An Overview of Small Business Contracting

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An Overview of Small Business Contracting
~~June 24~~August 2, 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, Small business contracting programs generally have strong bipartisan support. However, ~~that~~th at does not mean that these 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 For example, small business advocates note that implementing regulations in the Federal Acquisition ~~Regulation~~Regu lation (FAR) (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 governmentSmall 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 wide goals of awarding 23% of the total value of all small business eligible prime contract awards to small ~~businesses~~business es, 5% to , 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 The Small Business Goaling Report is the most convenient measure available to compare federal ~~small~~sma ll business contracting 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 the existence of thousands of ~~small~~ smal business concerns was being threatened by war-induced business concerns was being threatened by war-induced
shortages of materials coupled with an inabilityshortages of materials coupled with an inability to obtain defense contracts or financial to obtain defense contracts or financial
assistance.1 Concerned that many assistance.1 Concerned that many ~~small~~ smal businesses might fail without government assistance, in businesses might fail without government assistance, in
1953, Congress passed and President Dwight Eisenhower signed into law the 1953, Congress passed and President Dwight Eisenhower signed into law the ~~Small~~ Smal Business Act Business Act
(P.L. 83-163), which authorized the (P.L. 83-163), which authorized the ~~Small~~ Smal Business Administration (SBA).2 The act specifies that Business Administration (SBA).2 The act specifies that
it is the declared policy of Congress to promote the interests of it is the declared policy of Congress to promote the interests of ~~small~~ smal businesses to “preserve free 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 enterprise was to insure that ~~small~~ smal businesses received a “fair proportion” of federal contracts and 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,
andand ~~protect, insofar as is possible, the interests of small-business concerns in order~~ protect, insofar as is possible, the interests of small-business concerns in order to 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-businesswith 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~~ 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 the
overall economy of the Nation.3 overall economy of the Nation.3
Congress indicated that its intent in supporting Congress indicated that its intent in supporting ~~small~~ smal businesses was not to “favor businesses was not to “favor ~~small~~ smal business 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 SBAoperation of the SBA is to equalize the scales when necessary to guarantee the continued vigor of 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 More recently, a House committee report indicated that the primary rationale for ~~small~~ smal business business
contracting programs contracting programs
is the is the ~~positive economic benefits they provide, as well as assisting~~ positive economic benefits they provide, as well as assisting small businesses 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
seenseen in in two primary areas—market competition andtwo primary areas—market competition and local economiclocal economic development.development. First, 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 higherin higher ~~quality, greater product variety, and lower prices. Second,~~ quality, greater product variety, and lower prices. Second, these contracting these contracting
initiativesinitiatives ~~lower barriers to entry in a wide range of markets for small businesses. This~~

~~1 U.S.~~ lower barriers to entry in a wide range of markets for small businesses. This 1 U.S. Congress, Senate Select Committee on Small Business,Congress, Senate Select Committee on Small Business, Small Business Administration, committee print, 83rd , committee print, 83rd
Cong., 1st sess.,Cong., 1st sess., ~~August~~ August 10, 1953 (Washington: GPO, 1953), p. iii. Also, see U.S.10, 1953 (Washington: GPO, 1953), p. iii. Also, see U.S. Congress, HouseCongress, House Committee on Committee on
Banking and Currency, Banking and Currency, ~~Small~~Sm all Business Act of 1953, report to accompany H.R. 5141, , report to accompany H.R. 5141, ~~83rd~~83 rd Cong., 1st sess., May 28, Cong., 1st sess., May 28,
1953, H.Rept. 83-494 (Washington: GPO, 1953). 1953, H.Rept. 83-494 (Washington: GPO, 1953).
2 On July 2 On July 31, 1951, the Small Defense Plants Administration (SDPA) was31, 1951, the Small Defense Plants Administration (SDPA) was created by an amendment to P.L. 81-774, the created by an amendment to P.L. 81-774, the
Defense Production Act of 1950, and wasDefense Production Act of 1950, and was given “given “ primary responsibility in the field of channeling defense contracts to primary responsibility in the field of channeling defense contracts to
small producers.” As hostilities with Korea subsided,small producers.” As hostilities with Korea subsided, so didso did the perceived need for the SDPA. Congressthe perceived need for the SDPA. Congress granted the granted the
SmallSmall ~~Business~~ Business Administration (SBA) similar authority to promote small business contracting with federal agencies, Administration (SBA) similar authority to promote small business contracting with federal agencies,
but with all federal agencies, asbut with all federal agencies, as opposed to focusing on the Department of Defense. See U.S.opposed to focusing on the Department of Defense. See U.S. Congress,Congress, Senate Select Senate Select
Committee on Small Business,Committee on Small Business, ~~Small Business Administration~~ Sm all Business Adm inistration, committee print, 83rd Cong., 1st sess., August, committee print, 83rd Cong., 1st sess., August 10, 1953 10, 1953
(Washington: GPO, 1953), p. iv. (Washington: GPO, 1953), p. iv.
3 15 U.S.C. 3 15 U.S.C. §631(a); and P.L. 83-163, the Small Business§631(a); and P.L. 83-163, the Small Business Act of 1953 (as amended), see https://www.govinfo.gov/app/Act of 1953 (as amended), see https://www.govinfo.gov/app/
details/COMPS-1834. details/COMPS-1834.
4 U.S. 4 U.S. Congress, Senate Select Committee on Small Business,Congress, Senate Select Committee on Small Business, Small Business Administration, committee print, 83rd , committee print, 83rd
Cong., 1st sess.,Cong., 1st sess., ~~August~~ August 10, 1953 (Washington: GPO, 1953), p. v. 10, 1953 (Washington: GPO, 1953), p. v.
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provides provides ~~greater market access for small firms’ goods and services. From an~~ greater market access for small firms’ goods and services. From an economic economic
perspective, such accessperspective, such access is critical to generating positive macroeconomic benefits, 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 Over the years, Congress has approved legislation to support ~~small~~ smal business in various ways. For business in various ways. For
example, the SBA administers several types of programs to support example, the SBA administers several types of programs to support ~~small~~ smal businesses, including businesses, including
loan guaranty and venture capital programs to enhance loan guaranty and venture capital programs to enhance ~~small~~ smal business access to capital; business access to capital;
contracting programs to increase contracting programs to increase ~~small~~ smal business opportunities in federal contracting; direct loan 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 smal ~~and small~~ business management and technical assistance training programs to assist business 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 In recent years, congressional interest in the SBA’s programs has become ~~especially~~especial y acute given 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 the national economy ~~generally and small~~ general y and smal businesses in particular. 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 procurement offices involved in promoting federal contracting and subcontracting with ~~small~~
smal businesses, businesses, ~~small~~ smal disadvantaged businesses (SDBs), SDBs participating the SBA’s “8(a) disadvantaged businesses (SDBs), SDBs participating the SBA’s “8(a)
Program,” Program,” ~~Historically Underutilized~~ Historical y Underutilized Business Zone (HUBZone)Business Zone (HUBZone) ~~small~~ smal businesses, women-businesses, women-
owned owned ~~small~~ smal businesses (WOSBs), and service-disabled veteran-owned businesses (WOSBs), and service-disabled veteran-owned ~~small~~ smal businesses businesses
(SDVOSBs). The SBA administers many, but not (SDVOSBs). The SBA administers many, but not ~~all~~al , of these programs. , 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 subcontracting with ~~small~~ smal businesses: businesses:
1. The requirement that federal agencies 1. The requirement that federal agencies ~~generally~~ general y reserve contracts that have an 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 exclusively for ~~small~~ smal businesses unless the contracting officer is unable to obtain businesses unless the contracting officer is unable to obtain
offers from two or more offers from two or more ~~small~~ smal businesses that are competitive with market prices 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 2. The establishment of ~~small~~ smal business procurement goals, both government-wide business procurement goals, both government-wide
and agency specific, to promote the awarding of contracts to and agency specific, to promote the awarding of contracts to ~~small~~ smal businesses. businesses.
3. The requirement that federal agencies 3. The requirement that federal agencies ~~generally~~ general y set aside contracts that have an set aside contracts that have an
anticipated value exceeding the simplified anticipated value exceeding the simplified acquisition threshold exclusively for acquisition threshold exclusively for
~~small~~ smal businesses when there is a reasonable expectation that offers businesses when there is a reasonable expectation that offers ~~will be~~
wil be obtained from at least two responsible obtained from at least two responsible ~~small~~ smal businesses offering the products of businesses offering the products of
different different ~~small~~ smal businesses (Rule of Two) and the award businesses (Rule of Two) and the award ~~will~~ wil be made at a fair be made at a fair
market price.7 market price.7

~~5 U.S. Congress, House~~ 5 U.S. Congress, House Committee on Small Business,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 6 Federal Acquisition Regulation (FAR) §19.502-2. Regulation (FAR) §19.502-2.
7 “For acquisitions of supplies7 “For acquisitions of supplies or services that have an anticipated dollar value exceedingor services that have an anticipated dollar value exceeding the simplified acquisition the simplified acquisition
threshold …threshold … the contracting officer shall first consider an acquisition for the small businessthe contracting officer shall first consider an acquisition for the small business socioeconomic contracting socioeconomic contracting
programs (i.e., 8(a), HUBZone, SDVOSB,programs (i.e., 8(a), HUBZone, SDVOSB, or WOSBor WOSB programs) before considering a small businessprograms) before considering a small business set ~~set~~-aside (see -aside (see
19.502-2(b)). However, if a requirement has been accepted by the Small19.502-2(b)). However, if a requirement has been accepted by the Small ~~Business~~ Business Administration (SBA) under the 8(a) Administration (SBA) under the 8(a)
Program, it must remain in the 8(a) Program unless the SBAProgram, it must remain in the 8(a) Program unless the SBA ~~agrees~~ agrees to its release in accordance with 13 C.F.R.to its release in accordance with 13 C.F.R. parts 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 4. The authority provided federal agencies to make sole-source awards to ~~small~~
smal 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 source is available, under urgent and ~~compelling~~compel ing circumstances). 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 contracting preference to, specific types of ~~small~~ smal businesses (e.g., 8(a) businesses (e.g., 8(a) ~~small~~
smal businesses, HUBZone businesses, HUBZone ~~small~~ smal businesses, WOSBs, and SDVOSBs) and to specific businesses, WOSBs, and SDVOSBs) and to specific
types of businesses types of businesses ~~generally~~general y (e.g., the Buy Indian Act). (e.g., the Buy Indian Act).
It discusses the SBA’s oversight and responsibilities concerning the It discusses the SBA’s oversight and responsibilities concerning the ~~small~~ smal business goaling business goaling
program, program, ~~small~~ smal business mentor-protégé programs, the 7(j) management and training program, 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 It also discusses the role of the Office of ~~Small~~ Smal and Disadvantaged Business Utilization and Disadvantaged Business Utilization
(OSDBU), located in each federal agency, in promoting contracting with (OSDBU), located in each federal agency, in promoting contracting with ~~small~~ smal businesses, and 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 specialists, in promoting ~~small~~ smal business contracting opportunities. business contracting opportunities.
This report concludes with a brief discussion of the strong bipartisan support for This report concludes with a brief discussion of the strong bipartisan support for ~~small~~ smal business 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, example, ~~small~~ smal business advocates note that implementing regulations in the Federal Acquisition business advocates note that implementing regulations in the Federal Acquisition
Regulation (FAR) narrow the reach (and impact) of some Regulation (FAR) narrow the reach (and impact) of some ~~small~~ smal business contracting preferences 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 from FAR requirements pertaining to ~~small~~ smal business contracting.8 Advocates want the federal business contracting.8 Advocates want the federal
government to enact policies that reduce or eliminategovernment to enact policies that reduce or eliminate exclusions that narrow the reach of exclusions that narrow the reach of ~~small~~

~~8 FAR~~ smal 8 FAR §8.405-5 indicates that the small business§8.405-5 indicates that the small business preference programs are not mandatory in this subpart (blanket preference programs are not mandatory in this subpart (blanket
purchase agreements and Federal Supplypurchase agreements and Federal Supply Schedules).Schedules). ~~Federal~~ Federal agencies may, at their discretion, set asideagencies may, at their discretion, set aside orders under orders under
the Federal Supplythe Federal Supply ~~Schedules~~ Schedules and blanket purchase agreements for small businesses.and blanket purchase agreements for small businesses.
~~The~~ T he Federal Supply Federal Supply ~~Schedule~~ Schedule program “program “ provides Federal agencies with a simplified process of acquiringprovides Federal agencies with a simplified process of acquiring commercial commercial
suppliessupplies and services in varying quantities whileand services in varying quantities while obtaining volume discounts. Indefiniteobtaining volume discounts. Indefinite -delivery contracts are awarded -delivery contracts are awarded
usingusing competitive procedures to firms. competitive procedures to firms. ~~The~~T he firms provide supplies and services at stated prices for given periods of firms provide supplies and services at stated prices for given periods of
time, for delivery within a stated geographic area such astime, for delivery within a stated geographic area such as the 48 contiguous states, the District of Columbia, Alaska, the 48 contiguous states, the District of Columbia, Alaska,
Hawaii,Hawaii, and overseas. …Although GSAand overseas. …Although GSA [General[General Services Administration] awardsServices Administration] awards most Federal Supplymost Federal Supply Schedule Schedule
contracts, it may authorize other agencies to award schedulecontracts, it may authorize other agencies to award schedule contracts and publish schedules.contracts and publish schedules. For example, the For example, the
Department of Veterans Affairs awardsDepartment of Veterans Affairs awards ~~schedule~~ schedule contracts for certain medical and nonperishable subsistencecontracts for certain medical and nonperishable subsistence items.items. ” ”
FARFAR §38.101. §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 establishingservices by establishing “charge accounts” with qualified“charge accounts” with qualified ~~sources~~ sources of supply. …BPAsof supply. …BPAs ~~should~~ should be establishedbe established for usefor use by by
an organization responsible for providing suppliesan organization responsible for providing supplies for its own operations or for other offices, installations, projects, or for its own operations or for other offices, installations, projects, or
functions. Suchfunctions. Such organizations, for example, may be organized supply points, separate independent or detached field organizations, for example, may be organized supply points, separate independent or detached field
parties, or one-person posts or activities. …parties, or one-person posts or activities. …~~The~~T he use of BPAs does not exempt an agency from the responsibility for use of BPAs does not exempt an agency from the responsibility for
keeping obligations and expenditures within availablekeeping obligations and expenditures within available funds.” FARfunds.” FAR §13.303§13.303 -1. -1.
For an argument advocating regulatory changes that might require the mandatory application of set For an argument advocating regulatory changes that might require the mandatory application of set -asides to orders in -asides to orders in
the same manner that law and regulation currently require for contracts, see Interagency the same manner that law and regulation currently require for contracts, see Interagency ~~Task~~T ask Force on Federal 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~~T he U.S. Supreme U.S. Supreme Court ruledCourt ruled in 2016, in in 2016, in ~~Kingdomware~~Kingdom ware Technologies, Inc. v. United States, that the Department of , that the Department of
Veterans Affairs (VA)Veterans Affairs (VA) cannot continue its former practice of making purchases through the Federal Supplycannot continue its former practice of making purchases through the Federal Supply Schedules Schedules
without first considering whether the contract could be set asidewithout first considering whether the contract could be set aside for veteran-owned small businessesfor veteran-owned small businesses (VSOBs)(VSOBs) ~~due~~ due to to
languagelanguage in P.L. 109-461, the Veterans Benefits, Health Care, and Information Technology Act of 2006, that required in P.L. 109-461, the Veterans Benefits, Health Care, and Information Technology Act of 2006, that required
VAVA specifically to promote contract awards to VOSBs.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 in terms of promoting both ~~small~~ smal business opportunities to win federal contracts and a more 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.11several 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 Classification System (NAICS) code. Businesses ~~generally~~general y have a primary NAICS code, and may have a primary NAICS code, and may
have multiplehave multiple NAICS codes if they NAICS codes if they ~~sell~~ sel multiple products and services.12multiple products and services.12
Businesses that identify themselves as a Businesses that identify themselves as a ~~small~~ smal business in SAM must (1) meet the business in SAM must (1) meet the ~~Small~~ Smal Business Business
Act’s definition of a Act’s definition of a ~~small~~ smal business and (2) not exceed size standards established, and updated business and (2) not exceed size standards established, and updated
~~periodically~~ periodical y, by the SBA.13 , by the SBA.13
~~The Small~~ The Smal Business Act defines a Business Act defines a ~~small~~ smal business as one thatbusiness 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 Beale9 For example, see Henry Beale and Nicola Deas, “and Nicola Deas, “~~The~~T he HUBZone Report,” prepared for the SBA, Office of Advocacy, 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~~T homas R. Edison Jr., Nancy Young Moore, and Edward R. Edison Jr., Nancy Young Moore, and Edward G. G. Keating, Keating, ~~Small~~Sm all Business and Defense Acquisitions: A
Review of Policies and Current Practices (Santa Monica, CA: RAND, (Santa Monica, CA: RAND, 2011), pp. xii, 15, 16, at https://www.rand.org/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, 10 SBA, “Federal Contracting Guide:“Federal Contracting Guide: ~~Basic~~ Basic Requirements,” at https://www.sba.gov/federal-contracting/contracting-Requirements,” at https://www.sba.gov/federal-contracting/contracting-
guide/basic-requirements.guide/basic-requirements. For additional information and analysis, see CRSFor additional information and analysis, see CRS Report R44490, Report R44490, Unique Identification
Codes for Federal Contractors: DUNS ~~Numbers~~Num bers and CAGE Codes, by, by L. Elaine Halchin; and CRSL. Elaine Halchin; and CRS Report RS22536, Report RS22536,
Overview of the Federal ~~Procurement~~Procurem ent Process and Resources, by L. Elaine Halchin. , by L. Elaine Halchin.
11 SBA, 11 SBA, “Register with SAM,”“Register with SAM,” at https://www.sba.gov/federal-contracting/contracting-guide/basic-at https://www.sba.gov/federal-contracting/contracting-guide/basic-
requirements#section-header-8. requirements#section-header-8.
12 U.S.12 U.S. ~~Bureau~~ Bureau of the Census,of the Census, “North American Industry Classification System,” at https://www.census.gov/eos/www/“North American Industry Classification System,” at https://www.census.gov/eos/www/
naics/. naics/.
13 P.L. 111-240, the Small Business 13 P.L. 111-240, the Small Business ~~Jobs~~ Jobs Act of 2010, requires the SBAAct of 2010, requires the SBA to conduct a detailedto conduct a detailed review of not less than review of not less than
one-third of the SBA’sone-third of the SBA’s industry sizeindustry size standards every 18 months beginning on the new law’sstandards every 18 months beginning on the new law’s date of enactment date of enactment
(September 27, 2010) and ensure that each size standard is reviewed(September 27, 2010) and ensure that each size standard is reviewed at least once every five years. at least once every five years.
14 15 U.S.C.14 15 U.S.C. §632(a); and 13 C.F.R.§632(a); and 13 C.F.R. §121.105. Affiliations between businesses, or relationships allowing one party §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 becontrol or the power of control over another, generally count in size determinations. Businesses can thus be determined 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 The ~~Small~~ Smal Business Act authorizes the SBABusiness Act authorizes the SBA to establish size standards to ensure that only to establish size standards to ensure that only ~~small~~
smal 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 SBAdetermine SBA program eligibility: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 eligibilityspecific size standards are used to determine eligibility for federal for federal ~~small~~ smal business contracting business contracting
purposes. purposes.
The SBA The SBA determines if a business is determines if a business is ~~small~~ smal by comparing that business’s economic characteristics by comparing that business’s economic characteristics
((~~typically~~typical y number of employees or average annual receipts) to size standards listed in the SBA’s number of employees or average annual receipts) to size standards listed in the SBA’s
Table of Table of ~~Small~~ Smal Business Size Standards. The table has size standards for 1,036 industrial 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 applicable size standard for their primary industry do not meet the requirement of being ~~small~~smal . .
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 of firms.17 The SBA also considers the ability of ~~small~~ smal businesses to compete for federal 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 the industries and the interests of ~~small~~ smal businesses, including technological change, competition businesses, including technological change, competition
among industries, industry growth trends, and impacts of size standard revisions on among industries, industry growth trends, and impacts of size standard revisions on ~~small~~
smal businesses.”18 ~~businesses.”18~~

