An Overview of Small Business Contracting

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An Overview of Small Business Contracting
~~February~~May 25, 2022 25, 2022
Congress has broad authority to impose requirements upon the federal procurement Congress has broad authority to impose requirements upon the federal procurement
process, that is, the process whereby agencies obtain goods and services from the privateprocess, that is, the process whereby agencies obtain goods and services from the private ~~Robert Jay Dilger~~
~~sector. One way in~~ sector. One way in Robert Jay Dilger which Congress has exercised this authority is by adopting measures which Congress has exercised this authority is by adopting measures
to promote contracting and Senior Specialist in Senior Specialist in
~~to promote contracting and~~ subcontracting between “subcontracting between “~~smal~~ small businesses” and federal businesses” and federal
agencies. American National American National
~~agencies.~~
~~Government~~

Government These measures, among other things, are designed to ensure that a “fair proportion” of These measures, among other things, are designed to ensure that a “fair proportion” of
~~R. Corinne Blackford~~
~~federal~~ federal contract and subcontract dollars is awarded to contract and subcontract dollars is awarded to ~~smal~~ small businesses; establish businesses; establish
~~Analyst in Small Business~~
~~government-wide and~~ government-wide and R. Corinne Blackford agency-specific goals for the percentage of federal contract and agency-specific goals for the percentage of federal contract and
~~and Economic~~
~~subcontract dollars awarded to smal businesses; establish an annual Smal Business~~
~~Development Policy~~

subcontract dollars awarded to Analyst in Small Business small businesses; establish an annual Small Business Goaling Report to measure progress in Goaling Report to measure progress in and Economic meeting these goals; meeting these goals; ~~general y~~generally require federal require federal
agencies, under specified circumstances, to reserve agencies, under specified circumstances, to reserve Development Policy contracts that have an anticipated contracts that have an anticipated

value greater than the micro-purchase threshold (currently value greater than the micro-purchase threshold (currently $10,000), but not greater than $10,000), but not greater than
the simplified acquisition threshold (currently $250,000) exclusively for the simplified acquisition threshold (currently $250,000) exclusively for ~~smal~~ small businesses; authorize federal businesses; authorize federal
agencies, under specified circumstances, to set agencies, under specified circumstances, to set aside contracts that have an anticipated value greater than the aside contracts that have an anticipated value greater than the
simplified acquisition threshold exclusively for simplified acquisition threshold exclusively for ~~smal~~ small businesses; authorize federal agencies to make sole-source businesses; authorize federal agencies to make sole-source
awards to awards to ~~smal~~ small businesses when the award could not otherwise be made (e.g., only a single source is available, businesses when the award could not otherwise be made (e.g., only a single source is available,
under urgent and under urgent and ~~compel ing~~compelling circumstances); authorize federal agencies to set aside contracts for, or grant other circumstances); authorize federal agencies to set aside contracts for, or grant other
contracting preference to, specific types of contracting preference to, specific types of ~~smal~~ small businesses (e.g., 8(a) businesses (e.g., 8(a) ~~smal~~ small businesses, HUBZone businesses, HUBZone ~~smal~~
small businesses, women-owned businesses, women-owned ~~smal~~ small businesses (WOSBs), and service-disabled veteran-businesses (WOSBs), and service-disabled veteran-owned small businesses ~~owned smal businesses~~
(SDVOSBs)); and task the (SDVOSBs)); and task the ~~Smal~~ Small Business Administration (SBA) and other federal procurement officers with Business Administration (SBA) and other federal procurement officers with
reviewing and restructuring proposed procurements to maximize opportunities for reviewing and restructuring proposed procurements to maximize opportunities for ~~smal~~ small business participation. business participation.
~~Smal~~ Small business contracting programs business contracting programs ~~general y~~generally have strong bipartisan support. However, that does not mean that have strong bipartisan support. However, that does not mean that
these programs face no opposition, or that issues have not been raised concerning the impact and operations of these programs face no opposition, or that issues have not been raised concerning the impact and operations of
specific programs. For example, specific programs. For example, ~~smal~~ small business advocates note that implementing regulations in the Federal business advocates note that implementing regulations in the Federal
~~Acquisition~~ Acquisition Regulation (FAR) narrow the reach (and impact) of some Regulation (FAR) narrow the reach (and impact) of some ~~smal~~ small business contracting preferences by business contracting preferences by
excluding specific types of contracts, such as those listed in the Federal Supply Schedules, from FAR excluding specific types of contracts, such as those listed in the Federal Supply Schedules, from FAR
requirements pertaining to requirements pertaining to ~~smal~~ small business contracting. Advocates want the federal government to enact policies business contracting. Advocates want the federal government to enact policies
that reduce or eliminatethat reduce or eliminate such exclusions. Critics have questioned some of these programs’ effectiveness, in terms such exclusions. Critics have questioned some of these programs’ effectiveness, in terms
of both promoting of both promoting ~~smal~~ small business opportunities to win federal contracts and promoting a more diversified, robust business opportunities to win federal contracts and promoting a more diversified, robust
economy. economy.
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 ~~smal~~ small business contracting business contracting
opportunities by whether the federal government and individual federal agencies meet the predetermined opportunities by whether the federal government and individual federal agencies meet the predetermined
procurement goals in the annual procurement goals in the annual ~~Smal~~ Small Business Goaling Report. In recent years, the federal government has Business Goaling Report. In recent years, the federal government has
~~general y~~generally succeeded in meeting the government-wide goals of awarding 23% of the total value of succeeded in meeting the government-wide goals of awarding 23% of the total value of ~~al smal~~
all small business eligiblebusiness eligible prime contract awards to prime contract awards to ~~smal~~ small businesses, 5% to businesses, 5% to ~~smal~~ small disadvantaged businesses (SDBs), and disadvantaged businesses (SDBs), and
3% to SDVOSBs. It has had difficulty meeting the goals of 5% to WOSBs and 3% to HUBZone3% to SDVOSBs. It has had difficulty meeting the goals of 5% to WOSBs and 3% to HUBZone ~~smal~~ small businesses.businesses.
The The ~~Smal~~ Small Business Goaling Report is the most convenient measure available to compare federal Business Goaling Report is the most convenient measure available to compare federal ~~smal~~ small business business
contracting performance over time, but it has limitations. For example, the SBAcontracting performance over time, but it has limitations. For example, the SBA excludes some contracts from the excludes some contracts from the
report in its determination of what is “report in its determination of what is “~~smal~~ small business eligible” and some federal procurement activities are not 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 included because they are not recorded in the Federal Procurement Data System—Next Generation. It also does
not evaluate the effect these contracts have on not evaluate the effect these contracts have on ~~smal~~ small businesses, industry competitiveness, or the businesses, industry competitiveness, or the ~~overal~~ overall economy. 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 ~~smal~~ small 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 ~~smal~~ small 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 ~~Smal~~ Small Business Act Business Act
(P.L. 83-163), which authorized the (P.L. 83-163), which authorized the ~~Smal~~ Small 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 ~~smal~~ small 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 ~~smal~~ small 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 ~~smal~~ small businesses was not to “favor businesses was not to “favor ~~smal~~ small 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 ~~smal~~ small 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 competitiontwo primary areas—market competition ~~and local~~ and local economic development.economic 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 ~~Committe e~~ Committee on on
Banking and Currency, Banking and Currency, ~~Sm all~~Small Business Act of 1953, report to accompany H.R. 5141, 83rd Cong., 1st sess., May 28, , report to accompany H.R. 5141, 83rd Cong., 1st sess., May 28,
1953, H.Rept. 83-494 (Washington: GPO, 1953). 1953, H.Rept. 83-494 (Washington: GPO, 1953).
2 On July 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, ~~Sm all Business Adm inistration~~ Small Business Administration, 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 ~~smal~~ small 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 ~~smal~~ small businesses, including businesses, including
loan guaranty and venture capital programs to enhance loan guaranty and venture capital programs to enhance ~~smal~~ small business access to capital; business access to capital;
contracting programs to increase contracting programs to increase ~~smal~~ small 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 ~~especial y~~especially 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 ~~general y and smal~~ generally and small 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 ~~smal~~
small businesses, businesses, ~~smal~~ small disadvantaged businesses (SDBs), SDBs participating the SBA’s “8(a) Business disadvantaged businesses (SDBs), SDBs participating the SBA’s “8(a) Business
Development Program,” Development Program,” ~~Historical y Underutilized~~ Historically Underutilized Business Zone (HUBZone)Business Zone (HUBZone) ~~smal~~ small businesses, businesses,
women-owned women-owned ~~smal~~ small businesses (WOSBs), and service-disabled veteran-owned businesses (WOSBs), and service-disabled veteran-owned ~~smal~~ small businesses businesses
(SDVOSBs). The SBA administers many, but not (SDVOSBs). The SBA administers many, but not al all, 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 ~~smal~~ small businesses: businesses:
1. The requirement that federal agencies 1. The requirement that federal agencies ~~general y~~ generally 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 ~~smal~~ small 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 ~~smal~~ small 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 ~~smal~~ small 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 ~~smal~~ small businesses. businesses.
3. The requirement that federal agencies 3. The requirement that federal agencies ~~general y~~ generally 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
~~smal~~ small businesses when there is a reasonable expectation that offers businesses when there is a reasonable expectation that offers ~~wil be~~
will be obtained from at least two responsible obtained from at least two responsible ~~smal~~ small businesses offering the products of businesses offering the products of
different different ~~smal~~ small businesses (Rule of Two) and the award businesses (Rule of Two) and the award ~~wil~~ will 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 ~~smal~~
small businesses when the award could not otherwise be made (e.g., only a single businesses when the award could not otherwise be made (e.g., only a single
source is available, under urgent and source is available, under urgent and ~~compel ing~~compelling 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 ~~smal~~ small businesses (e.g., 8(a) businesses (e.g., 8(a) ~~smal~~
small businesses, HUBZone businesses, HUBZone ~~smal~~ small businesses, WOSBs, and SDVOSBs) and to specific businesses, WOSBs, and SDVOSBs) and to specific
types of businesses types of businesses ~~general y~~generally (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 ~~smal~~ small business goaling business goaling
program, program, ~~smal~~ small 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 ~~Smal~~ Small 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 ~~smal~~ small 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 ~~smal~~ small 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 ~~smal~~ small 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, ~~smal~~ small 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 ~~smal~~ small 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 ~~smal~~ small 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 ~~smal~~

~~8 FAR~~ small 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.
~~T he~~ The 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. ~~T he~~The 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 orfor its own operations or for other offices, installations, projects, 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. …~~T he~~The use of BPAs does not exempt an agency from use of BPAs does not exempt an agency from ~~t he~~the responsibility for 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 ~~T ask~~Task 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.
~~T he~~The U.S. Supreme U.S. Supreme Court ruledCourt ruled in 2016, in in 2016, in ~~Kingdom ware~~Kingdomware 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 ~~smal~~ small 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 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~~
~~identification number~~Unique Entity Identifier (i.e., a distinct 12-character, alpha-numeric identification value) for each of the business’s physical locations) for each of the business’s physical locations~~, and~~.10 Businesses apply for and receive this identification value when they register with the federal register with the federal
government’s System for Award Management (SAM).government’s System for Award Management (SAM).~~10 SAM is used by government agencies~~11 Government agencies use SAM for ~~for~~
several purposes, including to find contractors.several purposes, including to find contractors.11
12 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 ~~general y~~generally 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 ~~sel~~ sell multiple products and services.multiple products and services.12
13 Businesses that identify themselves as a Businesses that identify themselves as a ~~smal~~ small business in SAM must (1) meet the business in SAM must (1) meet the ~~Smal~~ Small Business Business
Act’s definition of a Act’s definition of a ~~smal~~ small business and (2) not exceed size standards established, and updated business and (2) not exceed size standards established, and updated
~~periodical y~~periodically, by the SBA., by the SBA.13
~~The Smal~~ 14 The Small Business Act defines a Business Act defines a ~~smal~~ small 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 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, “~~T he~~The 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,
~~T homas~~Thomas R. Edison Jr., Nancy Young Moore, and Edward R. Edison Jr., Nancy Young Moore, and Edward G. G. Keating, Keating, ~~Sm all~~Small 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 10 ~~SBA, “Federal Contracting Guide: Basic~~ For additional information concerning the Unique Entity Identifier requirement, see U.S. General Services Administration (GSA), “Unique Entity Identifier Update,” at https://www.gsa.gov/about-us/organization/federal-acquisition-service/office-of-systems-management/integrated-award-environment-iae/iae-systems-information-kit/unique-entity-identifier-update. 11 SBA, “Federal Contracting Guide: 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 ~~Num bers~~Numbers and CAGE Codes, by, by L. Elaine Halchin; and CRSL. Elaine Halchin; and CRS Report RS22536, Report RS22536,
Overview of the Federal ~~Procurem ent~~Procurement Process and Resources, by L. Elaine Halchin. , by L. Elaine Halchin.
1112 SBA, 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. Bureau~~ 13 U.S. 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/.
1314 P.L. 111-240, the Small Business 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. Congressional Research Service 4 An Overview of Small Business Contracting  is independently owned and operated; and  is not dominant in its field on a national basis.15~~at least once every five years.~~
~~14 15 U.S.C. §632(a); and 13 C.F.R. §121.105. Affiliations between businesses, or relationships allowing one party~~
~~control or the power of control over another, generally count in size determinations. Businesses can thus be determined~~
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The business may be a sole proprietorship, partnership, corporation, or any other legal form. The business may be a sole proprietorship, partnership, corporation, or any other legal form.1516
The The ~~Smal~~ Small 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 ~~smal~~
small businesses are provided SBA assistance. The SBA currently uses two types of size standards to businesses are provided SBA assistance. The SBA currently uses two types of size standards to
determine 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.maximum tangible net worth and average net income after federal taxes.1617 The SBA’s industry- The SBA’s industry-
specific size standards are used to determine eligibilityspecific size standards are used to determine eligibility for federal for federal ~~smal~~ small business contracting business contracting
purposes. purposes.
The SBA The SBA determines if a business is determines if a business is ~~smal~~ small by comparing that business’s economic characteristics by comparing that business’s economic characteristics
((~~typical y~~typically 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 ~~Smal~~ Small 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 ~~smal~~ small. .
The SBA’s size standards are designed to (1) encourage competition within each industry and The SBA’s size standards are designed to (1) encourage competition within each industry and
(2) ensure that SBA assistance is provided only to firms that are not dominant in their field on a (2) ensure that SBA assistance is provided only to firms that are not dominant in their field on a
national basis. The size standards are derived through an assessment of four economic factors: national basis. The size standards are derived through an assessment of four economic factors:
(1) the average firm size, (2) the average assets size as a proxy of start-up costs and entry barriers, (1) the average firm size, (2) the average assets size as a proxy of start-up costs and entry barriers,
(3) the four-firm concentration ratio (the cumulative share of total industry receipts of that (3) the four-firm concentration ratio (the cumulative share of total industry receipts of that
industry’s four biggest firms) as a measure of industry competition, and (4) the size distribution industry’s four biggest firms) as a measure of industry competition, and (4) the size distribution
of firms.of firms.1718 The SBA also considers the ability of The SBA also considers the ability of ~~smal~~ small 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 ~~smal~~ small businesses, including technological change, competition businesses, including technological change, competition
~~among industries, industry growth trends, and impacts of size standard revisions on smal~~
~~businesses.”18~~

