Federal Small Business Contracting Goals

Federal Small Business Contracting Goals

Federal Small Business Contracting Goals

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:

Table 1. Statutory Contracting Goals

Type of Firm

Goal

Measure of Contract Awards

Small Businesses

23%

Dollar value of prime contract awards

Small Disadvantaged Businesses (SDBs)

5%

Dollar value of prime and subcontract awards

Women-Owned Small Businesses (WOSBs)

5%

Dollar value of prime and subcontract awards

Service-Disabled Veteran-Owned Small Businesses (SDVOSBs)

5%

Dollar value of prime and subcontract awards

HUB (Historically Underutilized Business) Zone Small Businesses

3%

Dollar value of prime and subcontract awards

Source: 15 U.S.C. §644(g)(1)(A); P.L. 118-31.

Notes: Prime contracts are made directly to a business from an agency. Subcontracts are made between prime contractors and businesses. Some federal prime contracts require a contractor to subcontract with small businesses to create more opportunities for those firms. P.L. 118-31, the National Defense Authorization Act for Fiscal Year 2024, increased the SDVOSB goal from 3% to 5%. Executive action increased the statutory SDB goal for FY2022-FY2024. In FY2025, the SDB goal was the statutory level of 5%.

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.

Table 2. FY2024 Contract Awards

Type of Firm

Goal

SBA Scorecard Percentage Dollars Awarded

Small Businesses

23%

28.76%

Small Disadvantaged Businesses (SDBs)

13%a

12.27%

Women-Owned Small Businesses (WOSBs)

5%

4.97%

Service-Disabled Veteran-Owned Small Businesses (SDVOSBs)

5%b

5.14%

HUB (Historically Underutilized Business) Zone Small Businesses

3%

2.75%

Source: SBA, Government-wide FY2024 Small Business Procurement Scorecard.

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 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.

a. In FY2022, agencies were required to collectively award at least 11% of contract spending to SDBs, per the Office of Management and Budget Memorandum M-22-03. In FY2023, they were required to collectively award at least 12% to SDBs, per Office of Management and Budget Memorandum M-23-01. In FY2024, they were collectively award at least 13% to SDBs, per Office of Management and Budget Memorandum M-24-01. In FY2025, the SDB goal was the statutory level of 5%.

b. P.L. 118-31, the National Defense Authorization Act for Fiscal Year 2024, increased the SDVOSB goal from 3% to 5%.