Federal Government Awards Record $145.7 Billion in Contracts to Small Business


In the fiscal year 2020, the federal government awarded a record $145.7 billion in prime contracts to small businesses. This is a $13 billion increase from the previous fiscal year which comes out to 26.01% of the overall federal contracts. If that wasn’t impressive enough, there was also another $82.8 billion in subcontracts given to small businesses.

Federal Government Awards $145.7B in Small Business Contracts

The support of small businesses through federal contracts has incredible dividends. And this past year proves that very point. This is because almost 1 million jobs were added to the U.S. economy by awarding these contracts. This includes the prime contracts as well as the subcontracts. And considering the challenges of the pandemic, the impact of the government contracts can’t be overstated.

Percentage-wise there is a goal of awarding 23% in prime contracts to small businesses. So the 26.01% for this year is a good trend for small business owners looking to get a federal contract.

In the release announcing the record number and the pandemic year, SBA Administrator Isabel Guzman, said this, “…  Our nation’s entrepreneurs used their trademark ingenuity, grit, and determination to do a record amount of contracts — $145.7 billion — with the federal government. Thanks to the support of countless dedicated government professionals, the federal government exceeded its small business contracting goal for FY20 with a $13 billion increase from the previous fiscal year.”

Key Takeaways

Although the overall Federal Procurement Scorecard showed some great numbers, there are still some challenges to meeting all the goals.

  • It exceeded the goal for service-disabled veteran-owned small businesses (3%) and small disadvantaged businesses (5%).
  • Fell short of meeting the goals Congress established for the number of women-owned small businesses and HUBZone small businesses. However, monetarily it is up by more than $1 billion in spending for both with $27 billion with women-owned small businesses and over $13 billion with HUBZone businesses.
  • Awarded $83 billion in subcontracts, exceeding goals for awards to small businesses and women-owned small businesses.
  • Even though the overall value of small business awards in prime contracts increased, the number of businesses getting the contracts decreased.

image: sba

Small Business and Federal Contracts

According to Administrator Guzman, the U.S. federal government is the world’s largest customer. With hundreds of billions of dollars on the line every year, it is imperative for small business owners to try and get some of this money.  Guzman goes on to say, “Our goal this year, and every year, is to make sure that small businesses can be like the giants they are in our economy and to create conditions to guarantee their success.”

The key to getting these contracts is small businesses must get contract ready. This means identifying the contract you are bidding on and having the capability to deliver. Likewise, don’t feel you have to go at it alone the first time. Find a business that already has a prime federal contract and see if you can go as a subcontractor. This gives you invaluable experience for when you are ready to bid by yourself.

Image: Depositphotos

Michael Guta Michael Guta is the Assistant Editor at Small Business Trends and has been with the team for 9 years. He currently manages its East African editorial team. Michael brings with him many years of content experience in the digital ecosystem covering a wide range of industries. He holds a B.S. in Information Communication Technology, with an emphasis in Technology Management.