~~to be other than small because~~ 15 15 U.S.C. §632(a); and 13 C.F.R. §121.105. Affiliations between businesses, or relationships allowing one party control or the power of control over another, generally count in size determinations. Businesses can thus be determined to 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.
1516 For additional information and analysis of the SBA’s 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 ~~Contem porary~~Contemporary Issues, by Robert Jay Dilger. , by Robert Jay Dilger.
~~16 T he~~ 17 The 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 for the industry in which the applicant is primarily ~~en gaged,~~ engaged, or a maximum tangible net worth of not more than $15 or a maximum 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(years before the date of application. 15 U.S.C. §632( a)(2-3) and 15 U.S.C. §632(a)(5)(B). a)(2-3) 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 netnot have an average net income 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).
~~T he SBA’s Small Business~~ The SBA’s Small Business Investment Company (SBIC) program allowsInvestment Company (SBIC) program allows ~~businesses~~ businesses to qualify asto qualify as ~~sm all~~ small if they meet the 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.
1718 SBA, 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%2011%2C%202019.pdf (hereinafter SBA, Office of SBA%20Size%20Standards%20Methodology%20April%2011%2C%202019.pdf (hereinafter SBA, Office of
Government Contracting and BusinessGovernment Contracting and Business ~~Development, SBA Size Standards Methodology, April 2019).~~
~~18 SBA, Office of Government Contracting and Business Development, SBA Size Standards Methodology, April 2019,~~
~~p. 1. Any changes to size standards must follow the rulemaking procedures of the Administrative Procedure Act. A~~
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~~Historical y, the SBA~~ Development, SBA Size Standards Methodology, April 2019). Congressional Research Service 5 An Overview of Small Business Contracting among industries, industry growth trends, and impacts of size standard revisions on small businesses.”19 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 ~~smal~~ small (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 ~~mil ion~~ million for some industries to no more than $40 for some industries to no more than $40 ~~mil ion~~million for others). for others).1920
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 ~~smal~~ small 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.”than one.”2021 When acquiring a product or service that could be classified in two or more 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.”industry accounting for the greatest percentage of the contract price.”2122 If a solicitation If a solicitation ~~cal s~~calls for for
more than one item and more than one item and ~~al ows~~allows offers to be submitted on any or offers to be submitted on any or al all of the items, “an offeror must of the items, “an offeror must
meet the size standard for each item it offers to furnish.”meet the size standard for each item it offers to furnish.”2223 If a solicitation If a solicitation ~~cal ing~~calling for more than for more than
one item requires offers on one item requires offers on al all or none of the items, “an offeror may qualify as a or none of the items, “an offeror may qualify as a ~~smal~~ small 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.”contract price.”2324
With several notable exceptions (e.g., HUBZone With several notable exceptions (e.g., HUBZone ~~smal~~ small businesses, SBA 8(a) program businesses, SBA 8(a) program
participants, WOSBs, and veteran-owned participants, WOSBs, and veteran-owned ~~smal~~ small businesses [VOSBs] and SDVOSBs seeking businesses [VOSBs] and SDVOSBs seeking
contracts with the Department of Veterans Affairs), businesses contracts with the Department of Veterans Affairs), businesses ~~general y~~generally self-certify their status as self-certify their status as
~~smal~~ small when they register their business in the SAMwhen they register their business in the SAM database.database.2425
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 ~~smal~~ small business unless “(1) another offeror or interested party business unless “(1) another offeror or interested party ~~chal enges the~~
~~concern’s smal business representation or (2) the contracting officer has a reason to question the~~
~~representation.”25~~
~~If an offeror’s smal business status is chal enged, the contracting officer is general y not al owed~~
~~to award the contract until the SBA has made a size determination or 15 business days after the~~

~~proposed rule changing a size standard is first published in the Federal Register, allowing for public comment. It must~~
~~include~~ challenges the 19 SBA, Office of Government Contracting and Business Development, SBA Size Standards Methodology, April 2019, p. 1. Any changes to size standards must follow the rulemaking procedures of the Administrative Procedure Act. A proposed rule changing a size standard is first published in the Federal Register, allowing for public comment. It must include 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.
1920 SBA, 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.
2021 FAR FAR §19.102(c). §19.102(c).
2122 FAR FAR §19.102(d). §19.102(d).
2223 FAR FAR §19.102(e). §19.102(e).
2324 FAR FAR §19.102(e). §19.102(e).
2425 P.L. 116-283, the William M. (Mac) P.L. 116-283, the William M. (Mac) ~~T hornberry~~Thornberry National Defense Authorization Act for Fiscal Year 2021, requires National Defense Authorization Act for Fiscal Year 2021, requires
the Department of Veterans Affairs (VA), bythe Department of Veterans Affairs (VA), by January 1, 2023, to transfer the January 1, 2023, to transfer the ~~m aintenance~~maintenance of its SDVOSB of its SDVOSB ~~database~~ database to to
the SBA,the SBA, provide the SBAprovide the SBA compensation for doing so, and abolish VA’scompensation for doing so, and abolish VA’s Center for Verification and Evaluation and Center for Verification and Evaluation and
transfer its function to the SBA. transfer its function to the SBA. ~~T he SBA~~ The SBA is requiredis required to establish a governmentto establish a government -wide SDVOSB-wide SDVOSB certification and certification and
periodic recertification process by January 1, 2023. VA isperiodic recertification process by January 1, 2023. VA is to continue to determine whether an individual qualifiesto continue to determine whether an individual qualifies as a as a
service-disabledservice-disabled ~~veteran.~~
~~25 FAR §19.301-1(b)~~ veteran. .
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concern’s small business representation or (2) the contracting officer has a reason to question the representation.”26 If an offeror’s small business status is challenged, the contracting officer is generally not allowed to award the contract until the SBA has made a size determination or 15 business days after the SBA receives the protest, whichever occurs first.SBA receives the protest, whichever occurs first.2627 The SBA’s Office of Government Contracting 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
~~initial y~~ initially reviews the protest.reviews the protest.2728 The Area Office is required, by regulation, to determine the The Area Office is required, by regulation, to determine the
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.”of time granted by the contracting officer.”2829 If the SBA does not make a determination within the 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 ~~wil~~ will be disadvantageous to the government.”be disadvantageous to the government.”29
30 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 ~~shal~~ shall not exercise any not exercise any
options or award further task or delivery orders.”options or award further task or delivery orders.”3031 Furthermore, a concern cannot become 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 ~~smal~~ small 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 ~~smal business.31~~
small business.32 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.size to secure a federal contract can be subject to civil and criminal penalties.32
~~The Pre-Award Process~~
~~Federal Agency Requirements~~
~~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 shal facilitate the maximum~~

~~26 T he~~33 26 FAR §19.301-1(b). 27 The 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).
2728 FAR 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
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. ~~T he~~The 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.” FAR §19.302(c)(2). “protest.” 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). “ ~~T o~~To 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)officer that identifies the apparently successful offeror (in negotiated acquisitions) .” FAR.” FAR §19.302(d)(1). “§19.302(d)(1). “ …a protest …a protest
filed by filed by ~~t he~~the contracting officer or the SBA is generally always 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).
2829 FAR FAR §19.302(f)(1). §19.302(f)(1).
2930 FAR FAR §19.302(g)(2). §19.302(g)(2).
3031 FAR FAR §19.302(h). §19.302(h).
3132 FAR FAR §19.301-1(c). §19.301-1(c).
3233 13 C.F.R. §121.108; 18 U.S.C. 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 ~~Governm ent~~Government Contractor Accountability , by David H. Carpenter and , by David H. Carpenter and
Kathleen Ann Ruane. Kathleen Ann Ruane.
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The Pre-Award Process Federal Agency Requirements 15 U.S.C. §644(e)(1) states, “To the maximum extent practicable, procurement strategies used by a Federal department or agency having contracting authority shall facilitate the maximum participation of small ~~participation of 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:
1. “Divide 1. “Divide proposed acquisitions of supplies and services (proposed acquisitions of supplies and services (~~exc ept~~except construction) into construction) into
reasonably reasonably ~~smal~~ small 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 ~~smal~~ small 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 [~~general y $6.5~~
~~mil ion, or $10 mil ion~~ generally $6.5 million, or $10 million 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 ~~wil~~
will encourage encourage ~~smal~~ small 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 ~~smal business c oncerns~~small business concerns
[primarily through the agency’s role in negotiating an acceptable [primarily through the agency’s role in negotiating an acceptable ~~smal~~ small business business
subcontracting plan with prime contractors on contracts anticipated to exceed subcontracting plan with prime contractors on contracts anticipated to exceed
$750,000 or $1.5 $750,000 or $1.5 ~~mil ion~~million for construction contracts].” for construction contracts].”3334
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 ~~smal~~ small 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 ~~smal~~ small businesses can compete for the prime contract; businesses can compete for the prime contract;
(i (ii) 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 ~~smal~~ small businesses can compete for the prime contract; or businesses can compete for the prime contract; or
((~~i i)~~ iii) 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 ~~shal provide al~~ shall provide all 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]~~
~~7.107-4.34 The contracting officer shal also provide the same information to the~~

33 34 Subcontracting plans are not required from small businesses, 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 modifications that will be performed entirely outside of the United States and its outlying ~~are as~~areas, or for modifications , 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.practicable opportunity to participate in contract performance consistent with its efficient performance. ~~” FAR §19.702.~~
~~34 FAR §7.017-4(2)(b) states “…when the proposed acquisition strategy involves substantial bundling, the agency shall~~
~~document in its strategy—(1) T he specific benefits anticipated to be derived from substantial bundling; (2) An~~
~~assessment of the specific impediments to participation by small business concern s as contractors that result from~~
~~substantial bundling; (3) Actions designed to maximize small business participation as contractors, including provisions~~
~~that encourage small business teaming; (4) Actions designed to maximize small business participation as subcontractors~~
~~(including suppliers) at any tier under the contract, or order, that may be awarded to meet the requirements; (5) T he~~
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~~agency Office of Smal and Disadvantaged Business Utilization~~ ” FAR §19.702. Congressional Research Service 8 An Overview of Small Business Contracting the acquisition involves substantial bundling, the information identified in [FAR] 7.107-4.35 The contracting officer shall also provide the same information to the agency Office of Small and 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 ~~smal~~ small 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; (i ii) Delivery schedules ) Delivery schedules
cannot be established on a realistic basis that cannot be established on a realistic basis that ~~wil encourage smal~~ will encourage small 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; (~~i i~~iii) Proposed acquisition cannot be structured so as to make it ) Proposed acquisition cannot be structured so as to make it
likelylikely that that ~~smal~~ small 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].”head].”3536
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 43 PCRs located in the SBA’s six Area Offices.currently has 43 PCRs located in the SBA’s six Area Offices.3637 PCRs are required to comply 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.release of contract information.3738
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 ~~unilateral y~~ unilaterally set aside by the contracting officer;” new qualified set aside by the contracting officer;” new qualified
~~smal business sources; and the feasibility of breaking out components of the~~
~~contract for competitive acquisitions.38~~
~~ 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)~~
~~“believes that the acquisition, as proposed, makes it unlikely that smal~~
~~businesses can compete for the prime contract,” the PCR can recommend any~~
~~alternate contracting method that he or she “reasonably believes wil increase~~

~~determination that the anticipated benefits of the proposed bundled contract or order justify its use; and (6) Alternati ve~~
~~strategies that would reduce or minimize the scope of the bundling, and the rationale for not choosing those~~
~~alternatives.”~~
~~35 FAR §19.202-1. See FAR §19.505 for a description of the appeals process.~~
~~36 SBA,~~ 35 FAR §7.017-4(2)(b) states “…when the proposed acquisition strategy involves substantial bundling, the agency shall document in its strategy—(1) The specific benefits anticipated to be derived from substantial bundling; (2) An assessment of the specific impediments to participation by small business concerns as contractors that result from substantial bundling; (3) Actions designed to maximize small business participation as contractors, including provisions that encourage small business teaming; (4) Actions designed to maximize small business participation as subcontractors (including suppliers) at any tier under the contract, or order, that may be awarded to meet the requirements; (5) The determination that the anticipated benefits of the proposed bundled contract or order justify its use; and (6) Alternative strategies that would reduce or minimize the scope of the bundling, and the rationale for not choosing those alternatives.” 36 FAR §19.202-1. See FAR §19.505 for a description of the appeals process. 37 SBA, “Procurement Center Representative Directory,” accessed on January 18, 2022, at https://www.sba.gov/“Procurement Center Representative Directory,” accessed on January 18, 2022, at https://www.sba.gov/
federal-contracting/counseling-help/procurementfederal-contracting/counseling-help/procurement -center-representative-directory. There were three vacancies. -center-representative-directory. There were three vacancies.
~~37 FAR §19.402(a)(1).~~
~~38 FAR~~ 38 FAR §19.402(§19.402(ca)(1). )(1).
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~~smal~~ small business sources; and the feasibility of breaking out components of the contract for competitive acquisitions.39  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) “believes that the acquisition, as proposed, makes it unlikely that small businesses can compete for the prime contract,” the PCR can recommend any alternate contracting method that he or she “reasonably believes will increase small 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.made to the contracting officer within 15 days after the package’s receipt.3940
 Recommend  Recommend ~~smal~~ small 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.” in a specific acquisition.”4041
 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 ~~smal~~ small business being solicited.” This appeal may business being solicited.” This appeal may
be further appealed to the agency head.be further appealed to the agency head.4142
 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 ~~smal~~ small business subcontracting plan, “to business subcontracting plan, “to
ascertain whether the agency is complying with the ascertain whether the agency is complying with the ~~smal~~ small business policies in this business policies in this
regulation.”regulation.”4243
 Sponsor and participate in conferences and training “designed to increase  Sponsor and participate in conferences and training “designed to increase ~~smal~~
small business participation in the contracting activities of the office.” business participation in the contracting activities of the office.”4344
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.authority over agency staff performing certain procurement functions.4445 The OSDBU’s primary The OSDBU’s primary
responsibility is to ensure that responsibility is to ensure that ~~smal~~ small businesses, SDBs, WOSBs, SDVOSBs, and HUBZone businesses, SDBs, WOSBs, SDVOSBs, and HUBZone ~~smal~~
small businesses are treated fairly and that they have an opportunity to compete and be selected for a businesses are treated fairly and that they have an opportunity to compete and be selected for a
fair amount of the agency’s contract dollars. Among its statutory responsibilities are the fair amount of the agency’s contract dollars. Among its statutory responsibilities are the
following: following:
 “Identify proposed solicitations that involve significant bundling of contract  “Identify proposed solicitations that involve significant bundling of contract
requirements, and work with the agency acquisition officials and the requirements, and work with the agency acquisition officials and the
Administration to revise the procurement strategies for such proposed Administration to revise the procurement strategies for such proposed
~~solicitations where appropriate to increase the probability of participation by~~
~~smal businesses as prime contractors, or to facilitate smal business participation~~
~~as subcontractors and suppliers, if a solicitation for a bundled contract is to be~~
~~issued.”45~~

