The app for independent voices
“The federal government is required to award at least 23% of contracts to small businesses.”
I’ve heard some variety of this statement more times than I can count, including from government contracting consultants and federal websites. But it’s wrong, in two ways.
First, the 23% isn’t a mandate. It’s an unenforceable goal, just like the 5% goals for small disadvantaged businesses, service-disabled veteran-owned small businesses and women-owned small businesses, as well as the 3% goal for HUBZone small businesses.
Here’s how the Congressional Research Service put it in a report issued last year:
“Agency goal attainment is an aspirational pursuit without punitive consequences for failure to meet goals.”
Second, the metric isn’t 23% (or 5% or 3%) of contracts. It’s 23% (etc.) of prime contracting dollars. For example, if the total spend was $100, the government would meet the goal by awarding 77 $1 contracts to large businesses and a single $23 contract to a small business.
On its website, the SBA confirms:
“SBA works with federal agencies in order to award 23% of prime government contract dollars to eligible small businesses.”
Like a vampire, these myths about the small businesses goals simply refuse to die. I may not have the special abilities or angsty teenage drama of the Buffy the Vampire Slayer cast, but I do have a LinkedIn account and this Substack, which I will continue to use occasionally in an effort to put a stake in them.