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WNC Business

Government contracting provides increasing opportunities for disadvantaged small businesses

Dec 02, 2023 03:23PM ● By Randee Brown
The federal government requires that 23% of their spending be funneled through small businesses. Small businesses are defined by the US Small Business Administration classification system and consist of a varying number of employees across different industries.

In 2021, a federal memorandum set a goal to increase new business entrance into the federal contracting space aiming to simplify the ability for small businesses to work with the government. This gives small business representatives access to high-level decision makers, helping them to stay at the table for contract opportunities and acquisition approaches.

Broken down into socio-economic categories, 5% of contract spending must be allocated toward woman-owned small businesses, 12% to small disadvantaged businesses, 3% to HUBZone business, and 3% to service disabled veteran-owned small businesses. A certain number of federal contracts are set aside for bids from these types of businesses.

A business must be certified in one of the above categories in order to apply for these contract opportunities. Women-owned and veteran-owned businesses must be at least 51% owned by a woman/women or a veteran, respectively, and a woman or a veteran must hold the highest officer position within the company. 

HUBZone businesses must have a principal location at which the greatest number of employees perform the majority of the work, and 35% of employees must be HUBZone residents. 

A small disadvantaged business must comprise individuals who have been subject to racial prejudice or bias, or individuals who have limited access to capital and credit opportunities through a diminished ability to compete in a free market.

The federal government has created an 8(a) Business Development program through the SBA — a nine-year certification program providing access to business development support and help building capacity and growth through contracts. Benefits of this program include directly-awarded sole source threshold, competitive 8(a) contracting opportunities, mentor/protege opportunities, joint venturing opportunities, training, procurement assistance, and business development support.

Within the 8(a) Business Development program, there is an opportunity to build a network of federal contacts and share capabilities and performances. Contracts may be directly awarded to businesses, joint ventures may be possible, and there is the opportunity to self-identify a mentor which can be a big business.

The government expects partnered businesses to deliver once an opportunity has been provided. Deadlines must be met, quality products and services must be provided, and contracts must be handled responsibly. Responsible contractors must have adequate resources to perform contract duties, be able to comply with schedules, have a satisfactory performance record, have necessary experience, skills, and facilities, and be otherwise qualified to match contract terms.

When registering with the government, businesses must choose relevant North American Industry Classification System codes that match the offerings of their business. Multiple codes may be chosen, but businesses must choose one primary code that best correlates with the products and services offered. Evaluating unique selling propositions, utilizing market research tools, and crafting a business capability statement can help businesses select the best code in preparation for government contracts.

Further information regarding business registration, certification, and working with government contracts can be found at Local organizations such as the Western Women’s Business Center and the Small Business and Technology Development Center can provide guidance for businesses interested in government contracting opportunities.

Source: WWBC/SBTDC Government Contracting Webinar