robert Jay Dilger.~~
~~78 15 U.S.C. §657a(b)(2-3); and 41 U.S.C. §1980.~~
~~79 For specific criteria, see 15 U.S.C. §632(p)(4); and 13 C.F.R. §126.103.~~
~~80 GSA, Federal Procurement Data System—Next Generation, August 13, 2020, at https://www.fpds.gov/fpdsng/.~~
~~81 15 U.S.C. §657f(a-b); and 41 U.S.C. §1980.~~
82  $7.6 billion was awarded with another small business preference (e.g., set-asides and sole-source awards for small businesses generally and for HUBZone firms, 8(a) firms, and WOSBs).85 Women-Owned Small Business Program86 Under this program, contracts may be set aside for economically disadvantaged WOSBs in industries in which women are underrepresented and substantially underrepresented.87 Federal agencies may award sole-source contracts to WOSBs so long as the award can be made at a fair 82 A service-disabled veteran “is a person who served in the active military, naval, or air service, and who was discharged or released under conditions other than dishonorable, and whose disability was incurred or aggravated in line of duty in the active military, naval, or air service.” To be considered a service-disabled veteran, “the veteran must have an adjudication letter from the Veterans Administration (VA), a Department of Defense Form 214, Certificate of Release or Discharge from Active Duty, or a Statement of Service from the National Archives and Records Administration, stating that the veteran has a service-connected disability.” There is no minimum disability rating threshold. Also, the business must be small, as defined in section 3(q) of the Small Business Act (15 U.S.C. §632(q)) and the SBA’s implementing regulations (13 C.F.R. §125). See Department of Veterans Affairs, Office of Small Business Programs, “Service-Disabled Veteran-Owned Small Business,” at https://business.defense.gov/Small-Business/SDVOSB/. 83 15 U.S.C. §657f(a-b); and 41 U.S.C. §1980. 84 38 U.S.C. §8127(f). Veteran-owned small businesses and service-disabled veteran-owned small businesses are 38 U.S.C. §8127(f). Veteran-owned small businesses and service-disabled veteran-owned small businesses are
eligible for separate preferences in procurements conducted by the Department of Veterans Affairs under the authority eligible for separate preferences in procurements conducted by the Department of Veterans Affairs under the authority
of P.L. 109-461, the Veterans Benefits, Health Care, and Information Technology Act of 2006, as amended by P.L. of P.L. 109-461, the Veterans Benefits, Health Care, and Information Technology Act of 2006, as amended by P.L.
110-389, the Veterans’ Benefits Improvements Act of 2008. 110-389, the Veterans’ Benefits Improvements Act of 2008.
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~~ $7.6 billion was awarded with another small business preference (e.g., set-asides~~
~~and sole-source awards for small businesses generally and for HUBZone firms,~~
~~8(a) firms, and WOSBs).83~~
~~Women-Owned Small Business Program~~
~~Under this program, contracts may be set aside for economically disadvantaged WOSBs in~~
~~industries in which women are underrepresented and substantially underrepresented. Federal~~
~~agencies may award sole-source contracts to WOSBs so long as the award can be made at a fair~~
~~and reasonable price, and the anticipated total value of the contract, including any options, is $4.5~~
~~million or less ($7 million or less for manufacturing contracts).84~~85 GSA, Federal Procurement Data System—Next Generation, August 13 2020, at https://www.fpds.gov/fpdsng/. 86 For further information and analysis of the WOSB federal contacting program, see CRS Report R46322, SBA Women-Owned Small Business Federal Contracting Program, by Robert Jay Dilger. 87 The SBA has identified 364 six-digit North American Industry Classification System (NAICS) industry codes (out of 1,023) in which federal agencies may set aside federal contracts exceeding the micro-purchase threshold (currently $10,000) exclusively for WOSBs (including economically disadvantaged WOSBs) because those industries were identified as ones in which WOSBs are substantially underrepresented. The SBA has also identified 80 six-digit NAICS industry codes (out of 1,023) that may be set aside exclusively for economically disadvantaged WOSBs because those industries were identified as ones in which WOSBs are underrepresented. See SBA, “Qualifying NAICS for the Women-Owned Small Business Federal Contracting program,” effective October 1, 2017, at https://www.sba.gov/document/support--qualifying-naics-women-owned-small-business-federal-contracting-program. Congressional Research Service 18 An Overview of Small Business Contracting and reasonable price, and the anticipated total value of the contract, including any options, is $4.5 million or less ($7 million or less for manufacturing contracts).88 To be eligible for the WOSB program, a business must be  small, as determined by the SBA;  at least 51% owned and controlled by women who are U.S. citizens;  have women manage the day-to-day operations and also make long-term decisions; and  be certified by a federal agency, a state government, the SBA, or a national certifying entity approved by the SBA.89 To qualify as an economically disadvantaged WOSB, the owner must also demonstrate that her ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared with others in the same or similar line of business. The SBA uses the same three-part test used in the 8(a) Program to determine economic disadvantage relating to the degree of the applicant’s diminished credit and capital opportunities: 1. net worth of less than $750,000 (excluding ownership interest in the applicant’s business, equity in their primary personal residence, and funds invested in an official retirement account); 2. generally no more than $350,000 in average adjusted gross income over the preceding three years; and 3. no more than $6 million in assets (excluding funds invested in an official retirement account).90
In FY2019, the federal government awarded $25.5 billion to WOSBs: In FY2019, the federal government awarded $25.5 billion to WOSBs:
 $1.1 billion was awarded with a WOSB preference ($108.6 million through a  $1.1 billion was awarded with a WOSB preference ($108.6 million through a
WOSB sole-source award and $971.7 million through a WOSB set-aside award); WOSB sole-source award and $971.7 million through a WOSB set-aside award);
 $9.0 billion was awarded to a WOSB in open competition with other firms; and  $9.0 billion was awarded to a WOSB in open competition with other firms; and
 $15.4 billion was awarded with another small business preference (e.g., set- $15.4 billion was awarded with another small business preference (e.g., set-
asides and sole-source awards for small businesses generally and for HUBZone asides and sole-source awards for small businesses generally and for HUBZone
firms, 8(a) firms, and SDVOSBs).firms, 8(a) firms, and SDVOSBs).8591
Subcontracting Programs
Federal contracting officers are required to provide the SBA’s PCR (or, if a PCR is not assigned, Federal contracting officers are required to provide the SBA’s PCR (or, if a PCR is not assigned,
the SBA Area Office serving the procuring activity area) a “reasonable period of time” to review the SBA Area Office serving the procuring activity area) a “reasonable period of time” to review
any solicitation requiring submission of a small business subcontracting plan and to submit any solicitation requiring submission of a small business subcontracting plan and to submit
advisory findings before the solicitation is issued.advisory findings before the solicitation is issued.8692 The PCR’s advisory comments regarding the 88 15 U.S.C. §637(m); and 41 U.S.C. §1980. 89 15 U.S.C. §632(n); 15 U.S.C. §637(m)(2); and 13 C.F.R. §127.200. 90 SBA, “Women-Owned Small Business and Economically Disadvantaged Women-Owned Small Business Certification,” 85 Federal Register 27650-27665, May 11, 2020. 91 GSA, Federal Procurement Data System—Next Generation, August 13, 2020, at https://www.fpds.gov/fpdsng/. 92 FAR §19.705-3. Congressional Research Service 19 An Overview of Small Business Contracting ~~The PCR’s advisory comments regarding the~~
small business subcontracting plan’s acceptability must be submitted, in writing, to the small business subcontracting plan’s acceptability must be submitted, in writing, to the
appropriate contracting officer within five working days after the plan’s receipt.appropriate contracting officer within five working days after the plan’s receipt.8793
As mentioned previously, the SBA’s commercial market representatives help prime contractors As mentioned previously, the SBA’s commercial market representatives help prime contractors
find small businesses to perform subcontracts; counsel contractors on their responsibility to find small businesses to perform subcontracts; counsel contractors on their responsibility to
maximize subcontracting opportunities for small businesses; and conduct periodic reviews, often maximize subcontracting opportunities for small businesses; and conduct periodic reviews, often
in concert with a SBA PCR, of contractors awarded contracts that require an acceptable small in concert with a SBA PCR, of contractors awarded contracts that require an acceptable small
business subcontracting plan.business subcontracting plan.88

~~83 GSA, Federal Procurement Data System—Next Generation, August 13 2020, at https://www.fpds.gov/fpdsng/.~~
~~84 15 U.S.C. §637(m); and 41 U.S.C. §1980.~~
~~85 GSA, Federal Procurement Data System—Next Generation, August 13, 2020, at https://www.fpds.gov/fpdsng/.~~
~~86 FAR §19.705-3.~~
~~87 SBA, “Prime Contracts Program,” SOP 60 02 8, effective October 27, 2013, p. 15, at https://www.sba.gov/sites/~~
~~default/files/sops/Prime_Contracts_SOP-60-02-8.pdf.~~
~~88 15 U.S.C. §633(h)(1). For additional information on subcontracting plan requirements, see FAR §19.702(a)(1); and~~
~~15 U.S.C. §637(d)(3).~~
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94
Other Federal Agency Contracting Programs
Federal agencies may also set aside contracts or make sole-source awards to small businesses not Federal agencies may also set aside contracts or make sole-source awards to small businesses not
participating in any other program under certain conditions. participating in any other program under certain conditions.
Department of Transportation and Environmental Protection
Agency Disadvantaged Business Enterprise Programs
The Department of Transportation (DOT) Disadvantaged Business Enterprise (DBE) Program The Department of Transportation (DOT) Disadvantaged Business Enterprise (DBE) Program
began in 1980 as a minority/women’s business enterprise program “established by regulation began in 1980 as a minority/women’s business enterprise program “established by regulation
under the authority of Title VI of the Civil Rights Act of 1964 and other nondiscrimination under the authority of Title VI of the Civil Rights Act of 1964 and other nondiscrimination
statutes that apply to DOT financial assistance programs.”statutes that apply to DOT financial assistance programs.”8995 Congress has reauthorized the DOT Congress has reauthorized the DOT
DBE program several times since its inception; most recently in P.L. 114-94, the Fixing DBE program several times since its inception; most recently in P.L. 114-94, the Fixing
America’s Surface Transportation Act (FAST-Act). America’s Surface Transportation Act (FAST-Act).
The FAST-Act provides, that, except to the extent the Secretary of Transportation determines The FAST-Act provides, that, except to the extent the Secretary of Transportation determines
otherwise, not less than 10% of the amounts made available for any program under Titles I otherwise, not less than 10% of the amounts made available for any program under Titles I
(federal-aid highways), II (innovative project finance), III (public transportation) and VI (federal-aid highways), II (innovative project finance), III (public transportation) and VI
(innovation) of the act and 23 U.S.C. §403 (highway safety research and development), shall be (innovation) of the act and 23 U.S.C. §403 (highway safety research and development), shall be
expended with DBEs. DOT also has a separate DBE program for airport concessions.expended with DBEs. DOT also has a separate DBE program for airport concessions.9096
A DBE is a for-profit small business owned and controlled by socially and economically A DBE is a for-profit small business owned and controlled by socially and economically
disadvantaged individuals.disadvantaged individuals.9197 Eligibility for the DBE program differs somewhat from the 8(a) Eligibility for the DBE program differs somewhat from the 8(a)
~~program. For example, under the DBE program, women are presumed to be socially and~~
~~economically disadvantaged individuals. Also, to be regarded as economically disadvantaged, an~~
~~individual must have a personal net worth (excluding ownership interest in the firm and equity in~~
~~his or her primary personal residence) that does not exceed $1.32 million. The DBE must also~~
~~meet SBA size criteria and cannot have average annual gross receipts over the preceding three~~
~~fiscal years that exceed $26.29 million for participation in Federal Highway Administration and~~
~~Federal Transit Administration-assisted work. P.L. 115-254, the FAA Reauthorization Act of~~
~~2018, removed the gross receipts cap for Federal Aviation Administration-assisted work. 92 Size~~
~~limits for the airport concessions DBE program are higher.93~~