~~39 FAR §19.402(c)(2).~~
~~40 FAR §19.402(c)(3).~~
~~41 FAR §19.402(c)(4). See FAR~~ 39 FAR §19.402(c)(1). 40 FAR §19.402(c)(2). 41 FAR §19.402(c)(3). 42 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.
4243 FAR FAR §19.402(c)(5). §19.402(c)(5).
4344 FAR FAR §19.402(c)(6). §19.402(c)(6).
4445 For a discussion 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), ~~Sm all~~Small Business Contracting: Actions
Needed to ~~Dem onstrate~~Demonstrate and Better Review ~~Com pliance~~Compliance with Select ~~Requirem ents for Sm all~~Requirements for Small Business Advocates, GAO-, GAO-
17-675, August 25, 2017, pp. 1-4, at https://www.gao.gov/assets/690/686766.pdf. 17-675, August 25, 2017, pp. 1-4, at https://www.gao.gov/assets/690/686766.pdf.
~~45 15 U.S.C. §644(k)(5).~~
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solicitations where appropriate to increase the probability of participation by small businesses as prime contractors, or to facilitate small business participation as subcontractors and suppliers, if a solicitation for a bundled contract is to be issued.”46  Assist small ~~ Assist 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.”executive agency or a contractor.”4647
 Assign “a  Assign “a ~~smal~~ small 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 ~~smal~~ small business technical advisor “business technical advisor “~~shal~~ shall be a full-time be a full-time
employee of the procuring activity, employee of the procuring activity, ~~wel~~ well qualified, qualified, ~~technical y~~technically trained and trained and
~~familiar~~ familiar with the supplies or services purchased at the activity; and whose with the supplies or services purchased at the activity; and whose
principal duty principal duty ~~shal~~ shall be to assist” the PCR.be to assist” the PCR.4748
 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 ~~smal~~ small businesses appropriate opportunities to businesses appropriate opportunities to
participate as prime contractors and subcontractors].”participate as prime contractors and subcontractors].”4849
 Provide training to  Provide training to ~~smal~~ small 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.responsibilities.4950
 Ensure that a  Ensure that a ~~smal~~ small 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]
~~ability~~ ability … to compete for the award … is aware of other resources and processes … to compete for the award … is aware of other resources and processes
availableavailable 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].”program [described below].”50
51  Review  Review al all subcontracting plans “to ensure that the plan provides maximum subcontracting plans “to ensure that the plan provides maximum
practicable opportunity for practicable opportunity for ~~smal~~ small business concerns to participate in the business concerns to participate in the
performance of the contract to which the plan applies.”performance of the contract to which the plan applies.”5152
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 ~~Smal~~ Small 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.~~
~~The Roles of Other Procurement Officers and Offices~~
~~At the agency level, procurement department heads (sometimes titled~~ ~~senior procurement~~
~~executive) are responsible for implementing smal business programs at their agencies, including~~
~~achieving program goals. In general, procurement department staff who work on smal business~~

~~46 15 U.S.C. §644(k)(6).~~
~~47 15 U.S.C. §644(k)(8).~~
~~48 15 U.S.C. §644(k)(12).~~
~~49 15 U.S.C. §644(k)(13).~~
~~50 15 U.S.C. §644(k)(17).~~
~~51 15 U.S.C.~~ Air Force, respectively. 46 15 U.S.C. §644(k)(5). 47 15 U.S.C. §644(k)(6). 48 15 U.S.C. §644(k)(8). 49 15 U.S.C. §644(k)(12). 50 15 U.S.C. §644(k)(13). 51 15 U.S.C. §644(k)(17). 52 15 U.S.C. §644(k)(20). §644(k)(20).
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The Roles of Other Procurement Officers and Offices At the agency level, procurement department heads (sometimes titled senior procurement executive) are responsible for implementing small business programs at their agencies, including achieving program goals. In general, procurement department staff who work on small business issues (often titled issues (often titled small business specialists) coordinate with OSDBU directors on their ) coordinate with OSDBU directors on their
agencies’ agencies’ ~~smal~~ small business programs.business programs.5253
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
decisions, managing agency acquisition policy, acquisition career management, acquisition decisions, managing agency acquisition policy, acquisition career management, acquisition
resources planning, and conducting acquisition assessments.”resources planning, and conducting acquisition assessments.”5354
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.a breakout PCR.54
55 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.”such items are used.”5556 The breakout PCR is in addition to the PCR. 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 ~~smal~~ small 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.advisors as required by the contracting agency.5657
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 ~~smal~~ small 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 ~~smal~~ small 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 ~~smal~~ small 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” (~~general y~~generally any solicitation to any solicitation to
perform a contract that is expected to exceed $750,000 ($1.5 perform a contract that is expected to exceed $750,000 ($1.5 ~~mil ion~~million for construction) and that for construction) and that
~~has subcontracting possibilities).57~~
~~The SBA’s 140 business opportunity specialists provide, among other duties, guidance,~~
~~counseling, and referrals for assistance with technical, management, financial, or other matters~~

~~52 GAO,~~ has subcontracting possibilities).58 53 GAO, Small Business Contracting: Actions Needed to Demonstrate and Better Review Compliance with Select
~~Requirem ents for Sm all~~Requirements for Small 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, ~~Sm all~~Small Business Contracting: Actions Needed to ~~Dem onstrate~~Demonstrate and Better Review
~~Com pliance~~Compliance with Select ~~Requirem ents for Sm all~~Requirements for Small Business Advocates). ).
53 54 GAO, GAO, Small Business Contracting: Actions Needed to Demonstrate and Better Review Compliance with Select
~~Requirem ents for Sm all~~Requirements for Small Business Advocates, pp. 7-8. , pp. 7-8.
5455 15 U.S.C. 15 U.S.C. §644(l)(6); and FAR§644(l)(6); and FAR §19.403(a). §19.403(a).
5556 FAR FAR §19.403(a). §19.403(a).
5657 FAR FAR §19.403(a). §19.403(a).
5758 15 U.S.C. 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, Improvements~~GAO,~~ ~~Im provem ents~~ Needed to Help Ensure Reliability of SBA’s ~~Perform ance~~Performance Data on
~~Procurem ent~~Procurement Center Representatives, GAO-11-549R, June 15, 2011, pp. 4-7, 30, at https://www.gao.gov/products/, GAO-11-549R, June 15, 2011, pp. 4-7, 30, at https://www.gao.gov/products/
~~GAO-11-549R. For additional information on CMR duties and responsibilities see SBA, “ Subcontracting Assistance~~
~~Program Post Award,” SOP 60 03 7, effective July 17, 2018, at https://www.sba.gov/sites/default/files/2018-07/2018-~~
~~07-17%20Final%20Subcontracting%20Program%20SOP_1.pdf .~~
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Congressional Research Service 12 An Overview of Small Business Contracting The SBA’s 140 business opportunity specialists provide, among other duties, guidance, 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.of SBA 8(a) program participants.5859 They provide 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 ~~smal~~ small businesses in the award, modification, and businesses in the award, modification, and
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.the 8(a) program.5960
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 ~~smal~~
small business community. business community.
2. Submit comments reflecting such positions to appropriate regulatory authorities 2. Submit comments reflecting such positions to appropriate regulatory authorities . .
3. Conduct reviews of each OSDBU to determine the office’s compliance with its 3. Conduct reviews of each OSDBU to determine the office’s compliance with its
statutory requirements. statutory requirements.
4. Identify best practices for maximizing 4. Identify best practices for maximizing ~~smal~~ small 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 ~~annual y~~annually, to the House Committee on , to the House Committee on ~~Smal~~ Small Business and Senate Business and Senate
Committee on Committee on ~~Smal~~ Small 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 ~~smal~~ small business contracting.business contracting.6061
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.”agencies, state and local governments and with government prime contractors.”6162 Most of the Most of the
assistance provided by the 100 PTACs and their more than 300 local offices is free.assistance provided by the 100 PTACs and their more than 300 local offices is free.~~62 PTAC~~
~~support to businesses includes registration in systems such as the System for Award Management~~

~~58 U.S. Congress, House Committee on Small Business,~~ 63 PTAC GAO-11-549R. For additional information on CMR duties and responsibilities see SBA, “Subcontracting Assistance Program Post Award,” SOP 60 03 7, effective July 17, 2018, at https://www.sba.gov/sites/default/files/2018-07/2018-07-17%20Final%20Subcontracting%20Program%20SOP_1.pdf. 59 U.S. Congress, House 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.
5960 15 U.S.C. 15 U.S.C. §633(g)(1). §633(g)(1).
6061 15 U.S.C. 15 U.S.C. §644a(b). §644a(b).
6162 DOD, Defense Logistics DOD, Defense Logistics Agency, “Procurement Technical Assistance Program,” at https://www.dla.mil/Agency, “Procurement Technical Assistance Program,” at https://www.dla.mil/
SmallBusiness/SmallBusiness/~~PT AP/.~~
62PTAP/. 63 DOD, Defense Logistics DOD, Defense Logistics Agency, “Procurement Technical Assistance Centers: States and Agency, “Procurement Technical Assistance Centers: States and ~~T erritories~~Territories,” at ,” at
https://www.dla.mil/SmallBusiness/https://www.dla.mil/SmallBusiness/~~PT AP~~PTAP/AllLocations/;/AllLocations/; and SBA,and SBA, “ “Find Local Assistance: Procurement Find Local Assistance: Procurement ~~T echnical~~Technical
Assistance Centers,” at https://www.sba.gov/local-assistance/find/?type=Assistance Centers,” at https://www.sba.gov/local-assistance/find/?type=
Procurement%20Technical%20Assistance%20Center&Procurement%20Technical%20Assistance%20Center& pageNumber=2. pageNumber=2.
Procurement Procurement ~~T echnical~~Technical Assistance Center ( Assistance Center (~~PT ACs~~PTACs) are located in all 50 states, Washington, DC, Puerto Rico, Guam, ) are located in all 50 states, Washington, DC, Puerto Rico, Guam,
~~and the Northern Mariana Islands.~~

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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.preparing and submitting bids.6364
Set-Asides and Sole-Source Awards
The Competition in Contracting Act of 1984 The Competition in Contracting Act of 1984 ~~general y~~generally requires “full and open competition” for requires “full and open competition” for
government procurement contracts.government procurement contracts.6465 However, various provisions of the However, various provisions of the ~~Smal~~ Small 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 ~~smal~~ small businesses. businesses.
For example, as mentioned, federal agencies are For example, as mentioned, federal agencies are ~~general y~~ generally required to reserve contracts that have required to reserve contracts that have
an anticipated value greater than the micro-purchase threshold (currently $10,000), but not greater an anticipated value greater than the micro-purchase threshold (currently $10,000), but not greater
than the simplifiedthan the simplified acquisition threshold (currently $250,000) exclusively for acquisition threshold (currently $250,000) exclusively for ~~smal~~ small businesses businesses
unless the contracting officer is unable to obtain offers from two or more unless the contracting officer is unable to obtain offers from two or more ~~smal~~ small businesses that are businesses that are
competitive with market prices and the quality and delivery of the goods or services being competitive with market prices and the quality and delivery of the goods or services being
purchased.purchased.65
66 In addition, federal agencies In addition, federal agencies
 are  are ~~general y~~generally 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 ~~smal~~ small 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 ~~wil~~
will be obtained by at least two responsible be obtained by at least two responsible ~~smal~~ small businesses offering the products of businesses offering the products of
different different ~~smal~~ small businesses (Rule of Two) and the award businesses (Rule of Two) and the award ~~wil~~ will be made at a fair be made at a fair
market price;market price;6667
 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 ~~smal~~ small businesses (e.g., 8(a) businesses (e.g., 8(a) ~~smal~~
small businesses, HUBZone businesses, HUBZone ~~smal~~ small businesses, WOSBs and SDVOSBs);businesses, WOSBs and SDVOSBs);6768
 may enter into negotiations directly with particular types of  may enter into negotiations directly with particular types of ~~smal~~ small 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 compel ing~~
~~circumstances);68 and~~

63 and the Northern Mariana Islands. 64 DOD, Defense Logistics DOD, Defense Logistics Agency, “Procurement Technical Assistance Program,” at https://www.dla.mil/Agency, “Procurement Technical Assistance Program,” at https://www.dla.mil/
SmallBusiness/SmallBusiness/~~PT AP/.~~
64PTAP/. 65 41 U.S.C. 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 (~~T itle~~Title VII, the Competition in VII, the Competition in
Contracting Act). Contracting Act).
6566 15 U.S.C. 15 U.S.C. §644(j)(1). As mentioned, certain regulations implementing this provision of the Small Business§644(j)(1). As mentioned, certain regulations implementing this provision of the Small Business Act Act
effectively narrows its scope. For example, certain small businesseffectively narrows its scope. For example, certain small business contracts awardedcontracts awarded or performed overseas are not or performed overseas are not
necessarily requirednecessarily required to be setto be set ~~aside~~ aside for small businesses,for small businesses, and the small businessand the small business provisions contained in Part 19 of the provisions contained in Part 19 of the
FARFAR generally do not apply to blanket purchase agreements and orders placed against generally do not apply to blanket purchase agreements and orders placed against ~~Feder al Supply~~ Federal Supply Schedule Schedule
contracts. contracts.
6667 15 U.S.C. 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 “procedures that entail less than “ full and open competition,” and by sealedfull 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.
6768 15 U.S.C. 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. §637(m) for~~
~~WOSBs; and 15 U.S.C. §657f for SDVOSBs.~~
~~68 15 U.S.C. §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.
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only a single source is available or under urgent and compelling circumstances);69 and  are required to grant HUBZone are required to grant HUBZone ~~smal~~ small businesses a price evaluation preference of businesses a price evaluation preference of
not more than 10% in open and unrestricted competitions. not more than 10% in open and unrestricted competitions.69
70 SBA Contracting ~~Programs70~~Programs71
Several SBA programs assist Several SBA programs assist ~~smal~~ small 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 ~~smal~~
small business goaling program and the Surety Bond Guarantee program). business goaling program and the Surety Bond Guarantee program).
Prime Contracting Programs
Several contracting programs Several contracting programs ~~al ow smal~~ allow small 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 ~~smal~~ small 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) ~~Program71~~Program72
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 ~~social y~~
~~and economical y~~socially and economically disadvantaged, have good character, and demonstrate a potential for success. disadvantaged, have good character, and demonstrate a potential for success.72
73 Although the 8(a) program was Although the 8(a) program was ~~original y~~originally 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 ~~smal~~ small businesses owned by businesses owned by
four disadvantaged groups. four disadvantaged groups. ~~Smal~~ Small 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 ~~Hawai an~~Hawaiian
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.~~
~~For individual y owned smal businesses, African Americans, Hispanics, Native Americans~~
~~(including American Indians, Eskimos, Aleuts, and Native Hawai ans), Asian-Pacific Americans,~~
~~and Subcontinent Asian Americans are presumed to be social y and economical y~~

