Updated July 22, 2025 (IN12018)

Origins

Since 1988, the federal government has maintained annual goals for small 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:

Agency Goal-Making

The Small Business Administration (SBA) oversees small business procurement goal-making for individual agencies. It consults with agencies to establish annual goals for small business participation in contracting that collectively add up to the government-wide goals, as required by Section 15(g)(2) of the Small Business Act.

SBA negotiates with agencies to create small business goals. SBA currently sets agency goals for SDBs, HUBZone businesses, WOSBs, and SDVOSBs at the statutory level; it bases subcontracting goals on recent achievement levels. SBA added agency SDB goals to the negotiation process in FY2022, per Office of Management and Budget Memoranda, and maintained this practice through FY2024. In FY2025, the SDB goal was set to the statutory level of 5%.

Goal Negotiation and Guidelines

SBA's "Goaling Guidelines" describe the goal negotiation process. According to the FY2025 Guidelines, "SBA provides agencies with their proposed goal, and agencies respond with an acceptance of the proposed goal or counter-proposed goals." The SBA will then determine "if the agency-level goals, in the aggregate, meet or exceed the government-wide goal[s]." If an agency and the SBA cannot agree on an agency's goals, the agency may submit an appeal to the Office of Federal Procurement Policy at the Office of Management and Budget.

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 report to the SBA, denoting the reasons it failed to achieve the goal and how it will correct that deficiency in future years.

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 toward an agency's small business goal, WOSB goal, and SDVOSB 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 toward small business goals.

In addition to 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 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."

FY2024 Goal Attainment

According to the latest-available Procurement Scorecard, the government exceeded three of five prime contracting goals in FY2024.