89 93 SBA, “Prime Contracts Program,” SOP 60 02 8, effective October 27, 2013, p. 15, at https://www.sba.gov/sites/default/files/sops/Prime_Contracts_SOP-60-02-8.pdf. 94 15 U.S.C. §633(h)(1). For additional information on subcontracting plan requirements, see FAR §19.702(a)(1); and 15 U.S.C. §637(d)(3). 95 Department of Transportation (DOT), “Disadvantaged Business Enterprise (DBE) Program,” at Department of Transportation (DOT), “Disadvantaged Business Enterprise (DBE) Program,” at
https://www.transportation.gov/civil-rights/disadvantaged-business-enterprise. https://www.transportation.gov/civil-rights/disadvantaged-business-enterprise.
9096 49 C.F.R. Part 23. “As recipients of DOT financial assistance, state and local transportation agencies … certify the 49 C.F.R. Part 23. “As recipients of DOT financial assistance, state and local transportation agencies … certify the
eligibility of DBE firms to participate in their DOT-assisted contracts; establish narrowly-tailored goals for the eligibility of DBE firms to participate in their DOT-assisted contracts; establish narrowly-tailored goals for the
participation of disadvantaged entrepreneurs; and evaluate their DOT-assisted contracts throughout the year and participation of disadvantaged entrepreneurs; and evaluate their DOT-assisted contracts throughout the year and
establish contract-specific DBE subcontracting goals as necessary to achieve the overall goal of the agency…. DOT is establish contract-specific DBE subcontracting goals as necessary to achieve the overall goal of the agency…. DOT is
responsible for developing the rules and regulations for the national DBE program; providing guidance and conducting responsible for developing the rules and regulations for the national DBE program; providing guidance and conducting
oversight to make sure that these rules and regulations are followed by the recipients of DOT funds; and considering oversight to make sure that these rules and regulations are followed by the recipients of DOT funds; and considering
appeals from state/local certification decisions.” DOT, “Definition of a Disadvantaged Business Enterprise,” at appeals from state/local certification decisions.” DOT, “Definition of a Disadvantaged Business Enterprise,” at
https://www.transportation.gov/civil-rights/disadvantaged-business-enterprise/definition-disadvantaged-business-https://www.transportation.gov/civil-rights/disadvantaged-business-enterprise/definition-disadvantaged-business-
enterprise. enterprise.
9197 DOT, “Definition of a Disadvantaged Business Enterprise,” at https://www.transportation.gov/civil-rights/ DOT, “Definition of a Disadvantaged Business Enterprise,” at https://www.transportation.gov/civil-rights/
disadvantaged-business-enterprise/definition-disadvantaged-business-enterprise (hereinafter DOT, “Definition of a disadvantaged-business-enterprise/definition-disadvantaged-business-enterprise (hereinafter DOT, “Definition of a
Disadvantaged Business Enterprise”). Disadvantaged Business Enterprise”).
~~92 DOT, “Definition of a Disadvantaged Business Enterprise;” and Department of Transportation, “Disadvantaged~~
~~Business Enterprise Program; Inflationary Adjustment,” 85 Federal Register 80646-80648, December 14, 2020.~~
~~93 With a few noted exceptions, businesses participating in the airports concessions DBE program cannot have average~~
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Congressional Research Service 20 An Overview of Small Business Contracting program. For example, under the DBE program, women are presumed to be socially and economically disadvantaged individuals. Also, to be regarded as economically disadvantaged, an individual must have a personal net worth (excluding ownership interest in the firm and equity in his or her primary personal residence) that does not exceed $1.32 million. The DBE must also meet SBA size criteria and cannot have average annual gross receipts over the preceding three fiscal years that exceed $26.29 million for participation in Federal Highway Administration and Federal Transit Administration-assisted work. P.L. 115-254, the FAA Reauthorization Act of 2018, removed the gross receipts cap for Federal Aviation Administration-assisted work. 98 Size limits for the airport concessions DBE program are higher.99
The DOT DBE program’s eight objectives are to The DOT DBE program’s eight objectives are to
1. ensure nondiscrimination in the award and administration of DOT-assisted 1. ensure nondiscrimination in the award and administration of DOT-assisted
contracts in the department’s highway, transit, and airport financial assistance contracts in the department’s highway, transit, and airport financial assistance
programs; programs;
2. create a level playing field on which DBEs can compete fairly for DOT-assisted 2. create a level playing field on which DBEs can compete fairly for DOT-assisted
contracts; contracts;
3. ensure that the department’s DBE program is narrowly tailored in accordance 3. ensure that the department’s DBE program is narrowly tailored in accordance
with applicable law; with applicable law;
4. ensure that only firms that fully meet the program’s eligibility standards are 4. ensure that only firms that fully meet the program’s eligibility standards are
permitted to participate as DBEs; permitted to participate as DBEs;
5. help remove DBE-participation barriers in DOT-assisted contracts; 5. help remove DBE-participation barriers in DOT-assisted contracts;
6. promote the use of DBEs in all types of federally assisted contracts and 6. promote the use of DBEs in all types of federally assisted contracts and
procurement activities conducted by recipients; procurement activities conducted by recipients;
7. assist the development of firms that can compete successfully in the marketplace 7. assist the development of firms that can compete successfully in the marketplace
outside the DBE program; and outside the DBE program; and
8. provide appropriate flexibility to recipients of federal financial assistance in 8. provide appropriate flexibility to recipients of federal financial assistance in
establishing and providing opportunities for DBEs. establishing and providing opportunities for DBEs.94100
The Environmental Protection Agency (EPA) DBE program was authorized by P.L. 101-549, the The Environmental Protection Agency (EPA) DBE program was authorized by P.L. 101-549, the
Clean Air Act Amendments of 1990. The act requires the EPA Administrator to award, to the Clean Air Act Amendments of 1990. The act requires the EPA Administrator to award, to the
extent practicable, not less than 10% of the act’s research funding to DBEs. Eligibility for the extent practicable, not less than 10% of the act’s research funding to DBEs. Eligibility for the
EPA’s 10% set-aside differs somewhat from the 8(a) program. For example, the act presumes that EPA’s 10% set-aside differs somewhat from the 8(a) program. For example, the act presumes that
Black Americans, Hispanic Americans, Native Americans, Asian Americans, women, and Black Americans, Hispanic Americans, Native Americans, Asian Americans, women, and
disabled Americans are socially disadvantaged. Also eligible are historically black colleges and disabled Americans are socially disadvantaged. Also eligible are historically black colleges and
universities, colleges and universities with at least a 40% Hispanic student body, minority universities, colleges and universities with at least a 40% Hispanic student body, minority
institutions as defined pursuant to the General Education Provision Act, and private and voluntary institutions as defined pursuant to the General Education Provision Act, and private and voluntary
organizations controlled by social and economically disadvantaged individuals. organizations controlled by social and economically disadvantaged individuals.
P.L. 102-389, the Departments of Veterans Affairs and Housing and Urban Development, and P.L. 102-389, the Departments of Veterans Affairs and Housing and Urban Development, and
Independent Agencies Appropriations Act, 1993, requires the EPA Administrator to award, to the Independent Agencies Appropriations Act, 1993, requires the EPA Administrator to award, to the
98 DOT, “Definition of a Disadvantaged Business Enterprise;” and Department of Transportation, “Disadvantaged Business Enterprise Program; Inflationary Adjustment,” 85 Federal Register 80646-80648, December 14, 2020. 99 With a few noted exceptions, businesses participating in the airports concessions DBE program cannot have average annual gross receipts over the preceding three fiscal years that exceed $56.42 million. Banks and financial institutions must have no more than $1 billion in assets, car rental companies can have no more than $75.23 million in average annual gross receipts over the preceding three fiscal years, automobile dealers may have no more than 350 employees, and pay telephone companies can have no more than 1,500 employees. See 49 C.F.R. §23.33. 100 49 C.F.R. §26.1. Congressional Research Service 21 An Overview of Small Business Contracting fullest extent possible, at least 8% of federal funding awarded in support of EPA authorized fullest extent possible, at least 8% of federal funding awarded in support of EPA authorized
programs, including grants, loans, and contracts for wastewater treatment and leaking programs, including grants, loans, and contracts for wastewater treatment and leaking
underground storage tanks, to businesses or other organizations owned or controlled by socially underground storage tanks, to businesses or other organizations owned or controlled by socially
and economically disadvantaged individuals, including historically black colleges and universities and economically disadvantaged individuals, including historically black colleges and universities
and women. and women.
Individuals claiming economic disadvantage status must have an initial and continued personal Individuals claiming economic disadvantage status must have an initial and continued personal
net worth of less than $750,000. To be certified by the EPA as a DBE, applicants must first net worth of less than $750,000. To be certified by the EPA as a DBE, applicants must first
attempt to be certified by the SBA, DOT, or a tribal, state, or local government, or by an attempt to be certified by the SBA, DOT, or a tribal, state, or local government, or by an
independent private organization. EPA will consider applications for DBE certification only from independent private organization. EPA will consider applications for DBE certification only from
firms or organizations that have been denied certification from these aforementioned entities. firms or organizations that have been denied certification from these aforementioned entities.
The EPA DBE program’s four objectives are to The EPA DBE program’s four objectives are to

