U.S. Shorts Small Businesses $3 Billion in Federal Contracts

small business federal contracts

The federal government has again failed to meet its goals for small business federal contracts.  Last year, Washington fell short by an estimated $3 billion in prime contracts short of the goals set for awarding federal contracts to small businesses.

The Small Business Administration reported that just 22.25 percent of the estimated $400 billion spent by the federal government in 2012 was directed at small businesses across the country. SBA revealed this data in its 2012 federal spending scorecard which monitors contract spending by the federal government. While that figure is up from the 2011 total, it’s still short of the minimum established by the Small Business Act of 1953, according to a report at Entrepreneur.com.

The House Small Business Committee says it is the seventh consecutive year the federal government has missed its goal set in the 60-year-old legislation.

In a prepared statement, House Small Business Committee Chairman Sam Graves (R-MO) commented:

The fact that the federal government hasn’t met this meager 23 percent small business contracting goal for seven years is simply unacceptable, and further proof that our government continues to give lip service to small companies. We passed legislation last year that takes a step toward holding senior agency executives accountable for meeting the small business goals by making goal achievement an element in their performance plans. Nevertheless, the Administration must make meeting this goal a priority because it is efficient governance, and not just a law that makes small businesses feel good. Improving small business opportunities through federal contracts creates jobs and saves taxpayer money because small businesses bring competition, innovation and lower prices.

Although the shortfall may seem inconsequential in terms of percentage points, that $3 billion is more than enough to keep several small businesses thriving.

The government also failed to reach its goal in awarding sub-contracts to small businesses on which separate data is kept.

U.S. Flag Photo via Shutterstock


Joshua Sophy Joshua Sophy is the Editor for Small Business Trends and the Head of Content Partnerships. A journalist with 20 years of experience in traditional and online media, he is a member of the Society of Professional Journalists. He founded his own local newspaper, the Pottsville Free Press, covering his hometown.

10 Reactions
  1. Shawn Hessinger

    Hi Josh,
    Disappointing but not that surprising. Most frustrating of all perhaps is the response from government officials reported on one of your links. Blaming budget cuts for the government’s failure to meet its obligation to small businesses shows either great naïveté or deliberate misrepresentation. Federal goals for awarding contracts to small businesses have nothing to do with the total amount of the contracts being awarded. Instead, they have to do with the percentage of those contracts awarded to smaller firms.

  2. Government officials always praise the work of small business in creating jobs, but it’s only for votes. Crony capitalism lives in the big business/government world. Thanks for bringing this up, but it’s not surprising.

  3. The Obama White House has had the opportunity to level the playing field for four years, but it failed. http://slidesha.re/17QiZUh

    They did not eliminate the abuses, eliminated our barriers nor enforced the laws that protected our rights. What’s worst, they allowed SBA to misrepresent the results. Should they be held accountable? http://bit.ly/vZMTRe

  4. Prof. Samuel D. Bornstein

    May I suggest another aspect of the Small Business Federal Contracting is issue which I have been researching…the Federal Strategic Sourcing Initiative (FSSI). I would welcome your viewing my LinkedIn Profile on the scope of my small business research and in particular the FSSI impact on small business federal contractors.

    The Federal Strategic Sourcing Initiative (FSSI) has played a significant role in the diminution of the ability of small business federal contractors to sell to the federal government since its inception in June 2010. The problem, going forward, is that OMB has expressed its intention to implement FSSI on a Mandatory basis across ALL federal government agency procurement, beginning with the General Services Administration (GSA) which will implement ten new Government-Wide Strategic Sourcing Solutions in FY 2013-2014.

    There is an urgency in addressing this FSSI issue in light of the Bornstein & Song Research on the FSSI program, which they have been conducting since its inception, when the GSA applied the FSSI to GSA Schedule 75 Office Supplies (OS2).

    At this time, Bornstein & Song are conducting a “Bornstein & Song National Survey to Assess the GSA FSSI BPA Schedule 75 Office Supplies – 3 Years Later”. According to the initial Survey Results there is data and evidence which highlights the fact that the FSSI program has caused the displacement of small businesses, the loss of jobs, and has had a negative impact on the US economy.

    I would welcome your efforts to bring this issue to light in your next article.

    Thank you,

  5. It’s really surprising that the government has enough money for the UNWANTED WARS, which is in fact isolating the US from international community, but has no money for Small Business, which are the real employment generators. In fact, the governor of Fed is best known for terrifying the small businesses by withdrawing stimulus. However, has he ever questioned the Congress or the Senate, how the unwanted wars are going to be financed?