~~69 15 U.S.C. §657a(b)(3).~~
~~70 T hese programs apply government~~ different requirements. 69 15 U.S.C. §637(a) for 8(a) participants; 15 U.S.C. §657a for HUBZone small businesses; 15 U.S.C. §637(m) for WOSBs; and 15 U.S.C. §657f for SDVOSBs. 70 15 U.S.C. §657a(b)(3). 71 These 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 for the programs.that determine, in part, eligibility for the programs.
71 72 For additional information and analysis, see CRS 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.
72 73 Section 8(a) of the Small 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.
~~T he~~The 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.
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For individually owned small businesses, African Americans, Hispanics, Native Americans (including American Indians, Eskimos, Aleuts, and Native Hawaiians), Asian-Pacific Americans, and Subcontinent Asian Americans are presumed to be socially and economically disadvantaged.74~~disadvantaged.73~~ Other individuals can also qualify as Other individuals can also qualify as ~~social y and economical y~~socially and economically 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. ~~general y~~ generally 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 ~~mil ion~~ million in assets (excluding funds invested in an official in assets (excluding funds invested in an official
retirement account). retirement account).7475
For group-owned For group-owned ~~smal~~ small businesses, by statute, ANCs are deemed to be businesses, by statute, ANCs are deemed to be ~~economical y~~economically
disadvantaged, and CDCs are similarly treated as disadvantaged, and CDCs are similarly treated as ~~economical y~~economically 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 ~~general y~~generally determining the acquisition method used. determining the acquisition method used.
For For ~~individual y owned smal~~ individually owned small 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 ~~mil ion~~ million or less ($7.5 or less ($7.5 ~~mil ion~~ million or less for manufacturing contracts), the contract or less for manufacturing contracts), the contract
~~is normal y~~is normally awarded without competition (as a sole-source award). awarded without competition (as a sole-source award).7576 In contrast, when the In contrast, when the
contract’s anticipated value exceeds these thresholds, the contract generally must be awarded via contract’s anticipated value exceeds these thresholds, the contract generally must be awarded via
a set-aside with competition limited to 8(a) firms so long as there is a reasonable expectation that a set-aside with competition limited to 8(a) firms so long as there is a reasonable expectation that
at least two eligibleat least two eligible and responsible 8(a) firms and responsible 8(a) firms ~~wil~~ will submit offers and the award can be made at submit offers and the award can be made at
fair market price.fair market price.76
77 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 ~~mil ion~~ million or less ($7.5 million 74~~or less ($7.5 mil ion~~
~~or less for manufacturing contracts). However, firms owned by ANCs and Indian tribes can also~~
~~receive sole-source awards in excess of $4.5 mil ion ($7.5 mil ion for manufacturing contracts)~~
~~even when contracting officers reasonably expect that at least two eligible and responsible 8(a)~~

73 Asian Pacific Americans are those whose country of origin is Burma, Asian Pacific Americans are those whose country of origin is Burma, ~~T hailand~~ Thailand, Malaysia, Indonesia, Singapore, , Malaysia, Indonesia, Singapore,
Brunei, Japan, China (includingBrunei, Japan, China (including Hong Kong), Hong Kong), ~~T aiwan~~Taiwan, Laos, Cambodia,, Laos, Cambodia, Vietnam, Korea, the Philippines, U.S. Vietnam, Korea, the Philippines, U.S. ~~T rust~~
~~T erritory~~Trust Territory 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, ~~T onga~~Tonga, Kiribati, , Kiribati, ~~T uvalu~~Tuvalu, 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).
74 75 SBA, “Women-Owned Small Business and Economically Disadvantaged Women-Owned Small Business Certification,” 85 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.
7576 FAR FAR §19.805-1. §19.805-1. ~~T he~~The Federal Acquisition Regulatory Council has the responsibility of adjusting Federal Acquisition Regulatory Council has the responsibility of adjusting each acquisitioneach acquisition --
related dollar threshold (includingrelated dollar threshold (including those for the 8(a), HUBZone, Service-Disabledthose for the 8(a), HUBZone, Service-Disabled Veteran-Owned, and Women-Veteran-Owned, and Women-
OwnedOwned ~~Small Business contract ing~~ Small Business contracting programs), on October 1, of each year that is evenly divisible programs), on October 1, of each year that is evenly divisible by five. by five. ~~T he~~The next next
adjustment for inflation will take place on October 1, 2025. As a result, these thresholds may differ from those in adjustment for inflation will take place on October 1, 2025. As a result, these thresholds may differ from those in
statute. See 13 C.F.R.statute. See 13 C.F.R. §124.506(a); and 41 U.S.C. §1908§124.506(a); and 41 U.S.C. §1908 (c)(2). (c)(2).
7677 15 U.S.C. 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 ~~T echnical~~Technical Corrections to Small Corrections to Small
BusinessBusiness Government Contracting Regulations,” 83Government Contracting Regulations,” 83 Federal Register 12849, March 26, 2018. 12849, March 26, 2018.
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~~firms wil~~ or less for manufacturing contracts). However, firms owned by ANCs and Indian tribes can also receive sole-source awards in excess of $4.5 million ($7.5 million for manufacturing contracts) even when contracting officers reasonably expect that at least two eligible and responsible 8(a) firms will submit offers and the award can be made at fair market price.submit offers and the award can be made at fair market price.7778 NHO-owned firms may NHO-owned firms may
receive sole-source awards from the Department of Defense under the same conditions.receive sole-source awards from the Department of Defense under the same conditions.7879
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 ~~general y~~generally 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 ~~smal~~ small businesses adversely businesses adversely
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 ~~Smal~~
Small 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), provided businesses participating in the 8(a) program on or before September 9, Act of 2021), provided 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 FY2020, the federal government awarded $34.0 In FY2020, the federal government awarded $34.0 ~~bil ion~~billion to 8(a) firms: to 8(a) firms:
 $20.4  $20.4 ~~bil ion~~ billion was awarded with an 8(a) preference ($9.3 was awarded with an 8(a) preference ($9.3 ~~bil ion~~billion through an 8(a) through an 8(a)
set-aside and $11.1 set-aside and $11.1 ~~bil ion~~ billion through an 8(a) sole-source award); through an 8(a) sole-source award);
 $2.2  $2.2 ~~bil ion~~ billion 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
 $11.4  $11.4 ~~bil ion~~ billion was awarded with another was awarded with another ~~smal~~ small business preference (e.g., set-business preference (e.g., set-
asides and sole-source awards for asides and sole-source awards for ~~smal businesses general y~~small businesses generally and for HUBZone and for HUBZone
firms, women-owned firms, women-owned ~~smal~~ small businesses, and service-disabled veteran-owned businesses, and service-disabled veteran-owned
~~smal~~ small businesses).businesses).7980
Historically Underutilized Business Zone ~~Program80~~Program81
This program assists This program assists ~~smal~~ small businesses located in businesses located in ~~Historical y Underutilized~~ Historically 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
~~mil ion or less, or $7.5 mil ion or less for manufacturing contracts) and price evaluation~~

77 78 P.L. 100-656, §602(a), 102 Stat. 3887-88 (November 15, 1988) (codified at 15 U.S.C. 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 authority of §8(a) analogous ~~t o~~to those required for sole-source contracts awarded under those required for sole-source contracts awarded under the general contracting the general contracting
authorities. authorities. ~~T he~~The $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, and to $25 million, effective October 1, 2020, to account for inflation. P.L. 116-92, the National Defense 2015, and to $25 million, effective October 1, 2020, to account for inflation. P.L. 116-92, the National Defense
Authorization Act for Fiscal Year 2020, increased this threshold to $100 million for the Department of Defense.Authorization Act for Fiscal Year 2020, increased this threshold to $100 million for the Department of Defense. See See
Department of Defense, General ServicesDepartment of Defense, General Services Administration, and National Aeronautics and SpaceAdministration, and National Aeronautics and Space Administration, Administration,
“Federal Acquisition Regulation: Inflation Adjustment of Acquisition-Related “Federal Acquisition Regulation: Inflation Adjustment of Acquisition-Related ~~T hresholds~~Thresholds,” 80 ,” 80 Federal Register 38296, 38296,
JulyJuly 2, 2015; and Department of Defense, General Services2, 2015; and Department of Defense, General Services Administration, and National Aeronautics and Space Administration, and National Aeronautics and Space
Administration, “Federal Acquisition Regulation: Inflation Adjustment of AcquisitionAdministration, “Federal Acquisition Regulation: Inflation Adjustment of Acquisition -Related -Related ~~T hresholds~~Thresholds,” 85 ,” 85 Federal
Register 62485, October 2, 2020. 62485, October 2, 2020.
7879 DOD’s authority to make sole-source awards 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 2004-2006, and became permanent in 2006. See P.L. 109-existed on a temporary basis in 2004-2006, and became permanent in 2006. See P.L. 109-
148, Department of Defense, Emergency Supplemental Appropriations to Address Hurricanes in the Gulf148, Department of Defense, Emergency Supplemental Appropriations to Address Hurricanes in the Gulf ~~of Me xico~~ 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).
7980 Data generated using Data generated using ~~U.S. General Services Administration (GSA)~~ GSA, “Sam.Gov data bank,” August, “Sam.Gov data bank,” August 2, 2021, at 2, 2021, at
https://sam.gov/reports/awards/adhoc. https://sam.gov/reports/awards/adhoc.
8081 For additional information and analysis, see CRS For additional information and analysis, see CRS Report R41268, Report R41268, Small Business Administration HUBZone
Program , by Robert Jay Dilger. , by Robert Jay Dilger.
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million or less, or $7.5 million or less for manufacturing contracts) and price evaluation preferences (of up to 10%) in full and open competitions.preferences (of up to 10%) in full and open competitions.8182 The HUBZone program targets The HUBZone program targets
assistance to assistance to ~~smal~~ small businesses located in areas with low income, high poverty, or high businesses located in areas with low income, high poverty, or high
unemployment.unemployment.8283 To be certified as a HUBZone To be certified as a HUBZone ~~smal~~ small business, at least 35% of the business, at least 35% of the ~~smal~~
small business’s employees must business’s employees must ~~general y~~generally reside in a HUBZone. reside in a HUBZone.
In FY2020, the federal government awarded $13.6 In FY2020, the federal government awarded $13.6 ~~bil ion~~billion to HUBZone-certified to HUBZone-certified ~~smal~~
small businesses:businesses:
 $2.1  $2.1 ~~bil ion~~ billion was awarded with a HUBZone preference ($2.0 was awarded with a HUBZone preference ($2.0 ~~bil ion~~billion through a through a
HUBZone HUBZone set-aside, $67.5 set-aside, $67.5 ~~mil ion~~million through a HUBZone through a HUBZone sole-source award and sole-source award and
$48.5 $48.5 ~~mil ion~~ million through a HUBZonethrough a HUBZone price-evaluation preference);price-evaluation preference);
 $4.0  $4.0 ~~bil ion~~ billion was awarded to HUBZone-certified was awarded to HUBZone-certified ~~smal~~ small businesses in open businesses in open
competition with other firms; and competition with other firms; and
 $7.5  $7.5 ~~bil ion~~ billion was awarded with another was awarded with another ~~smal~~ small business preference (e.g., set-asides business preference (e.g., set-asides
and sole-source awards for and sole-source awards for ~~smal businesses general y~~small businesses generally and for 8(a), women- and for 8(a), women-
owned, and service-disabled veteran-owned owned, and service-disabled veteran-owned ~~smal~~ small businesses).businesses).8384
Service-Disabled Veteran-Owned Small Business Procurement ~~Program84~~
Program85 This program This program ~~al ows~~allows agencies to set aside contracts for SDVOSBs. agencies to set aside contracts for SDVOSBs.8586 Also, federal agencies may Also, federal agencies may
award sole-source contracts to SDVOSBs so long as the award can be made at a fair and award sole-source contracts to SDVOSBs so long as the award can be made at a fair and
reasonable price, and the anticipated total value of the contract, including any options, is $4 reasonable price, and the anticipated total value of the contract, including any options, is $4
~~mil ion~~ million or less ($7 or less ($7 ~~mil ion~~ million or less for manufacturing contracts).or less for manufacturing contracts).8687 For purposes of this program, For purposes of this program,
veterans and service-related disabilities are defined as they are under the statutes governing veterans and service-related disabilities are defined as they are under the statutes governing
veterans affairs.veterans affairs.87
88 In FY2020, the federal government awarded $26.1 In FY2020, the federal government awarded $26.1 ~~bil ion to SDVOSBs:~~
~~ $9.7 bil ion was awarded with a SDVOSB preference ($9.4 bil ion through a~~
~~SDVOSB set-aside and $281.9 mil ion through a SDVOSB sole-source award);~~

~~81 FAR~~ billion to SDVOSBs: 82 FAR §19.1306; 15 U.S.C. §657a(b)(2-3); and 41 U.S.C.§19.1306; 15 U.S.C. §657a(b)(2-3); and 41 U.S.C. §1980. §1980.
8283 For specific criteria, see 15 U.S.C. 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.
8384 Data generated using Data generated using GSA,GSA, “Sam.Gov data bank,” July 31, 2021, at https://sam.gov/reports/awards/adhoc. “Sam.Gov data bank,” July 31, 2021, at https://sam.gov/reports/awards/adhoc.
8485 For further information and analysis of the SDVOSB For further information and analysis of the SDVOSB Procurement program, see CRSProcurement program, see CRS Report R46906, Report R46906, Service-
Disabled Veteran-Owned ~~Sm all Business Procurem ent Program~~ Small Business Procurement Program, by Robert Jay Dilger. , by Robert Jay Dilger.
8586 A service-disabled 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.” ~~T o~~To be considered a service-disabled be considered a service-disabled veteran, “the veteran must veteran, “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 Service from the National Archives and Records or Discharge from Active Duty, or a Statement of Service from the National Archives and Records
Administration, stating that the veteran has a service-connected disability.” Administration, stating that the veteran has a service-connected disability.” ~~T here~~There 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 (15 U.S.C.Act (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
~~Business~~ Business 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/~~SDVO SB~~SDVOSB/. /.
8687 FAR FAR §19.1406; 15 U.S.C. §657f(a-b); and 41 U.S.C.§19.1406; 15 U.S.C. §657f(a-b); and 41 U.S.C. §1980. §1980.
8788 38 U.S.C. 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.
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 $  $~~8.4 bil ion~~ 9.7 billion was awarded with a SDVOSB preference ($9.4 billion through a SDVOSB set-aside and $281.9 million through a SDVOSB sole-source award);  $8.4 billion was awarded to a SDVOSB in open competition with other firms; was awarded to a SDVOSB in open competition with other firms;
and and
 $8.0  $8.0 ~~bil ion~~ billion was awarded with another was awarded with another ~~smal~~ small business preference (e.g., set-asides business preference (e.g., set-asides
and sole-source awards for and sole-source awards for ~~smal businesses general y~~small businesses generally and for HUBZone and for HUBZone firms, firms,
8(a) firms, and WOSBs).8(a) firms, and WOSBs).8889
Women-Owned Small Business ~~Program89~~Program90
Under this program, contracts may be set aside for Under this program, contracts may be set aside for ~~economical y~~economically disadvantaged WOSBs in disadvantaged WOSBs in
industries in which women are underrepresented and industries in which women are underrepresented and ~~substantial y~~substantially underrepresented. underrepresented.9091 Federal 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
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
~~mil ion~~ million or less ($7 or less ($7 ~~mil ion~~ million or less for manufacturing contracts).or less for manufacturing contracts).91
92 To be eligibleTo be eligible for the WOSB program, a business must be for the WOSB program, a business must be
  ~~smal~~ small, 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. certifying entity approved by the SBA.9293
To qualify as an To qualify as an ~~economical y~~economically 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. general y no more than $350,000 in average adjusted gross income over the~~
~~preceding three years; and~~