to be other than small becauseto be other than small because of their involvement in joint ventures, subcontracting arrangements, or franchise or 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.exceed the pertinent size threshold. See 13 C.F.R. §121.103. §121.103.
15 For additional information and analysis of the SBA’s 15 For additional information and analysis of the SBA’s size standards, see CRSsize standards, see CRS Report R40860, Report R40860, Small Business Size
Standards: A Historical Analysis of ~~Contemporary~~Contem porary Issues, by Robert Jay Dilger. , by Robert Jay Dilger.
~~16 The~~16 T he SBA’s SBA’s 7(a) loan guarantee program allows7(a) loan guarantee program allows ~~businesses~~ businesses to qualify as smallto qualify as small if they meet the SBA’sif they meet the SBA’s size standard size standard
for the industry in which the applicant is primarily engaged,for the industry in which the applicant is primarily engaged, ~~or a maximum~~ or a m aximum tangible net worth of not more than $15 tangible net worth of not more than $15
million and average after-tax net income after federal taxes (excluding any carrymillion and average after-tax net income after federal taxes (excluding any carry -over losses) of not more than $5 -over losses) of not more than $5
million for two full fiscalmillion for two full fiscal years before the date of application. 15 U.S.C. §632(a)(2years before the date of application. 15 U.S.C. §632(a)(2 -3) and 15 U.S.C. §632(a)(5)(B). -3) and 15 U.S.C. §632(a)(5)(B).
BusinessesBusinesses participating in the SBA’sparticipating in the SBA’s 504/Certified Development Company (504/CDC) loan guaranty program are 504/Certified Development Company (504/CDC) loan guaranty program are
deemeddeemed small if they did not have a tangible net worth in excess of $15 million and didsmall if they did not have a tangible net worth in excess of $15 million and did not have an average net income not have an average net income
in excess of $5 million after taxes (excludingin excess of $5 million after taxes (excluding any carryany carry -over losses) for the preceding two years before the date of -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~~ T he SBA’s Small Business Investment Company (SBIC) program allowsInvestment Company (SBIC) program allows ~~businesses~~ businesses to qualify asto qualify as small if they meet the small if they meet the
SBA’sSBA’s size standard for the industry in which the applicant is primarily engaged,size standard for the industry in which the applicant is primarily engaged, or a maximum tangible net worth of 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.million. 15 U.S.C. §662(12)(A-B); and SBA,§662(12)(A-B); and SBA, ~~“Small Business Size~~ “ Small Business Size Standards:Standards: Inflation Adjustment to Monetary Based Inflation Adjustment to Monetary Based
SizeSize Standards,”Standards,” 79 79 Federal Register 33647-33669, June 12, 2014. 33647-33669, June 12, 2014.
17 SBA,17 SBA, Office of Government Contracting and BusinessOffice of Government Contracting and Business Development, 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%SBA%20Size%20Standards%20Methodology%20April%~~2011~~2 011%2C%202019.pdf (hereinafter SBA, Office of %2C%202019.pdf (hereinafter SBA, Office of
Government Contracting and BusinessGovernment Contracting and Business Development, Development, SBA Size Standards Methodology, April 2019). , April 2019).
18 SBA,18 SBA, Office of Government Contracting and BusinessOffice of Government Contracting and Business Development, Development, SBA Size Standards Methodology, April 2019, , April 2019,
p. 1. Any changes to size standards must follow the rulemaking proceduresp. 1. Any changes to size standards must follow the rulemaking procedures of the Administrative Procedure Act. A of the Administrative Procedure Act. A
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Historically, the SBA Historically, the SBA has used the number of employees to determine if manufacturing and has used the number of employees to determine if manufacturing and
mining companies are mining companies are ~~small~~ smal (ranging from fewer than 50 employees for some industries to fewer (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 from no more than $1 ~~million~~ mil ion for some industries to no more than $40 for some industries to no more than $40 ~~million~~mil ion for others).19 for others).19
Federal Agencies
To make it easier to determine if an offeror meets the SBA’s definition of a To make it easier to determine if an offeror meets the SBA’s definition of a ~~small~~ smal business, prior 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 industry accounting for the greatest percentage of the contract price.”21 If a solicitation ~~calls~~cal s for for
more than one item and more than one item and ~~allows~~al ows offers to be submitted on any or offers to be submitted on any or ~~all~~ al of the items, “an offeror must of the items, “an offeror must
meet the size standard for each item it offers to furnish.”22 If a solicitation meet the size standard for each item it offers to furnish.”22 If a solicitation ~~calling~~cal ing for more than for more than
one item requires offers on one item requires offers on ~~all~~ al or none of the items, “an offeror may qualify as a or none of the items, “an offeror may qualify as a ~~small~~ smal business 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 With several notable exceptions (e.g., HUBZone ~~small~~ smal businesses, SBA 8(a) program businesses, SBA 8(a) program
participants, and veteran-owned participants, and veteran-owned ~~small~~ smal businesses [VOSBs] and SDVOSBs seeking contracts with businesses [VOSBs] and SDVOSBs seeking contracts with
the Department of Veterans Affairs), businesses the Department of Veterans Affairs), businesses ~~generally~~general y self-certify their status as self-certify their status as ~~small~~ smal when 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 proposal that it is a ~~small~~ smal business unless “(1) another offeror or interested party business unless “(1) another offeror or interested party ~~challenges~~chal enges the the
concern’s concern’s ~~small~~ smal business representation or (2) the contracting officer has a reason to question the business representation or (2) the contracting officer has a reason to question the
representation.”24representation.”24
If an offeror’s If an offeror’s ~~small~~ smal business status is business status is ~~challenged~~chal enged, the contracting officer is , the contracting officer is ~~generally not allowed~~general y not al owed
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~~ initial y reviews the protest.26 The Area Office is required, by regulation, to determine the reviews the protest.26 The Area Office is required, by regulation, to determine the

proposed rule changing a sizeproposed rule changing a size standard isstandard is first publishedfirst published in the in the Federal Register, allowing, allowing for publicfor public comment. It must comment. It must
includeinclude documentation establishing that a significant problem exists that requires a revision of the size standard, plusdocumentation establishing that a significant problem exists that requires a revision of the size standard, plus an an
economic analysis of the change. Comments from the public, pluseconomic analysis of the change. Comments from the public, plus any other new information, are reviewed and any other new information, are reviewed and
evaluated before a final rule is promulgated establishingevaluated before a final rule is promulgated establishing a newa new size standard. size standard.
19 SBA, 19 SBA, Office of Government Contracting and BusinessOffice of Government Contracting and Business Development, Development, SBA Size Standards Methodology, April 2019, , April 2019,
p. 28. p. 28.
20 FAR20 FAR §19.102(c). §19.102(c).
21 FAR21 FAR §19.102(d). §19.102(d).
22 FAR22 FAR §19.102(e). §19.102(e).
23 FAR23 FAR §19.102(e). §19.102(e).
24 FAR24 FAR §19.301-1(b). §19.301-1(b).
25 25 ~~The~~T he contracting officer may award the contract if he or she “ contracting officer may award the contract if he or she “ determines in writing that an award must be made to 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 FAR26 FAR §19.302(c)(1). “An offeror, the SBA, or another interested party may protest the small business§19.302(c)(1). “An offeror, the SBA, or another interested party may protest the small business representation 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 determination ~~will~~ wil be disadvantageous to the government.”28be 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 OHAAppeals (OHA). If the OHA accepts the appeal for consideration and finds the protested concern accepts the appeal for consideration and finds the protested concern
to be ineligibleto be ineligible for award, the contracting officer must “terminate the contract unless termination 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 [aforementioned] written determination. However, the contracting officer ~~shall~~ shal not exercise any 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
eligibleeligible for a specific award after the SBA has determined that it is not a for a specific award after the SBA has determined that it is not a ~~small~~ smal business, even if business, even if
the concern takes action to meet the definition of a the concern takes action to meet the definition of a ~~small~~ smal business.30business.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 a Federal department or agency having contracting authority ~~shall~~ shal facilitate the maximum facilitate the maximum
participation of participation of ~~small~~ smal business concerns as prime contractors, subcontractors, and suppliers.” To 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.” FARthe contracting officer, or the SBA.” FAR §19.302(a)(2). “§19.302(a)(2). “ The protest, or confirmation if the protest was initiated 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. allegation that the offeror is not small. ~~The~~T he SBA will SBA will ~~dismiss~~ dismiss any protest that does not contain specific grounds for the any protest that does not contain specific grounds for the
~~protest~~prot est.” FAR §19.302(c)(2). “.” FAR §19.302(c)(2). “ The protest shall include a referral letter written by the contracting officer with The protest shall include a referral letter written by the contracting officer with
information pertaining to the solicitation.” FAR §19.302(c)(3). “information pertaining to the solicitation.” FAR §19.302(c)(3). “ In order to affect a specific solicitation, a protest must In order to affect a specific solicitation, a protest must
be timely.” FAR §19.302(d). “be timely.” FAR §19.302(d). “To T o be timely, a protest … must be received … be timely, a protest … must be received … by the close of businessby the close of business of the fifth of the fifth
businessbusiness day after bidday after bid opening (in sealedopening (in sealed ~~bid~~ bid acquisitions) or receipt of the special notification from the contracting acquisitions) or receipt of the special notification from the contracting
officer that identifies the apparently successful offeror (in negotiated acquisitions).” FARofficer that identifies the apparently successful offeror (in negotiated acquisitions).” FAR §19.302(d)(1). “§19.302(d)(1). “ …a protest …a protest
filed by the contracting officer or the SBA is generally alwaysfiled by the contracting officer or the SBA is generally always considered timely whether filed before or after award.” considered timely whether filed before or after award.”
FARFAR §19.302(d)(2). §19.302(d)(2).
27 FAR 27 FAR §19.302(f)(1). §19.302(f)(1).
28 FAR28 FAR §19.302(g)(2). §19.302(g)(2).
29 FAR29 FAR §19.302(h). §19.302(h).
30 FAR30 FAR §19.301-1(c). §19.301-1(c).
31 13 C.F.R. §121.108; 18 U.S.C.31 13 C.F.R. §121.108; 18 U.S.C. §287; and 18 U.S.C.§287; and 18 U.S.C. §1001. For additional information and analysis, see§1001. For additional information and analysis, see ~~CRS~~ CRS Report Report
R45322, R45322, Selected Legal Tools for Maintaining ~~Government~~Governm ent Contractor Accountability, by David H. Carpenter and , by David H. Carpenter and
Kathleen Ann Ruane. Kathleen Ann Ruane.
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1. “Divide 1. “Divide proposed acquisitions of supplies and services (except construction) into proposed acquisitions of supplies and services (except construction) into
reasonably reasonably ~~small~~ smal lots (not less than economic production runs) to permit offers 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 2. “Plan acquisitions such that, if practicable, more than one ~~small~~ smal business concern 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 SBAguaranteed by the SBA against loss under 15 U.S.C. §694b [against loss under 15 U.S.C. §694b [~~generally $6.5~~
~~million, or $10 million~~ general y $6.5 mil ion, or $10 mil ion if the contracting officer certifies that the higher amount 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 3. “Ensure that delivery schedules are established on a realistic basis that ~~will~~
wil encourage encourage ~~small~~ smal business participation to the extent consistent with the actual business participation to the extent consistent with the actual
requirements of the Government.” requirements of the Government.”
4. “Encourage prime contractors to subcontract with 4. “Encourage prime contractors to subcontract with ~~small~~ smal business concerns business concerns
[primarily through the agency’s role in negotiating an acceptable [primarily through the agency’s role in negotiating an acceptable ~~small~~ smal business 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 $700,000 or $1.5 ~~million~~mil ion for construction contracts].”32 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 supplies or services currently being provided by a ~~small~~ smal business and the 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 which makes it unlikely that ~~small~~ smal businesses can compete for the prime contract; businesses can compete for the prime contract;
~~(ii~~ (i ) The proposed acquisition is for construction and seeks to package or ) 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 makes it unlikely that ~~small~~ smal businesses can compete for the prime contract; or businesses can compete for the prime contract; or
((~~iii)~~ i i) The proposed acquisition is for a consolidated or bundled requirement.… The proposed acquisition is for a consolidated or bundled requirement.…
The contracting officer The contracting officer ~~shall provide all~~ shal provide al information relative to the justification 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 7.107-4.33 The contracting officer ~~shall~~ shal also provide the same information to the also provide the same information to the