~~annual gross receipts over the preceding three fiscal years that exceed $56.42 million. Banks and financial institutions~~
~~must have no more than $1 billion in assets, car rental companies can have no more than $75.23 million in average~~
~~annual gross receipts over the preceding three fiscal years, automobile dealers may have no more than 350 employees,~~
~~and pay telephone companies can have no more than 1,500 employees. See 49 C.F.R. §23.33.~~
~~94 49 C.F.R. §26.1.~~
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1. ensure nondiscrimination in the award of contracts under EPA financial 1. ensure nondiscrimination in the award of contracts under EPA financial
assistance agreements; assistance agreements;
2. operate harmoniously with the U.S. Supreme Court’s decision in 2. operate harmoniously with the U.S. Supreme Court’s decision in Adarand
Constructors, Inc. v. Pena, 515 U.S. 200 (1995); , 515 U.S. 200 (1995);
3. help remove barriers to the participation of DBEs in the award of contracts under 3. help remove barriers to the participation of DBEs in the award of contracts under
EPA financial assistance agreements; and EPA financial assistance agreements; and
4. provide appropriate flexibility to recipients of EPA financial assistance in 4. provide appropriate flexibility to recipients of EPA financial assistance in
establishing and providing contracting opportunities for DBEs. establishing and providing contracting opportunities for DBEs.95101
Contracting Preferences for Indian Tribes and Native American-
Owned and -Controlled Businesses
Several federal programs provide contracting preferences for qualified Indian tribes and Native Several federal programs provide contracting preferences for qualified Indian tribes and Native
American-owned and -controlled businesses. Although these programs are not necessarily American-owned and -controlled businesses. Although these programs are not necessarily
targeted at small businesses, many Native American-owned and -controlled small businesses targeted at small businesses, many Native American-owned and -controlled small businesses
participate in them. For example, under authority provided by the Buy Indian Act of 1910 (as participate in them. For example, under authority provided by the Buy Indian Act of 1910 (as
amended, 25 U.S.C. §47), the Department of the Interior’s Bureau of Indian Affairs, Bureau of amended, 25 U.S.C. §47), the Department of the Interior’s Bureau of Indian Affairs, Bureau of
Indian Education, and the offices of the Assistant Secretary-Indian Affairs and the Department of Indian Education, and the offices of the Assistant Secretary-Indian Affairs and the Department of
Health and Human Services’ Indian Health Service provide contracting preferences to qualified Health and Human Services’ Indian Health Service provide contracting preferences to qualified
Indian tribes and Native American-owned and -controlled businesses.Indian tribes and Native American-owned and -controlled businesses.96102 In addition, the In addition, the
Department of Defense’s Indian Incentive Program encourages prime contractors with a Department of Defense’s Indian Incentive Program encourages prime contractors with a
subcontract worth at least $500,000 to subcontract with qualified Indian tribes, Native American-subcontract worth at least $500,000 to subcontract with qualified Indian tribes, Native American-
owned and -controlled businesses, and Native Hawaiian small businesses by providing a 5% owned and -controlled businesses, and Native Hawaiian small businesses by providing a 5%
rebate on the amount subcontracted to these businesses.rebate on the amount subcontracted to these businesses.97
~~Subcontracting Programs for Small Disadvantaged Businesses~~
~~Other federal programs promote subcontracting with small disadvantaged businesses (SDBs).~~
~~SDBs include 8(a) participants and other small businesses that are at least 51% unconditionally~~
~~owned and controlled by socially or economically disadvantaged individuals or groups.~~
~~Individuals owning and controlling non-8(a) SDBs must generally satisfy the same eligibility~~
~~requirements as 8(a) firms, although they do not apply to the SBA to be designated SDBs in the~~
~~same way that 8(a) firms do.~~
~~Federal agencies must negotiate “subcontracting plans” with the apparently successful bidder or~~
~~offeror on eligible prime contracts prior to awarding the contract. Subcontracting plans set goals~~
~~for the percentage of subcontract dollars to be awarded to SDBs, among others, and describe~~
~~efforts that will be made to ensure that SDBs “have an equitable opportunity to compete for~~103

95101 Environmental Protection Agency, “Disadvantaged Business Enterprise Program Under EPA Assistance Agreements Environmental Protection Agency, “Disadvantaged Business Enterprise Program Under EPA Assistance Agreements
(DBE Program),” at https://www.epa.gov/grants/disadvantaged-business-enterprise-program-under-epa-assistance-(DBE Program),” at https://www.epa.gov/grants/disadvantaged-business-enterprise-program-under-epa-assistance-
agreements-dbe-program. agreements-dbe-program.
96102 GAO, GAO, Buy Indian Act: Bureau of Indian Affairs and Indian Health Service Need Greater Insight into Implementation
at Regional Offices, GAO-15-588, July 9, 2015, at https://www.gao.gov/products/GAO-15-588; and U.S. Department , GAO-15-588, July 9, 2015, at https://www.gao.gov/products/GAO-15-588; and U.S. Department
of the Interior, Office of Indian Energy and Economic Development, “The Buy Indian Opportunity,” at of the Interior, Office of Indian Energy and Economic Development, “The Buy Indian Opportunity,” at
https://www.bia.gov/as-ia/ieed/online-primers-economic-development-glance. https://www.bia.gov/as-ia/ieed/online-primers-economic-development-glance.
97103 U.S. Department of Defense, Office of Small Business Programs, “Indian Incentive Program (IIP),” at U.S. Department of Defense, Office of Small Business Programs, “Indian Incentive Program (IIP),” at
https://business.defense.gov/Programs/Indian-Incentive-Program/. https://business.defense.gov/Programs/Indian-Incentive-Program/.
Congressional Research Service Congressional Research Service

2122 An Overview of Small Business Contracting Subcontracting Programs for Small Disadvantaged Businesses Other federal programs promote subcontracting with small disadvantaged businesses (SDBs). SDBs include 8(a) participants and other small businesses that are at least 51% unconditionally owned and controlled by socially or economically disadvantaged individuals or groups. Individuals owning and controlling non-8(a) SDBs must generally satisfy the same eligibility requirements as 8(a) firms, although they do not apply to the SBA to be designated SDBs in the same way that 8(a) firms do. Federal agencies must negotiate “subcontracting plans” with the apparently successful bidder or offeror on eligible prime contracts prior to awarding the contract. Subcontracting plans set goals for the percentage of subcontract dollars to be awarded to SDBs, among others, and describe efforts that will be made to ensure that SDBs “have an equitable opportunity to compete for subcontracts.”104

~~An Overview of Small Business Contracting~~

~~subcontracts.”98~~ Federal agencies may also consider the extent of subcontracting with SDBs in Federal agencies may also consider the extent of subcontracting with SDBs in
determining to whom to award a contract or give contractors “monetary incentives” to determining to whom to award a contract or give contractors “monetary incentives” to
subcontract with SDBs. subcontract with SDBs.
As of As of ~~February 12~~June 24, 2021, the SBA’s Dynamic Small Business Search database included 6,, 2021, the SBA’s Dynamic Small Business Search database included 6,~~251~~
832 SBA-certified 8(a) firms and SBA-certified 8(a) firms and ~~164,704~~162,490 self-certified SDBs. self-certified SDBs.99105
Other Small Business Programs of Interest
The SBA 7(j) Management and Technical Assistance Program
The SBA’s 7(j) Management and Technical Assistance program The SBA’s 7(j) Management and Technical Assistance program “provides training to small businesses that are owned and controlled by economically and socially disadvantaged individuals and small business located in areas of high unemployment or low income, certified 8(a) and HUBZone firms, and economically disadvantaged women-owned small businesses.”106 Training includes “~~provides “eligible disadvantaged~~
~~small businesses with assistance such as training, executive education, and one-on-one~~ consulting consulting
in a wide range of business activities, including marketing, accounting, opportunity development in a wide range of business activities, including marketing, accounting, opportunity development
and capture, contract management, compliance, and financial analysis.”and capture, contract management, compliance, and financial analysis.”~~100~~107 Eligible firms work directly with their respective SBA district office to enroll in the program. In FY2020 ~~Eligible individuals~~
~~and businesses include “8(a) certified firms, SDBs, businesses operating in areas of high~~
~~unemployment or low income, or firms owned by low-income individuals.”101~~
~~In FY2019~~, the 7(j) Management and Technical Assistance program assisted , the 7(j) Management and Technical Assistance program assisted ~~8,032~~9,941 small small
businesses.businesses.~~102~~108
SBA Surety Bond Guarantee ~~Program103~~Program109
The SBA’s Surety Bond Guarantee program aims to increase small businesses’ access to federal, The SBA’s Surety Bond Guarantee program aims to increase small businesses’ access to federal,
state, and local government contracting, as well as private-sector contracts, by guaranteeing bid, state, and local government contracting, as well as private-sector contracts, by guaranteeing bid,
~~performance, and payment bonds for small businesses that cannot obtain surety bonds through~~
~~regular commercial channels.104 The program guarantees individual contracts of up to $6.5~~
~~million and up to $10 million if a federal contracting officer certifies that such a guarantee is~~
~~necessary. The SBA’s guarantee ranges from not to exceed 80% to not to exceed 90% of the~~

98 104 15 U.S.C. §637(d)(6)(c). 15 U.S.C. §637(d)(6)(c).
99105 SBA, “Dynamic Small Business Search,” at http://dsbs.sba.gov/dsbs/search/dsp_dsbs.cfm. SBA, “Dynamic Small Business Search,” at http://dsbs.sba.gov/dsbs/search/dsp_dsbs.cfm.
~~100~~106 SBA, SBA, ~~FY2021~~FY2022 Congressional ~~Budget~~ Justification and ~~FY2019~~FY2020 Annual Performance Report, p. , p. 7672, at , at
https://www.sba.gov/document/reporthttps://www.sba.gov/document/report—-congressional-budget-justification-annual-performance-reportcongressional-budget-justification-annual-performance-report (hereinafter SBA, FY2022 Congressional Justification and FY2020 Annual Performance Report). 107.
~~101~~ SBA, SBA, ~~FY2018~~FY2022 Congressional ~~Budget~~ Justification and ~~FY2016~~FY2020 Annual Performance Report, p. , p. ~~44, at~~
~~https://www.sba.gov/sites/default/files/2018-06/Fiscal%20year%202018.zip.~~
~~102~~72. 108 SBA, SBA, ~~FY2020~~FY2022 Congressional ~~Budget~~ Justification and ~~FY2018~~FY2020 Annual Performance Report, p. , p. ~~76, at~~
~~https://www.sba.gov/sites/default/files/2019-04/~~
~~SBA%20FY%202020%20Congressional%20Justification_final%20508%20%204%2023%202019.pdf.~~
~~103~~73. 109 For additional information and analysis, see CRS Report R42037, For additional information and analysis, see CRS Report R42037, SBA Surety Bond Guarantee Program, by Robert , by Robert
~~Jay Dilger.~~
~~104 Ancillary bonds are also eligible if they are incidental and essential to a contract for which the SBA has guaranteed~~
~~a final bond. A reclamation bond is eligible if it is issued to reclaim an abandoned mine site and for a project~~
~~undertaken for a specific period of time.~~
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~~surety’s loss if a default occurs.105~~ Congressional Research Service 23 An Overview of Small Business Contracting performance, and payment bonds for small businesses that cannot obtain surety bonds through regular commercial channels.110 The program guarantees individual contracts of up to $6.5 million and up to $10 million if a federal contracting officer certifies that such a guarantee is necessary. The SBA’s guarantee ranges from not to exceed 80% to not to exceed 90% of the surety’s loss if a default occurs.111 In FY2020, the SBA guaranteed 10,577 bid and final surety In FY2020, the SBA guaranteed 10,577 bid and final surety
bonds with a total contract value of nearly $7.2 billion.bonds with a total contract value of nearly $7.2 billion.~~106~~112
A surety bond is a three-party instrument between a surety (someone who agrees to be A surety bond is a three-party instrument between a surety (someone who agrees to be
responsible for the debt or obligation of another), a contractor, and a project owner. The responsible for the debt or obligation of another), a contractor, and a project owner. The
agreement binds the contractor to comply with the terms and conditions of a contract. If the agreement binds the contractor to comply with the terms and conditions of a contract. If the
contractor is unable to successfully perform the contract, the surety assumes the contractor’s contractor is unable to successfully perform the contract, the surety assumes the contractor’s
responsibilities and ensures that the project is completed. The surety bond reduces the risk responsibilities and ensures that the project is completed. The surety bond reduces the risk
associated with contracting.associated with contracting.~~107~~113
Surety bonds are meant to encourage project owners to contract with small businesses that may Surety bonds are meant to encourage project owners to contract with small businesses that may
not have the credit history or prior experience of larger businesses and may be at greater risk of not have the credit history or prior experience of larger businesses and may be at greater risk of
failing to comply with the contract’s terms and conditions.failing to comply with the contract’s terms and conditions.~~108~~114
Surety bonds are important to small businesses interested in competing for federal contracts Surety bonds are important to small businesses interested in competing for federal contracts
because the federal government requires prime contractors—prior to the award of a federal because the federal government requires prime contractors—prior to the award of a federal
contract exceeding $150,000 for the construction, alteration, or repair of any building or public contract exceeding $150,000 for the construction, alteration, or repair of any building or public
work of the United States—to furnish a performance bond issued by a surety satisfactory to the work of the United States—to furnish a performance bond issued by a surety satisfactory to the
contracting officer in an amount that the officer considers adequate to protect the government.contracting officer in an amount that the officer considers adequate to protect the government.~~109~~115
Small Business Mentor-Protégé ~~Programs110~~Programs116
Small business mentor-protégé programs typically seek to pair new businesses with more Small business mentor-protégé programs typically seek to pair new businesses with more
experienced businesses in mutually beneficial relationships. Protégés may receive financial, experienced businesses in mutually beneficial relationships. Protégés may receive financial,
technical, or management assistance from mentors in obtaining and performing federal contracts technical, or management assistance from mentors in obtaining and performing federal contracts
~~or subcontracts, or serving as suppliers under such contracts or subcontracts. Mentors may~~
~~receive credit toward subcontracting goals, reimbursement of certain expenses, or other~~
~~incentives.~~
~~The federal government currently has several mentor-protégé programs to assist small businesses~~
~~in various ways.~~
~~ The SBA’s All Small Mentor-Protégé Program is a government-wide program~~
~~designed to assist small businesses in obtaining and performing federal contracts.~~