88 89 Data generated using Data generated using GSA,GSA, “Sam.Gov data bank,” July 31, 2021, at https://sam.gov/reports/awards/adhoc. “Sam.Gov data bank,” July 31, 2021, at https://sam.gov/reports/awards/adhoc.
8990 For further information and analysis of the WOSB For further information and analysis of the WOSB federal contacting program, see CRSfederal contacting program, see CRS Report R46322, Report R46322, SBA
~~Wom en-Owned Sm all~~Women-Owned Small Business Federal Contracting Program , by Robert Jay Dilger. , by Robert Jay Dilger.
~~90 T he SBA~~ 91 The 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 microfederal contracts exceeding the micro -purchase threshold (currently -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. ~~T he SBA~~ The 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.
9192 FAR FAR §19.1506; 15 U.S.C. §637(m); and 41 U.S.C.§19.1506; 15 U.S.C. §637(m); and 41 U.S.C. §1980. §1980.
9293 15 U.S.C. 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.
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2. generally no more than $350,000 in average adjusted gross income over the preceding three years; and 3. no more than $6 million ~~3. no more than $6 mil ion~~ in assets (excluding funds invested in an official in assets (excluding funds invested in an official
retirement account). retirement account).9394
In FY2020, the federal government awarded $27.2 In FY2020, the federal government awarded $27.2 ~~bil ion~~billion to WOSBs: to WOSBs:
 $1.2  $1.2 ~~bil ion~~ billion was awarded with a WOSB preference ($1.1 was awarded with a WOSB preference ($1.1 ~~bil ion~~billion through a through a
WOSB set-aside award and $116.1 WOSB set-aside award and $116.1 ~~mil ion~~million through a WOSB sole-source award); through a WOSB sole-source award);
 $9.3  $9.3 ~~bil ion~~ billion was awarded to a WOSB in open competition with other firms; and was awarded to a WOSB in open competition with other firms; and
 $16.6  $16.6 ~~bil ion~~ billion was awarded with another was awarded with another ~~smal~~ small business preference (e.g., set-business preference (e.g., set-
asides and sole-source awards for asides and sole-source awards for ~~smal businesses general y~~small businesses generally and for HUBZone and for HUBZone
firms, 8(a) firms, and SDVOSBs).firms, 8(a) firms, and SDVOSBs).9495
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 ~~smal~~ small business subcontracting plan and to submit business subcontracting plan and to submit
advisory findings before the solicitation is issued.advisory findings before the solicitation is issued.9596 The PCR’s advisory comments regarding the The PCR’s advisory comments regarding the
~~smal~~ small 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.appropriate contracting officer within five working days after the plan’s receipt.96
97 As mentioned, the SBA’s commercial market representatives help prime contractors find As mentioned, the SBA’s commercial market representatives help prime contractors find ~~smal~~
small businesses to perform subcontracts; counsel contractors on their responsibility to maximize businesses to perform subcontracts; counsel contractors on their responsibility to maximize
subcontracting opportunities for subcontracting opportunities for ~~smal~~ small businesses; and conduct periodic reviews, often in concert businesses; and conduct periodic reviews, often in concert
with a SBAwith a SBA PCR, of contractors awarded contracts that require an acceptable PCR, of contractors awarded contracts that require an acceptable ~~smal~~ small P.L. 117-58 P.L. 117-58
business subcontracting plan.business subcontracting plan.9798
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 ~~smal~~ small 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’s The Department of Transportation (DOT) Disadvantaged Business Enterprise (DBE) Program’s
origin can be traced to DOT’s implementation in 1980 of a minority/women’s business enterprise origin can be traced to DOT’s implementation in 1980 of a minority/women’s business enterprise
~~(MBE) program to encourage DOT grant recipients to contract with MBEs. DOT’s MBE program~~
~~was “established by regulation under the authority of Title VI of the Civil Rights Act of 1964 and~~

93 94 SBA, “Women-Owned Small Business and Economically Disadvantaged Women-Owned Small Business Certification,” 85 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.
9495 Data generated using Data generated using GSA,GSA, “Sam.Gov data bank,” July 31, 2021, at https://sam.gov/reports/awards/adhoc. “Sam.Gov data bank,” July 31, 2021, at https://sam.gov/reports/awards/adhoc.
9596 FAR FAR §19.705-3. §19.705-3.
9697 SBA, 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.
9798 15 U.S.C. 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).
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(MBE) program to encourage DOT grant recipients to contract with MBEs. DOT’s MBE program was “established by regulation under the authority of Title VI of the Civil Rights Act of 1964 and other nondiscrimination statutes that apply to DOT financial assistance programs.”other nondiscrimination statutes that apply to DOT financial assistance programs.”9899 In 1983, P.L. In 1983, P.L.
97-424, the Surface Transportation Assistance Act of 1982, required DOT’s Secretary, “except to 97-424, the Surface Transportation Assistance Act of 1982, required DOT’s Secretary, “except to
the extent that the Secretary determines otherwise,” to insure that “not less than 10 per centum of the extent that the Secretary determines otherwise,” to insure that “not less than 10 per centum of
the amounts authorized to be appropriated under this Act [federal highway and mass transit the amounts authorized to be appropriated under this Act [federal highway and mass transit
programs] programs] ~~shal~~ shall be expended with” be expended with” ~~social y and economical y~~socially and economically disadvantaged individuals disadvantaged individuals as as
defined by the SBA. The SBAdefined by the SBA. The SBA does not presume that women are does not presume that women are ~~social y~~socially disadvantaged. disadvantaged.
To comply with the act’s requirements, in 1983, DOT created the Disadvantaged Business To comply with the act’s requirements, in 1983, DOT created the Disadvantaged Business
Enterprise (DBE) Program for the Federal Highway Administration (FHWA) and Urban Mass Enterprise (DBE) Program for the Federal Highway Administration (FHWA) and Urban Mass
Transportation Administration (UMTA). DOT’s MBE program continued to be applicable to Transportation Administration (UMTA). DOT’s MBE program continued to be applicable to al
all DOT agencies but applied to the FHWA and UMTA only to the extent that it did not supersede the DOT agencies but applied to the FHWA and UMTA only to the extent that it did not supersede the
new DBE program. Because the act used the SBA definition for disadvantaged individuals, new DBE program. Because the act used the SBA definition for disadvantaged individuals,
WOSBs were not presumed to be a DBE.WOSBs were not presumed to be a DBE.99100 However, WOSBs could seek certification as a DBE However, WOSBs could seek certification as a DBE
on an individualon an individual basis with evidence of their being basis with evidence of their being ~~social y and economical y~~socially and economically disadvantaged. disadvantaged.
In 1987, P.L. 100-17, the Surface Transportation and Uniform Relocation Assistance Act of 1987, In 1987, P.L. 100-17, the Surface Transportation and Uniform Relocation Assistance Act of 1987,
among other provisions, added women to the list of individuals presumed to be among other provisions, added women to the list of individuals presumed to be ~~social y~~socially
disadvantaged for DBE purposes. Also in 1987, P.L. 100-223, the Airport and Airway Safety and disadvantaged for DBE purposes. Also in 1987, P.L. 100-223, the Airport and Airway Safety and
Capacity Expansion Act of 1987, required DOT to include the Federal Aviation Administration’s Capacity Expansion Act of 1987, required DOT to include the Federal Aviation Administration’s
(FAA) airport financial assistance program in the DBE program.(FAA) airport financial assistance program in the DBE program.~~100~~101 The act required airport The act required airport
owners and operators “to ensure that, to the maximum extent practicable” at least 10% of owners and operators “to ensure that, to the maximum extent practicable” at least 10% of al
all airport concessioners are DBEs.airport concessioners are DBEs.~~101~~
102 Congress has reauthorized the DOT DBE program several times since its inception; most recently Congress has reauthorized the DOT DBE program several times since its inception; most recently
in P.L. 117-58, the Infrastructure Investment and Jobs Act. in P.L. 117-58, the Infrastructure Investment and Jobs Act.
The Infrastructure Investment and Jobs Act provides, that, except to the extent the Secretary of The Infrastructure Investment and Jobs Act provides, that, except to the extent the Secretary of
Transportation determines otherwise, not less than 10% of the amounts made available for any Transportation determines otherwise, not less than 10% of the amounts made available for any
Surface Transportation program, including the Federal-Aid to Highways program (other than Surface Transportation program, including the Federal-Aid to Highways program (other than
tribal transportation funds), any Transit program, and the Highway Safety Research and tribal transportation funds), any Transit program, and the Highway Safety Research and
Development program (section 403 of title 23, United States Code), “Development program (section 403 of title 23, United States Code), “~~shal~~ shall be expended through be expended through
~~smal~~ small business concerns owned and controlled by business concerns owned and controlled by ~~social y and economical y~~socially and economically disadvantaged disadvantaged
individuals.” As mentioned, FAA’s airport financial assistance program also participates in the individuals.” As mentioned, FAA’s airport financial assistance program also participates in the

~~98 Department of T ransportation (DOT~~ 99 Department of Transportation (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.
99100 U.S. U.S. Congress, HouseCongress, House Committee on Small Business,Committee on Small Business, Subcommittee on SBASubcommittee on SBA and SBICand SBIC Authority, Minority Authority, Minority
Enterprise, and General SmallEnterprise, and General Small Business,Business, Review of the 10-Percent Set-Aside Program (Section 105(f) of the Surface
Transportation Assistance Act of 1982, hearings, 99th Cong., 1st sess., April 17, 1985 (Washington: GPO, 1985), p. 1. , hearings, 99th Cong., 1st sess., April 17, 1985 (Washington: GPO, 1985), p. 1.
~~100~~ 101 DOT DOT , “Participation by Minority Business Enterprise in Department of , “Participation by Minority Business Enterprise in Department of ~~T ransportation~~Transportation Programs,” Programs,” ~~5 3~~53 Federal
Register 18285, May 23, 1988. 18285, May 23, 1988.
~~101 T he~~102 The Federal Aviation Administration’s (FAA’s) participation in the DBE program and the separate airport Federal Aviation Administration’s (FAA’s) participation in the DBE program and the separate airport
concessions program have been statutorily amended over time; but becauseconcessions program have been statutorily amended over time; but because these two programs are permanently these two programs are permanently
authorized, they do not require statutory reauthorization in the same manner as surface transportation DBE programs. authorized, they do not require statutory reauthorization in the same manner as surface transportation DBE programs.
~~T he~~The Federal Highway Federal Highway Administration’s and Urban MassAdministration’s and Urban Mass ~~T ransit~~ Transit Administration’s (later the Federal Administration’s (later the Federal ~~T ransit~~Transit
Administration’s) participation in the DBE program are not permanently authorized. Administration’s) participation in the DBE program are not permanently authorized. ~~T heir~~Their participation in the DBE participation in the DBE
program has been reauthorized, and their program requirements have been amended through highway andprogram has been reauthorized, and their program requirements have been amended through highway and mass transit mass transit
reauthorization acts. As a result, FAA DBE program requirements (e.g., related to size standards) and surface reauthorization acts. As a result, FAA DBE program requirements (e.g., related to size standards) and surface
transportation DBE program requirements have been addressedtransportation DBE program requirements have been addressed in different acts and, while similar, are not identical.in different acts and, while similar, are not identical.
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DBE program under separate statutory authority, and DOT has a separate DBE program for DBE program under separate statutory authority, and DOT has a separate DBE program for
airport concessions.airport concessions.~~102~~103
A DBE is a for-profit A DBE is a for-profit ~~smal~~ small business owned and controlled by business owned and controlled by ~~social y and economical y~~socially and economically
disadvantaged individuals.disadvantaged individuals.~~103~~104 Eligibility Eligibility for the DBE program differs somewhat from the SBA’s for the DBE program differs somewhat from the SBA’s
8(a) program. For example, under the DBE program, women are presumed to be 8(a) program. For example, under the DBE program, women are presumed to be ~~social y~~
socially disadvantaged individuals. Also, to be regarded as disadvantaged individuals. Also, to be regarded as ~~economical y~~economically disadvantaged for DBE disadvantaged for DBE
purposes, an individual must have a personal net worth (excluding ownership interest in the firm purposes, an individual must have a personal net worth (excluding ownership interest in the firm
and equity in his or her primary personal residence) that does not exceed $1.32 and equity in his or her primary personal residence) that does not exceed $1.32 ~~mil ion~~million. As . As
mentioned, the SBA’s 8(a) program has a three-part test for being deemed mentioned, the SBA’s 8(a) program has a three-part test for being deemed ~~economical y~~economically
disadvantaged, including personal net worth of less than $750,000 (excluding ownership interest disadvantaged, including personal 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 in the applicant’s business, equity in their primary personal residence, and funds invested in an
official retirement account). official retirement account).
The DBE The DBE must also meet SBA size criteria and cannot have average annual gross receipts over must also meet SBA size criteria and cannot have average annual gross receipts over
the preceding three fiscal years that exceed $26.29 the preceding three fiscal years that exceed $26.29 ~~mil ion~~million for participation in Federal Highway for participation in Federal Highway
Administration and Federal Transit Administration-assisted work.Administration and Federal Transit Administration-assisted work.~~104~~105 P.L. 115-254, the FAA P.L. 115-254, the FAA
Reauthorization Act of 2018, removed the gross receipts cap for Federal Aviation Administration-Reauthorization Act of 2018, removed the gross receipts cap for Federal Aviation Administration-
assisted work.assisted work. ~~105~~106 Size limits for the airport concessions DBE program are higher. Size limits for the airport concessions DBE program are higher.~~106~~
107 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;

