Fewer small businesses are drawn to federal contracts. who booked a record $154 billion in 2021

Once again, 2021 was a very good year to be a small business contractor, despite the continued decline in the amount of small businesses working with the government.

Federal agencies hit a new milestone last fiscal year after awarding contracts worth $154.2 billion to small businesses. This figure, which was $8.5 billion higher than FY2020 – another record-breaking year – accounts for about 27 per cent of the total number of federal contracts awarded by the government.

Notably, it is a few percentage points north of its 23 percent target, but the overall number of small contractors has declined. In FY21, sixty-five thousand small businesses received contracts, a decrease of nearly 40 percent over the past decade SBA Administrator Isabel Guzman, who acknowledged the problem and offered a fix,

“We need to increase competition, and we need to ensure equity so that we can take advantage of all the great products and services that are available on the market through our federal spending,” Guzman explains. Inc. In an exclusive interview.

One of the major issues behind this phenomenon, the SBA says, is bundling, or the practice of consolidation that makes contracts so large that small and medium-sized businesses cannot take them. The SBA indicated Tuesday during a separate call to the media and others that the agency is working with cabinet members to crack down on this behavior.

It is also working on improving its statistics regarding carving. For the first time, small disadvantaged business spending declined by 11 percent during the last fiscal year. Federal agencies also paid $72 billion to small business subcontractors over the same period.

But the contracted dollar amount for small businesses owned by women fell short of the SBA’s announced 5 percent target for the year. In FY2021, spending among this group stood at 4.63 per cent, up from 4.85 per cent a year ago. The agency is expanding North American Industry Classification System (NAICS) code eligibility as well as increasing the number of certified firms by nearly six times, making women-owned businesses eligible for federal spending programs in more diverse industries. Is.

The government also made a mark in reaching the three per cent contract target for small businesses, which may include some companies located in tribal areas or rural areas, in the historically underutilized business zone (HUBZone). Those businesses still received $14.3 billion in contract awards, or 2.53 percent of eligible dollars.

Guzman says the agency is working toward expanding the small-business supplier base to ensure that more small businesses can participate. and the agency intends to continue to adjust the application process; The SBA sought comment in late April on a proposed rule that seeks to change size standards for businesses in nine NAICS regions — such changes would expand eligibility for the agency’s contract programs. “The SBA is looking to create more simple solutions so that businesses can navigate federal government programs more easily,” she explains. Inc.