~~105~~ Jay Dilger. 110 Ancillary bonds are also eligible if they are incidental and essential to a contract for which the SBA has guaranteed a final bond. A reclamation bond is eligible if it is issued to reclaim an abandoned mine site and for a project undertaken for a specific period of time. 111 P.L. 114-92, the National Defense Authorization Act for Fiscal Year 2016, includes a provision that increased the P.L. 114-92, the National Defense Authorization Act for Fiscal Year 2016, includes a provision that increased the
Preferred Surety Bond Guarantee Program’s guarantee rate from not to exceed 70% to not to exceed 90% of losses Preferred Surety Bond Guarantee Program’s guarantee rate from not to exceed 70% to not to exceed 90% of losses
starting one year from enactment (effective November 25, 2016). For additional information and analysis, see CRS starting one year from enactment (effective November 25, 2016). For additional information and analysis, see CRS
Report R42037, Report R42037, SBA Surety Bond Guarantee Program, by Robert Jay Dilger. , by Robert Jay Dilger.
~~106~~112 SBA, SBA, FY2020 Program Performance: SBA Surety Bond Guarantee Program, at , at
https://content.govdelivery.com/accounts/USSBA/bulletins/2a5a0e6. https://content.govdelivery.com/accounts/USSBA/bulletins/2a5a0e6.
~~107~~113 SBA, “Surety Bonds,” at https://www.sba.gov/funding-programs/surety-bonds. SBA, “Surety Bonds,” at https://www.sba.gov/funding-programs/surety-bonds.
~~108~~114 SBA, “Surety Bonds.” SBA, “Surety Bonds.”
~~109~~115 The threshold amount was originally set at $2,000 in 1935 under P.L. 74-321, An Act Requiring Contracts for the The threshold amount was originally set at $2,000 in 1935 under P.L. 74-321, An Act Requiring Contracts for the
Construction, Alteration, and Repair of Any Public Building or Public Work of the United States to be Accompanied Construction, Alteration, and Repair of Any Public Building or Public Work of the United States to be Accompanied
by a Performance Bond Protecting the United States and an Additional Bond for the Protection of Persons Furnishing by a Performance Bond Protecting the United States and an Additional Bond for the Protection of Persons Furnishing
Material or Labor for the Construction, Alteration, or Repair of Said Public Buildings or Public Work [the Miller Act Material or Labor for the Construction, Alteration, or Repair of Said Public Buildings or Public Work [the Miller Act
of 1935], 49 Stat. 793 (August 24, 1935) (codified at 40 U.S.C. §3131(a)(b)). Also, see Department of Defense, of 1935], 49 Stat. 793 (August 24, 1935) (codified at 40 U.S.C. §3131(a)(b)). Also, see Department of Defense,
General Services Administration, and National Aeronautics and Space Administration, “Federal Acquisition General Services Administration, and National Aeronautics and Space Administration, “Federal Acquisition
Regulation; Inflation Adjustment of Acquisition-Related Thresholds,” 75Regulation; Inflation Adjustment of Acquisition-Related Thresholds,” 75 Federal Register 53130, August 30, 2010. 53130, August 30, 2010.
~~110~~116 For additional information and analysis of federal small business mentor-protégé programs, see CRS Report For additional information and analysis of federal small business mentor-protégé programs, see CRS Report
R41722, R41722, Small Business Mentor-Protégé Programs, by Robert Jay Dilger. , by Robert Jay Dilger.
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2324 An Overview of Small Business Contracting or subcontracts, or serving as suppliers under such contracts or subcontracts. Mentors may receive credit toward subcontracting goals, reimbursement of certain expenses, or other incentives. The federal government currently has several mentor-protégé programs to assist small businesses in various ways.  The SBA’s All Small Mentor-Protégé Program is a government-wide program designed to assist small businesses in obtaining and performing federal contracts.

~~An Overview of Small Business Contracting~~

Mentors may (1) form joint ventures with protégés that are eligible to perform Mentors may (1) form joint ventures with protégés that are eligible to perform
federal contracts set aside for small businesses; (2) make certain equity federal contracts set aside for small businesses; (2) make certain equity
investments in protégé firms; (3) lend or subcontract to protégé firms; and (4) investments in protégé firms; (3) lend or subcontract to protégé firms; and (4)
provide technical or management assistance to their protégés.provide technical or management assistance to their protégés.~~111~~117
 The  The Department of Defense (DOD) Mentor-Protégé Program, in contrast, is , in contrast, is
agency-specific. It assists various types of small businesses and other entities in agency-specific. It assists various types of small businesses and other entities in
obtaining and performing DOD subcontracts and serving as suppliers on DOD obtaining and performing DOD subcontracts and serving as suppliers on DOD
contracts. Mentors may (1) make advance or progress payments to their protégés contracts. Mentors may (1) make advance or progress payments to their protégés
that DOD reimburses; (2) award subcontracts to their protégés on a that DOD reimburses; (2) award subcontracts to their protégés on a
noncompetitive basis when they would not otherwise be able to do so; (3) lend noncompetitive basis when they would not otherwise be able to do so; (3) lend
money to or make investments in protégé firms; and (4) provide or arrange for money to or make investments in protégé firms; and (4) provide or arrange for
other assistance.other assistance.~~112~~118
Other agencies also have agency-specific mentor-protégé programs to assist various types of Other agencies also have agency-specific mentor-protégé programs to assist various types of
small businesses or other entities in obtaining and performing subcontracts under agency prime small businesses or other entities in obtaining and performing subcontracts under agency prime
contracts. The Department of Homeland Security (DHS), for example, has a mentor-protégé contracts. The Department of Homeland Security (DHS), for example, has a mentor-protégé
program wherein mentors may provide protégés with rent-free use of facilities or equipment, program wherein mentors may provide protégés with rent-free use of facilities or equipment,
temporary personnel for training, property, loans, or other assistance. Because these programs are temporary personnel for training, property, loans, or other assistance. Because these programs are
not based in statute, unlike the SBA and DOD programs, they generally rely upon preexisting not based in statute, unlike the SBA and DOD programs, they generally rely upon preexisting
authorities (e.g., authorizing use of evaluation factors) or publicity to incentivize mentor authorities (e.g., authorizing use of evaluation factors) or publicity to incentivize mentor
participation. participation.
Currently, more than 1,600 mentor-protégé agreements are in place, even though there are issues Currently, more than 1,600 mentor-protégé agreements are in place, even though there are issues
with the accuracy and thoroughness of some federal agency records.with the accuracy and thoroughness of some federal agency records.~~113~~119
Small Business Procurement Goals
Since 1978, federal agency heads have been required to establish federal procurement goals, in Since 1978, federal agency heads have been required to establish federal procurement goals, in
consultation with the SBA, “that realistically reflect the potential of small business concerns and consultation with the SBA, “that realistically reflect the potential of small business concerns and
~~small business concerns owned and controlled by socially and economically disadvantaged~~
~~individuals” to participate in federal procurement. Each agency is required, at the conclusion of~~
~~each fiscal year, to report its progress in meeting the goals to the SBA.114~~
~~In 1988, Congress authorized the President annually to establish government-wide minimum~~
~~participation goals for procurement contracts awarded to small businesses and small businesses~~
~~owned and controlled by socially and economically disadvantaged individuals. Congress required~~