~~102~~ 103 49 C.F.R. Part 23. “As recipients of DOT 49 C.F.R. Part 23. “As recipients of DOT financial assistance, state and local transportationfinancial assistance, state and local transportation agencies … certify the 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 thatoversight to make sure that these rules and regulations are followed bythese 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.
~~103~~104 DOT 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”).
~~104~~105 DOT DOT is requiredis required to adjustto adjust the DBE grossthe DBE gross receipts cap annually to account for inflation.receipts cap annually to account for inflation.
~~105 DOT , “~~ 106 DOT, “Definition of a Disadvantaged BusinessDefinition of a Disadvantaged Business Enterprise;” and Department of Enterprise;” and Department of ~~T ransportation~~Transportation, “Disadvantaged , “Disadvantaged
BusinessBusiness Enterprise Program; Inflationary Adjustment,” 85Enterprise Program; Inflationary Adjustment,” 85 Federal Register 80646-80648, December 14, 2020. 80646-80648, December 14, 2020.
~~106~~107 With a few 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.
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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 al all types of types of ~~federal y~~federally 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. establishing and providing opportunities for DBEs.~~107~~108
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 ~~social y~~socially disadvantaged. Also eligible disadvantaged. Also eligible ~~are historical y~~ are historically 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 ~~economical y~~economically 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
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 ~~social y~~
~~and economical y~~socially and economically disadvantaged individuals, including disadvantaged individuals, including ~~historical y~~ historically 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.net worth of less than $750,000.~~108~~109 To be certified by the EPA as a DBE, applicants must first 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 ~~wil~~ will 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. establishing and providing contracting opportunities for DBEs.~~109~~

~~107~~110 108 49 C.F.R. §26.1. 49 C.F.R. §26.1.
~~108~~109 40 C.F.R. §33.202(c); and 40 C.F.R. 40 C.F.R. §33.202(c); and 40 C.F.R. §33.203(c). §33.203(c).
~~109~~110 Environmental Protection Agency, “ 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-
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In addition, P.L. 95-28, the Public Works Employment Act of 1977, requires, “except to the extent In addition, P.L. 95-28, the Public Works Employment Act of 1977, requires, “except to the extent
that the Secretary [of Commerce] determines otherwise,” that at least 10% of Economic that the Secretary [of Commerce] determines otherwise,” that at least 10% of Economic
Development Administration local public works project grants “Development Administration local public works project grants “~~shal~~ shall be expended for minority be expended for minority
business enterprises.”business enterprises.”~~110~~
111 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 ~~smal~~ small businesses, many Native American-owned and -controlled businesses, many Native American-owned and -controlled ~~smal~~ small 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.Indian tribes and Native American-owned and -controlled businesses.~~111~~112 In addition, the In addition, the
Department of Defense’s Indian Incentive Program encourages prime contractors with a Department of Defense’s Indian Incentive Program encourages prime contractors with a
subcontract worth at least $500,000 to subcontract with qualified Indian tribes, Native American-subcontract worth at least $500,000 to subcontract with qualified Indian tribes, Native American-
owned and -controlled businesses, and Native owned and -controlled businesses, and Native ~~Hawai an smal~~ Hawaiian small businesses by providing a 5% businesses by providing a 5%
rebate on the amount subcontracted to these businesses.rebate on the amount subcontracted to these businesses.~~112~~113
Subcontracting Programs for Small Disadvantaged Businesses
Other federal programs promote subcontracting with Other federal programs promote subcontracting with ~~smal~~ small disadvantaged businesses (SDBs). disadvantaged businesses (SDBs).
SDBs include 8(a) participants and other SDBs include 8(a) participants and other ~~smal~~ small businesses that are at least 51% businesses that are at least 51% ~~unconditional y~~unconditionally
owned and controlled by owned and controlled by ~~social y or economical y~~socially or economically 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 ~~general y~~generally 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 goalsofferor 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 ~~wil~~ will 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.”subcontracts.”~~113~~114 Federal agencies may also consider the extent of subcontracting with SDBs in Federal agencies may also consider the extent of subcontracting with SDBs in
determining to whom to award a contract or give contractors “monetary incentives” to determining to whom to award a contract or give contractors “monetary incentives” to
subcontract with SDBs. subcontract with SDBs.

assistance-agreements-dbe-program. assistance-agreements-dbe-program.
~~110~~111 See See 42 U.S.C.42 U.S.C. §6705(f)(2). §6705(f)(2).
~~111~~112 GAO, GAO, Buy Indian Act: Bureau of Indian Affairs and Indian Health Service Need Greater Insight into
~~Im plem entation~~Implementation 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, “~~Th e~~The Buy Indian Opportunity,” 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.
~~112~~113 U.S. 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/.
~~113~~114 15 U.S.C. 15 U.S.C. §637(d)(6)(c). §637(d)(6)(c).
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As of As of ~~February 23~~May 24, 2022, the SBA’s Dynamic , 2022, the SBA’s Dynamic ~~Smal~~ Small Business Search database included 6,Business Search database included 6,~~592~~
~~SBA-certified~~ 525 SBA-certified 8(a) firms and 8(a) firms and ~~167,628~~166,180 self-certified SDBs. self-certified SDBs.~~114~~115
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 ~~smal~~
small businesses that are owned and controlled by businesses that are owned and controlled by ~~economical y and social y~~economically and socially disadvantaged individuals disadvantaged individuals
and and ~~smal~~ small 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
~~HUBZone~~ HUBZone firms, and firms, and ~~economical y~~economically disadvantaged women-owned disadvantaged women-owned ~~smal~~ small businesses.”businesses.”~~115~~116 Training 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.”analysis.”~~116~~117 Eligible 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 In ~~FY2020~~FY2021, the 7(j) Management and Technical Assistance program assisted , the 7(j) Management and Technical Assistance program assisted ~~9,941 smal~~
11,900 small businesses.businesses.~~117~~118
SBA Surety Bond Guarantee ~~Program118~~Program119
The SBA’s Surety Bond Guarantee program aims to increase The SBA’s Surety Bond Guarantee program aims to increase ~~smal~~ small businesses’ access to federal, businesses’ access to federal,
state, and local government contracting, as state, and local government contracting, as ~~wel~~ well as private-sector contracts, by guaranteeing bid, as private-sector contracts, by guaranteeing bid,
performance, and payment bonds for performance, and payment bonds for ~~smal~~ small businesses that cannot obtain surety bonds through businesses that cannot obtain surety bonds through
regular commercial channels.regular commercial channels.~~119~~120 The program guarantees individual contracts of up to $6.5 The program guarantees individual contracts of up to $6.5
~~mil ion~~ million and up to $10 and up to $10 ~~mil ion~~ million 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.surety’s loss if a default occurs.~~120 In FY2020~~121 In FY2021, the SBA guaranteed , the SBA guaranteed ~~10,577~~9,633 bid and final surety bid and final surety
bonds with a total contract value of nearly $7.bonds with a total contract value of nearly $7.~~2 bil ion.121~~

~~114 SBA,~~ 0 billion.122 115 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.
~~115~~ 116 SBA, SBA, FY2022 Congressional Justification and FY2020 Annual Performance Report, p. 72, at https://www.sba.gov/, p. 72, at https://www.sba.gov/
document/reportdocument/report -congressional-budget-justification-annual-performance-report-congressional-budget-justification-annual-performance-report ~~(hereinafter SBA,~~ ~~FY2022~~
~~Congressional~~. 117 SBA, FY2023 Congressional Budget Justification and ~~FY2020 Annual Perform ance Report~~).
~~116 SBA, FY2022 Congressional Justification and FY2020 Annual Performance Report, p. 72.~~
~~117 SBA, FY2022 Congressional Justification and FY2020 Annual Performance Report, p. 73.~~
~~118 For additional information and analysis, see CRS Report R42037, SBA Surety Bond Guarantee Program , by Robert~~
~~Jay Dilger.~~
~~119 Ancillary bonds are also eligible~~ FY2021 Annual Performance Report, p. 69, at https://www.sba.gov/document/report-congressional-budget-justification-annual-performance-report (hereinafter SBA, FY2023 Congressional Budget Justification and FY2021 Annual Performance Report). 118 SBA, FY2023 Congressional Budget Justification and FY2021 Annual Performance Report, p. 71. 119 For additional information and analysis, see CRS Report R42037, SBA Surety Bond Guarantee Program, by Robert Jay Dilger. 120 Ancillary bonds are 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.
~~120~~ 121 P.L. 114-92, the National Defense Authorization Act for Fiscal Year 2016, includes 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 25starting one year from enactment (effective November 25 , 2016). For additional information and analysis, see CRS , 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.
~~121~~122 SBA, FY2023 Congressional Budget Justification and FY2021 Annual Performance Report, p. 41 ~~SBA, FY2020 Program Performance: SBA Surety Bond Guarantee Program , at https://content.govdelivery.com/~~
~~accounts/USSBA/bulletins/2a5a0e6~~. .
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A surety bond is a three-party instrument between a surety (someone who agrees to be A surety bond is a three-party instrument between a surety (someone who agrees to be
responsible for the debt or obligation of another), a contractor, and a project owner. The responsible for the debt or obligation of another), a contractor, and a project owner. The
agreement binds the contractor to comply with the terms and conditions of a contract. If the agreement binds the contractor to comply with the terms and conditions of a contract. If the
contractor is unable to successfully perform the contract, the surety assumes the contractor’s contractor is unable to successfully perform the contract, the surety assumes the contractor’s
responsibilities and ensures that the project is completed. The surety bond reduces the risk responsibilities and ensures that the project is completed. The surety bond reduces the risk
associated with contracting.associated with contracting.~~122~~123
Surety bonds are meant to encourage project owners to contract with Surety bonds are meant to encourage project owners to contract with ~~smal~~ small 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.failing to comply with the contract’s terms and conditions.~~123~~124
Surety bonds are important to Surety bonds are important to ~~smal~~ small 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.contracting officer in an amount that the officer considers adequate to protect the government.~~124~~125
Small Business Mentor-Protégé ~~Programs125~~
~~Smal~~ Programs126 Small business mentor-protégé programs business mentor-protégé programs ~~typical y~~typically seek to pair new businesses with more seek to pair new businesses with more
experienced businesses in experienced businesses in ~~mutual y~~mutually 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
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 ~~smal~~ small 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 ~~smal~~ small 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 ~~smal~~ small 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.provide technical or management assistance to their protégés.~~126~~

~~122 SBA,~~ 127 123 SBA, “Surety Bonds,” at https://www.sba.gov/funding-programs/surety-bonds. “Surety Bonds,” at https://www.sba.gov/funding-programs/surety-bonds.
~~123~~124 SBA, SBA, “Surety Bonds.” “Surety Bonds.”
~~124 T he~~125 The 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 Public Work [the Miller Act or Public 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; Inflation Adjustment of Acquisition-Related Regulation; Inflation Adjustment of Acquisition-Related ~~T hresholds~~Thresholds,” 75,” 75 Federal Register 53130, August 30, 2010. 53130, August 30, 2010.
~~125~~ 126 For additional information and analysis of federal small business For additional information and analysis of federal small business mentor-protégé programs, see CRSmentor-protégé programs, see CRS Report Report
R41722, R41722, ~~Sm all~~Small Business Mentor-Protégé ~~Program s~~Programs, by Robert Jay Dilger. , by Robert Jay Dilger.
~~126~~127 SBA, SBA, “SBA“SBA Mentor-Protégé Program,” at https://www.sba.gov/federal-contracting/contracting-assistance-programs/Mentor-Protégé Program,” at https://www.sba.gov/federal-contracting/contracting-assistance-programs/
sba-mentor-protege-program; SBA, “sba-mentor-protege-program; SBA, “ Small BusinessSmall Business Mentor Protégé Programs,” 81Mentor Protégé Programs,” 81 Federal Register 48558-48595, 48558-48595,
JulyJuly 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.
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 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 ~~smal~~ small 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.other assistance.~~127~~
128 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
~~smal~~ small 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 ~~general y~~generally 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 1,700 mentor-protégé agreements are in place, even though there are issues Currently, more than 1,700 mentor-protégé agreements are in place, even though there are issues
with the accuracy and thoroughness of some federal agency records.with the accuracy and thoroughness of some federal agency records.~~128~~129
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 ~~realistical y~~realistically reflect the potential of reflect the potential of ~~smal~~ small business concerns and business concerns and
~~smal~~ small business concerns owned and controlled by business concerns owned and controlled by ~~social y and economical y~~socially and economically 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.each fiscal year, to report its progress in meeting the goals to the SBA.~~129~~130
In 1988, Congress authorized the President In 1988, Congress authorized the President ~~annual y~~annually to establish government-wide minimum to establish government-wide minimum
participation goals for procurement contracts awarded to participation goals for procurement contracts awarded to ~~smal~~ small businesses and businesses and ~~smal~~ small businesses businesses
owned and controlled by owned and controlled by ~~social y and economical y~~socially and economically disadvantaged individuals. Congress required disadvantaged individuals. Congress required
the government-wide minimum participation goal for the government-wide minimum participation goal for ~~smal~~ small businesses to be “not less than 20% businesses to be “not less than 20%
of the total value of of the total value of al all 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 al all prime contract and subcontract awards for each fiscal year” for prime contract and subcontract awards for each fiscal year” for ~~smal~~ small businesses businesses
owned and controlled by owned and controlled by ~~social y and economical y~~socially and economically disadvantaged individuals. disadvantaged individuals.~~130~~