32 Subcontracting plans are not required from small businesses,32 Subcontracting plans are not required from small businesses, for personal services contracts, for contracts or contract 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, “requirements of the subcontracting plan is in material breach of its contract.” FAR §19.702(c). In addition, “ Any Any
contractor receiving a contract with a value greater than the simplified acquisition threshold must agreecontractor receiving a contract with a value greater than the simplified acquisition threshold must agree in the contract in the contract
that small business,that small business, veteran-owned small business,veteran-owned small business, service-disabledservice-disabled veteran-owned small business,veteran-owned small business, HUBZone small HUBZone small
business,business, small disadvantagedsmall disadvantaged business,business, and women-ownedand women-owned small businesssmall business concerns willconcerns will have the maximum 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 33 FAR §7.017-4(2)(b) states “…when the proposed acquisition strategy involves substantial bundling,§7.017-4(2)(b) states “…when the proposed acquisition strategy involves substantial bundling, the agency shall the agency shall
document in its strategy—(1) document in its strategy—(1) ~~The~~T he specific benefits anticipated to be derived from substantial bundling; specific benefits anticipated to be derived from substantial bundling; (2) An (2) An
assessment of the specific impediments to participation by small businessassessment of the specific impediments to participation by small business concerns as contractors that result from concerns as contractors that result from
substantial bundling;substantial bundling; (3) Actions designed(3) Actions designed to maximize small businessto maximize small business participation as contractors, including participation as contractors, including ~~provisions~~pr ovisions
that encourage small businessthat encourage small business teaming; (4) Actions designedteaming; (4) Actions designed to maximize small businessto maximize small business participation as subcontractors participation as subcontractors
(including(including suppliers) at any tier under the contract, or order, that may be awardedsuppliers) at any tier under the contract, or order, that may be awarded to meet the requirements; (5) to meet the requirements; (5) ~~The~~
~~determination~~T he determinat ion that the anticipated benefits of the proposed bundled that the anticipated benefits of the proposed bundled contract or order justify its use;contract or order justify its use; and (6) Alternative and (6) Alternative
strategies that wouldstrategies that would ~~reduce~~ reduce or minimize the scope of the bundling,or minimize the scope of the bundling, and the rationale for not choosing those and the rationale for not choosing those
alternatives.” alternatives.”
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agency Office of agency Office of ~~Small~~ Smal and Disadvantaged Business Utilizationand Disadvantaged Business Utilization [duties are [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 divided into reasonably ~~small~~ smal lots (not less than economic production runs) to lots (not less than economic production runs) to
permit offers on quantities less than the total requirement; (permit offers on quantities less than the total requirement; (iii ) Delivery schedules ) Delivery schedules
cannot be established on a realistic basis that cannot be established on a realistic basis that ~~will encourage small~~ wil encourage smal business business
participation to the extent consistent with the actual requirements of the participation to the extent consistent with the actual requirements of the
government; (government; (~~iii~~i i) Proposed acquisition cannot be structured so as to make it ) Proposed acquisition cannot be structured so as to make it
likelylikely that that ~~small~~ smal businesses can compete for the prime contract; (iv) Consolidated 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~~ SBA currently has 46 PCRs located in the SBA’s six Area Offices.35 PCRs are required to comply currently has 46 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 acquisitions not ~~unilaterally~~ unilateral y set aside by the contracting officer;” new qualified set aside by the contracting officer;” new qualified
~~small~~ smal business sources; and the feasibility of breaking out components of the 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 “believes that the acquisition, as proposed, makes it unlikely that ~~small~~
smal 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 alternate contracting method that he or she “reasonably believes ~~will~~ wil increase increase
~~small~~ smal business prime contracting opportunities.” The recommendation must be 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~~ 34 FAR §19.202-1. See FAR§19.202-1. See FAR §19.505 for a description of the appeals process. §19.505 for a description of the appeals process.
35 SBA,35 SBA, “Procurement Center Representative Directory,” June 24, 2021, at https://www.sba.gov/federal-contracting/“Procurement Center Representative Directory,” June 24, 2021, at https://www.sba.gov/federal-contracting/
counseling-help/procurementcounseling-help/procurement -center-representative-directory. -center-representative-directory. ~~There~~T here were two vacancies. were two vacancies.
36 FAR36 FAR §19.402(a)(1). §19.402(a)(1).
37 FAR37 FAR §19.402(c)(1). §19.402(c)(1).
38 FAR38 FAR §19.402(c)(2). §19.402(c)(2).
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 Recommend  Recommend ~~small~~ smal businesses “for inclusion on a list of concerns to be solicited 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 when not doing so results in no ~~small~~ smal business being solicited.” This appeal may 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 agency’s assessment of any required ~~small~~ smal business subcontracting plan, “to business subcontracting plan, “to
ascertain whether the agency is complying with the ascertain whether the agency is complying with the ~~small~~ smal business policies in this business policies in this
regulation.”41 regulation.”41
 Sponsor and participate in conferences and training “designed to increase  Sponsor and participate in conferences and training “designed to increase ~~small~~
smal 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 responsibility is to ensure that ~~small~~ smal businesses, SDBs, WOSBs, SDVOSBs, and HUBZone businesses, SDBs, WOSBs, SDVOSBs, and HUBZone ~~small~~
smal 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~~ smal businesses as prime contractors, or to facilitate businesses as prime contractors, or to facilitate ~~small~~ smal business participation 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  Assist ~~small~~ smal businesses “to obtain payments, required late payment interest 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  Assign “a ~~small~~ smal business technical adviser to each office to which the SBA has business technical adviser to each office to which the SBA has
assigned” a PCR. The assigned” a PCR. The ~~small~~ smal business technical advisor “business technical advisor “~~shall~~ shal be a full-time be a full-time

~~39 FAR~~ 39 FAR §19.402(c)(3). §19.402(c)(3).
40 FAR40 FAR §19.402(c)(4). See FAR§19.402(c)(4). See FAR §19.505 for a description of the appeals process. §19.505 for a description of the appeals process.
41 FAR41 FAR §19.402(c)(5). §19.402(c)(5).
42 FAR42 FAR §19.402(c)(6). §19.402(c)(6).
43 For a discussion43 For a discussion of the extent to which Offices of Smallof the extent to which Offices of Small and Disadvantagedand Disadvantaged ~~Business~~ Business Utilization have implemented Utilization have implemented
these statutory requirements, see U.S. Government Accountability Office (GAO), these statutory requirements, see U.S. Government Accountability Office (GAO), ~~Small~~Sm all Business Contracting: Actions
Needed to ~~Demonstrate~~Dem onstrate and Better Review ~~Compliance~~Com pliance with Select ~~Requirements for Small~~Requirem ents for Sm all 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. 44 15 U.S.C. §644(k)(5). §644(k)(5).
45 15 U.S.C.45 15 U.S.C. §644(k)(6). §644(k)(6).
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employee of the procuring activity, employee of the procuring activity, ~~well~~ wel qualified, qualified, ~~technically~~technical y trained and 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 principal duty ~~shall~~ shal be to assist” the PCR.46 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 contracts as a means to provide ~~small~~ smal businesses appropriate opportunities to businesses appropriate opportunities to
participate as prime contractors and subcontractors].”47 participate as prime contractors and subcontractors].”47
 Provide training to  Provide training to ~~small~~ smal businesses and contract specialists, provided that the 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  Ensure that a ~~small~~ smal business that notifies the PCR prior to a contract’s award that 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]
abilityability … to compete for the award … is aware of other resources and processes … to compete for the award … is aware of other resources and processes
~~available~~ available to address unduly restrictive provisions … even if such resources and 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].”49program [described below].”49
 Review  Review ~~all~~ al subcontracting plans “to ensure that the plan provides maximum subcontracting plans “to ensure that the plan provides maximum
practicable opportunity for practicable opportunity for ~~small~~ smal business concerns to participate in the 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 OSDBUrenamed its OSDBU the Office of the Office of ~~Small~~ Smal Business Programs (OSBP). The act also redesignated 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 ) are responsible for implementing ~~small~~ smal business programs at their agencies, including business programs at their agencies, including
achieving program goals. In general, procurement department staff who work on achieving program goals. In general, procurement department staff who work on ~~small~~ smal business business
issues (often titled issues (often titled small business specialists) coordinate with OSDBU directors on their ) coordinate with OSDBU directors on their
agencies’ agencies’ ~~small~~ smal business programs.51 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.~~ 46 15 U.S.C. §644(k)(8). §644(k)(8).
47 15 U.S.C.47 15 U.S.C. §644(k)(12). §644(k)(12).
48 15 U.S.C.48 15 U.S.C. §644(k)(13). §644(k)(13).
49 15 U.S.C.49 15 U.S.C. §644(k)(17). §644(k)(17).
50 15 U.S.C.50 15 U.S.C. §644(k)(20). §644(k)(20).
51 GAO,51 GAO, Small Business Contracting: Actions Needed to Demonstrate and Better Review Compliance with Select
~~Requirements for Small~~Requirem ents for Sm all Business Advocates, GAO-17-675, August, GAO-17-675, August 25, 2017, p. 7, at https://www.gao.gov/assets/690/25, 2017, p. 7, at https://www.gao.gov/assets/690/
686766.pdf (hereinafter GAO, 686766.pdf (hereinafter GAO, ~~Small~~Sm all Business Contracting: Actions Needed to ~~Demonstrate~~Dem onstrate and Better Review
~~Compliance~~Com pliance with Select ~~Requirements for Small~~Requirem ents for Sm all 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 The SBA must assign a 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.53a 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 When a breakout PCR is assigned, the SBA must assign at least two co-located must assign at least two co-located ~~small~~ smal business 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 find ~~small~~ smal businesses that are capable of performing subcontracts; provide counseling on the businesses that are capable of performing subcontracts; provide counseling on the
contractor’s responsibility to maximize subcontracting opportunities for contractor’s responsibility to maximize subcontracting opportunities for ~~small~~ smal businesses; and 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 plan that provides ~~small~~ smal businesses “the maximum practicable opportunity to participate in businesses “the maximum practicable opportunity to participate in
contract performance consistent with its efficient performance” (contract performance consistent with its efficient performance” (~~generally~~general y any solicitation to any solicitation to
perform a contract that is expected to exceed $700,000 ($1.5 perform a contract that is expected to exceed $700,000 ($1.5 ~~million~~mil ion for construction) and that 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 viabilityintended to improve the competitive viability of SBA 8(a) program participants.57 They provide 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 interests of the SBA Administrator and ~~small~~ smal businesses in the award, modification, and 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~~Selec t Requirem ents for Sm all Business Advocates, pp. 7-8. , pp. 7-8.
53 15 U.S.C.53 15 U.S.C. §644(l)(6); and FAR§644(l)(6); and FAR §19.403(a). §19.403(a).
54 FAR54 FAR §19.403(a). §19.403(a).
55 FAR55 FAR §19.403(a). §19.403(a).
56 15 U.S.C.56 15 U.S.C. §633(h)(1). For additional information on subcontracting plan requirements, see FAR§633(h)(1). For additional information on subcontracting plan requirements, see FAR §19.702(a)(1); and §19.702(a)(1); and
15 U.S.C.15 U.S.C. §637(d)(3). Also, see§637(d)(3). Also, see GAO, Im provem ents~~GAO,~~ ~~Improvements~~ Needed to Help Ensure Reliability of SBA’s ~~Performance~~Perform ance Data on
~~Procurement~~Procurem ent 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 dutiesGAO-11-549R. For additional information on CMR duties and responsibilities see SBA,and responsibilities see SBA, “ “Subcontracting Assistance 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.pdf07-17%20Final%20Subcontracting%20Program%20SOP_1.pdf . .
57 U.S. 57 U.S. Congress, HouseCongress, House Committee on Small Business,Committee on Small Business, Subcommittee on Contracting and Infrastructure, Subcommittee on Contracting and Infrastructure, Oversight of
the SBA’s Women-Owned Small Business Federal Contract Program , hearing, 116th Cong., 1st sess.,, hearing, 116th Cong., 1st sess., May 16, 2019, 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 1. Develop positions on proposed procurement regulations affecting the ~~small~~
smal 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 4. Identify best practices for maximizing ~~small~~ smal business utilizationbusiness utilization in federal 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 5. Submit ~~annually~~annual y, to the House Committee on , to the House Committee on ~~Small~~ Smal Business and Senate Business and Senate
Committee on Committee on ~~Small~~ Smal Business and Entrepreneurship, a report describing (1) the 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 and (3) best practices identified for maximizing ~~small~~ smal business contracting.59 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 The Competition in Contracting Act of 1984 ~~generally~~general y requires “full and open competition” for requires “full and open competition” for
government procurement contracts.62 However, various provisions of the government procurement contracts.62 However, various provisions of the ~~Small~~ Smal Business Act 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 competition through the use of competitive procedures” when contracting with ~~small~~ smal businesses. businesses.
For example, as mentioned previously, federal agencies are For example, as mentioned previously, federal agencies are ~~generally~~ general y required to reserve contracts 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.~~ 58 15 U.S.C. §633(g)(1). §633(g)(1).
59 15 U.S.C.59 15 U.S.C. §644a(b). §644a(b).
60 DOD, Defense Logistics60 DOD, Defense Logistics Agency, “Procurement Technical Assistance Centers: States and Agency, “Procurement Technical Assistance Centers: States and ~~Territories~~T erritories,” at ,” at
https://www.dla.mil/SmallBusiness/https://www.dla.mil/SmallBusiness/~~PTAP~~PT AP/AllLocations/;/AllLocations/; and SBA,and SBA, “ “Find Local Assistance: Procurement Find Local Assistance: Procurement ~~Technical~~T echnical
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&Procurement%20Technical%20Assistance%20Center& pageNumber=2. pageNumber=2.
61 DOD, Defense Logistics 61 DOD, Defense Logistics Agency, “Procurement Technical Assistance Program,” at Agency, “Procurement Technical Assistance Program,” at
https://www.dla.mil/SmallBusiness/https://www.dla.mil/SmallBusiness/~~PTAP/.~~
PT AP/. 62 41 U.S.C. 62 41 U.S.C. §253(b)(1); 41 U.S.C.§253(b)(1); 41 U.S.C. §259(b); and, the Deficit Reduction Act of 1984 (§259(b); and, the Deficit Reduction Act of 1984 (~~Title~~T itle VII, the Competition in VII, the Competition in
Contracting Act). Contracting Act).
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not greater than the simplified acquisition threshold (currently $250,000) exclusively for not greater than the simplified acquisition threshold (currently $250,000) exclusively for ~~small~~
smal businesses unless the contracting officer is unable to obtain offers from two or more businesses unless the contracting officer is unable to obtain offers from two or more ~~small~~
smal 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  are ~~generally~~general y required to set aside contracts that have an anticipated value required to set aside contracts that have an anticipated value
exceeding the simplified exceeding the simplified acquisition threshold exclusively for acquisition threshold exclusively for ~~small~~ smal businesses businesses
when there is a reasonable expectation by the contracting officer that offers when there is a reasonable expectation by the contracting officer that offers ~~will~~
wil be obtained by at least two responsible be obtained by at least two responsible ~~small~~ smal businesses offering the products of businesses offering the products of
different different ~~small~~ smal businesses (Rule of Two) and the award businesses (Rule of Two) and the award ~~will~~ wil be made at a fair 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 for competition reserved for specific types of ~~small~~ smal businesses (e.g., 8(a) businesses (e.g., 8(a) ~~small~~
smal businesses, HUBZone businesses, HUBZone ~~small~~ smal businesses, WOSBs and SDVOSBs);65 businesses, WOSBs and SDVOSBs);65
 may enter into negotiations directly with particular types of  may enter into negotiations directly with particular types of ~~small~~ smal businesses 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 only a single source is available or under urgent and ~~compelling~~compel ing
circumstances);66 and circumstances);66 and
 are required to grant HUBZone  are required to grant HUBZone ~~small~~ smal businesses a price evaluation preference of 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 Several SBA programs assist ~~small~~ smal businesses in obtaining and performing federal contracts and 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 other assistance (e.g., contracting technical training assistance and oversight of the federal ~~small~~
smal business goaling program and the Surety Bond Guarantee program). business goaling program and the Surety Bond Guarantee program).