~~111~~ 117 SBA, “SBA Mentor-Protégé Program,” at https://www.sba.gov/federal-contracting/contracting-assistance- SBA, “SBA Mentor-Protégé Program,” at https://www.sba.gov/federal-contracting/contracting-assistance-
programs/sba-mentor-protege-program; SBA, “Small Business Mentor Protégé Programs,” 81programs/sba-mentor-protege-program; SBA, “Small Business Mentor Protégé Programs,” 81 Federal Register 48558- 48558-
48595, July 25, 2016; and SBA, “Consolidation of Mentor-Protégé Programs and Other Government Contracting 48595, July 25, 2016; and SBA, “Consolidation of Mentor-Protégé Programs and Other Government Contracting
Amendments,” 85Amendments,” 85 Federal Register 66146-66199, October 16, 2020. 66146-66199, October 16, 2020.
~~112~~118 10 U.S.C. §2302note: Mentor-Protégé Pilot Program. 10 U.S.C. §2302note: Mentor-Protégé Pilot Program.
~~113~~119 As of As of ~~February~~June 1, 2021, the SBA’s All Small Mentor-Protégé program had 1, 1, 2021, the SBA’s All Small Mentor-Protégé program had 1,~~192~~185 active mentor-protégé agreements. active mentor-protégé agreements.
See SBA, “Active mentor-protégé agreements,” at https://www.sba.gov/document/support-active-mentor-protege-See SBA, “Active mentor-protégé agreements,” at https://www.sba.gov/document/support-active-mentor-protege-
agreements. agreements.
As of January 1, 2018, there were 63 active Department of Defense (DOD) mentor-protégé agreements. See DOD, As of January 1, 2018, there were 63 active Department of Defense (DOD) mentor-protégé agreements. See DOD,
Office of Small Business Programs, “Active MPP [Mentor-Protégé Program] Agreements,” at Office of Small Business Programs, “Active MPP [Mentor-Protégé Program] Agreements,” at
https://business.defense.gov/Programs/Mentor-Protege-Program/Protege-Eligibility-Requirements/. https://business.defense.gov/Programs/Mentor-Protege-Program/Protege-Eligibility-Requirements/.
~~114 15 U.S.C. §644(g)(2); and P.L. 95-507, a bill to amend the Small Business Act and the Small Business Investment~~
~~Act of 1958.~~
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Congressional Research Service 25 An Overview of Small Business Contracting small business concerns owned and controlled by socially and economically disadvantaged individuals” to participate in federal procurement. Each agency is required, at the conclusion of each fiscal year, to report its progress in meeting the goals to the SBA.120 In 1988, Congress authorized the President annually to establish government-wide minimum participation goals for procurement contracts awarded to small businesses and small businesses owned and controlled by socially and economically disadvantaged individuals. Congress required the government-wide minimum participation goal for small businesses to be “not less than 20% the government-wide minimum participation goal for small businesses to be “not less than 20%
of the total value of all prime contract awards for each fiscal year” and “not less than 5% of the of the total value of all prime contract awards for each fiscal year” and “not less than 5% of the
total value of all prime contract and subcontract awards for each fiscal year” for small businesses total value of all prime contract and subcontract awards for each fiscal year” for small businesses
owned and controlled by socially and economically disadvantaged individuals.owned and controlled by socially and economically disadvantaged individuals.~~115~~121
Each federal agency was also directed to “have an annual goal that presents, for that agency, the Each federal agency was also directed to “have an annual goal that presents, for that agency, the
maximum practicable opportunity for small business concerns and small business concerns maximum practicable opportunity for small business concerns and small business concerns
owned and controlled by socially and economically disadvantaged individuals to participate in the owned and controlled by socially and economically disadvantaged individuals to participate in the
performance of contracts let by such agency.”performance of contracts let by such agency.”~~116~~122 The SBA was also required to report to the The SBA was also required to report to the
President annually on the attainment of the goals and to include the information in an annual President annually on the attainment of the goals and to include the information in an annual
report to Congress.report to Congress.~~117~~123 The SBA negotiates the goals with each federal agency and establishes a The SBA negotiates the goals with each federal agency and establishes a
small business eligible baseline for evaluating the agency’s performance. baseline for evaluating the agency’s performance.~~118~~124 The agency head is The agency head is
required to “make consistent efforts to annually expand participation by small business concerns required to “make consistent efforts to annually expand participation by small business concerns
from each industry category.”from each industry category.”~~119~~125 If the SBA and the agency cannot agree on the goals, the agency If the SBA and the agency cannot agree on the goals, the agency
may submit the case to the Office of Management and Budget (OMB) Office of Federal may submit the case to the Office of Management and Budget (OMB) Office of Federal
Procurement Policy (OFPP) for resolution.Procurement Policy (OFPP) for resolution.~~120~~126
The small business eligible baseline excludes certain contracts that the SBA has determined do The small business eligible baseline excludes certain contracts that the SBA has determined do
not realistically reflect the potential for small business participation in federal procurement (such not realistically reflect the potential for small business participation in federal procurement (such
as those awarded to mandatory and directed sources), contracts funded predominately from as those awarded to mandatory and directed sources), contracts funded predominately from
agency-generated sources (i.e., nonappropriated funds), contracts not covered by the FAR, agency-generated sources (i.e., nonappropriated funds), contracts not covered by the FAR,
acquisitions on behalf of foreign governments, and contracts not reported in the General Services acquisitions on behalf of foreign governments, and contracts not reported in the General Services
Administration’s (GSA’s) Federal Procurement Data System—Next Generation, or FPDS-NG Administration’s (GSA’s) Federal Procurement Data System—Next Generation, or FPDS-NG
~~(such as government procurement card purchases and contracts valued less than $10,000).121~~
~~These exclusions typically account for 18% to 20% of all federal prime contracts each year.~~
~~The SBA then evaluates the agencies’ performance against their negotiated goals and presents the~~
~~results in the SBA’s annual Small Business Procurement Scorecards. The SBA uses FPDS-NG~~
~~data, which are published in GSA’s annual Small Business Goaling Report. Each agency that~~
~~fails to achieve any proposed prime or subcontract goal is required to submit a justification to the~~

~~115~~ 120 15 U.S.C. §644(g)(2); and P.L. 95-507, a bill to amend the Small Business Act and the Small Business Investment Act of 1958. 121 15 U.S.C. §644(g)(1); and P.L. 100-656, the Business Opportunity Development Reform Act of 1988. The 15 U.S.C. §644(g)(1); and P.L. 100-656, the Business Opportunity Development Reform Act of 1988. The
government-wide minimum participation goal for small businesses was increased from 20% to 23% by P.L. 105-135, government-wide minimum participation goal for small businesses was increased from 20% to 23% by P.L. 105-135,
the Small Business Reauthorization Act of 1997. the Small Business Reauthorization Act of 1997.
~~116~~122 15 U.S.C. §644(g)(1); and P.L. 100-656, the Business Opportunity Development Reform Act of 1988. 15 U.S.C. §644(g)(1); and P.L. 100-656, the Business Opportunity Development Reform Act of 1988.
~~117~~123 15 U.S.C. §644(g)(1); and P.L. 100-656, the Business Opportunity Development Reform Act of 1988. 15 U.S.C. §644(g)(1); and P.L. 100-656, the Business Opportunity Development Reform Act of 1988.
~~118~~124 According to a 2001 GAO report, the SBA began to specify what types of contracts the Federal Procurement Data According to a 2001 GAO report, the SBA began to specify what types of contracts the Federal Procurement Data
System would exclude when determining agency compliance with federal contracting goals in FY1998. Prior to System would exclude when determining agency compliance with federal contracting goals in FY1998. Prior to
FY1998, “agencies reported their small business achievements directly to SBA and excluded from their calculations FY1998, “agencies reported their small business achievements directly to SBA and excluded from their calculations
certain types of contracts, such as those for which small businesses had a limited or no chance to compete. SBA then certain types of contracts, such as those for which small businesses had a limited or no chance to compete. SBA then
published an annual report summarizing each agency’s achievements. SBA officials said that in some cases they were published an annual report summarizing each agency’s achievements. SBA officials said that in some cases they were
not aware of all exclusions the agencies made when reporting their numbers.” GAO, not aware of all exclusions the agencies made when reporting their numbers.” GAO, Small Business: More
Transparency Needed in Prime Contract Goal Program, GAO-01-551, August 1, 2001, pp. 9-10, at , GAO-01-551, August 1, 2001, pp. 9-10, at
http://www.gao.gov/assets/240/231854.pdf. http://www.gao.gov/assets/240/231854.pdf.
~~119~~125 15 U.S.C. §644(g)(2). 15 U.S.C. §644(g)(2).
~~120~~126 SBA, Office of Policy, Planning & Liaison, Office of Government Contracting & Business Development, “FY 2018 SBA, Office of Policy, Planning & Liaison, Office of Government Contracting & Business Development, “FY 2018
Goaling Guidelines,” August 30, 2017, p. 4, at https://www.sba.gov/sites/default/files/2018-06/Goaling Guidelines,” August 30, 2017, p. 4, at https://www.sba.gov/sites/default/files/2018-06/
FY18_Small_Business_Goaling_Guidelines.pdf (hereinafter SBA, Office of Policy, Planning & Liaison, Office of FY18_Small_Business_Goaling_Guidelines.pdf (hereinafter SBA, Office of Policy, Planning & Liaison, Office of
Government Contracting & Business Development, “FY 2018 Goaling Guidelines”). Government Contracting & Business Development, “FY 2018 Goaling Guidelines”).
~~121 SBA, Office of Policy, Planning & Liaison, Office of Government Contracting & Business Development, “FY 2018~~
~~Goaling Guidelines,” p. 3; and GSA, Federal Procurement Data System—Next Generation, “What’s In FPDS-NG,” at~~
~~https://www.fpds.gov/wiki/index.php/FPDS-NG_FAQ.~~
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Congressional Research Service 26 An Overview of Small Business Contracting (such as government procurement card purchases and contracts valued less than $10,000).127 These exclusions typically account for 18% to 20% of all federal prime contracts each year. The SBA then evaluates the agencies’ performance against their negotiated goals and presents the results in the SBA’s annual Small Business Procurement Scorecards. The SBA uses FPDS-NG data, which are published in GSA’s annual Small Business Goaling Report. Each agency that fails to achieve any proposed prime or subcontract goal is required to submit a justification to the SBA on why it failed to achieve a proposed or negotiated goal with a proposed plan of corrective SBA on why it failed to achieve a proposed or negotiated goal with a proposed plan of corrective
action.action.~~122~~128
Agencies can take credit in every category that is applicable to the recipient of the contract. For Agencies can take credit in every category that is applicable to the recipient of the contract. For
example, “when counting goaling achievements, a contract awarded to a Service-Disabled example, “when counting goaling achievements, a contract awarded to a Service-Disabled
Veteran-Owned Woman-Owned Small Business would be counted toward the Small Business Veteran-Owned Woman-Owned Small Business would be counted toward the Small Business
(SB) goal, the Service-Disabled Veteran-Owned Small Business (SDVOSB) goal and the Women-(SB) goal, the Service-Disabled Veteran-Owned Small Business (SDVOSB) goal and the Women-
Owned Small Business (WOSB) goal. However, these category counts are not summed to triple Owned Small Business (WOSB) goal. However, these category counts are not summed to triple
the total count. the total count. The Sum of Parts Does Not Equal the Whole (italics in original).”(italics in original).”~~123~~129
Over the years, federal government-wide procurement goals have been established for small Over the years, federal government-wide procurement goals have been established for small
businesses generally (P.L. 100-656, the Business Opportunity Development Reform Act of 1988, businesses generally (P.L. 100-656, the Business Opportunity Development Reform Act of 1988,
and P.L. 105-135, the HUBZone Act of 1997—Title VI of the Small Business Reauthorization and P.L. 105-135, the HUBZone Act of 1997—Title VI of the Small Business Reauthorization
Act of 1997); small businesses owned and controlled by socially and economically disadvantaged Act of 1997); small businesses owned and controlled by socially and economically disadvantaged
individuals (P.L. 100-656); women (P.L. 103-355, the Federal Acquisition Streamlining Act of individuals (P.L. 100-656); women (P.L. 103-355, the Federal Acquisition Streamlining Act of
1994); small businesses located within a HUBZone (P.L. 105-135); and small businesses owned 1994); small businesses located within a HUBZone (P.L. 105-135); and small businesses owned
and controlled by a service-disabled veteran (P.L. 106-50, the Veterans Entrepreneurship and and controlled by a service-disabled veteran (P.L. 106-50, the Veterans Entrepreneurship and
Small Business Development Act of 1999). Small Business Development Act of 1999).
The current federal small business procurement goals are The current federal small business procurement goals are
 at least 23.0% of the total value of all small business eligible prime contract  at least 23.0% of the total value of all small business eligible prime contract
awards to small businesses for each fiscal year; awards to small businesses for each fiscal year;
 5.0% of the total value of all small business eligible prime contract awards and  5.0% of the total value of all small business eligible prime contract awards and
subcontract awards to small disadvantaged businesses (including participants in subcontract awards to small disadvantaged businesses (including participants in
the SBA’s 8(a) Program) for each fiscal year;the SBA’s 8(a) Program) for each fiscal year;~~124~~130
 5.0% of the total value of all small business eligible prime contract awards and  5.0% of the total value of all small business eligible prime contract awards and
subcontract awards to women-owned small businesses; subcontract awards to women-owned small businesses;
 3.0% of the total value of all small business eligible prime contract awards and  3.0% of the total value of all small business eligible prime contract awards and
subcontract awards to HUBZone small businesses; subcontract awards to HUBZone small businesses;~~125 and~~
~~ 3.0% of the total value of all small business eligible prime contract awards and~~
~~subcontract awards to service-disabled veteran-owned small businesses.126~~
~~There are no punitive consequences for not meeting these goals. However, the SBA’s Small~~
~~Business Procurement Scorecards and GSA’s Small Business Goaling Report are distributed~~
~~widely, receive media attention, and heighten public awareness of the issue of small business~~
~~contracting. For example, agency performance as reported in the SBA’s Small Business~~

