INSIGHTi
Federal Small Business Contracting Goals
Updated April 13, 2023
Origins
Since 1988, the federal government has maintained annual goals for small and small “disadvantaged”
business participation in federal contracting. At that time, Congress required that small businesses receive
“not less than 20 percent of the total value of all prime contract awards for each fiscal year” and that small
disadvantaged business (those owned and controlled by socially and economically disadvantaged
individuals) receive “not less than 5 percent of the total value of all prime contract and subcontract
awards for each fiscal year” (P.L. 100-656). Congress has since increased the small business contracting
goal.
Current Small Business Contracting Goals
There are five government-wide statutory small business contracting goals set by Congress:
Table 1. Statutory Contracting Goals
Type of Firm
Goal Measure of Contract Awards
Small Businesses
23% Dol ar value of prime contract awards
Small Disadvantaged Businesses
5% Dol ar value of prime and subcontract awards
(criteria for social and economic disadvantage apply)
Women-Owned Small Businesses
5% Dol ar value of prime and subcontract awards
Service-Disabled Veteran-Owned Small Businesses
3% Dol ar value of prime and subcontract awards
HUB (Historically Underutilized Business) Zone Small Businesses
3% Dol ar value of prime and subcontract awards
Source: 15 U.S.C. §644(g)(1)(A)
Notes: Prime contracts are made directly to a business from an agency, whereas subcontracts are made between prime
contractors’ businesses. Some federal prime contracts require a contractor to subcontract with small businesses to create
more opportunities for those firms. While the above goals were created through legislation, executive action has altered
them; for FY2023, agencies must col ectively award at least 12% of contract spending to Small Disadvantaged Businesses,
Congressional Research Service
https://crsreports.congress.gov
IN12018
CRS INSIGHT
Prepared for Members and
Committees of Congress
Congressional Research Service
2
per Office of Management and Budget Memorandum M-23-01, as part of an effort to increase this share of award dol ars
to 15% by 2025.
Agency Goal-Making
The Small Business Administration (SBA) oversees small business procurement goal-making for
individual federal agencies. It consults with agencies to establish annual goals for small business
participation in contracting that collectively add up to the statutory, government-wide goals, as required
by Section 15(g)(2) of the Small Business Act.
SBA negotiates with agencies to create small business and small disadvantaged business goals (SBA
added small disadvantaged business goals to the negotiation process in FY2022, per the Office of
Management and Budget Memorandum M-22-03). SBA sets agency goals for HUBZone businesses,
women-owned small businesses, and service-disabled veteran-owned small businesses at the statutory
level; it bases subcontracting goals on recent attainment levels.
Goal Negotiation and Guidelines
SBA’s “Goaling Guidelines” describe the goal negotiation process. According to the FY2023 Guidelines,
“Before the beginning of the fiscal year, SBA provides agencies with a proposed goal, and agencies
respond with an acceptance of the proposed goal or a counter-proposed goal.” The SBA will then
“determine if these individual agency goals, in the aggregate, meet or exceed the government-wide
statutory goals.” If an agency and the SBA cannot agree on an agency’s goals, the agency “may submit
the case to the Office of Federal Procurement Policy at the Office of Management and Budget for
resolution.”
Aspirational Goal Attainment
Agency goal attainment is an aspirational pursuit without punitive consequences for failure to meet goals.
The SBA creates annual Small Business Procurement Scorecards and the GSA produces annual reports,
which can attract scrutiny of contracting practices. Any agency that does not achieve a goal must submit a
“corrective action report” to the SBA, denoting the reasons it failed to achieve the goal and proposing a
“corrective action plan.”
Scorecards and Reports
Since 2007, the SBA has issued a Procurement Scorecard for the 24 CFO Act agencies every fiscal year.
The SBA gives agencies small business contracting credit in every category applicable to a contract
recipient. For example, a contract with a small business that is women-owned and service-disabled
veteran-owned would count towards an agency’s small business goal, women-owned small business goal,
and service-disabled veteran-owned small business goal. The SBA also “double-counts” certain prime
contracts awarded in disaster areas (15 U.S.C. §644(f)) and in Puerto Rico and other covered territories
(15 U.S.C. §644(x)(1)). Section 318 of P.L. 113-76 requires the SBA to also count Department of Energy
first-tier subcontract awards towards small business goals.
In the FY2021 Procurement Scorecard, the SBA gave the federal government the grade of “A.” The
grades on agency scorecards were also “A’s,” except for the Departments of Health and Human Services,
Housing and Urban Development, and Treasury.
In addition to the SBA’s Procurement Scorecards, GSA’s annual Goaling Reports, available through the
SAM.gov data bank, monitor goal achievement. The Small Business Act also requires GSA to provide a
Congressional Research Service
3
report on all prime contract procurements made each fiscal year. The report must be provided to the
President and Congress and made available on a public website. Per Section 15(h)(3)(A)(ii) of the act, it
must include “all procurements made for the period covered by the report and may not exclude any
contract awarded.”
FY2021 Goal Attainment
According to the SBA, the federal government reached or exceeded three of five contracting goals in
FY2021.
Table 2. FY2021 Contract Awards
SBA Scorecard
Percentage
GSA Report
Type of Firm
Goal
Dollars Awarded
Percentage
(exclusions and
Dollars Awarded
double-credits)
(All)
Small Businesses
23%
27.23%
22.99%
Small Disadvantaged Businesses
5%
11.01%
9.26%
(criteria for social and economic disadvantage apply)
Women-Owned Small Businesses
5%
4.63%
3.86%
Service-Disabled Veteran-Owned Small Businesses
3%
4.41%
3.86%
HUB (Historically Underutilized Business) Zone Small Businesses
3%
2.53%
2.01%
Source: SBA, Government Wide FY2021 Small Business Procurement Scorecard; U.S. General Services Administration,
FY2021 Federal Procurement Data System Report.
Notes: SBA excludes certain contracts when procurement data is unavailable or because the work cannot realistically be
performed by small businesses. According to the SBA’s FY2021 Goaling Guidelines, most excluded contracts are
acquisitions on behalf of foreign governments, awarded to mandatory and directed sources, or funded with non-
appropriated, agency-generated funds. Purchases valued at less than $10,000 are also excluded because they are not
tracked in the Federal Procurement Data System. The value of contracts with these exclusions is referred to as the “small
business eligible” value.
Author Information
R. Corinne Blackford
Analyst in Small Business and Economic Development
Policy
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff
to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of
Congressional Research Service
4
Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of
information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role.
CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United
States. Any CRS Report may be reproduced and distributed in its entirety without permission from CRS. However,
as a CRS Report may include copyrighted images or material from a third party, you may need to obtain the
permission of the copyright holder if you wish to copy or otherwise use copyrighted material.
IN12018 · VERSION 2 · UPDATED