~~63 15 U.S.C.~~ 63 15 U.S.C. §644(j)(1). As mentioned previously, certain regulations implementing this provision of the Small §644(j)(1). As mentioned previously, certain regulations implementing this provision of the Small
BusinessBusiness Act effectively narrows its scope. For example, certain small businessAct effectively narrows its scope. For example, certain small business contracts awardedcontracts awarded or performed or performed
overseas are not necessarily requiredoverseas are not necessarily required to be setto be set ~~aside~~ aside for small businesses,for small businesses, and the small businessand the small business provisions contained in provisions contained in
Part 19 of the FAR generally do not apply to blanket purchase agreements and orders placedPart 19 of the FAR generally do not apply to blanket purchase agreements and orders placed against Federalagainst Federal Supply Supply
ScheduleSchedule contracts. contracts.
64 15 U.S.C.64 15 U.S.C. §644(a). A set-aside is commonly used to refer to a competition in which only small businesses§644(a). A set-aside is commonly used to refer to a competition in which only small businesses may may
compete. However, some setcompete. However, some set -asides-asides involve small purchasesinvolve small purchases that may be made by means of simplified acquisition that may be made by means of simplified acquisition
procedures that entail less than “full and open competition,” and by sealedprocedures that entail less than “full and open competition,” and by sealed ~~bidding~~ bidding or contracting by negotiation that is or contracting by negotiation that is
more commonly associated with setmore commonly associated with set -asides of larger contracts. -asides of larger contracts.
65 15 U.S.C. 65 15 U.S.C. §637(a) for 8(a) participants; 15 U.S.C. §657a for HUBZone small businesses;§637(a) for 8(a) participants; 15 U.S.C. §657a for HUBZone small businesses; 15 U.S.C.15 U.S.C. §637(m) for §637(m) for
WOSBs;WOSBs; and 15 U.S.C.and 15 U.S.C. §657f for SDVOSBs. §657f for SDVOSBs.
66 15 U.S.C.66 15 U.S.C. §637(a) for 8(a) participants; 15 U.S.C. §657a for HUBZone small businesses;§637(a) for 8(a) participants; 15 U.S.C. §657a for HUBZone small businesses; 15 U.S.C.15 U.S.C. §637(m) for §637(m) for
WOSBs;WOSBs; and 15 U.S.C.and 15 U.S.C. §657f for SDVOSBs. §657f for SDVOSBs.
67 15 U.S.C. 67 15 U.S.C. §657a(b)(3). §657a(b)(3).
68 68 ~~These~~T hese programs apply government programs apply government -wide but are implemented under the authority of the Small Business-wide but are implemented under the authority of the Small Business Act, Act,
pursuant to regulations promulgated by the SBApursuant to regulations promulgated by the SBA that determine, in part, eligibility forthat determine, in part, eligibility for the programs. the programs.
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Prime Contracting Programs
Several contracting programs Several contracting programs ~~allow small~~ al ow smal businesses to compete only with similar firms for 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 not be made to other firms. These programs provide ~~small~~ smal businesses an opportunity to win 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) Business Development Program (commonly known as the 8(a) Program) provides The 8(a) Business Development Program (commonly known as the 8(a) Program) provides
business development assistance to businesses owned and controlled by persons who are business development assistance to businesses owned and controlled by persons who are ~~socially~~
~~and economically~~social y and economical y disadvantaged, have good character, and demonstrate a potential for success.70 disadvantaged, have good character, and demonstrate a potential for success.70
Although the 8(a) Program was Although the 8(a) Program was ~~originally~~original y established for the benefit of disadvantaged established for the benefit of disadvantaged
individuals, in the 1980s, Congress expanded the program to include individuals, in the 1980s, Congress expanded the program to include ~~small~~ smal businesses owned by businesses owned by
four disadvantaged groups. four disadvantaged groups. ~~Small~~ Smal businesses owned by Alaska Native Corporations (ANCs), businesses owned by Alaska Native Corporations (ANCs),
Community Development Corporations (CDCs), Indian tribes, and Native Community Development Corporations (CDCs), Indian tribes, and Native ~~Hawaiian~~Hawai an
Organizations (NHOs) are also eligibleOrganizations (NHOs) are also eligible to participate in the 8(a) Program under somewhat to participate in the 8(a) Program under somewhat
different requirements. different requirements.
For For ~~individually owned small~~ individual y owned smal businesses, African Americans, Hispanics, Native Americans businesses, African Americans, Hispanics, Native Americans
(including American Indians, Eskimos, Aleuts, and Native (including American Indians, Eskimos, Aleuts, and Native ~~Hawaiians~~Hawai ans), Asian-Pacific Americans, ), Asian-Pacific Americans,
and Subcontinent Asian Americans are presumed to be and Subcontinent Asian Americans are presumed to be ~~socially and economically~~social y and economical y
disadvantaged.71 Other individuals can also qualify as disadvantaged.71 Other individuals can also qualify as ~~socially and economically~~social y and economical y disadvantaged disadvantaged
on a case-by-case basis.on a case-by-case basis.
The SBA uses a three-part test for determining economic disadvantage relating to the degree of The SBA uses a three-part test for determining economic disadvantage relating to the degree of
applicant’s diminished credit and capital opportunities: applicant’s diminished credit and capital opportunities:
1. net worth of less than $750,000 (excluding ownership interest in the applicant’s 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 business, equity in their primary personal residence, and funds invested in an
official retirement account); official retirement account);
2. 2. ~~generally~~ general y no more than $350,000 in average adjusted gross income over the no more than $350,000 in average adjusted gross income over the
preceding three years; and preceding three years; and

69 For additional information and analysis, see CRS69 For additional information and analysis, see CRS Report R44844, Report R44844, SBA’s “8(a) Program”: Overview, History, and
Current Issues,, by Robert Jay Dilger. by Robert Jay Dilger.
70 Section 8(a) of the Small 70 Section 8(a) of the Small ~~Business~~ Business Act, P.L. 85-536, as amended, can be found at 15 U.S.C.Act, P.L. 85-536, as amended, can be found at 15 U.S.C. §637(a). Regulations are §637(a). Regulations are
in 13 C.F.R. §124. in 13 C.F.R. §124.
~~The~~T he 8(a) Program takes its name from one of the sections of the Small Business Act that authorizes it. The program is also 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 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 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 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 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 Disadvantaged Business Status Determinations; Rules of Procedure Governing Cases Before the Office of Hearings and
Appeals,” 63 Appeals,” 63 Federal Register 35727, June 30, 1998.35727, June 30, 1998.
71 Asian Pacific Americans are those whose country of origin is Burma,71 Asian Pacific Americans are those whose country of origin is Burma, ~~Thailand~~ T hailand, Malaysia, Indonesia, Singapore, , Malaysia, Indonesia, Singapore,
Brunei, Japan, China (includingBrunei, Japan, China (including Hong Kong), Hong Kong), ~~Taiwan~~T aiwan, Laos, Cambodia,, Laos, Cambodia, Vietnam, Korea, the Philippines, U.S. Vietnam, Korea, the Philippines, U.S. ~~Trust~~
~~Territory~~T rust T erritory of the Pacific Islands (Republic of the Pacific Islands (Republic of Palau), Republicof Palau), Republic of the Marshall Islands, Federated States of Micronesia, of the Marshall Islands, Federated States of Micronesia,
Commonwealth of the Northern Mariana Islands, Guam,Commonwealth of the Northern Mariana Islands, Guam, Samoa, Macao, Fiji, Samoa, Macao, Fiji, ~~Tonga~~T onga, Kiribati, , Kiribati, ~~Tuvalu~~T uvalu, or Nauru. , or Nauru.
Subcontinent Asian Americans are those whose country of origin isSubcontinent Asian Americans are those whose country of origin is India, Pakistan, Bangladesh, SriIndia, Pakistan, Bangladesh, Sri Lanka, Bhutan, the Lanka, Bhutan, the
MaldivesMaldives Islands, or Nepal. 13 C.F.R. §124.103(b). Islands, or Nepal. 13 C.F.R. §124.103(b).
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3. no more than $6 3. no more than $6 ~~million~~ mil ion in assets (excluding funds invested in an official in assets (excluding funds invested in an official
retirement account).72 retirement account).72
For group-owned For group-owned ~~small~~ smal businesses, by statute, ANCs are deemed to be businesses, by statute, ANCs are deemed to be ~~economically~~economical y
disadvantaged, and CDCs are similarly treated as disadvantaged, and CDCs are similarly treated as ~~economically~~economical y disadvantaged. In contrast, Indian disadvantaged. In contrast, Indian
tribes and NHOs must establish economic disadvantage. tribes and NHOs must establish economic disadvantage.
Federal agencies are authorized to award contracts for goods or services, or to perform 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 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 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 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 sole-source basis, with the contract amount ~~generally~~general y determining the acquisition method used. determining the acquisition method used.
For For ~~individually owned small~~ individual y owned smal businesses, when the contract’s anticipated total value, including businesses, when the contract’s anticipated total value, including
any options, is $4.5 any options, is $4.5 ~~million~~ mil ion or less ($7.5 or less ($7.5 ~~million~~ mil ion or less for manufacturing contracts), the contract or less for manufacturing contracts), the contract
is is ~~normally~~normal y awarded without competition (as a sole-source award).73 In contrast, when the awarded without competition (as a sole-source award).73 In contrast, when the
contract’s anticipated value exceeds these thresholds, the contract contract’s anticipated value exceeds these thresholds, the contract ~~generally~~general y must be awarded via 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 eligibleat least two eligible and responsible 8(a) firms and responsible 8(a) firms ~~will~~ wil submit offers and the award can be made at submit offers and the award can be made at
fair market price.74fair market price.74
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 for 8(a) set-asides and may receive sole-source awards valued at $4.5 ~~million~~mil ion or less ($7.5 or less ($7.5 ~~million~~mil ion
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 receive sole-source awards in excess of $4.5 ~~million~~mil ion ($7.5 ($7.5 ~~million~~mil ion for manufacturing contracts) 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 firms ~~will~~ wil submit offers and the award can be made at fair market price.75 NHO-owned firms may submit offers and the award can be made at fair market price.75 NHO-owned firms may
receive sole-source awards from the Department of Defense under the same conditions.76 receive sole-source awards from the Department of Defense under the same conditions.76
The SBA also provides technical assistance and training to 8(a) firms. Firms The SBA also provides technical assistance and training to 8(a) firms. Firms ~~generally~~general y participate participate
in the 8(a) Program for no more than nine years. In an effort to assist in the 8(a) Program for no more than nine years. In an effort to assist ~~small~~ smal businesses adversely businesses adversely

72 SBA, “Women-Owned Small Business and Economically Disadvantaged Women-Owned Small Business Certification,” 85 72 SBA, “Women-Owned Small Business and Economically Disadvantaged Women-Owned Small Business Certification,” 85
Federal Register 27650-27665, May 11, 2020. 27650-27665, May 11, 2020.
73 73 ~~The~~T he Federal Acquisition Regulatory Council has the responsibility of adjusting Federal Acquisition Regulatory Council has the responsibility of adjusting each acquisitioneach acquisition -related dollar -related dollar
threshold (includingthreshold (including those for the 8(a), HUBZone, Service-Disabledthose for the 8(a), HUBZone, Service-Disabled Veteran-Owned,Veteran-Owned, and Women-Owned Small and Women-Owned Small
BusinessBusiness contracting programs), on October 1, of each year that is evenly divisiblecontracting programs), on October 1, of each year that is evenly divisible by five. by five. ~~The~~T he next adjustment for next adjustment for
inflation will take place on October 1, 2025. See 13 C.F.R. §124.506(a); and 41 U.S.C.inflation will take place on October 1, 2025. See 13 C.F.R. §124.506(a); and 41 U.S.C. §1980. §1980.
74 15 U.S.C.74 15 U.S.C. §637(a)(1)(D)(ii); and SBA,§637(a)(1)(D)(ii); and SBA, “Conforming Statutory Amendments and “Conforming Statutory Amendments and ~~Technical~~T echnical Corrections to Small Corrections to Small
BusinessBusiness Government Contracting Regulations,” 83Government Contracting Regulations,” 83 Federal Register 12849, March 26, 2018. 12849, March 26, 2018.
75 P.L. 100-656, §602(a), 102 Stat. 3887-88 (November 15, 1988) (codified at 15 U.S.C.75 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. §637 note); and 48 C.F.R.
§19.805-1(b)(2). §19.805-1(b)(2).
P.L. 111-84, the National Defense Authorization Act for Fiscal Year 2010, required P.L. 111-84, the National Defense Authorization Act for Fiscal Year 2010, required federal contracting officers to federal contracting officers to
execute written justifications and obtain approval for sole-source contracts in excess of $20 million awardedexecute written justifications and obtain approval for sole-source contracts in excess of $20 million awarded ~~under~~ under the the
authority of §8(a) analogous to those required for sole-source contracts awarded underauthority of §8(a) analogous to those required for sole-source contracts awarded under the general contracting the general contracting
authorities. authorities. ~~The~~T he $20 million threshold was increased $20 million threshold was increased through a regulatory update to $22 million, effective October 1, 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 2015, to account for inflation and to $100 million by P.L. 116-92, the National Defense Authorization Act for Fiscal
Year 2020.Year 2020.
76 DOD’s authority to make sole-source awards 76 DOD’s authority to make sole-source awards to NHO-owned firms of contracts exceeding $4.5 million ($7.5 million 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 businessesresponsible small businesses existed on a temporary basis in 2004existed on a temporary basis in 2004 -2006, and became permanent in 2006. See P.L. 109--2006, and became permanent in 2006. See P.L. 109-
148, Department of Defense, Emergency Supplemental Appropriations to Address Hurricanes in the Gulf148, Department of Defense, Emergency Supplemental Appropriations to Address Hurricanes in the Gulf of Mexico, of Mexico,
and Pandemic Influenza Act of 2006, §8020, 119 Stat. 2702and Pandemic Influenza Act of 2006, §8020, 119 Stat. 2702 -03 (December 30, 2005); 48 C.F.R. §219.805-03 (December 30, 2005); 48 C.F.R. §219.805 -1(b)(2)(A)--1(b)(2)(A)-
(B). (B).
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affected by the COVID-19 pandemic, P.L. 116-260, the Economic Aid to Hard-Hit affected by the COVID-19 pandemic, P.L. 116-260, the Economic Aid to Hard-Hit ~~Small~~
Smal Businesses, Nonprofits, and Venues Act (Division N, Title III of the Consolidated Appropriations 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, 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. 2020, the option to extend their participation in the program for one year.
In In ~~FY2019~~FY2020, the federal government awarded $, the federal government awarded $~~30.4 billion~~34.0 bil ion to 8(a) firms: to 8(a) firms:
~~ $18.5 billion~~  $20.4 bil ion was awarded with an 8(a) preference ($was awarded with an 8(a) preference ($~~8.6 billion~~9.3 bil ion through an 8(a) through an 8(a)
set-aside and $ set-aside and $~~9.9 billion~~ 11.1 bil ion through an 8(a) sole-source award); through an 8(a) sole-source award);
 $  $~~5.4 billion~~ 2.2 bil ion was awarded to an 8(a) firm in open competition with other firms; was awarded to an 8(a) firm in open competition with other firms;
and and
 $  $~~6.4 billion~~ 11.4 bil ion was awarded with another was awarded with another ~~small~~ smal business preference (e.g., set-business preference (e.g., set-~~asides~~
asides and sole-source awards for and sole-source awards for ~~small businesses generally~~smal businesses general y and for HUBZone firms, and for HUBZone firms,
women-owned women-owned ~~small~~ smal businesses, and service-disabled veteran-owned businesses, and service-disabled veteran-owned ~~small~~
smal businesses).77 businesses).77
Historically Underutilized Business Zone Program78
This program assists This program assists ~~small~~ smal businesses located in businesses located in ~~Historically~~Historical y Underutilized Underutilized Business Zones 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~~ mil ion or less, or $7.5 or less, or $7.5 ~~million~~ mil ion or less for manufacturing contracts) and price evaluation or less for manufacturing contracts) and price evaluation
preferences (of up to 10%) in full and open competitions.79 The HUBZone program targets preferences (of up to 10%) in full and open competitions.79 The HUBZone program targets
assistance to assistance to ~~small~~ smal businesses located in areas with low income, high poverty, or high businesses located in areas with low income, high poverty, or high
unemployment.80 To be certified as a HUBZoneunemployment.80 To be certified as a HUBZone ~~small~~ smal business, at least 35% of the business, at least 35% of the ~~small~~
smal business’s employees must business’s employees must ~~generally~~general y reside in a HUBZone. reside in a HUBZone.
~~In FY2019~~ In FY2020, the federal government awarded $, the federal government awarded $~~11.5 billion~~13.6 bil ion to HUBZone-certified to HUBZone-certified ~~small~~
smal businesses:businesses:
 $2.  $2.~~0 billion~~ 1 bil ion was awarded with a HUBZone preference ($was awarded with a HUBZone preference ($~~1.9 billion~~2.0 bil ion through a through a
HUBZone HUBZone set-aside, $set-aside, $~~95.0 million~~67.5 mil ion through a HUBZone through a HUBZone sole-source award and sole-source award and
$$~~72.5 million~~ 48.5 mil ion through a HUBZonethrough a HUBZone price-evaluation preference);price-evaluation preference);
~~ $2.8 billion~~  $4.0 bil ion was awarded to HUBZone-certified was awarded to HUBZone-certified ~~small~~ smal businesses in open businesses in open
competition with other firms; and competition with other firms; and
 $  $~~6.7 billion~~ 7.5 bil ion was awarded with another was awarded with another ~~small~~ smal business preference (e.g., set-asides business preference (e.g., set-asides
and sole-source awards for and sole-source awards for ~~small businesses generally~~smal businesses general y and for 8(a), women- and for 8(a), women-
owned, and service-disabled veteran-owned owned, and service-disabled veteran-owned ~~small~~ smal businesses).81 businesses).81