~~127 10 U.S.C.~~ 131 128 10 U.S.C. §2302note: Mentor-Protégé Pilot Program. §2302note: Mentor-Protégé Pilot Program.
~~128~~129 As of As of ~~February~~ May 1, 2022, the SBA’s All1, 2022, the SBA’s All ~~Small~~ Small Mentor-Protégé program had 1,Mentor-Protégé program had 1,~~511~~556 active mentor-protégé agreements. active mentor-protégé agreements.
~~See SBA, “~~ See SBA, “Active mentor-protégé agreements,” at https://www.sba.gov/document/supportActive mentor-protégé agreements,” at https://www.sba.gov/document/support -active-mentor-protege--active-mentor-protege-
agreements. agreements.
As of January 1, 2018, there were 63 active Department of Defense (DOD) mentor As of January 1, 2018, there were 63 active Department of Defense (DOD) mentor -protégé agreements. See DOD, -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/.
~~129~~130 15 U.S.C. 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.
~~130~~131 15 U.S.C. 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 1997. Reauthorization Act of 1997.
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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 ~~smal~~ small business concerns and business concerns and ~~smal~~ small business concerns business concerns
owned and controlled by owned and controlled by ~~social y and economical y~~socially and economically disadvantaged individuals to participate in the disadvantaged individuals to participate in the
performance of contracts let by such agency.”performance of contracts let by such agency.”~~131~~132 The SBA was also required to report to the The SBA was also required to report to the
President President ~~annual y~~annually 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.report to Congress.~~132~~133 The SBA negotiates the goals with each federal agency and establishes a The SBA negotiates the goals with each federal agency and establishes a
small business eligible baseline for evaluating the agency’s performance. baseline for evaluating the agency’s performance.~~133~~134 The agency head is The agency head is
required to “make consistent efforts to required to “make consistent efforts to ~~annual y~~annually expand participation by expand participation by ~~smal~~ small business concerns business concerns
from each industry category.”from each industry category.”~~134~~135 If the SBA and the agency cannot agree on the goals, the agency If the SBA and the agency cannot agree on the goals, the agency
may submit the case to the Office of Management and Budget (OMB) Office of Federal may submit the case to the Office of Management and Budget (OMB) Office of Federal
Procurement Policy (OFPP) for resolution.Procurement Policy (OFPP) for resolution.~~135~~136
The The ~~smal~~ small 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 ~~realistical y~~ realistically reflect the potential for reflect the potential for ~~smal~~ small 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
(such as government procurement card purchases and contracts valued less than $10,000).(such as government procurement card purchases and contracts valued less than $10,000).~~136~~
137 These exclusions These exclusions ~~typical y~~typically account for 18% to 20% of account for 18% to 20% of al all 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 ~~Smal~~ Small 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 ~~Smal~~ Small 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.action.~~137~~138
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

~~131 15 U.S.C.~~ 132 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 .
~~132~~. 133 15 U.S.C. 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 .
~~133~~. 134 According to a 2001 GAO 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 tohad a limited or no chance to compete. SBA then 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~~ when reporting their numbers.” GAO,reporting their numbers.” GAO, ~~Sm all~~ Small Business: More
Transparency Needed in ~~Prim e~~Prime Contract Goal Program , GAO-01-551, August 1, 2001, pp. 9-10, at , GAO-01-551, August 1, 2001, pp. 9-10, at
http://www.gao.gov/assets/240/231854.pdf. http://www.gao.gov/assets/240/231854.pdf.
~~134~~135 15 U.S.C. 15 U.S.C. §644(g)(2). §644(g)(2).
~~135~~136 SBA, 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”).
~~136~~137 SBA, 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.
~~137 SBA,~~ 138 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.
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Veteran-Owned Woman-Owned Veteran-Owned Woman-Owned ~~Smal~~ Small Business would be counted toward the Business would be counted toward the ~~Smal~~ Small Business Business
(SB) goal, the Service-Disabled Veteran-Owned (SB) goal, the Service-Disabled Veteran-Owned ~~Smal~~ Small Business (SDVOSB) goal and the Women-Business (SDVOSB) goal and the Women-
Owned Owned ~~Smal~~ Small 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).”(italics in original).”~~138~~139
Over the years, federal government-wide procurement goals have been established for Over the years, federal government-wide procurement goals have been established for ~~smal~~
~~businesses general y~~small businesses generally (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 ~~Smal~~ Small Business Reauthorization Business Reauthorization
Act of 1997); Act of 1997); ~~smal~~ small businesses owned and controlled by businesses owned and controlled by ~~social y and economical y~~socially and economically 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); ~~smal~~ small businesses located within a HUBZonebusinesses located within a HUBZone (P.L. 105-135); and (P.L. 105-135); and ~~smal~~ small 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
~~Smal~~ Small Business Development Act of 1999). Business Development Act of 1999).
The current federal small business procurement goals are The current federal small business procurement goals are
 at least 23.0% of the total value of  at least 23.0% of the total value of ~~al smal~~ all small business eligiblebusiness eligible prime contract prime contract
awards to awards to ~~smal~~ small businesses for each fiscal year; businesses for each fiscal year;
 5.0% of the total value of  5.0% of the total value of ~~al smal~~ all small business eligible prime contract awards and business eligible prime contract awards and
subcontract awards to subcontract awards to ~~smal~~ small disadvantaged businesses (including participants in disadvantaged businesses (including participants in
the SBA’s 8(a) program) for each fiscal year;the SBA’s 8(a) program) for each fiscal year;~~139~~140
 5.0% of the total value of  5.0% of the total value of ~~al smal~~ all small business eligible prime contract awards and business eligible prime contract awards and
subcontract awards to women-owned subcontract awards to women-owned ~~smal~~ small businesses; businesses;
 3.0% of the total value of  3.0% of the total value of ~~al smal~~ all small business eligible prime contract awards and business eligible prime contract awards and
subcontract awards to HUBZone subcontract awards to HUBZone ~~smal~~ small businesses;businesses;~~140~~141 and and
 3.0% of the total value of  3.0% of the total value of ~~al smal~~ all small 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 ~~smal~~ small businesses.businesses.~~141~~142
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 ~~Smal~~
Small Business Procurement Scorecards and GSA’s Business Procurement Scorecards and GSA’s ~~Smal~~ Small 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 ~~smal~~ small business business
contracting. For example, agency performance as reported in the SBA’s contracting. For example, agency performance as reported in the SBA’s ~~Smal~~ Small 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 the FY2020 Small Business Procurement Scorecard indicates that federal indicates that federal
agencies met the federal procurement goal for agencies met the federal procurement goal for ~~smal businesses general y, smal~~ small businesses generally, small disadvantaged disadvantaged
businesses, and service-disabled veteran-owned businesses, and service-disabled veteran-owned ~~smal~~ small businesses in FY2020 (see the second and businesses in FY2020 (see the second and
third columns). third columns).

~~138 SBA,~~ 139 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. “~~T he~~The 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. ~~T hat~~ That
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).”
~~139~~140 For additional information and analysis of the SBA’s 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.
~~140~~141 For additional information and analysis of the HUBZone program, see CRS For additional information and analysis of the HUBZone program, see CRS Report R41268, Report R41268, Small Business
~~Adm inistration~~Administration HUBZone Program , by Robert Jay Dilger. , by Robert Jay Dilger.
~~141~~ 142 15 U.S.C. 15 U.S.C. §644(g)(1)-(2). §644(g)(1)-(2).
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For comparative purposes For comparative purposes, Table 1 provides the percentage of provides the percentage of ~~smal~~ small business eligible contracts business eligible contracts
awarded to awarded to ~~smal~~ small businesses in FY2020 without the required double counting of awards in a 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 disaster area and to Puerto Rico and other covered territories (see the fourth column), as ~~wel~~ well as as
the percentage of the percentage of al all federal contracts (without exclusions and without double counting) awarded federal contracts (without exclusions and without double counting) awarded
~~to smal~~ to small businesses (see the fifth column). businesses (see the fifth column).
Table 1. Federal Procurement Goals and Percentage of FY2020 Federal Contract
Dollars Awarded to Small Businesses, by Type
Percentage 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
Business Type
Federal Goal
counting)
counting)
counting)
~~Smal~~ Small Businesses Businesses
23.0% 23.0%
26.02% 26.02%
25.42% 25.42%
21.89% 21.89%
~~Smal~~ Small Disadvantaged Disadvantaged
5.0% 5.0%
10.54% 10.54%
10.39% 10.39%
9.08% 9.08%
Businesses Businesses
Women-Owned Women-Owned ~~Smal~~
Small 5.0% 5.0%
4.85% 4.85%
4.71% 4.71%
4.10% 4.10%
Businesses Businesses
HUBZone HUBZone ~~Smal~~
Small 3.0% 3.0%
2.44% 2.44%
2.39% 2.39%
2.04% 2.04%
Businesses Businesses
Service-Disabled Service-Disabled
3.0% 3.0%
4.28% 4.28%
4.23% 4.23%
3.92% 3.92%
Veteran-Owned Veteran-Owned ~~Smal~~
Small Businesses Businesses
Sources: U.S. U.S. ~~Smal~~ Small Business AdministrationBusiness Administration (SBA), “Statutory Guidelines,”(SBA), “Statutory Guidelines,” at https://www.sba.gov/content/at https://www.sba.gov/content/
statutory-guidelines-0 (federal goals); SBA, “Government-Widestatutory-guidelines-0 (federal goals); SBA, “Government-Wide Performance,Performance, FY2020 FY2020 ~~Smal~~ Small Business Business
Procurement Scorecard,”Procurement Scorecard,” at https://www.sba.gov/document/support-at https://www.sba.gov/document/support-~~smal~~ small-business-procurement-scorecard--business-procurement-scorecard-
overview;overview; and data generated using Generaland data generated using General ~~Service~~ Service Administration,Administration, “Sam.Gov“Sam.Gov data bank,” July 31, 2021, at data bank,” July 31, 2021, at
https://sam.gov/reports/awards/adhochttps://sam.gov/reports/awards/adhoc ~~(al~~ (all reported contract reported contract ~~dol ars~~dollars). ).
Notes: In accordance with federal In accordance with federal law, the SBAlaw, the SBA provided double credit,provided double credit, for scorecardfor scorecard purposes only, for prime purposes only, for prime
contracts awarded in disastercontracts awarded in disaster areas that are awarded as a local set aside and a areas that are awarded as a local set aside and a ~~smal~~ small business or other business or other
socioeconomicsocioeconomic set aside when the vendor state is the sameset aside when the vendor state is the same as the place of performanceas the place of performance (see 15 U.S.C.(see 15 U.S.C. §644(f)) §644(f))
and for primeand for prime contracts awarded to businesses in Puerto Rico and covered territoriescontracts awarded to businesses in Puerto Rico and covered territories (see 15 U.S.C.(see 15 U.S.C. §644(x)(1)). §644(x)(1)).
The SBA also included Department of Energy first-tierThe SBA also included Department of Energy first-tier subcontract awards as required by P.L.subcontract awards as required by P.L. 113-76, the 113-76, the
Consolidated Appropriations Act, 2014 (§318). Consolidated Appropriations Act, 2014 (§318).
The FY2020 The FY2020 ~~Smal Business~~ Small Business Procurement ScorecardProcurement Scorecard was made available on July 30, 2021, and reflectswas made available on July 30, 2021, and reflects contracting contracting
data as of February 22, 2021. data as of February 22, 2021. ~~Smal~~ Small business eligiblebusiness eligible contracts totaled $559.981 contracts totaled $559.981 ~~bil ion~~billion in FY2020, and $145.8 in FY2020, and $145.8
~~bil ion~~billion was awarded to was awarded to ~~smal~~ small businesses ($142.4 without double counting), $59.0 businesses ($142.4 without double counting), $59.0 ~~bil ion to smal~~ billion to small disadvantaged disadvantaged
businessesbusinesses ($58.2 ($58.2 ~~bil ion~~billion without double counting), $27.1 without double counting), $27.1 ~~bil ion~~billion to women-owned to women-owned ~~smal businesses ($26.4 bil ion~~small businesses ($26.4 billion
without double counting), $13.6 without double counting), $13.6 ~~bil ion~~billion to SBA-certified to SBA-certified ~~HUBZone smal businesses ($13.4 bil ion~~ HUBZone small businesses ($13.4 billion without double without double
counting), and $23.9 counting), and $23.9 ~~bil ion~~ billion to service-disabledto service-disabled veteran-owned veteran-owned ~~smal~~ small businesses ($23.7 businesses ($23.7 ~~bil ion~~billion without double without double
counting). The Department of Energy first-tiercounting). The Department of Energy first-tier subcontract awards in FY2020 were as subcontract awards in FY2020 were as ~~fol ows: $3.36 bil ion to~~
~~smal businesses, $0.81 bil ion to smal~~ follows: $3.36 billion to small businesses, $0.81 billion to small disadvantaged businesses,disadvantaged businesses, ~~$0.76 bil ion to smal~~ $0.76 billion to small women-owned businesses, women-owned businesses,
$0.24 $0.24 ~~bil ion~~billion to SBA-certified to SBA-certified HUBZone HUBZone ~~smal~~ small businesses,businesses, and $0.23 and $0.23 ~~bil ion~~ billion to service-disabledto service-disabled veteran-owned veteran-owned
~~smal~~ small businesses. businesses.
The percentages provided in the column for The percentages provided in the column for ~~al reported~~ all reported contracts in FY2020 were calculated using contracting contracts in FY2020 were calculated using contracting
data as reporteddata as reported on July 31, 2021 (without double counting): $665.7 on July 31, 2021 (without double counting): $665.7 ~~bil ion~~billion in total contracts, and $145.8 in total contracts, and $145.8 ~~bil ion~~billion
was awarded to was awarded to ~~smal~~ small businesses;businesses; ~~$60.5 bil ion to smal~~ $60.5 billion to small disadvantaged businesses; $27.3 disadvantaged businesses; $27.3 ~~bil ion~~ billion to women-owned to women-owned
~~smal~~ small businesses; $13.6 businesses; $13.6 ~~bil ion~~billion to SBA-certified to SBA-certified HUBZone HUBZone ~~smal~~ small businesses; and $26.1 businesses; and $26.1 ~~bil ion~~ billion to service-disabled to service-disabled
veteran-owned veteran-owned ~~smal~~ small businesses. businesses.
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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 ~~smal~~ small business offeror lacks certain elements of responsibility (e.g., is unable business offeror lacks certain elements of responsibility (e.g., is unable
to to ~~fulfil~~ 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 ~~smal~~
small business.business.~~142~~143 The COC certifies in writing that the The COC certifies in writing that the ~~smal~~ small business meets business meets al all 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 al all elements of elements of
responsibility of any responsibility of any ~~smal~~ small 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.”imposed and enforced by other federal agencies.”~~143~~144
Post-Award Requirements
As mentioned, the SBA’s commercial market representatives conduct periodic compliance As mentioned, the SBA’s commercial market representatives conduct periodic compliance
reviews of contractors awarded contracts that require an acceptable reviews of contractors awarded contracts that require an acceptable ~~smal~~ small business subcontracting business subcontracting
plan.plan.~~144~~145 In addition, once the contract is completed, federal agencies are required to pay the 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 specified 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 payment’s due circumstances, federal agencies may also pay contractors before the contract’s payment’s due
date. date.
Small Business Subcontracting Plan Reviews
The periodic compliance review can take place on-site, at the contracting agency, or virtual.The periodic compliance review can take place on-site, at the contracting agency, or virtual.~~145~~146
Materials that may be reviewed include the contractor’s contract files, correspondence that is Materials that may be reviewed include the contractor’s contract files, correspondence that is
directly or indirectly related to the contract, IT systems, subcontracting methods, and directly or indirectly related to the contract, IT systems, subcontracting methods, and
procedures.procedures.~~146~~147 Contractors are selected randomly for audit. Contractors are selected randomly for audit.~~147~~148 The SBA may enter into agreements The SBA may enter into agreements
with other federal agencies to conduct these assessments.with other federal agencies to conduct these assessments.~~148~~149
The compliance report includes compliant and noncompliant items found during the assessment The compliance report includes compliant and noncompliant items found during the assessment
of the contractor’s subcontracting activities and a rating indicating the contractor’s level of of the contractor’s subcontracting activities and a rating indicating the contractor’s level of
compliance or noncompliance, ranging from unsatisfactory to outstanding.compliance or noncompliance, ranging from unsatisfactory to outstanding.~~149~~150 If any deficiencies If any deficiencies
are found, the contractor is required to submit, within 30 days of the compliance review rating are found, the contractor is required to submit, within 30 days of the compliance review rating

