House Passes Bill Aimed at Getting Small Business Better Shot at Federal Contracts



Small Business Federal Contracts Legislation

As a small business, you might’ve tried to get a federal contract at some point. If you have, you know the process can be burdensome, complicated and full of obstacles, which is putting it mildly.

To overcome some of these challenges, two bills (H.R. 226 and H.R. 227) introduced by newly appointed Chairwoman of the House Committee on Small Business for the 116th Congress, Representative Nydia M. Velázquez (D-New York) were just passed by the House of Representatives.



Small Business Federal Contracts Legislation

If the bills work as intended, they will make the process of going after federal contracts much easier for small business owners. If you have the right products and services the government needs, this means you will have a better chance to successfully bid on the $500 billion-a-year federal marketplace.

Whether you get a short- or long-term contract, the new revenue stream can make a huge difference for your small business. It will also open more opportunities for local and state government bids once you have a federal contract under your belt.

In the press release, Velázquez said the bills would give small businesses the opportunity to participate in the multi-billion federal market. Adding, “My bills passed in the House this week will make important strides towards ensuring small firms are given a fair shot at accessing the federal contracting marketplace and that small business subcontractors are paid in a timely manner.”

But she also said she had some concerns because of category management and the lack of incentive prime contractors have to bring in small businesses as part of their bid. The two bills address these specific issues.

The Bills

To address category management, H.R.226 or Clarity on Small Business Participation in Category Management Act will look into the practice of consolidating contracts and shutting small businesses out of the bidding process.

Velázquez said she was, “… deeply concerned that the use of category management may be resulting in fewer contracts awarded to deserving small firms.”

With the passage of H.R.266, her committee will be able to determine the scope of this problem and find solutions to increase the participation of small businesses.

Incentivizing Fairness in Subcontracting Act (H.R. 227) will allow federal agencies access to how much prime contractors are spending on their subcontractors. The agencies can then determine just how much of their statutory small business contracting goals prime contractors are meeting.



Additionally, H.R. 227 also has provisions to ensure subcontractors are paid promptly when they finalize their contract. According to Velázquez, late payments are a recurring and widespread problem.

Federal Contracts and Small Businesses

By law, the federal government has to meet a 23% goal of awarding a contract to small businesses. For the past five years it has been meeting and exceeding this goal and in 2017 the total was a record-breaking $105.7 billion.

Small Business Federal Contracts Legislation

The contracts are for a wide range of services and products. So, if your small business provides said services and products, go ahead and try a federal contract. If anything, it will be a learning experience.



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Michael Guta


Michael Guta Michael Guta is a Staff Writer for Small Business Trends focusing on business systems, gadgets and other small business news. He has a background in information and communications technology coordination.

3 Reactions

  1. Despite these bills, and the myriad of existing laws, and policies intended for small businesses, until federal government employees change their perspectives of small businesses and government contractors in general, it’s a hard row when it comes to federal contracting. Large businesses are still favored and the federal procurement system is complicated and made even more so given the less than sterling ability of most federal contracting staff. If they could do something else they would because government doesn’t doesn’t attract the best and the brightest. It’s also a myth that the federal government is a “good” customer because they pay on time. Be prepared to miss as many payments as you would anywhere else with the notable difference that the government has you over a barrel. Everyone means well with these bills but the reality is that government contracting is not for the weak. The bureaucracy is intractable, the mindset is fixed in stone and the process will bring you to tears.

  2. Tried for a couple years, but ultimately let my registrations lapse this past year. Just too hard without the payoff.

  3. Aira Bongco

    This is good. Some businesses need to work with the government to succeed and this can help.

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