~~77 U.S. General Services Administration (GSA), Federal Procurement Data System—Next Generation, August 13,~~
~~2020, at https://www.fpds.gov/fpdsng/~~ 77 Data generated using U.S. General Services Administration (GSA), “Sam.Gov data bank,” August 2, 2021, at https://sam.gov/reports/awards/adhoc. .
78 For additional information and analysis, see CRS 78 For additional information and analysis, see CRS Report R41268, Report R41268, Small Business Administration HUBZone
Program , by Robert Jay Dilger. , by Robert Jay Dilger.
79 15 U.S.C.79 15 U.S.C. §657a(b)(2-3); and 41 U.S.C.§657a(b)(2-3); and 41 U.S.C. §1980. §1980.
80 For specific criteria, see 15 U.S.C.80 For specific criteria, see 15 U.S.C. §632(p)(4); and 13 C.F.R. §126.103. §632(p)(4); and 13 C.F.R. §126.103.
81 81 ~~GSA, Federal Procurement Data System—Next Generation, August 13, 2020, at https://www.fpds.gov/fpdsng/~~Data generated using GSA, “Sam.Gov data bank,” July 31, 2021, at https://sam.gov/reports/awards/adhoc. .
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Service-Disabled Veteran-Owned Small Business Program
This program This program ~~allows~~al ows agencies to set aside contracts for SDVOSBs.82 Also, federal agencies may agencies to set aside contracts for SDVOSBs.82 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~~ mil ion or less ($7 or less ($7 ~~million~~ mil ion or less for manufacturing contracts).83 For purposes of this program, or less for manufacturing contracts).83 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.84 veterans affairs.84
~~In FY2019~~In FY2020, the federal government awarded $, the federal government awarded $~~23.6 billion~~26.1 bil ion to SDVOSBs: to SDVOSBs:
 $9.  $9.~~0 billion~~ 7 bil ion was awarded with a SDVOSB preference ($was awarded with a SDVOSB preference ($~~8.8 billion~~9.4 bil ion through a through a
SDVOSB set-aside and $ SDVOSB set-aside and $~~274.8 million~~281.9 mil ion through a SDVOSB sole-source award); through a SDVOSB sole-source award);
 $  $~~6.9 billion~~ 8.4 bil ion was awarded to a SDVOSB in open competition with other firms; was awarded to a SDVOSB in open competition with other firms;
and and
 $  $~~7.6 billion~~ 8.0 bil ion was awarded with another was awarded with another ~~small~~ smal business preference (e.g., set-asides business preference (e.g., set-asides
and sole-source awards for and sole-source awards for ~~small businesses generally~~smal businesses general y and for HUBZone and for HUBZone firms, firms,
8(a) firms, and WOSBs).85 8(a) firms, and WOSBs).85
Women-Owned Small Business Program86
Under this program, contracts may be set aside for Under this program, contracts may be set aside for ~~economically~~economical y disadvantaged WOSBs in disadvantaged WOSBs in
industries in which women are underrepresented and industries in which women are underrepresented and ~~substantially~~substantial y underrepresented.87 Federal underrepresented.87 Federal
agencies may award sole-source contracts to WOSBs so long as the award can be made at a fair agencies may award sole-source contracts to WOSBs so long as the award can be made at a fair

82 A service-disabled82 A service-disabled veteran “is a person who served in the active military, naval, or air service, and who was veteran “is a person who served in the active military, naval, or air service, and who was
dischargeddischarged or released underor released under conditions other than dishonorable, and whose disabilityconditions other than dishonorable, and whose disability ~~was~~ was incurred or aggravatedincurred or aggravated in in
line of duty in the active military, naval, or air service.” line of duty in the active military, naval, or air service.” ToT o be considered a service-disabled be considered a service-disabled veteran, “veteran, “ the veteran must the veteran must
have an adjudicationhave an adjudication letter from the Veterans Administration (VA), a Department of Defense Form 214, Certificate of letter from the Veterans Administration (VA), a Department of Defense Form 214, Certificate of
ReleaseRelease or Discharge from Active Duty, or a Statement of or Discharge from Active Duty, or a Statement of ~~Service~~Serv ice from the National Archives and Records from the National Archives and Records
Administration, stating that the veteran has a service-connected disability.” Administration, stating that the veteran has a service-connected disability.” ~~There~~T here is no minimum disability is no minimum disability rating rating
threshold. Also, the businessthreshold. Also, the business must be small, as definedmust be small, as defined in section 3(q) of the Small Businessin section 3(q) of the Small Business ~~Act~~ Act (15 U.S.C.(15 U.S.C. §632(q)) §632(q))
and the SBA’sand the SBA’s implementing regulations (13 C.F.R. §125). Seeimplementing regulations (13 C.F.R. §125). See Department of Veterans Affairs, Office of Small Department of Veterans Affairs, Office of Small
BusinessBusiness Programs, “Service-DisabledPrograms, “Service-Disabled Veteran-Owned SmallVeteran-Owned Small Business,”Business,” at https://business.defense.gov/Small-at https://business.defense.gov/Small-
Business/Business/~~SDVOSB~~SDVO SB/. /.
83 15 U.S.C. 83 15 U.S.C. §657f(a-b); and 41 U.S.C.§657f(a-b); and 41 U.S.C. §1980. §1980.
84 38 U.S.C.84 38 U.S.C. §8127(f). Veteran-owned small businesses§8127(f). Veteran-owned small businesses and service-disabledand service-disabled veteran-owned small businessesveteran-owned small businesses are are
eligibleeligible for separate preferences in procurements conducted by the Department of Veterans Affairs under the authority 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.
85 85 ~~GSA, Federal Procurement Data System—Next Generation, August 13 2020, at https://www.fpds.gov/fpdsng/~~Data generated using GSA, “Sam.Gov data bank,” July 31, 2021, at https://sam.gov/reports/awards/adhoc. .
86 For further information and analysis of the WOSB86 For further information and analysis of the WOSB federal contacting program, see CRSfederal contacting program, see CRS Report R46322, Report R46322, SBA
~~Women-Owned Small~~Wom en-Owned Sm all Business Federal Contracting Program , by Robert Jay Dilger. , by Robert Jay Dilger.
87 87 ~~The~~T he SBA SBA has identified 364 six-digit North American Industry Classification System (NAICS)has identified 364 six-digit North American Industry Classification System (NAICS) industry codesindustry codes (out of (out of
1,023) in which federal agencies may set aside1,023) in which federal agencies may set aside federal contracts exceeding the micro-purchase threshold (currently federal contracts exceeding the micro-purchase threshold (currently
$10,000) exclusively for WOSBs$10,000) exclusively for WOSBs (including(including economically disadvantaged WOSBs)economically disadvantaged WOSBs) ~~because~~ because those industries were those industries were
identified as ones in which WOSBsidentified as ones in which WOSBs are substantially underrepresented. are substantially underrepresented. ~~The~~T he SBA SBA has also identified 80 sixhas also identified 80 six -digit -digit
NAICSNAICS industry codesindustry codes (out of 1,023) that may be set aside exclusively for economically disadvantaged(out of 1,023) that may be set aside exclusively for economically disadvantaged WOSBs WOSBs
becausebecause those industriesthose industries were identified as ones in whichwere identified as ones in which ~~WOSBs~~ WOSBs are underrepresented. Seeare underrepresented. See SBA,SBA, “Qualifying NAICS “Qualifying NAICS
for the Women-Owned Smallfor the Women-Owned Small ~~Business Federal~~ Business Federal Contracting program,” effective October 1, 2017, at Contracting program,” effective October 1, 2017, at
https://www.sba.gov/document/supporthttps://www.sba.gov/document/support-- —qualifying-naics-women-owned-small-business-federal-contracting-program. qualifying-naics-women-owned-small-business-federal-contracting-program.
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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~~ mil ion or less ($7 or less ($7 ~~million~~ mil ion or less for manufacturing contracts).88 or less for manufacturing contracts).88
To be eligibleTo be eligible for the WOSB program, a business must be for the WOSB program, a business must be
  ~~small~~smal , as determined by the SBA; , as determined by the SBA;
 at least 51% owned and controlled by women who are U.S. citizens; 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  have women manage the day-to-day operations and also make long-term
decisions; and decisions; and
 be certified by a federal agency, a state government, the SBA, or a national  be certified by a federal agency, a state government, the SBA, or a national
certifying entity approved by the SBA.89 certifying entity approved by the SBA.89
To qualify as an To qualify as an ~~economically~~economical y disadvantaged WOSB, the owner must also demonstrate that her disadvantaged WOSB, the owner must also demonstrate that her
abilityability to compete in the free enterprise system has been impaired due to diminished capital and 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 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 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: 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 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 business, equity in their primary personal residence, and funds invested in an
official retirement account); official retirement account);
2. 2. ~~generally~~ general y no more than $350,000 in average adjusted gross income over the no more than $350,000 in average adjusted gross income over the
preceding three years; and preceding three years; and
3. no more than $6 3. no more than $6 ~~million~~ mil ion in assets (excluding funds invested in an official in assets (excluding funds invested in an official
retirement account).90 retirement account).90
In In ~~FY2019~~FY2020, the federal government awarded $, the federal government awarded $~~25.5 billion~~27.2 bil ion to WOSBs: to WOSBs:
 $1.  $1.~~1 billion~~ 2 bil ion was awarded with a WOSB preference ($was awarded with a WOSB preference ($~~108.6 million~~1.1 bil ion through a through a
WOSB WOSB ~~sole-source~~set-aside award and $ award and $~~971.7 million~~116.1 mil ion through a WOSB through a WOSB ~~set-aside~~sole-source award); award);
 $9.  $9.~~0 billion~~ 3 bil ion was awarded to a WOSB in open competition with other firms; and was awarded to a WOSB in open competition with other firms; and
 $ $~~15.4 billion~~ 16.6 bil ion was awarded with another was awarded with another ~~small~~ smal business preference (e.g., set-business preference (e.g., set-
asides and sole-source awards for asides and sole-source awards for ~~small businesses generally~~smal businesses general y and for HUBZone and for HUBZone
firms, 8(a) firms, and SDVOSBs).91 firms, 8(a) firms, and SDVOSBs).91
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 any solicitation requiring submission of a ~~small~~ smal business subcontracting plan and to submit business subcontracting plan and to submit
advisory findings before the solicitation is issued.92 The PCR’s advisory comments regarding the advisory findings before the solicitation is issued.92 The PCR’s advisory comments regarding the

~~88 15 U.S.C.~~ 88 15 U.S.C. §637(m); and 41 U.S.C.§637(m); and 41 U.S.C. §1980. §1980.
89 15 U.S.C.89 15 U.S.C. §632(n); 15 U.S.C.§632(n); 15 U.S.C. §637(m)(2); and 13 C.F.R. §127.200. §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 90 SBA, “Women-Owned Small Business and Economically Disadvantaged Women-Owned Small Business Certification,” 85
Federal Register 27650-27665, May 11, 2020. 27650-27665, May 11, 2020.
91 91 ~~GSA, Federal Procurement Data System—Next Generation, August 13, 2020, at https://www.fpds.gov/fpdsng/.~~
~~92 FAR~~ Data generated using GSA, “Sam.Gov data bank,” July 31, 2021, at https://sam.gov/reports/awards/adhoc. 92 FAR §19.705-3. §19.705-3.
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~~small~~ smal business subcontracting plan’s acceptability must be submitted, in writing, to the business subcontracting plan’s acceptability must be submitted, in writing, to the
appropriate contracting officer within five working days after the plan’s receipt.93appropriate contracting officer within five working days after the plan’s receipt.93
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 find ~~small~~ smal businesses to perform subcontracts; counsel contractors on their responsibility to businesses to perform subcontracts; counsel contractors on their responsibility to
maximize subcontracting opportunities for maximize subcontracting opportunities for ~~small~~ smal businesses; and conduct periodic reviews, often businesses; and conduct periodic reviews, often
in concert with a SBA PCR, of contractors awarded contracts that require an acceptable in concert with a SBA PCR, of contractors awarded contracts that require an acceptable ~~small~~
smal business subcontracting plan.94 business subcontracting plan.94
Other Federal Agency Contracting Programs
Federal agencies may also set aside contracts or make sole-source awards to Federal agencies may also set aside contracts or make sole-source awards to ~~small~~ smal businesses not 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 Civilunder the authority of Title VI of the Civil Rights Act of 1964 and other nondiscrimination Rights Act of 1964 and other nondiscrimination
statutes that apply to DOT financial assistance programs.”95 Congress has reauthorized the DOT statutes that apply to DOT financial assistance programs.”95 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), (innovation) of the act and 23 U.S.C. §403 (highway safety research and development), ~~shall be~~
shal be expended with DBEs. DOT also has a separate DBE program for airport concessions.96 expended with DBEs. DOT also has a separate DBE program for airport concessions.96
A DBE is a for-profit A DBE is a for-profit ~~small~~ smal business owned and controlled by business owned and controlled by ~~socially and economically~~social y and economical y
disadvantaged individuals.97 Eligibilitydisadvantaged individuals.97 Eligibility for the DBE program differs somewhat from the 8(a) for the DBE program differs somewhat from the 8(a)

~~93 SBA,~~ 93 SBA, “Prime Contracts Program,” SOP 60 02 8, effective October 27, 2013, p. 15, at https://www.sba.gov/sites/“Prime Contracts Program,” SOP 60 02 8, effective October 27, 2013, p. 15, at https://www.sba.gov/sites/
default/files/sops/Prime_Contracts_SOPdefault/files/sops/Prime_Contracts_SOP -60-02-8.pdf. -60-02-8.pdf.
94 15 U.S.C.94 15 U.S.C. §633(h)(1). For additional information on subcontracting plan requirements, see FAR§633(h)(1). For additional information on subcontracting plan requirements, see FAR §19.702(a)(1); and §19.702(a)(1); and
15 U.S.C.15 U.S.C. §637(d)(3). §637(d)(3).
95 Department of 95 Department of ~~Transportation (DOT~~T ransportation (DOT ), “Disadvantaged Business), “Disadvantaged Business Enterprise (DBE) Program,” at Enterprise (DBE) Program,” at
https://www.transportation.gov/civil-rights/disadvantaged-business-enterprise. https://www.transportation.gov/civil-rights/disadvantaged-business-enterprise.
96 49 C.F.R. Part 23. “As recipients of DOT 96 49 C.F.R. Part 23. “As recipients of DOT financial assistance, state and local transportation agencies … certify the financial assistance, state and local transportation agencies … certify the
eligibilityeligibility of DBE firms to participate in their DOTof DBE firms to participate in their DOT -assisted contracts; establish narrowly-tailored goals for the -assisted contracts; establish narrowly-tailored goals for the
participation of disadvantaged entrepreneurs; and evaluate their DOTparticipation of disadvantaged entrepreneurs; and evaluate their DOT -assisted contracts throughout the year and -assisted contracts throughout the year and
establish contractestablish contract -specific DBE subcontracting goals as necessary to achieve the overall goal of the agency….-specific DBE subcontracting goals as necessary to achieve the overall goal of the agency…. ~~DOT~~ DOT is is
responsible for developing the rules and regulations for the national DBE program; providing guidanceresponsible for developing the rules and regulations for the national DBE program; providing guidance and conducting and conducting
oversight to make sure that these rules and regulations are followed byoversight to make sure that these rules and regulations are followed by the recipients of DOTthe recipients of DOT funds; and considering funds; and considering
appeals from state/local certification decisions.” DOTappeals from state/local certification decisions.” DOT , “Definition of a Disadvantaged Business, “Definition of a Disadvantaged Business Enterprise,” at 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.
97 DOT 97 DOT , “, “ Definition of a Disadvantaged BusinessDefinition of a Disadvantaged Business Enterprise,” at https://www.transportation.gov/civil-rights/Enterprise,” at https://www.transportation.gov/civil-rights/
disadvantaged-business-enterprise/definition-disadvantaged-business-enterprisedisadvantaged-business-enterprise/definition-disadvantaged-business-enterprise (hereinafter DOT(hereinafter DOT , “, “ Definition of a Definition of a
DisadvantagedDisadvantaged ~~Business~~ Business Enterprise”). Enterprise”).
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program. For example, under the DBE program, women are presumed to be program. For example, under the DBE program, women are presumed to be ~~socially and~~
~~economically~~social y and economical y disadvantaged individuals. Also, to be regarded as disadvantaged individuals. Also, to be regarded as ~~economically~~economical y disadvantaged, an disadvantaged, an
~~individual~~ individual must have a personal net worth (excluding ownership interest in the firm and equity in 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 his or her primary personal residence) that does not exceed $1.32 ~~million~~mil ion. The DBE. The DBE must also must also
meet SBAmeet SBA size criteria and cannot have average annual gross receipts over the preceding three size criteria and cannot have average annual gross receipts over the preceding three
fiscal years that exceed $26.29 fiscal years that exceed $26.29 ~~million~~mil ion for participation in Federal Highway Administration and for participation in Federal Highway Administration and
Federal Transit Administration-assisted work. P.L. 115-254, the FAA Reauthorization Act of 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 2018, removed the gross receipts cap for Federal Aviation Administration-assisted work. 98 Size
limits for the airport concessions DBE program are higher.99 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 2. create a level ~~playing~~ playing field on which DBEs can compete fairly for DOT-assisted 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 4. ensure that only firms that fully meet the program’s eligibility standards are standards are
permitted to participate as DBEs; permitted to participate as DBEs;
5. help remove DBE-participation 5. help remove DBE-participation barriers in DOT-assisted contracts; barriers in DOT-assisted contracts;
6. promote the use of DBEs in 6. promote the use of DBEs in ~~all~~ al types of types of ~~federally~~federal y assisted contracts and 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 8. provide appropriate flexibility to recipients of federal financial assistance in to recipients of federal financial assistance in
establishing and providing opportunities for DBEs.100 establishing and providing opportunities for DBEs.100
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. Eligibilityextent practicable, not less than 10% of the act’s research funding to DBEs. Eligibility for the 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 disabled Americans are ~~socially~~social y disadvantaged. Also eligible disadvantaged. Also eligible ~~are historically~~ are historical y black colleges and 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 organizations controlled by social and ~~economically~~economical y disadvantaged individuals. 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, “~~ 98 DOT , “ Definition of a Disadvantaged BusinessDefinition of a Disadvantaged Business Enterprise;” and Department of Enterprise;” and Department of ~~Transportation~~T ransportation, “Disadvantaged , “Disadvantaged
BusinessBusiness Enterprise Program; Inflationary Adjustment,” 85Enterprise Program; Inflationary Adjustment,” 85 Federal Register 80646-80648, December 14, 2020. 80646-80648, December 14, 2020.
99 With a few99 With a few noted exceptions, businesses participating in the airports concessions DBE program cannot have average 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 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 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 dealersannual gross receipts over the preceding three fiscal years, automobile dealers may have no more than 350 employees, may have no more than 350 employees,
and pay telephone companies can have no more than 1,500 employees. See 49 C.F.R.and pay telephone companies can have no more than 1,500 employees. See 49 C.F.R. §23.33. §23.33.
100 49 C.F.R. §26.1. 100 49 C.F.R. §26.1.
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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 underground storage tanks, to businesses or other organizations owned or controlled by ~~socially~~
~~and economically~~social y and economical y disadvantaged individuals, including disadvantaged individuals, including ~~historically~~ historical y black colleges and universities 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 independent private organization. EPA ~~will~~ wil consider applications for DBE certification only from 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
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 3. help remove barriers to the participation of DBEs in the award of contracts under in the award of contracts under
EPA financial assistance agreements; and EPA financial assistance agreements; and
4. provide appropriate flexibility 4. provide appropriate flexibility to recipients of EPA financialto recipients of EPA financial assistance in assistance in
establishing and providing contracting opportunities for DBEs.101 establishing and providing contracting opportunities for DBEs.101
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 targeted at ~~small~~ smal businesses, many Native American-owned and -controlled businesses, many Native American-owned and -controlled ~~small~~ smal businesses 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.102 In addition, the Indian tribes and Native American-owned and -controlled businesses.102 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 owned and -controlled businesses, and Native ~~Hawaiian small~~ Hawai an smal businesses by providing a 5% businesses by providing a 5%
rebate on the amount subcontracted to these businesses.103 rebate on the amount subcontracted to these businesses.103