~~122~~131 and 127 SBA, Office of Policy, Planning & Liaison, Office of Government Contracting & Business Development, “FY 2018 Goaling Guidelines,” p. 3; and GSA, Federal Procurement Data System—Next Generation, “What’s In FPDS-NG,” at https://www.fpds.gov/wiki/index.php/FPDS-NG_FAQ. 128 SBA, Office of Policy, Planning & Liaison, Office of Government Contracting & Business Development, “FY 2018 SBA, Office of Policy, Planning & Liaison, Office of Government Contracting & Business Development, “FY 2018
Goaling Guidelines,” p. 6. Goaling Guidelines,” p. 6.
~~123~~129 SBA, Office of Policy, Planning & Liaison, Office of Government Contracting & Business Development, “FY 2018 SBA, Office of Policy, Planning & Liaison, Office of Government Contracting & Business Development, “FY 2018
Goaling Guidelines,” p. 5. “The exception to this non-additive rule is for total Small Disadvantaged Business (SDB) Goaling Guidelines,” p. 5. “The exception to this non-additive rule is for total Small Disadvantaged Business (SDB)
which is the sum of 8(a) and non-8(a) SDBs. Each special type of small business is first of all a small business. That which is the sum of 8(a) and non-8(a) SDBs. Each special type of small business is first of all a small business. That
also means Federal procurements awarded to SDVOSB will also have been awarded to Veteran-Owned Small Business also means Federal procurements awarded to SDVOSB will also have been awarded to Veteran-Owned Small Business
(VOSB).” (VOSB).”
~~124~~130 For additional information and analysis of the SBA’s 8(a) Program, see CRS Report R44844, For additional information and analysis of the SBA’s 8(a) Program, see CRS Report R44844, SBA’s “8(a)
Program”: Overview, History, and Current Issues, by Robert Jay Dilger. , by Robert Jay Dilger.
~~125~~131 For additional information and analysis of the HUBZone program, see CRS Report R41268, For additional information and analysis of the HUBZone program, see CRS Report R41268, Small Business
~~Administration HUBZone Program, by Robert Jay Dilger.~~
~~126 15 U.S.C. §644(g)(1)-(2).~~
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link to page link to page 3031 link to page link to page 3031 An Overview of Small Business Contracting  3.0% of the total value of all small business eligible prime contract awards and subcontract awards to service-disabled veteran-owned small businesses.132 There are no punitive consequences for not meeting these goals. However, the SBA’s Small Business Procurement Scorecards and GSA’s Small Business Goaling Report are distributed widely, receive media attention, and heighten public awareness of the issue of small business contracting. For example, agency performance as reported in the SBA’s Small Business ~~An Overview of Small Business Contracting~~

Procurement Scorecards is often cited by Members during their questioning of federal agency Procurement Scorecards is often cited by Members during their questioning of federal agency
witnesses during congressional hearings. witnesses during congressional hearings.
As shown As shown inin Table 1, ~~the~~the FY2019 Small Business Goaling Report indicates that federal agencies indicates that federal agencies
met the federal procurement goal for small businesses generally, small disadvantaged businesses, met the federal procurement goal for small businesses generally, small disadvantaged businesses,
women-owned small businesses, and service-disabled veteran-owned small businesses in women-owned small businesses, and service-disabled veteran-owned small businesses in
FY2019. FY2019.
Table 1 also provides, for comparative purposes, the percentage of total reported federal contracts also provides, for comparative purposes, the percentage of total reported federal contracts
(without exclusions) awarded to those small businesses in FY2019. (without exclusions) awarded to those small businesses in FY2019.
Table 1. Federal Procurement Goals and Percentage of FY2019 Federal Contract
Dollars Awarded to Small Businesses, by Type
Percentage of Federal
Percentage of Federal
Contracts (small
Contracts (all
Business Type
Federal Goal
business eligible)
reported contracts)
Small Businesses Small Businesses
23.0% 23.0%
25.82% 25.82%
22.21% 22.21%
Small Disadvantaged Small Disadvantaged
5.0% 5.0%
10.13% 10.13%
8.69% 8.69%
Businesses Businesses
Women-Owned Small Women-Owned Small
5.0% 5.0%
5.04% 5.04%
4.32% 4.32%
Businesses Businesses
HUBZone Small Businesses HUBZone Small Businesses
3.0% 3.0%
2.23% 2.23%
1.95% 1.95%
Service-Disabled Veteran- Service-Disabled Veteran-
3.0% 3.0%
4.34% 4.34%
4.00% 4.00%
Owned Small Businesses Owned Small Businesses
Sources: U.S. Small Business Administration, “Statutory Guidelines,” at https://www.sba.gov/content/statutory-U.S. Small Business Administration, “Statutory Guidelines,” at https://www.sba.gov/content/statutory-
guidelines-0 (federal goals); U.S. General Services Administration, Federal Procurement Data System—Next guidelines-0 (federal goals); U.S. General Services Administration, Federal Procurement Data System—Next
Generation, “Small Business Goaling Report: Fiscal Year 2019,” at https://www.fpds.gov/downloads/Generation, “Small Business Goaling Report: Fiscal Year 2019,” at https://www.fpds.gov/downloads/
top_requests/FPDSNG_SB_Goaling_FY_2019.pdf; and U.S. General Services Administration, Federal top_requests/FPDSNG_SB_Goaling_FY_2019.pdf; and U.S. General Services Administration, Federal
Procurement Data System—Next Generation, at https://www.fpds.gov/fpdsng/ (contract Procurement Data System—Next Generation, at https://www.fpds.gov/fpdsng/ (contract ~~dol ars~~dollars). ).
Notes: The Small Business Goaling Report for FY2019 was made available on-line on August 12, 2020. The The Small Business Goaling Report for FY2019 was made available on-line on August 12, 2020. The
report does not indicate when the data were generated. The report indicates that small business eligible report does not indicate when the data were generated. The report indicates that small business eligible
contracts totaled $501.58 contracts totaled $501.58 ~~bil ion~~billion and that $129.5 and that $129.5 ~~bil ion~~billion was awarded to small businesses, $50.8 was awarded to small businesses, $50.8 ~~bil ion~~billion to small to small
disadvantaged businesses, $25.3 disadvantaged businesses, $25.3 ~~bil ion~~billion to women-owned small businesses, $11.2 to women-owned small businesses, $11.2 ~~bil ion~~billion to SBA-certified to SBA-certified
HUBZone small businesses, and $21.8 HUBZone small businesses, and $21.8 ~~bil ion~~billion to service-disabled veteran-owned small businesses. The to service-disabled veteran-owned small businesses. The
percentages provided in the column for all reported contracts in FY2019 were calculated using FPDS-NG data as percentages provided in the column for all reported contracts in FY2019 were calculated using FPDS-NG data as
reported on August 12, 2020: $589.5 reported on August 12, 2020: $589.5 ~~bil ion~~billion in total contracts; $131.0 in total contracts; $131.0 ~~bil ion~~billion to small businesses, $51.3 to small businesses, $51.3 ~~bil ion~~billion to to
small disadvantaged businesses, $25.5 small disadvantaged businesses, $25.5 ~~bil ion~~billion to women-owned small businesses, $11.5 to women-owned small businesses, $11.5 ~~bil ion~~billion to SBA-certified to SBA-certified
HUBZone small businesses, and $23.6 HUBZone small businesses, and $23.6 ~~bil ion~~billion to service-disabled veteran-owned small businesses. to service-disabled veteran-owned small businesses.
Administration HUBZone Program, by Robert Jay Dilger. 132 15 U.S.C. §644(g)(1)-(2). Congressional Research Service 28 An Overview of Small Business Contracting Certificate of Competency Program
Before awarding a federal contract, the contracting officer must affirmatively determine that the Before awarding a federal contract, the contracting officer must affirmatively determine that the
business is responsible to perform the contract. If the contracting officer determines that an business is responsible to perform the contract. If the contracting officer determines that an
apparent successful small business offeror lacks certain elements of responsibility (e.g., is unable apparent successful small business offeror lacks certain elements of responsibility (e.g., is unable
to fulfill the requirements of a specific government procurement because it lacks capability, to fulfill the requirements of a specific government procurement because it lacks capability,
competency, capacity, credit, integrity, perseverance, tenacity, or limitations on subcontracting), competency, capacity, credit, integrity, perseverance, tenacity, or limitations on subcontracting),
the officer is required to refer the matter in writing to the SBA for review and a possible the officer is required to refer the matter in writing to the SBA for review and a possible
Certificate of Competency (COC), even if the next acceptable offer is also from a small Certificate of Competency (COC), even if the next acceptable offer is also from a small
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~~business.127~~business.133 The COC certifies in writing that the small business meets all required elements of The COC certifies in writing that the small business meets all required elements of
responsibility for the purpose of receiving and performing a specific government contract. The responsibility for the purpose of receiving and performing a specific government contract. The
“COC program empowers the SBA to certify to contracting officers as to all elements of “COC program empowers the SBA to certify to contracting officers as to all elements of
responsibility of any small business concern to receive and perform a specific government responsibility of any small business concern to receive and perform a specific government
contract. The COC program does not extend to questions concerning regulatory requirements contract. The COC program does not extend to questions concerning regulatory requirements
imposed and enforced by other federal agencies.”imposed and enforced by other federal agencies.”~~128~~134
Post-Award Requirements
As mentioned previously, the SBA’s commercial market representatives conduct periodic As mentioned previously, the SBA’s commercial market representatives conduct periodic
compliance reviews of contractors awarded contracts that require an acceptable small business compliance reviews of contractors awarded contracts that require an acceptable small business
subcontracting plan.subcontracting plan.~~129~~135 In addition, once the contract is completed, federal agencies are required In addition, once the contract is completed, federal agencies are required
to pay the contractor on a timely basis and pay interest penalties for late payments. Under to pay the contractor on a timely basis and pay interest penalties for late payments. Under
specified circumstances, federal agencies may also pay contractors before the contract’s specified circumstances, federal agencies may also pay contractors before the contract’s
payment’s due date. payment’s due date.
Small Business Subcontracting Plan Reviews
The periodic compliance review can take place on-site, at the contracting agency, or virtual.The periodic compliance review can take place on-site, at the contracting agency, or virtual.~~130~~136
Materials that may be reviewed include the contractor’s contract files, correspondence that is Materials that may be reviewed include the contractor’s contract files, correspondence that is
directly or indirectly related to the contract, IT systems, subcontracting methods, and directly or indirectly related to the contract, IT systems, subcontracting methods, and
procedures.procedures.~~131~~137 Contractors are selected randomly for audit. Contractors are selected randomly for audit.~~132~~138 The SBA may enter into agreements The SBA may enter into agreements
with other federal agencies to conduct these assessments.with other federal agencies to conduct these assessments.~~133~~139
The compliance report includes compliant and noncompliant items found during the assessment The compliance report includes compliant and noncompliant items found during the assessment
of the contractor’s subcontracting activities and a rating indicating the contractor’s level of of the contractor’s subcontracting activities and a rating indicating the contractor’s level of
compliance or noncompliance, ranging from unsatisfactory to outstanding.compliance or noncompliance, ranging from unsatisfactory to outstanding.~~134~~140 If any deficiencies If any deficiencies
are found, the contractor is required to submit, within 30 days of the compliance review rating are found, the contractor is required to submit, within 30 days of the compliance review rating
~~letter date, a corrective action plan (CAP).135 The CAP is submitted to the SBA Area Office via~~
~~email, or any method designated by the SBA. The commercial market representative conducts a~~
~~follow-up compliance report within six months to a year of the date the SBA acknowledges~~
~~receipt of the contractor’s CAP to ensure that corrective actions have been taken to eliminate the~~
~~deficiencies. The SBA keeps the federal agency that awarded the contract informed of the~~
~~contractor’s adherence to correcting the deficiencies.136~~