~~142 15 U.S.C.~~ 143 15 U.S.C. §637(b)(7); and FAR §19.601(a-e). §637(b)(7); and FAR §19.601(a-e).
~~143~~144 FAR FAR §19.601(b). §19.601(b).
~~144~~145 15 U.S.C. 15 U.S.C. §633(h). §633(h).
~~145~~146 SBA, SBA, “Subcontracting Assistance Program Post Award,” SOP“Subcontracting Assistance Program Post Award,” SOP 60 03 7, effective July 17, 2018, p. 60 03 7, effective July 17, 2018, p. ~~1 1~~11, at , at
https://www.sba.gov/sites/default/files/2018-07/2018-07-17%20Final%20Subcontracting%20Program%20SOP_1.pdf https://www.sba.gov/sites/default/files/2018-07/2018-07-17%20Final%20Subcontracting%20Program%20SOP_1.pdf .
~~146~~. 147 SBA, SBA, “Subcontracting Assistance Program Post Award,” SOP“Subcontracting Assistance Program Post Award,” SOP 60 03 7, p. 60 03 7, p. ~~1 1.~~
~~147 SBA,~~ 11. 148 SBA, “Subcontracting Assistance Program Post Award,” SOP“Subcontracting Assistance Program Post Award,” SOP 60 03 7, p60 03 7, p . 12. . 12.
~~148~~149 SBA, SBA, “Subcontracting Assistance Program Post Award,” SOP“Subcontracting Assistance Program Post Award,” SOP 60 03 7, p. 14. 60 03 7, p. 14.
~~149~~150 13 C.F.R. §125.3(e)(3). 13 C.F.R. §125.3(e)(3).
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letter date, a corrective action plan (CAP). letter date, a corrective action plan (CAP).~~150~~151 The CAP is submitted to the SBA 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.contractor’s adherence to correcting the deficiencies.~~151~~152
If the contractor refuses to provide or address If the contractor refuses to provide or address al all 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 ~~al otted~~allotted 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.that awarded the contract for resolution or to begin accessing liquidated damages.~~152~~153
Prompt Payments
Once a contract is awarded, federal agencies are Once a contract is awarded, federal agencies are ~~general y~~generally 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.in the contract.~~153~~
154 Similar requirements exist for prime contractors in paying subcontractors on construction Similar requirements exist for prime contractors in paying subcontractors on construction
contracts. These requirements are contracts. These requirements are ~~especial y~~especially important for important for ~~smal~~ small businesses in the construction businesses in the construction
industry. industry. ~~Specifical y~~Specifically, every construction contract awarded by a federal agency must contain , every construction contract awarded by a federal agency must contain
clauses obligating the prime contractor to (1) pay the subcontractor for “satisfactory clauses obligating the prime contractor to (1) pay the subcontractor for “satisfactory
performance” under the subcontract within seven days of receiving payment from the agency and performance” under the subcontract within seven days of receiving payment from the agency and
(2) pay interest on any amounts that are not paid within the proper time frame.(2) pay interest on any amounts that are not paid within the proper time frame.~~154~~155 The contract The contract
must also obligate the prime contractor to include similar payment and interest penalty terms in must also obligate the prime contractor to include similar payment and interest penalty terms in
its subcontracts, as its subcontracts, as ~~wel~~ well as require its subcontractors to impose these terms on as require its subcontractors to impose these terms on their
subcontractors. This latter provision ensures that the payment and interest penalty requirements subcontractors. This latter provision ensures that the payment and interest penalty requirements
flow down to to al all tiers of construction subcontractors. tiers of construction subcontractors.
In addition, required subcontracting plans must incorporate terms obligating the prime contractor In addition, required subcontracting plans must incorporate terms obligating the prime contractor
to notify the agency awarding the contract in writing if a subcontractor is paid a reduced price for to notify the agency awarding the contract in writing if a subcontractor is paid a reduced price for
goods supplied or services completed under the contract, or if payment is made to the goods supplied or services completed under the contract, or if payment is made to the
subcontractor more than 90 days past due. The prime contractor must include the reason for the subcontractor more than 90 days past due. The prime contractor must include the reason for the

~~150 SBA,~~ 151 SBA, “Subcontracting Assistance Program Post Award,” SOP“Subcontracting Assistance Program Post Award,” SOP 60 03 7, p. 1260 03 7, p. 12 .
~~151~~. 152 SBA, SBA, “Subcontracting Assistance Program Post Award,” SOP“Subcontracting Assistance Program Post Award,” SOP 60 03 7, p. 60 03 7, p. ~~1 3.~~
~~152 SBA,~~ 13. 153 SBA, “Subcontracting Assistance Program Post Award,” SOP“Subcontracting Assistance Program Post Award,” SOP 60 03 7, p. 60 03 7, p. ~~1 3. Liquidated damages~~ 13. Liquidated damages are predetermined are predetermined
sumssums 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 ~~Governm ent~~Government Contractor
Accountability, by David, by David H. Carpenter and Kathleen Ann Ruane. H. Carpenter and Kathleen Ann Ruane.
~~153~~ 154 31 U.S.C. 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 information required undershipping and payment terms; (3) other substantiating documentation or information 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 sent. 31
U.S.C.U.S.C. §3901(a); and 48 C.F.R. §32.905(b)(1)(i)-(x). §3901(a); and 48 C.F.R. §32.905(b)(1)(i)-(x). ~~T he~~The interest rate to be used interest rate to be used is thatis that determined by the Secretary of determined by the Secretary of
the the ~~T reasury~~Treasury twice a year under twice a year under the Contract Disputes Act. 31 U.S.C. §3902(a). the Contract Disputes Act. 31 U.S.C. §3902(a).
~~154~~155 31 U.S.C. 31 U.S.C. §3905(b); and P.L. 100-496, the Prompt Payment Act Amendments of 1988. §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. reduction in payment or failure to pay a subcontractor within 90 days.~~155~~156 If the contracting officer 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 ~~shal~~ shall 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.Federal Awardee Performance and Integrity Information System, or any successor.~~156~~157 This This
information is used by federal agencies to “evaluate the business ethics and quality of prospective information is used by federal agencies to “evaluate the business ethics and quality of prospective
contractors competing for Federal contracts and to protect taxpayers from doing business with contractors competing for Federal contracts and to protect taxpayers from doing business with
contractors that are not responsible sources.”contractors that are not responsible sources.”~~157~~
158 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 ~~smal~~ small business; or business; or
 the payment is related to an emergency, disaster, or military deployment. the payment is related to an emergency, disaster, or military deployment.~~158~~159
In addition, the Secretary of Defense is required, to the fullest extent permitted by law, to In addition, the Secretary of Defense is required, to the fullest extent permitted by law, to
establish an accelerated payment date for its establish an accelerated payment date for its ~~smal~~ small business prime contractors, with a goal of 15 business prime contractors, with a goal of 15
days after receipt of a proper invoice for the amount due if a specific payment date is not days after receipt of a proper invoice for the amount due if a specific payment date is not
established by contract.established by contract.~~159~~
160 The Secretary of Defense is also required to establish, to the fullest extent permitted by law, an The Secretary of Defense is also required to establish, to the fullest extent permitted by law, an
accelerated payment date for its prime contractors that subcontract with accelerated payment date for its prime contractors that subcontract with ~~smal~~ small businesses, with a businesses, with a
goal of 15 days after receipt of a proper invoice for the amount due if a specific payment date is goal of 15 days after receipt of a proper invoice for the amount due if a specific payment date is
not established by contract and the prime contractor agrees to make payments to the subcontractor not established by contract and the prime contractor agrees to make payments to the subcontractor
“in accordance with the accelerated payment date, to the maximum extent practicable, without “in accordance with the accelerated payment date, to the maximum extent practicable, without
any further consideration from or fees charged to the subcontractor.”any further consideration from or fees charged to the subcontractor.”~~160~~

~~155 15 U.S.C.~~ 161 156 15 U.S.C. §637(d)(13)(A-B); and U.S.§637(d)(13)(A-B); and U.S. Department of the Department of the ~~T reasury~~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 construction contract, an agency may withhold payment to a prime vendor if it learns that the ~~pr ime~~prime vendor has failed 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.
~~156~~ 157 15 U.S.C. 15 U.S.C. §637(d)(13)(C-E). §637(d)(13)(C-E).
~~157~~158 Department of Defense, General Services 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.
~~158~~159 31 U.S.C. 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, 52582-52583,
September 29, 1999; and 5 C.F.R. §1315.5. September 29, 1999; and 5 C.F.R. §1315.5.
~~159~~160 10 U.S.C. 10 U.S.C. §2307(2)(A); and P.L. 115-232, the John S. McCain National Defense Authorization Act for Fiscal Year §2307(2)(A); and P.L. 115-232, the John S. McCain National Defense Authorization Act for Fiscal Year
2019. 2019.
~~160~~161 10 U.S.C. 10 U.S.C. §2307(2)(B); and P.L. 115-232, the John S. McCain National Defense Authorization Act for Fiscal Year §2307(2)(B); and P.L. 115-232, the John S. McCain National Defense Authorization Act for Fiscal Year
2019. 2019.
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Concluding Observations
The The ~~smal~~ small business contracting programs described in this report business contracting programs described in this report ~~general y~~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, ~~smal~~
small 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 ~~smal~~ small 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 al all prime prime
contract awards in the contract awards in the ~~Smal~~ Small Business Goaling Report.Business Goaling Report.~~161~~162 Also, critics have questioned some of Also, critics have questioned some of
these programs’ effectiveness, in terms of both promoting these programs’ effectiveness, in terms of both promoting ~~smal~~ small business opportunities to win business opportunities to win
federal contracts and a more diversified, robust economy.federal contracts and a more diversified, robust economy.~~162~~163
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 ~~smal~~ small 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 ~~Smal~~ Small Business Goaling Report. In recent years, the federal Business Goaling Report. In recent years, the federal
government has government has ~~general y~~generally 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
~~al smal~~ all small business eligiblebusiness eligible prime contract awards to prime contract awards to ~~smal businesses general y~~small businesses generally, 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 3% to SDVOSBs. However, it has had difficulty meeting the goals of 5% to WOSBs and 3% to
~~HUBZone smal businesses.163~~
~~The Smal~~ HUBZone small businesses.164 The Small Business Goaling Report is the most convenient measure available to compare federal Business Goaling Report is the most convenient measure available to compare federal
~~smal~~ small business contracting performance over time, but it has limitations. For example, the report business contracting performance over time, but it has limitations. For example, the report
does not include does not include al all federal contracts, because some are not deemed to be federal contracts, because some are not deemed to be ~~smal~~ small business eligible business eligible
and others are not recorded in the FPDS-NG. In addition, the report does not evaluate the effect and others are not recorded in the FPDS-NG. In addition, the report does not evaluate the effect
these contracts have on these contracts have on ~~smal~~ small businesses, industry competitiveness, or the businesses, industry competitiveness, or the ~~overal~~ overall economy. As economy. As
one group of researchers has arguedone group of researchers has argued,
the entire goal-setting process … is geared to measuring the dollars and contracts awarded the entire goal-setting process … is geared to measuring the dollars and contracts awarded
to small business, and pays little attention to the to small business, and pays little attention to the effect that access to government contracts that access to government contracts
has on small business starts, growth, and wealth generation. Results of the program are also has on small business starts, growth, and wealth generation. Results of the program are also
hard to isolate, difficult to measure, and generally not judged against the next best or other hard to isolate, difficult to measure, and generally not judged against the next best or other
alternative policies [emphasis in original].alternative policies [emphasis in original].~~164~~

~~161 See~~ 165 162 See American Small Business League v. Maria Contreras-Sweet in her capacity as Administrator of the United
States ~~Sm all Business Adm inistration~~Small Business Administration, 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.
~~T he~~The federal government awarded federal government awarded more than $more than $~~50 8~~508.8 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.
~~162~~ 163 For example, see Henry Beale For example, see Henry Beale and Nicola Deas, “and Nicola Deas, “~~T he~~The 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, ~~T homas~~Thomas R. Edison Jr., Nancy Young Moore, and Edward R. Edison Jr., Nancy Young Moore, and Edward G. Keating, G. Keating, ~~Sm all~~Small 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.
~~163 SBA, “ T he~~164 SBA, “The Federal Government Achieves Small Federal Government Achieves Small ~~Business~~ Business Contracting Goal for the Sixth Consecutive Year with Contracting Goal for the Sixth Consecutive Year with
Record-Breaking $120 Billion to Small Businesses,”Record-Breaking $120 Billion to Small Businesses,” at https://www.sba.gov/about-sba/sba-newsroom/press-releases-at https://www.sba.gov/about-sba/sba-newsroom/press-releases-
media-advisories/federal-governmentmedia-advisories/federal-government -achieves-small-business-contracting-goal-sixth-consecutive-year-record--achieves-small-business-contracting-goal-sixth-consecutive-year-record-
breaking. breaking.
~~164~~ 165 Clifford A. Grammich, Clifford A. Grammich, ~~T homas~~Thomas R. Edison Jr., Nancy Young R. Edison Jr., Nancy Young Moore, and EdwardMoore, and Edward G. G. Keating, Keating, Small Business and
Defense Acquisitions: A Review of Policies and Current Practices (Santa Monica, CA: RAND, (Santa Monica, CA: RAND, ~~2011), p. 15, at~~
2011), p. 15, at https://www.rand.org/content/dam/rand/pubs/monographs/2011/RAND_MG443.pdf. Congressional Research Service Congressional Research Service

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Comprehensive studies examining the effect of Comprehensive studies examining the effect of ~~smal~~ small business contracting preferences on business contracting preferences on ~~smal~~
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 ~~Smal~~ Small 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 HUBZone smal businesses.165~~

~~https://www.rand.org/content/dam/rand/pubs/monographs/2011/RAND_MG443.pdf.~~
~~165 SBA, FY2019 Congressional Budget Justification and FY2017 Annual Performance Report, pp. 75-77, at~~
~~https://www.sba.gov/sites/default/files/aboutsbaarticle/SBA_FY_19_508-Final-FINAL.PDF.~~
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agencies have had in meeting the 3% goal for HUBZone small businesses.166

Author Information

Robert Jay Dilger Robert Jay Dilger
R. Corinne Blackford R. Corinne Blackford
Senior Specialist in American National Government Analyst in Small Business and Economic Senior Specialist in American National Government Analyst in Small Business and Economic

Development Policy Development Policy

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166 SBA, FY2019 Congressional Budget Justification and FY2017 Annual Performance Report, pp. 75-77, at 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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