101 Environmental Protection Agency, “101 Environmental Protection Agency, “ Disadvantaged BusinessDisadvantaged Business Enterprise Program Under EPA Assistance Enterprise Program Under EPA Assistance
Agreements (DBE Program),” at https://www.epa.gov/grants/disadvantaged-business-enterprise-program-under-epa-Agreements (DBE Program),” at https://www.epa.gov/grants/disadvantaged-business-enterprise-program-under-epa-
assistance-agreements-dbe-program. assistance-agreements-dbe-program.
102 GAO, 102 GAO, Buy Indian Act: Bureau of Indian Affairs and Indian Health Service Need Greater Insight into
~~Implementation~~Im plem entation at Regional Offices, GAO-15-588, July 9, 2015, at https://www.gao.gov/products/GAO-15-588; and , GAO-15-588, July 9, 2015, at https://www.gao.gov/products/GAO-15-588; and
U.S.U.S. Department of the Interior, Office of Indian Energy and Economic Development, “Department of the Interior, Office of Indian Energy and Economic Development, “ The Buy Indian Opportunity,” The Buy Indian Opportunity,”
at https://www.bia.gov/as-ia/ieed/online-primers-economic-developmentat https://www.bia.gov/as-ia/ieed/online-primers-economic-development -glance. -glance.
103 U.S.103 U.S. Department of Defense, Office of Small BusinessDepartment of Defense, Office of Small Business Programs, “Indian Incentive Program (IIP),” at Programs, “Indian Incentive Program (IIP),” at
https://business.defense.gov/Programs/Indian-Incentive-Program/. https://business.defense.gov/Programs/Indian-Incentive-Program/.
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Subcontracting Programs for Small Disadvantaged Businesses
Other federal programs promote subcontracting with Other federal programs promote subcontracting with ~~small~~ smal disadvantaged businesses (SDBs). disadvantaged businesses (SDBs).
SDBs include 8(a) participants and other SDBs include 8(a) participants and other ~~small~~ smal businesses that are at least 51% businesses that are at least 51% ~~unconditionally~~unconditional y
owned and controlled by owned and controlled by ~~socially or economically~~social y or economical y disadvantaged individuals disadvantaged individuals or groups. or groups.
Individuals owning and controlling non-8(a) SDBs must Individuals owning and controlling non-8(a) SDBs must ~~generally~~general y satisfy the same eligibility satisfy the same eligibility
requirements as 8(a) firms, although they do not apply to the SBA to be designated SDBs in the 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. same way that 8(a) firms do.
Federal agencies must negotiate “subcontracting plans” with the apparently successful bidder or 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 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 for the percentage of subcontract dollars to be awarded to SDBs, among others, and describe
efforts that efforts that ~~will~~ wil be made to ensure that SDBs “have an equitable opportunity to compete for be made to ensure that SDBs “have an equitable opportunity to compete for
subcontracts.”104 Federal agencies may also consider the extent of subcontracting with SDBs in subcontracts.”104 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 ~~June 24~~August 2, 2021, the SBA’s Dynamic , 2021, the SBA’s Dynamic ~~Small~~ Smal Business Search database included 6,Business Search database included 6,~~832~~818 SBA- SBA-
certified 8(a) firms and certified 8(a) firms and ~~162,490~~158,475 self-certified SDBs.105 self-certified SDBs.105
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 “provides training to The SBA’s 7(j) Management and Technical Assistance program “provides training to ~~small~~
smal businesses that are owned and controlled by businesses that are owned and controlled by ~~economically and socially~~economical y and social y disadvantaged individuals disadvantaged individuals
and and ~~small~~ smal business located in areas of high unemployment or low income, certified 8(a) and business located in areas of high unemployment or low income, certified 8(a) and
HUBZoneHUBZone firms, and firms, and ~~economically~~economical y disadvantaged women-owned disadvantaged women-owned ~~small~~ smal businesses.”106 Training businesses.”106 Training
includes “consulting in a wide range of business activities, including marketing, accounting, includes “consulting in a wide range of business activities, including marketing, accounting,
opportunity development and capture, contract management, compliance, and financial opportunity development and capture, contract management, compliance, and financial
analysis.”107 Eligibleanalysis.”107 Eligible firms work directly with their respective SBA district office to enroll in the firms work directly with their respective SBA district office to enroll in the
program. program.
In FY2020, the 7(j) Management and Technical Assistance program assisted 9,941 In FY2020, the 7(j) Management and Technical Assistance program assisted 9,941 ~~small~~
smal businesses.108 businesses.108
SBA Surety Bond Guarantee Program109
The SBA’s Surety Bond Guarantee program aims to increase The SBA’s Surety Bond Guarantee program aims to increase ~~small~~ smal businesses’ access to federal, businesses’ access to federal,
state, and local government contracting, as state, and local government contracting, as ~~well~~ wel as private-sector contracts, by guaranteeing bid, as private-sector contracts, by guaranteeing bid,

~~104 15 U.S.C.~~ 104 15 U.S.C. §637(d)(6)(c). §637(d)(6)(c).
105 SBA,105 SBA, “Dynamic Small Business“Dynamic Small Business Search,” at http://dsbs.sba.gov/dsbs/search/dsp_dsbs.cfm.Search,” at http://dsbs.sba.gov/dsbs/search/dsp_dsbs.cfm.
106 SBA,106 SBA, FY2022 Congressional Justification and FY2020 Annual Performance Report, p. 72, at , p. 72, at
https://www.sba.gov/document/reporthttps://www.sba.gov/document/report -congressional-budget-justification-annual-performance-report (hereinafter SBA, -congressional-budget-justification-annual-performance-report (hereinafter SBA,
FY2022 Congressional Justification and FY2020 Annual ~~Performance~~Perform ance Report). ).
107 SBA, 107 SBA, FY2022 Congressional Justification and FY2020 Annual Performance Report, p. 72. , p. 72.
108 SBA,108 SBA, FY2022 Congressional Justification and FY2020 Annual Performance Report, p. 73. , p. 73.
109 For additional information and analysis, see CRS109 For additional information and analysis, see CRS Report R42037, Report R42037, SBA Surety Bond Guarantee Program , by Robert , by Robert
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performance, and payment bonds for performance, and payment bonds for ~~small~~ smal businesses that cannot obtain surety bonds through businesses that cannot obtain surety bonds through
regular commercial channels.110 The program guarantees individual contracts of up to $6.5 regular commercial channels.110 The program guarantees individual contracts of up to $6.5
~~million~~ mil ion and up to $10 and up to $10 ~~million~~ mil ion if a federal contracting officer certifies that such a guarantee is 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 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 surety’s loss if a default occurs.111 In FY2020, the SBA guaranteed 10,577 bid and final surety
bonds with a total contract value of nearly $7.2 bonds with a total contract value of nearly $7.2 ~~billion~~bil ion.112 .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.113 associated with contracting.113
Surety bonds are meant to encourage project owners to contract with Surety bonds are meant to encourage project owners to contract with ~~small~~ smal businesses that may 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.114 failing to comply with the contract’s terms and conditions.114
Surety bonds are important to Surety bonds are important to ~~small~~ smal businesses interested in competing for federal contracts 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.115 contracting officer in an amount that the officer considers adequate to protect the government.115
Small Business Mentor-Protégé Programs116
~~Small~~ Smal business mentor-protégé programs business mentor-protégé programs ~~typically~~typical y seek to pair new businesses with more seek to pair new businesses with more
experienced businesses in experienced businesses in ~~mutually~~mutual y beneficial relationships. Protégés may receive financial, 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

~~Jay Dilger.~~
Jay Dilger. 110 Ancillary bonds110 Ancillary bonds are also eligibleare also eligible if they are incidental and essential to a contract for which the SBAif they are incidental and essential to a contract for which the SBA has guaranteed has guaranteed
a final bond. A reclamation bond is eligiblea final bond. A reclamation bond is eligible if it is issuedif it is issued to reclaim an abandoned mine site and for a project to reclaim an abandoned mine site and for a project
undertaken for a specific period of time. undertaken for a specific period of time.
111 P.L. 114-92, the National Defense Authorization Act for Fiscal Year 2016, includes 111 P.L. 114-92, the National Defense Authorization Act for Fiscal Year 2016, includes a provision that increased the 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.
112 SBA,112 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.
113 SBA, 113 SBA, “Surety Bonds,” at https://www.sba.gov/funding-programs/surety-bonds. “Surety Bonds,” at https://www.sba.gov/funding-programs/surety-bonds.
114 SBA,114 SBA, “Surety Bonds.” “Surety Bonds.”
115 115 ~~The~~T he threshold amount was originally set at $2,000 in 1935 under P.L. 74 threshold amount was originally set at $2,000 in 1935 under P.L. 74 -321, An Act Requiring Contracts for the -321, An Act Requiring Contracts for the
Construction, Alteration, and Repair of Any PublicConstruction, Alteration, and Repair of Any Public ~~Building~~ Building or Publicor Public Work of the United States to be Accompanied Work of the United States to be Accompanied
by a Performance Bond Protecting the United States and an Additional Bondby a Performance Bond Protecting the United States and an Additional Bond for the Protection of Persons Furnishing for the Protection of Persons Furnishing
Material or Labor for the Construction, Alteration, or Repair of SaidMaterial or Labor for the Construction, Alteration, or Repair of Said ~~Public Buildings~~ Public Buildings or Publicor Public Work [the Miller Act Work [the Miller Act
of 1935], 49 Stat. 793 (August 24, 1935) (codified at 40 U.S.C.of 1935], 49 Stat. 793 (August 24, 1935) (codified at 40 U.S.C. §3131(a)(b)). Also, see§3131(a)(b)). Also, see Department of Defense, Department of Defense,
General ServicesGeneral Services Administration, and National Aeronautics and SpaceAdministration, and National Aeronautics and Space Administration, “Federal Acquisition Administration, “Federal Acquisition
Regulation; Regulation; ~~Inflation~~Inflat ion Adjustment of Acquisition-Related Adjustment of Acquisition-Related ~~Thresholds~~T hresholds,” 75,” 75 Federal Register 53130, August 30, 2010. 53130, August 30, 2010.
116 For additional information and analysis of federal small business 116 For additional information and analysis of federal small business mentor-protégé programs, see CRSmentor-protégé programs, see CRS Report Report
R41722, R41722, ~~Small~~Sm all Business Mentor-Protégé ~~Programs~~Program s, by Robert Jay Dilger. , by Robert Jay Dilger.
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or subcontracts, or serving as suppliers under such contracts or subcontracts. Mentors may or subcontracts, or serving as suppliers under such contracts or subcontracts. Mentors may
receive credit toward subcontracting goals, reimbursement of certain expenses, or other receive credit toward subcontracting goals, reimbursement of certain expenses, or other
incentives.incentives.
The federal government currently has several mentor-protégé programs to assist The federal government currently has several mentor-protégé programs to assist ~~small~~ smal businesses businesses
in various ways. in various ways.
 The SBA’s  The SBA’s All Small Mentor-Protégé Program is a government-wide program is a government-wide program
designed to assist designed to assist ~~small~~ smal businesses in obtaining and performing federal contracts. businesses in obtaining and performing federal contracts.
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 federal contracts set aside for ~~small~~ smal businesses; (2) make certain equity 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.117 provide technical or management assistance to their protégés.117
 The  The Department of Defense (DOD) Mentor-Protégé Program, in contrast, is , in contrast, is
agency-specific. It assists various types of agency-specific. It assists various types of ~~small~~ smal businesses and other entities in 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.118other assistance.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~~ smal businesses or other entities in obtaining and performing subcontracts under agency prime 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 not based in statute, unlike the SBA and DOD programs, they ~~generally~~general y rely upon preexisting 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.119 with the accuracy and thoroughness of some federal agency records.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 consultation with the SBA, “that ~~realistically~~realistical y reflect the potential of reflect the potential of ~~small~~ smal business concerns and business concerns and

~~117 SBA, “SBA~~ 117 SBA, “SBA Mentor-Protégé Program,” at https://www.sba.gov/federal-contracting/contracting-assistance-Mentor-Protégé Program,” at https://www.sba.gov/federal-contracting/contracting-assistance-
programs/sba-mentor-protege-program; SBA, “programs/sba-mentor-protege-program; SBA, “ Small BusinessSmall Business Mentor Protégé Programs,” 81Mentor Protégé Programs,” 81 Federal Register 48558- 48558-
48595, 48595, ~~July~~ July 25, 2016; and SBA,25, 2016; and SBA, “Consolidation of Mentor-Protégé Programs and Other Government Contracting “Consolidation of Mentor-Protégé Programs and Other Government Contracting
Amendments,” 85Amendments,” 85 Federal Register 66146-66199, October 16, 2020. 66146-66199, October 16, 2020.
118 10 U.S.C.118 10 U.S.C. §2302note: Mentor-Protégé Pilot Program. §2302note: Mentor-Protégé Pilot Program.
119 As of 119 As of ~~June~~ July 1, 2021, the SBA’s1, 2021, the SBA’s All SmallAll Small Mentor-Protégé program had 1,Mentor-Protégé program had 1,~~185~~237 active mentor-protégé agreements. See active mentor-protégé agreements. See
SBA,SBA, “Active mentor-protégé agreements,” at https://www.sba.gov/document/support-active-mentor-protege-“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 As of January 1, 2018, there were 63 active ~~Department~~Departmen t of Defense (DOD) mentor-protégé agreements. See DOD, of Defense (DOD) mentor-protégé agreements. See DOD,
Office of SmallOffice of Small ~~Business~~ Business Programs, “Active MPP [Mentor-Protégé Program] Agreements,” at 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/.
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~~small~~ smal business concerns owned and controlled by business concerns owned and controlled by ~~socially and economically~~social y and economical y disadvantaged disadvantaged
individuals”individuals” to participate in federal procurement. Each agency is required, at the conclusion of 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 each fiscal year, to report its progress in meeting the goals to the SBA.120
In 1988, Congress authorized the President In 1988, Congress authorized the President ~~annually~~annual y to establish government-wide minimum to establish government-wide minimum
participation goals for procurement contracts awarded to participation goals for procurement contracts awarded to ~~small~~ smal businesses and businesses and ~~small~~ smal businesses businesses
owned and controlled by owned and controlled by ~~socially and economically~~social y and economical y disadvantaged individuals. Congress required disadvantaged individuals. Congress required
the government-wide minimum participation goal for the government-wide minimum participation goal for ~~small~~ smal businesses to be “not less than 20% businesses to be “not less than 20%
of the total value of of the total value of ~~all~~ al prime contract awards for each fiscal year” and “not less than 5% of the prime contract awards for each fiscal year” and “not less than 5% of the
total value of total value of ~~all~~ al prime contract and subcontract awards for each fiscal year” for prime contract and subcontract awards for each fiscal year” for ~~small~~ smal businesses businesses
owned and controlled by owned and controlled by ~~socially and economically~~social y and economical y disadvantaged individuals.121 disadvantaged individuals.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 maximum practicable opportunity for ~~small~~ smal business concerns and business concerns and ~~small~~ smal business concerns business concerns
owned and controlled by owned and controlled by ~~socially and economically~~social y and economical y disadvantaged individuals to participate in the disadvantaged individuals to participate in the
performance of contracts let by such agency.”122 The SBA was also required to report to the performance of contracts let by such agency.”122 The SBA was also required to report to the
President President ~~annually~~annual y on the attainment of the goals and to include the information in an annual on the attainment of the goals and to include the information in an annual
report to Congress.123 The SBA negotiates the goals with each federal agency and establishes a report to Congress.123 The SBA negotiates the goals with each federal agency and establishes a
small business eligible baseline for evaluating the agency’s performance.124 The agency head is baseline for evaluating the agency’s performance.124 The agency head is
required to “make consistent efforts to required to “make consistent efforts to ~~annually~~annual y expand participation by expand participation by ~~small~~ smal business concerns business concerns
from each industry category.”125 If the SBA and the agency cannot agree on the goals, the agency from each industry category.”125 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.126 Procurement Policy (OFPP) for resolution.126
The The ~~small~~ smal business eligiblebusiness eligible baseline excludes certain contracts that the SBA has determined do baseline excludes certain contracts that the SBA has determined do
not not ~~realistically~~ realistical y reflect the potential for reflect the potential for ~~small~~ smal business participation in federal procurement (such 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