~~127~~ 133 15 U.S.C. §637(b)(7); and FAR §19.601(a-e). 15 U.S.C. §637(b)(7); and FAR §19.601(a-e).
~~128~~134 FAR §19.601(b). FAR §19.601(b).
~~129~~135 15 U.S.C. §633(h). 15 U.S.C. §633(h).
~~130~~136 SBA, “Subcontracting Assistance Program Post Award,” SOP 60 03 7, effective July 17, 2018, p. 11, at SBA, “Subcontracting Assistance Program Post Award,” SOP 60 03 7, effective July 17, 2018, p. 11, at
https://www.sba.gov/sites/default/files/2018-07/2018-07-17%20Final%20Subcontracting%20Program%20SOP_1.pdf. https://www.sba.gov/sites/default/files/2018-07/2018-07-17%20Final%20Subcontracting%20Program%20SOP_1.pdf.
~~131~~137 SBA, “Subcontracting Assistance Program Post Award,” SOP 60 03 7, p. 11. SBA, “Subcontracting Assistance Program Post Award,” SOP 60 03 7, p. 11.
~~132~~138 SBA, “Subcontracting Assistance Program Post Award,” SOP 60 03 7, p. 12. SBA, “Subcontracting Assistance Program Post Award,” SOP 60 03 7, p. 12.
~~133~~139 SBA, “Subcontracting Assistance Program Post Award,” SOP 60 03 7, p. 14. SBA, “Subcontracting Assistance Program Post Award,” SOP 60 03 7, p. 14.
~~134~~140 13 C.F.R. §125.3(e)(3). Congressional Research Service 29 An Overview of Small Business Contracting letter date, a corrective action plan (CAP).141 The CAP is submitted to the SBA Area Office via email, or any method designated by the SBA. The commercial market representative conducts a follow-up compliance report within six months to a year of the date the SBA acknowledges receipt of the contractor’s CAP to ensure that corrective actions have been taken to eliminate the deficiencies. The SBA keeps the federal agency that awarded the contract informed of the contractor’s adherence to correcting the deficiencies.142 ~~13 C.F.R. §125.3(e)(3).~~
~~135 SBA, “Subcontracting Assistance Program Post Award,” SOP 60 03 7, p. 12.~~
~~136 SBA, “Subcontracting Assistance Program Post Award,” SOP 60 03 7, p. 13.~~
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If the contractor refuses to provide or address all deficiencies in the CAP, a delinquent CAP letter If the contractor refuses to provide or address all deficiencies in the CAP, a delinquent CAP letter
is sent advising the contractor that it has 15 days from the letter’s date to comply with federal is sent advising the contractor that it has 15 days from the letter’s date to comply with federal
regulations. If an acceptable CAP is not received in the allotted time frame the case is escalated to regulations. If an acceptable CAP is not received in the allotted time frame the case is escalated to
the SBA’s subcontracting program manager who informs the SBA’s Office of Government the SBA’s subcontracting program manager who informs the SBA’s Office of Government
Contracting director and works with the SBA’s Office of General Counsel and the federal agency Contracting director and works with the SBA’s Office of General Counsel and the federal agency
that awarded the contract for resolution or to begin accessing liquidated damages.that awarded the contract for resolution or to begin accessing liquidated damages.~~137~~143
Prompt Payments
Once a contract is awarded, federal agencies are generally required to pay interest to prime Once a contract is awarded, federal agencies are generally required to pay interest to prime
contractors on any invoice payments the agency fails to make by the date(s) specified in the contractors on any invoice payments the agency fails to make by the date(s) specified in the
contract, or within 30 days of receipt of a contract, or within 30 days of receipt of a proper invoice for the amount due if no date is specified for the amount due if no date is specified
in the contract.in the contract.~~138~~144
Similar requirements exist for prime contractors in paying subcontractors on construction Similar requirements exist for prime contractors in paying subcontractors on construction
contracts. These requirements are especially important for small businesses in the construction contracts. These requirements are especially important for small businesses in the construction
industry. Specifically, every construction contract awarded by a federal agency must contain industry. Specifically, every construction contract awarded by a federal agency must contain
clauses obligating the prime contractor to (1) pay the subcontractor for “satisfactory clauses obligating the prime contractor to (1) pay the subcontractor for “satisfactory
performance” under the subcontract within seven days of receiving payment from the agency and performance” under the subcontract within seven days of receiving payment from the agency and
(2) pay interest on any amounts that are not paid within the proper time frame.(2) pay interest on any amounts that are not paid within the proper time frame.~~139~~145 The contract The contract
must also obligate the prime contractor to include similar payment and interest penalty terms in must also obligate the prime contractor to include similar payment and interest penalty terms in
its subcontracts, as well as require its subcontractors to impose these terms on its subcontracts, as well as require its subcontractors to impose these terms on their
subcontractors. This latter provision ensures that the payment and interest penalty requirements subcontractors. This latter provision ensures that the payment and interest penalty requirements
flow down to all tiers of construction subcontractors. to all tiers of construction subcontractors.
In addition, required subcontracting plans must incorporate terms obligating the prime contractor In addition, required subcontracting plans must incorporate terms obligating the prime contractor
to notify the agency awarding the contract in writing if a subcontractor is paid a reduced price for to notify the agency awarding the contract in writing if a subcontractor is paid a reduced price for
goods supplied or services completed under the contract, or if payment is made to the goods supplied or services completed under the contract, or if payment is made to the
subcontractor more than 90 days past due. The prime contractor must include the reason for the subcontractor more than 90 days past due. The prime contractor must include the reason for the
~~reduction in payment or failure to pay a subcontractor within 90 days.140 If the contracting officer~~
~~for a covered contract (a contract that requires an acceptable subcontracting plan) determines that~~
~~a prime contractor has a history of unjustified, untimely payments to contractors, the contracting~~
~~officer shall record the contractor’s identity, describe the circumstances under which the~~
~~contractor may be determined to have a history of unjustified, untimely payments to~~
~~subcontractors, and include the contractor’s identity in, and make publicly available through, the~~

~~137~~ 141 SBA, “Subcontracting Assistance Program Post Award,” SOP 60 03 7, p. 12. 142 SBA, “Subcontracting Assistance Program Post Award,” SOP 60 03 7, p. 13. 143 SBA, “Subcontracting Assistance Program Post Award,” SOP 60 03 7, p. 13. Liquidated damages are predetermined SBA, “Subcontracting Assistance Program Post Award,” SOP 60 03 7, p. 13. Liquidated damages are predetermined
sums a contractor must pay the procuring agency for specified contract breaches or performance failures. For additional sums a contractor must pay the procuring agency for specified contract breaches or performance failures. For additional
information and analysis, see CRS Report R45322, information and analysis, see CRS Report R45322, Selected Legal Tools for Maintaining Government Contractor
Accountability, by David H. Carpenter and Kathleen Ann Ruane. , by David H. Carpenter and Kathleen Ann Ruane.
~~138~~144 31 U.S.C. §3903(a); and P.L. 97-177, the Prompt Payment Act. Among other things, a proper invoice contains (1) 31 U.S.C. §3903(a); and P.L. 97-177, the Prompt Payment Act. Among other things, a proper invoice contains (1)
the name of the contractor, the invoice date, and the contract number; (2) a description of the goods rendered and the the name of the contractor, the invoice date, and the contract number; (2) a description of the goods rendered and the
shipping and payment terms; (3) other substantiating documentation or information required under the contract; and (4) shipping and payment terms; (3) other substantiating documentation or information required under the contract; and (4)
the name, title, telephone number, and complete mailing address of the person to whom payment should be sent. 31 the name, title, telephone number, and complete mailing address of the person to whom payment should be sent. 31
U.S.C. §3901(a); and 48 C.F.R. §32.905(b)(1)(i)-(x). The interest rate to be used is that determined by the Secretary of U.S.C. §3901(a); and 48 C.F.R. §32.905(b)(1)(i)-(x). The interest rate to be used is that determined by the Secretary of
the Treasury twice a year under the Contract Disputes Act. 31 U.S.C. §3902(a). the Treasury twice a year under the Contract Disputes Act. 31 U.S.C. §3902(a).
~~139~~145 31 U.S.C. §3905(b); and P.L. 100-496, the Prompt Payment Act Amendments of 1988. 31 U.S.C. §3905(b); and P.L. 100-496, the Prompt Payment Act Amendments of 1988.
~~140 15 U.S.C. §637(d)(13)(A-B); and U.S. Department of the Treasury, Bureau of the Fiscal Service, “Prompt~~
~~Payment,” at https://www.fiscal.treasury.gov/fsservices/gov/pmt/promptPayment/promptPayment_home.htm. Under a~~
~~construction contract, an agency may withhold payment to a prime vendor if it learns that the prime vendor has failed~~
~~to pay subcontractors in accordance with the terms of the contract.~~
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Congressional Research Service 30 An Overview of Small Business Contracting reduction in payment or failure to pay a subcontractor within 90 days.146 If the contracting officer for a covered contract (a contract that requires an acceptable subcontracting plan) determines that a prime contractor has a history of unjustified, untimely payments to contractors, the contracting officer shall record the contractor’s identity, describe the circumstances under which the contractor may be determined to have a history of unjustified, untimely payments to subcontractors, and include the contractor’s identity in, and make publicly available through, the Federal Awardee Performance and Integrity Information System, or any successor.Federal Awardee Performance and Integrity Information System, or any successor.~~141~~147 This This
information is used by federal agencies to “evaluate the business ethics and quality of prospective information is used by federal agencies to “evaluate the business ethics and quality of prospective
contractors competing for Federal contracts and to protect taxpayers from doing business with contractors competing for Federal contracts and to protect taxpayers from doing business with
contractors that are not responsible sources.”contractors that are not responsible sources.”~~142~~148
Accelerated Payments
Federal agencies are permitted to make an accelerated payment up to seven days before the Federal agencies are permitted to make an accelerated payment up to seven days before the
required payment date in a federal contract, or earlier if the agency deems it necessary on a case-required payment date in a federal contract, or earlier if the agency deems it necessary on a case-
by-case basis if, after receiving a proper invoice, it is in the best interest of the government, and by-case basis if, after receiving a proper invoice, it is in the best interest of the government, and
any of the following is true: any of the following is true:
 the invoice in under $2,500;  the invoice in under $2,500;
 the payment is to a small business; or  the payment is to a small business; or
 the payment is related to an emergency, disaster, or military deployment. the payment is related to an emergency, disaster, or military deployment.~~143~~149
In addition, the Secretary of Defense is required, to the fullest extent permitted by law, to In addition, the Secretary of Defense is required, to the fullest extent permitted by law, to
establish an accelerated payment date for its small business prime contractors, with a goal of 15 establish an accelerated payment date for its small business prime contractors, with a goal of 15
days after receipt of a proper invoice for the amount due if a specific payment date is not days after receipt of a proper invoice for the amount due if a specific payment date is not
established by contract.established by contract.~~144~~150
The Secretary of Defense is also required to establish, to the fullest extent permitted by law, an The Secretary of Defense is also required to establish, to the fullest extent permitted by law, an
accelerated payment date for its prime contractors that subcontract with small businesses, with a accelerated payment date for its prime contractors that subcontract with small businesses, with a
goal of 15 days after receipt of a proper invoice for the amount due if a specific payment date is goal of 15 days after receipt of a proper invoice for the amount due if a specific payment date is
not established by contract and the prime contractor agrees to make payments to the subcontractor not established by contract and the prime contractor agrees to make payments to the subcontractor
“in accordance with the accelerated payment date, to the maximum extent practicable, without “in accordance with the accelerated payment date, to the maximum extent practicable, without
any further consideration from or fees charged to the subcontractor.”any further consideration from or fees charged to the subcontractor.”~~145~~
~~Concluding Observations~~
~~The small business contracting programs described in this report generally have strong bipartisan~~
~~support. However, that does not mean that these programs face no opposition or that issues have~~
~~not been raised concerning the impact or operations of specific programs. For example, small~~
~~business advocates have sought policies that reduce or eliminate exclusions that narrow the reach~~
~~of small business contracting preferences and want the SBA to use the total value of all prime~~
~~contract awards in the Small Business Goaling Report.146 Also, critics have questioned some of~~