~~120 15 U.S.C.~~ 120 15 U.S.C. §644(g)(2); and P.L. 95-507, a bill to amend the Small Business§644(g)(2); and P.L. 95-507, a bill to amend the Small Business Act and the SmallAct and the Small ~~Business~~ Business Investment Investment
Act of 1958. Act of 1958.
121 15 U.S.C. 121 15 U.S.C. §644(g)(1); and P.L. 100-656, the Business Opportunity Development Reform Act of 1988. The §644(g)(1); and P.L. 100-656, the Business Opportunity Development Reform Act of 1988. The
governmentgovernment -wide minimum participation goal for small businesses-wide minimum participation goal for small businesses ~~was increased~~ was increased from 20% to 23% byfrom 20% to 23% by P.L. 105-135, P.L. 105-135,
the Smallthe Small ~~Business~~ Business Reauthorization Act of 1997Reauthorization Act of 1997 . .
122 15 U.S.C. 122 15 U.S.C. §644(g)(1); and P.L. 100-656, the Business Opportunity Development Reform Act of 1988§644(g)(1); and P.L. 100-656, the Business Opportunity Development Reform Act of 1988 . .
123 15 U.S.C.123 15 U.S.C. §644(g)(1); and P.L. 100-656, the Business Opportunity Development Reform Act of 1988§644(g)(1); and P.L. 100-656, the Business Opportunity Development Reform Act of 1988 . .
124 According to a 2001 GAO124 According to a 2001 GAO report, the SBA began to specify what types of contracts the Federal Procurement Data report, the SBA began to specify what types of contracts the Federal Procurement Data
System wouldSystem would ~~exclude~~ exclude when determining agency compliance with federal contracting goals in FY1998. Prior to when determining agency compliance with federal contracting goals in FY1998. Prior to
FY1998, “FY1998, “ agencies reported their small businessagencies reported their small business achievements directlyachievements directly to SBA and excludedto SBA and excluded from their calculations from their calculations
certain types of contracts, such as those for which small businessescertain types of contracts, such as those for which small businesses had a limited or no chance to compete. SBA then had a limited or no chance to compete. SBA then
publishedpublished an annual report summarizing each agency’s achievements. SBAan annual report summarizing each agency’s achievements. SBA officials saidofficials said that in some casesthat in some cases they were they were
not aware of all exclusions the agencies madenot aware of all exclusions the agencies made when reporting their numbers.” GAO,when reporting their numbers.” GAO, ~~Small~~ Sm all Business: More
Transparency Needed in ~~Prime~~Prim e 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.
125 15 U.S.C. 125 15 U.S.C. §644(g)(2). §644(g)(2).
126 SBA,126 SBA, Office of Policy, Planning & Liaison, Office of Government Contracting & BusinessOffice of Policy, Planning & Liaison, Office of Government Contracting & Business Development, “FY 2018 Development, “FY 2018
GoalingGoaling Guidelines,”Guidelines,” ~~August~~ August 30, 2017, p. 4, at https://www.sba.gov/sites/default/files/2018-06/30, 2017, p. 4, at https://www.sba.gov/sites/default/files/2018-06/
FY18_Small_Business_Goaling_Guidelines.pdfFY18_Small_Business_Goaling_Guidelines.pdf (hereinafter SBA, Office of Policy, Planning & Liaison, Office of (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”).
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(such as government procurement card purchases and contracts valued less than $10,000).127 (such as government procurement card purchases and contracts valued less than $10,000).127
These exclusions These exclusions ~~typically~~typical y account for 18% to 20% of account for 18% to 20% of ~~all~~ al federal prime contracts each year. federal prime contracts each year.
The SBA then evaluates the agencies’ performance against their negotiated goals and presents the The SBA then evaluates the agencies’ performance against their negotiated goals and presents the
results in the SBA’s annual results in the SBA’s annual ~~Small~~ Smal Business Procurement Scorecards. The SBA uses FPDS-NG Business Procurement Scorecards. The SBA uses FPDS-NG
data, which are published in GSA’s annual data, which are published in GSA’s annual ~~Small~~ Smal Business Goaling Report. Each agency that Business Goaling Report. Each agency that
fails to achieve any proposed prime or subcontract goal is required to submit a justification to the 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.128 action.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 Veteran-Owned Woman-Owned ~~Small~~ Smal Business would be counted toward the Business would be counted toward the ~~Small~~ Smal Business Business
(SB) goal, the Service-Disabled Veteran-Owned (SB) goal, the Service-Disabled Veteran-Owned ~~Small~~ Smal Business (SDVOSB) goal and the Women-Business (SDVOSB) goal and the Women-
Owned Owned ~~Small~~ Smal Business (WOSB) goal. However, these category counts are not summed to triple 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).”129 (italics in original).”129
Over the years, federal government-wide procurement goals have been established for Over the years, federal government-wide procurement goals have been established for ~~small~~
~~businesses generally~~smal businesses general y (P.L. 100-656, the Business Opportunity Development Reform Act of 1988, (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 and P.L. 105-135, the HUBZone Act of 1997—Title VI of the ~~Small~~ Smal Business Reauthorization Business Reauthorization
Act of 1997); Act of 1997); ~~small~~ smal businesses owned and controlled by businesses owned and controlled by ~~socially and economically~~social y and economical y disadvantaged disadvantaged
individualsindividuals (P.L. 100-656); women (P.L. 103-355, the Federal Acquisition Streamlining Act of (P.L. 100-656); women (P.L. 103-355, the Federal Acquisition Streamlining Act of
1994); 1994); ~~small~~ smal businesses located within a HUBZonebusinesses located within a HUBZone (P.L. 105-135); and (P.L. 105-135); and ~~small~~ smal businesses owned 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~~ Smal Business Development Act of 1999). Business Development Act of 1999).
The current federal The current federal ~~small~~ smal business procurement goals are business procurement goals are
 at least 23.0% of the total value of  at least 23.0% of the total value of ~~all small~~ al smal business eligiblebusiness eligible prime contract prime contract
awards to awards to ~~small~~ smal businesses for each fiscal year; businesses for each fiscal year;
 5.0% of the total value of  5.0% of the total value of ~~all small~~ al smal business eligible prime contract awards and business eligible prime contract awards and
subcontract awards to subcontract awards to ~~small~~ smal disadvantaged businesses (including participants in disadvantaged businesses (including participants in
the SBA’s 8(a) Program) for each fiscal year;130 the SBA’s 8(a) Program) for each fiscal year;130
 5.0% of the total value of  5.0% of the total value of ~~all small~~ al smal business eligible prime contract awards and business eligible prime contract awards and
subcontract awards to women-owned subcontract awards to women-owned ~~small~~ smal businesses; businesses;
 3.0% of the total value of  3.0% of the total value of ~~all small~~ al smal business eligible prime contract awards and business eligible prime contract awards and
subcontract awards to HUBZone subcontract awards to HUBZone ~~small~~ smal businesses;131 and businesses;131 and

~~127 SBA,~~ 127 SBA, Office of Policy, Planning & Liaison, Office of Government Contracting & BusinessOffice of Policy, Planning & Liaison, Office of Government Contracting & Business Development, “FY 2018 Development, “FY 2018
GoalingGoaling Guidelines,”Guidelines,” p. 3; and GSA,p. 3; and GSA, ~~Federal~~ Federal Procurement Data System—Next Generation, “What’s In FPDS-NG,” at Procurement Data System—Next Generation, “What’s In FPDS-NG,” at
https://www.fpds.gov/wiki/index.php/FPDS-NG_FAQ.https://www.fpds.gov/wiki/index.php/FPDS-NG_FAQ.
128 SBA, 128 SBA, Office of Policy, Planning & Liaison, Office of Government Contracting & BusinessOffice of Policy, Planning & Liaison, Office of Government Contracting & Business Development, “FY 2018 Development, “FY 2018
GoalingGoaling Guidelines,”Guidelines,” p. 6. p. 6.
129 SBA,129 SBA, Office of Policy, Planning & Liaison, Office of Government Contracting & BusinessOffice of Policy, Planning & Liaison, Office of Government Contracting & Business Development, “FY 2018 Development, “FY 2018
GoalingGoaling Guidelines,”Guidelines,” p. 5. “p. 5. “~~The~~T he exception to this non-additive rule is for total Small Disadvantaged exception to this non-additive rule is for total Small Disadvantaged ~~Business~~ Business (SDB) (SDB)
which iswhich is the sum of 8(a) and non-8(a) SDBs. Each special type of small businessthe sum of 8(a) and non-8(a) SDBs. Each special type of small business is first of all a smallis first of all a small business.business. ~~That~~ T hat
also means Federalalso means Federal procurements awardedprocurements awarded to SDVOSBto SDVOSB ~~will~~ will also have been awardedalso have been awarded to Veteranto Veteran -Owned Small-Owned Small Business Business
(VOSB).” (VOSB).”
130 For additional information and analysis of the SBA’s 130 For additional information and analysis of the SBA’s 8(a) Program, see CRS8(a) Program, see CRS Report R44844, Report R44844, SBA’s “8(a)
Program”: Overview, History, and Current Issues, by Robert Jay Dilger. , by Robert Jay Dilger.
131 For additional information and analysis of the HUBZone program, see CRS131 For additional information and analysis of the HUBZone program, see CRS Report R41268, Report R41268, Small Business
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 3.0% of the total value of  3.0% of the total value of ~~all small~~ al smal business eligible prime contract awards and business eligible prime contract awards and
subcontract awards to service-disabled veteran-owned subcontract awards to service-disabled veteran-owned ~~small~~ smal businesses.132 businesses.132
There are no punitive consequences for not meeting these goals. However, the SBA’s There are no punitive consequences for not meeting these goals. However, the SBA’s ~~Small~~
Smal Business Procurement Scorecards and GSA’s Business Procurement Scorecards and GSA’s ~~Small~~ Smal Business Goaling Report are distributed Business Goaling Report are distributed
widely, receive media attention, and heighten public awareness of the issue of widely, receive media attention, and heighten public awareness of the issue of ~~small~~ smal business business
contracting. For example, agency performance as reported in the SBA’s contracting. For example, agency performance as reported in the SBA’s ~~Small~~ Smal Business Business
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 ~~FY2019~~the FY2020 Small Business ~~Goaling Report~~Procurement Scorecard indicates that federal agencies indicates that federal agencies
met the federal procurement goal for met the federal procurement goal for ~~small businesses generally, small disadvantaged businesses,~~
~~women-owned small~~ smal businesses general y, smal disadvantaged businesses, and service-disabled veteran-owned businesses, and service-disabled veteran-owned ~~small~~ smal businesses in FY2020 (see the second and third columns). For comparative purposes, Table 1 provides the percentage of smal business eligible contracts awarded to smal businesses in FY2020 without the required double counting of awards in a disaster area and to Puerto Rico and other covered territories (see the fourth column), as wel as the percentage of al ~~businesses in~~
~~FY2019.~~
~~Table 1~~ ~~also provides, for comparative purposes, the percentage of total reported~~ federal contracts federal contracts
(without exclusions(without exclusions~~) awarded to those small businesses in FY2019~~ and without double counting) awarded to smal businesses (see the fifth column). .
Table 1. Federal Procurement Goals and Percentage of ~~FY2019~~FY2020 Federal Contract
Dollars Awarded to Small Businesses, by Type
Percentage ~~of Federal~~
of Percentage of Percentage of Federal Federal Federal Contracts (all Contracts (small Contracts (small reported business eligible, business eligible, contracts, including double excluding double excluding double ~~Percentage of Federal~~
~~Contracts (small~~
~~Contracts (all~~
Business Type
Federal Goal
~~business eligible)~~
~~reported contracts)~~
~~Small~~ counting) counting) counting) Smal Businesses Businesses
23.0% 23.0%
26.02% 25.42% 21.89% Smal ~~25.82%~~
~~22.21%~~
~~Small~~ Disadvantaged Disadvantaged
5.0% 5.0%
10. 10.~~13%~~
~~8.69~~54% 10.39% 9.08% %
Businesses Businesses
Women-Owned Women-Owned ~~Small~~
Smal 5.0% 5.0%
~~5.04%~~
~~4.32~~4.85% 4.71% 4.10% %
Businesses Businesses
HUBZone HUBZone ~~Small Businesses~~Smal
3.0% 3.0%
2. 2.~~23%~~
~~1.95%~~
44% 2.39% 2.04% Businesses Service-Disabled Service-Disabled ~~Veteran-~~
3.0% 3.0%
4. 4.3428% 4.23% 3.92% Veteran-Owned Smal %
~~4.00%~~
~~Owned Small~~ Businesses Businesses
Sources: U.S. U.S. ~~Small~~ Smal Business AdministrationBusiness Administration (SBA), “Statutory Guidelines,”, “Statutory Guidelines,” at https://www.sba.gov/content/statutory-at https://www.sba.gov/content/statutory-
guidelines-0 (federal goals); 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/~~
~~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 dollars).~~
Notes: 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~~
~~contracts totaled $501.58 billion and that $129.5 billion was awarded to small businesses, $50.8 billion to small~~
~~disadvantaged businesses, $25.3 billion to women-owned small businesses, $11.2 billion to SBA-certified~~
~~HUBZone small businesses, and $21.8 billion 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~~
~~reported on August 12, 2020: $589.5 billion in total contracts; $131.0 billion to small businesses, $51.3 billion to~~
~~small disadvantaged businesses, $25.5 billion to women-owned small businesses, $11.5 billion to SBA-certified~~
~~HUBZone small businesses, and $23.6 billion to service-disabled veteran-owned small businesses.~~