~~141 15 U.S.C. §637(d)(13)(C-E).~~
~~142~~151 146 15 U.S.C. §637(d)(13)(A-B); and U.S. Department of the Treasury, Bureau of the Fiscal Service, “Prompt Payment,” at https://www.fiscal.treasury.gov/fsservices/gov/pmt/promptPayment/promptPayment_home.htm. Under a construction contract, an agency may withhold payment to a prime vendor if it learns that the prime vendor has failed to pay subcontractors in accordance with the terms of the contract. 147 15 U.S.C. §637(d)(13)(C-E). 148 Department of Defense, General Services Administration, and National Aeronautics and Space Administration, Department of Defense, General Services Administration, and National Aeronautics and Space Administration,
“Federal Acquisition Regulation; FAR Case 2008-027, Federal Awardee Performance and Integrity Information “Federal Acquisition Regulation; FAR Case 2008-027, Federal Awardee Performance and Integrity Information
System,” 75System,” 75 Federal Register 14059, March 23, 2010. 14059, March 23, 2010.
~~143~~149 31 U.S.C. §3903(a)(8); Office of Management and Budget, “Prompt Payment,” 64 31 U.S.C. §3903(a)(8); Office of Management and Budget, “Prompt Payment,” 64 Federal Register 52582-52583, 52582-52583,
September 29, 1999; and 5 C.F.R. §1315.5. September 29, 1999; and 5 C.F.R. §1315.5.
~~144~~150 10 U.S.C. §2307(2)(A); and P.L. 115-232, the John S. McCain National Defense Authorization Act for Fiscal Year 10 U.S.C. §2307(2)(A); and P.L. 115-232, the John S. McCain National Defense Authorization Act for Fiscal Year
2019. 2019.
~~145~~151 10 U.S.C. §2307(2)(B); and P.L. 115-232, the John S. McCain National Defense Authorization Act for Fiscal Year 10 U.S.C. §2307(2)(B); and P.L. 115-232, the John S. McCain National Defense Authorization Act for Fiscal Year
2019. 2019.
~~146 See~~ ~~American Small Business League v. Maria Contreras-Sweet in her capacity as Administrator of the United~~
~~States Small Business Administration, May 3, 2016, at http://www.asbl.com/documents/~~
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Congressional Research Service 31 An Overview of Small Business Contracting Concluding Observations The small business contracting programs described in this report generally have strong bipartisan support. However, that does not mean that these programs face no opposition or that issues have not been raised concerning the impact or operations of specific programs. For example, small business advocates have sought policies that reduce or eliminate exclusions that narrow the reach of small business contracting preferences and want the SBA to use the total value of all prime contract awards in the Small Business Goaling Report.152 Also, critics have questioned some of these programs’ effectiveness, in terms of both promoting small business opportunities to win these programs’ effectiveness, in terms of both promoting small business opportunities to win
federal contracts and a more diversified, robust economy.federal contracts and a more diversified, robust economy.~~147~~153
Many observers judge the relative success or failure of federal efforts to enhance small business Many observers judge the relative success or failure of federal efforts to enhance small business
contracting opportunities by whether the federal government and individual federal agencies meet contracting opportunities by whether the federal government and individual federal agencies meet
the procurement goals in the annual Small Business Goaling Report. In recent years, the federal the procurement goals in the annual Small Business Goaling Report. In recent years, the federal
government has generally met the government-wide goals of awarding 23% of the total value of government has generally met the government-wide goals of awarding 23% of the total value of
all small business eligible prime contract awards to small businesses generally, 5% to SDBs, and all small business eligible prime contract awards to small businesses generally, 5% to SDBs, and
3% to SDVOSBs. However, it has had difficulty meeting the goals of 5% to WOSBs and 3% to 3% to SDVOSBs. However, it has had difficulty meeting the goals of 5% to WOSBs and 3% to
HUBZone small businesses.HUBZone small businesses.~~148~~154
The Small Business Goaling Report is the most convenient measure available to compare federal The Small Business Goaling Report is the most convenient measure available to compare federal
small business contracting performance over time, but it has limitations. For example, the report small business contracting performance over time, but it has limitations. For example, the report
does not include all federal contracts, because some are not deemed to be small business eligible does not include all federal contracts, because some are not deemed to be small business eligible
and others are not recorded in the FPDS-NG. In addition, the report does not evaluate the effect and others are not recorded in the FPDS-NG. In addition, the report does not evaluate the effect
these contracts have on small businesses, industry competitiveness, or the overall economy. As these contracts have on small businesses, industry competitiveness, or the overall economy. As
one group of researchers has argued, one group of researchers has argued,
the entire goal-setting process … is geared to measuring the dollars and contracts awarded the entire goal-setting process … is geared to measuring the dollars and contracts awarded
to small business, and pays little attention to the to small business, and pays little attention to the effect that access to government contracts that access to government contracts
has on small business starts, growth, and wealth generation. Results of the program are also has on small business starts, growth, and wealth generation. Results of the program are also
hard to isolate, difficult to measure, and generally not judged against the next best or other hard to isolate, difficult to measure, and generally not judged against the next best or other
alternative policies [emphasis in original].alternative policies [emphasis in original].~~149~~
~~Comprehensive studies examining the effect of small business contracting preferences on small~~
~~business startups, growth, wealth generation, and industry competitiveness may prove useful for~~
~~congressional oversight. In the meantime, although the Small Business Goaling Report has its~~
~~limitations, it can help policymakers identify programs most in need of examination. For~~
~~example, the SBA has announced that it is focusing additional efforts on promoting the HUBZone~~
~~program to federal contracting officials, primarily due to the continuing difficulties federal~~
~~agencies have had in meeting the 3% goal for HUBZone small businesses.150~~

155 152 See American Small Business League v. Maria Contreras-Sweet in her capacity as Administrator of the United States Small Business Administration, May 3, 2016, at http://www.asbl.com/documents/Filed_Complaint_For_Injunctive_Relief.pdf. Filed_Complaint_For_Injunctive_Relief.pdf.
The federal government awarded more than $508.8 billion in federal contracts in FY2017. About $442.5 billion of that The federal government awarded more than $508.8 billion in federal contracts in FY2017. About $442.5 billion of that
amount was deemed small business eligible. GSA, Federal Procurement Data System—Next Generation, at amount was deemed small business eligible. GSA, Federal Procurement Data System—Next Generation, at
https://www.fpds.gov/fpdsng/ (contract dollar amount); and GSA, Federal Procurement Data System—Next https://www.fpds.gov/fpdsng/ (contract dollar amount); and GSA, Federal Procurement Data System—Next
Generation, “Small Business Goaling Report: Fiscal Year 2017,” at https://www.fpds.gov/downloads/top_requests/Generation, “Small Business Goaling Report: Fiscal Year 2017,” at https://www.fpds.gov/downloads/top_requests/
FPDSNG_SB_Goaling_FY_2017.pdf. FPDSNG_SB_Goaling_FY_2017.pdf.
~~147~~153 For example, see Henry Beale and Nicola Deas, “The HUBZone Report,” prepared for the SBA, Office of For example, see Henry Beale and Nicola Deas, “The HUBZone Report,” prepared for the SBA, Office of
Advocacy, May 2008, pp. i, ii, 124-131, at https://www.sba.gov/sites/default/files/rs325tot.pdf; and Clifford A. Advocacy, May 2008, pp. i, ii, 124-131, at https://www.sba.gov/sites/default/files/rs325tot.pdf; and Clifford A.
Grammich, Thomas R. Edison Jr., Nancy Young Moore, and Edward G. Keating, Grammich, Thomas R. Edison Jr., Nancy Young Moore, and Edward G. Keating, Small Business and Defense
Acquisitions: A Review of Policies and Current Practices (Santa Monica, CA: RAND, 2011), pp. xii, 15, 16, at (Santa Monica, CA: RAND, 2011), pp. xii, 15, 16, at
https://www.rand.org/content/dam/rand/pubs/monographs/2011/RAND_MG443.pdf. https://www.rand.org/content/dam/rand/pubs/monographs/2011/RAND_MG443.pdf.
~~148~~154 SBA, “The Federal Government Achieves Small Business Contracting Goal for the Sixth Consecutive Year with SBA, “The Federal Government Achieves Small Business Contracting Goal for the Sixth Consecutive Year with
Record-Breaking $120 Billion to Small Businesses,” at https://www.sba.gov/about-sba/sba-newsroom/press-releases-Record-Breaking $120 Billion to Small Businesses,” at https://www.sba.gov/about-sba/sba-newsroom/press-releases-
media-advisories/federal-government-achieves-small-business-contracting-goal-sixth-consecutive-year-record-media-advisories/federal-government-achieves-small-business-contracting-goal-sixth-consecutive-year-record-
breaking. breaking.
~~149~~155 Clifford A. Grammich, Thomas R. Edison Jr., Nancy Young Moore, and Edward G. Keating, Clifford A. Grammich, Thomas R. Edison Jr., Nancy Young Moore, and Edward G. Keating, Small Business and
Defense Acquisitions: A Review of Policies and Current Practices (Santa Monica, CA: RAND, 2011), p. 15, at (Santa Monica, CA: RAND, 2011), p. 15, at
Congressional Research Service 32 An Overview of Small Business Contracting Comprehensive studies examining the effect of small business contracting preferences on small business startups, growth, wealth generation, and industry competitiveness may prove useful for congressional oversight. In the meantime, although the Small Business Goaling Report has its limitations, it can help policymakers identify programs most in need of examination. For example, the SBA has announced that it is focusing additional efforts on promoting the HUBZone program to federal contracting officials, primarily due to the continuing difficulties federal agencies have had in meeting the 3% goal for HUBZone small businesses.156 https://www.rand.org/content/dam/rand/pubs/monographs/2011/RAND_MG443.pdf. 156~~https://www.rand.org/content/dam/rand/pubs/monographs/2011/RAND_MG443.pdf.~~
~~150~~ SBA, SBA, FY2019 Congressional Budget Justification and FY2017 Annual Performance Report, pp. 75-77, at , pp. 75-77, at
https://www.sba.gov/sites/default/files/aboutsbaarticle/SBA_FY_19_508-Final-FINAL.PDF. https://www.sba.gov/sites/default/files/aboutsbaarticle/SBA_FY_19_508-Final-FINAL.PDF.
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An Overview of Small Business Contracting

Author Information

Robert Jay Dilger Robert Jay Dilger

Senior Specialist in American National Government Senior Specialist in American National Government

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