Administration HUBZone Program, by Robert Jay Dilger.
~~132 15 U.S.C. §644(g)(1)-(2).~~
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SBA, “Government-Wide Performance, FY2020 Smal Business Procurement Scorecard,” at https://www.sba.gov/document/support-smal -business-procurement-scorecard-overview; and data generated using General Service Administration, “Sam.Gov data bank,” July 31, 2021, at https://sam.gov/reports/awards/adhoc (al reported contract dol ars). Notes: In accordance with federal law, the SBA provided double credit, for scorecard purposes only, for prime contracts awarded in disaster areas that are awarded as a local set aside and a smal business or other socioeconomic set aside when the vendor state is the same as the place of performance (see 15 U.S.C. §644(f)) Adm inistration 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 and for prime contracts awarded to businesses in Puerto Rico and covered territories (see 15 U.S.C. §644(x)(1)). The SBA also included Department of Energy first-tier subcontract awards as required by P.L. 113-76, the Consolidated Appropriations Act, 2014 (§318). The FY2020 Smal Business Procurement Scorecard was made available on July 30, 2021, and reflects contracting data as of February 22, 2021. Smal business eligible contracts totaled $559.981 bil ion in FY2020, and $145.8 bil ion was awarded to smal businesses ($142.4 without double counting), $59.0 bil ion to smal disadvantaged businesses ($58.2 bil ion without double counting), $27.1 bil ion to women-owned smal businesses ($26.4 bil ion without double counting), $13.6 bil ion to SBA-certified HUBZone smal businesses ($13.4 bil ion without double counting), and $23.9 bil ion to service-disabled veteran-owned smal businesses ($23.7 bil ion without double counting). The Department of Energy first-tier subcontract awards in FY2020 were as fol ows: $3.36 bil ion to smal businesses, $0.81 bil ion to smal disadvantaged businesses, $0.76 bil ion to smal women-owned businesses, $0.24 bil ion to SBA-certified HUBZone smal businesses, and $0.23 bil ion to service-disabled veteran-owned smal businesses. The percentages provided in the column for al reported contracts in FY2020 were calculated using contracting data as reported on July 31, 2021 (without double counting): $665.7 bil ion in total contracts, and $145.8 bil ion was awarded to smal businesses; $60.5 bil ion to smal disadvantaged businesses; $27.3 bil ion to women-owned smal businesses; $13.6 bil ion to SBA-certified HUBZone smal businesses; and $26.1 bil ion to service-disabled veteran-owned smal businesses.
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 apparent successful ~~small~~ smal business offeror lacks certain elements of responsibility (e.g., is unable business offeror lacks certain elements of responsibility (e.g., is unable
to fulfil ~~to fulfill~~ the requirements of a specific government procurement because it lacks capability, 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 Certificate of Competency (COC), even if the next acceptable offer is also from a ~~small~~
smal business.133 The COC certifies in writing that the business.133 The COC certifies in writing that the ~~small~~ smal business meets business meets ~~all~~ al required elements of 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 “COC program empowers the SBA to certify to contracting officers as to ~~all~~ al elements of elements of
responsibility of any responsibility of any ~~small~~ smal business concern to receive and perform a specific government 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.”134 imposed and enforced by other federal agencies.”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 compliance reviews of contractors awarded contracts that require an acceptable ~~small~~ smal business business
subcontracting plan.135 In addition, once the contract is completed, federal agencies are required subcontracting plan.135 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. 133 15 U.S.C. §637(b)(7); and FAR §19.601(a-e). 134 FAR §19.601(b). 135 15 U.S.C. §633(h). Congressional Research Service 29 An Overview of Small Business Contracting ~~payment’s due date.~~
Small Business Subcontracting Plan Reviews
The periodic compliance review can take place on-site, at the contracting agency, or virtual.136 The periodic compliance review can take place on-site, at the contracting agency, or virtual.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.137 Contractors are selected randomly for audit.138 The SBA may enter into agreements procedures.137 Contractors are selected randomly for audit.138 The SBA may enter into agreements
with other federal agencies to conduct these assessments.139 with other federal agencies to conduct these assessments.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.140 If any deficiencies compliance or noncompliance, ranging from unsatisfactory to outstanding.140 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

~~133 15 U.S.C. §637(b)(7); and FAR §19.601(a-e).~~
~~134 FAR §19.601(b).~~
~~135 15 U.S.C. §633(h).~~
~~136 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.~~
~~137 SBA, “Subcontracting Assistance Program Post Award,” SOP 60 03 7, p. 11.~~
~~138 SBA, “Subcontracting Assistance Program Post Award,” SOP 60 03 7, p. 12.~~
~~139 SBA, “Subcontracting Assistance Program Post Award,” SOP 60 03 7, p. 14.~~
~~140 13 C.F.R. §125.3(e)(3).~~
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~~letter date, a corrective action plan (CAP).141 The CAP is submitted to the SBA~~ letter date, a corrective action plan (CAP).141 The CAP is submitted to the SBA Area Office via Area Office via
email, or any method designated by the SBA. The commercial market representative conducts a 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 SBAfollow-up compliance report within six months to a year of the date the SBA acknowledges acknowledges
receipt of the contractor’s CAP to ensure that corrective actions have been taken to eliminate the 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 deficiencies. The SBA keeps the federal agency that awarded the contract informed of the
contractor’s adherence to correcting the deficiencies.142 contractor’s adherence to correcting the deficiencies.142
If the contractor refuses to provide or address If the contractor refuses to provide or address ~~all~~ al deficiencies in the CAP, a delinquent CAP letter 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 regulations. If an acceptable CAP is not received in the ~~allotted~~al otted time frame the case is escalated to 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.143 that awarded the contract for resolution or to begin accessing liquidated damages.143
Prompt Payments
Once a contract is awarded, federal agencies are Once a contract is awarded, federal agencies are ~~generally~~general y required to pay interest to prime 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.144 136 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. 137 SBA, “Subcontracting Assistance Program Post Award,” SOP 60 03 7, p. 1 1. 138 SBA, “Subcontracting Assistance Program Post Award,” SOP 60 03 7, p. 1 2. 139 SBA, “Subcontracting Assistance Program Post Award,” SOP 60 03 7, p. 14. 140 13 C.F.R. §125.3(e)(3). 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. 1 3. 143 SBA, “Subcontracting Assistance Program Post Award,” SOP 60 03 7, p. 1 3. Liquidated damages are predetermined sums ~~in the contract.144~~
~~Similar requirements exist for prime contractors in paying subcontractors on 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~~
~~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~~
~~(2) pay interest on any amounts that are not paid within the proper time frame.145 The contract~~
~~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~~ ~~their~~
~~subcontractors. This latter provision ensures that the payment and interest penalty requirements~~
flow down to all tiers of construction subcontractors.
~~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~~
~~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~~

~~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~~
~~sums~~ a contractor must pay the procuring agency for specified contract breaches or performance failures. For additional a contractor must pay the procuring agency for specified contract breaches or performance failures. For additional
information and analysis, see CRSinformation and analysis, see CRS Report R45322, Report R45322, Selected Legal Tools for Maintaining ~~Government~~Governm ent Contractor
Accountability, by David, by David H. Carpenter and Kathleen Ann Ruane. H. Carpenter and Kathleen Ann Ruane.
144 31 U.S.C. 144 31 U.S.C. §3903(a); and P.L. 97-177, the Prompt Payment Act. Among other things, a proper invoice contains (1) §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 ofthe name of the contractor, the invoice date, and the contract number; (2) a description of the goods renderedthe goods rendered and the and the
shipping and payment terms; (3) other substantiating documentation or shipping and payment terms; (3) other substantiating documentation or ~~information~~info rmation required under required under the contract; and (4) the contract; and (4)
the name, title, telephone number, and complete mailing addressthe name, title, telephone number, and complete mailing address of the person to whomof the person to whom payment should bepayment 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~~
~~the Treasury twice a year under the Contract Disputes Act. 31 U.S.C. §3902(a).~~
~~145 31 U.S.C. §3905(b); and P.L. 100-496, the Prompt Payment Act Amendments of 1988.~~
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~~reduction in payment or failure to pay a subcontractor within 90 days.146 If the contracting officer~~
sent. 31 Congressional Research Service 30 An Overview of Small Business Contracting Similar requirements exist for prime contractors in paying subcontractors on construction contracts. These requirements are especial y important for smal businesses in the construction industry. Specifical y, every construction contract awarded by a federal agency must contain 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 (2) pay interest on any amounts that are not paid within the proper time frame.145 The contract must also obligate the prime contractor to include similar payment and interest penalty terms in its subcontracts, as wel as require its subcontractors to impose these terms on their subcontractors. This latter provision ensures that the payment and interest penalty requirements flow down to al tiers of construction subcontractors. 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 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 reduction in payment or failure to pay a subcontractor within 90 days.146 If the contracting officer for a for a covered contract (a contract that requires an acceptable subcontracting plan) determines that (a contract that requires an acceptable subcontracting plan) determines that
a prime contractor has a history of unjustified, untimely payments to contractors, the contracting a prime contractor has a history of unjustified, untimely payments to contractors, the contracting
officer officer ~~shall~~ shal record the contractor’s identity, describe the circumstances under which the record the contractor’s identity, describe the circumstances under which the
contractor may be determined to have a history of unjustified, untimely payments to contractor may be determined to have a history of unjustified, untimely payments to
subcontractors, and include the contractor’s identity in, and make publicly availablesubcontractors, and include the contractor’s identity in, and make publicly available through, the through, the
Federal Awardee Performance and Integrity Information System, or any successor.147 This Federal Awardee Performance and Integrity Information System, or any successor.147 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.”148contractors that are not responsible sources.”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  the payment is to a ~~small~~ smal business; or  the payment is related to an emergency, disaster, or military deployment.149 U.S.C. §3901(a); and 48 C.F.R. §32.905(b)(1)(i)-(x). T he interest rate to be used is that determined by the Secretary of the T reasury twice a year under the Contract Disputes Act. 31 U.S.C. §3902(a). 145 31 U.S.C. §3905(b); and P.L. 100-496, the Prompt Payment Act Amendments of 1988. 146 15 U.S.C. §637(d)(13)(A-B); and U.S. Department of the T reasury~~business; or~~
~~ the payment is related to an emergency, disaster, or military deployment.149~~
~~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~~
~~days after receipt of a proper invoice for the amount due if a specific payment date is not~~
~~established by contract.150~~
~~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~~
~~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~~
~~“in accordance with the accelerated payment date, to the maximum extent practicable, without~~
~~any further consideration from or fees charged to the subcontractor.”151~~

~~146 15 U.S.C. §637(d)(13)(A-B); and U.S. Department of the Treasury~~, Bureau of the Fiscal Service, “Prompt , Bureau of the Fiscal Service, “Prompt
Payment,” at https://www.fiscal.treasury.gov/fsservices/gov/pmt/promptPayment/promptPayment_home.htm. Under a 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 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. to pay subcontractors in accordance with the terms of the contract.
147 15 U.S.C. 147 15 U.S.C. §637(d)(13)(C-E). §637(d)(13)(C-E).
148 Department of Defense, General Services148 Department of Defense, General Services Administration, and National Aeronautics and SpaceAdministration, and National Aeronautics and Space Administration, Administration,
“Federal Acquisition Regulation; FAR“Federal Acquisition Regulation; FAR ~~Case~~ Case 2008-027, Federal Awardee2008-027, Federal Awardee Performance and Integrity Information Performance and Integrity Information
System,” 75System,” 75 Federal Register 14059, March 23, 2010. 14059, March 23, 2010.
149 31 U.S.C.149 31 U.S.C. §3903(a)(8); Office of Management and Budget,§3903(a)(8); Office of Management and Budget, “Prompt Payment,” 64“Prompt Payment,” 64 Federal Register 52582-52583, Congressional Research Service 31 An Overview of Small Business Contracting In addition, the Secretary of Defense is required, to the fullest extent permitted by law, to establish an accelerated payment date for its smal 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 established by contract.150 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 smal businesses, with a 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 “in accordance with the accelerated payment date, to the maximum extent practicable, without any further consideration from or fees charged to the subcontractor.”151 Concluding Observations The smal business contracting programs described in this report general y ~~Federal Register~~ ~~52582-52583,~~
~~September 29, 1999; and 5 C.F.R. §1315.5.~~
~~150 10 U.S.C. §2307(2)(A); and P.L. 115-232, the John S. McCain National Defense Authorization Act for Fiscal Year~~
~~2019.~~
~~151 10 U.S.C. §2307(2)(B); and P.L. 115-232, the John S. McCain National Defense Authorization Act for Fiscal Year~~
~~2019.~~
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~~Concluding Observations~~
~~The small business contracting programs described in this report generally~~ have strong bipartisan have strong bipartisan
support. However, that does not mean that these programs face no opposition or that issues have 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, not been raised concerning the impact or operations of specific programs. For example, ~~small~~
smal business advocates have sought policies that reduce or eliminate exclusions that narrow the reach business advocates have sought policies that reduce or eliminate exclusions that narrow the reach
of of ~~small~~ smal business contracting preferences and want the SBA to use the total value of business contracting preferences and want the SBA to use the total value of ~~all~~ al prime prime
contract awards in the contract awards in the ~~Small~~ Smal Business Goaling Report.152 Also, critics have questioned some of Business Goaling Report.152 Also, critics have questioned some of
these programs’ effectiveness, in terms of both promoting these programs’ effectiveness, in terms of both promoting ~~small~~ smal business opportunities to win business opportunities to win
federal contracts and a more diversified, robust economy.153 federal contracts and a more diversified, robust economy.153
Many observers judge the relative success or failure of federal efforts to enhance Many observers judge the relative success or failure of federal efforts to enhance ~~small~~ smal business 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 the procurement goals in the annual ~~Small~~ Smal Business Goaling Report. In recent years, the federal Business Goaling Report. In recent years, the federal
government has government has ~~generally~~general y met the government-wide goals of awarding 23% of the total value of met the government-wide goals of awarding 23% of the total value of
~~all small~~ al smal business eligiblebusiness eligible prime contract awards to prime contract awards to ~~small businesses generally~~smal businesses general y, 5% to SDBs, and , 5% to SDBs, and
3% to SDVOSBs. However, it has had difficulty meeting the goals of 5% to WOSBs and 3% to HUBZone smal businesses.154 September 29, 1999; and 5 C.F.R. §1315.5. 150 10 U.S.C. §2307(2)(A); and P.L. 115-232, the John S. McCain National Defense Authorization Act for Fiscal Year 2019. 151 10 U.S.C. §2307(2)(B); and P.L. 115-232, the John S. McCain National Defense Authorization Act for Fiscal Year 2019. 152 See ~~3% to SDVOSBs. However, it has had difficulty meeting the goals of 5% to WOSBs and 3% to~~
~~HUBZone small businesses.154~~
~~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~~
~~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~~
~~these contracts have on small businesses, industry competitiveness, or the overall economy. As~~
~~one group of researchers has argued,~~
~~the entire goal-setting process … is geared to measuring the dollars and contracts awarded~~
~~to small business, and pays little attention to the effect that access to government contracts~~
~~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~~
~~alternative policies [emphasis in original].155~~

~~152 See~~ American Small Business League v. Maria Contreras-Sweet in her capacity as Administrator of the United
States ~~Small Business Administration~~Sm all Business Adm inistration, May 3, 2016, at http://www.asbl.com/documents/, May 3, 2016, at http://www.asbl.com/documents/
Filed_Complaint_For_Injunctive_Relief.pdf. Filed_Complaint_For_Injunctive_Relief.pdf.
~~The~~T he federal government awarded federal government awarded more than $more than $~~508~~50 8.8 billion in federal contracts in FY2017. About $442.5 billion of that .8 billion in federal contracts in FY2017. About $442.5 billion of that
amount wasamount was ~~deemed~~ deemed small businesssmall business eligible.eligible. ~~GSA, Federal~~ GSA, Federal Procurement Data SystemProcurement Data System —Next Generation, at —Next Generation, at
https://www.fpds.gov/fpdsng/https://www.fpds.gov/fpdsng/ (contract dollar amount); and GSA,(contract dollar amount); and GSA, Federal Procurement Data System—Next Federal Procurement Data System—Next
Generation, “Small BusinessGeneration, “Small Business ~~Goaling~~ Goaling Report: Fiscal Year 2017,” at https://www.fpds.gov/downloads/top_requests/Report: Fiscal Year 2017,” at https://www.fpds.gov/downloads/top_requests/
FPDSNG_SB_Goaling_FY_2017.pdf. FPDSNG_SB_Goaling_FY_2017.pdf.
153 For example, see Henry Beale 153 For example, see Henry Beale and Nicola Deas, “and Nicola Deas, “~~The~~T he HUBZone Report,” prepared for the SBA, Office of 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, Grammich, ~~Thomas~~T homas R. Edison Jr., Nancy Young Moore, and Edward R. Edison Jr., Nancy Young Moore, and Edward G. Keating, G. Keating, ~~Small~~Sm all Business and Defense
Acquisitions: A Review of Policies and Current Practices (Santa Monica, CA: RAND, (Santa Monica, CA: RAND, 2011), pp. xii, 15, 16, at 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.
154 SBA,154 SBA, ~~“The~~ “ T he Federal Government Achieves Small Federal Government Achieves Small ~~Business~~ Business Contracting Goal for the Sixth Consecutive Year with Congressional Research Service 32 An Overview of Small Business Contracting The Smal Business Goaling Report is the most convenient measure available to compare federal smal business contracting performance over time, but it has limitations. For example, the report does not include al federal contracts, because some are not deemed to be smal business eligible and others are not recorded in the FPDS-NG. In addition, the report does not evaluate the effect these contracts have on smal businesses, industry competitiveness, or the overal economy. As one group of researchers has argued, the entire goal-setting process … is geared to measuring the dollars and contracts awarded to small business, and pays little attention to the effect that access to government contracts 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 alternative policies [emphasis in original].155 Comprehensive studies examining the effect of smal business contracting preferences on smal ~~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-~~
~~media-advisories/federal-government-achieves-small-business-contracting-goal-sixth-consecutive-year-record-~~
~~breaking.~~
~~155 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~~
~~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 business startups, growth, wealth generation, and industry competitiveness may prove useful for
congressional oversight. In the meantime, although the congressional oversight. In the meantime, although the ~~Small~~ Smal Business Goaling Report has its Business Goaling Report has its
limitations, it can help policymakers identify programs most in need of examination. For 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 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 program to federal contracting officials, primarily due to the continuing difficulties federal
agencies have had in meeting the 3% goal for HUBZoneagencies have had in meeting the 3% goal for HUBZone ~~small~~ smal businesses.156 businesses.156

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-breaking. 155 Clifford A. Grammich, T homas 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 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.
156 SBA,156 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.
Congressional Research Service Congressional Research Service

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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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