Once a year the SBA publishes its scorecard which rates how well federal agencies have met their small business contracting goals. The purpose? To provide a sense of how strong the federal government’s small business contracting initiatives are performing on an annual basis. And for 2024, the overall federal contracting dollars paid to small businesses looked good. However, the agency-specific numbers were not consistently as promising for small businesses.
First, a short primer for those unfamiliar with the SBA scorecard before we get into the specifics making up this record-breaking achievement.
In case you have never heard of these scorecards in the past, the annual scorecard details information on the various categories of small businesses recognized by the SBA. Specifically, the scorecard is used to assess “how well federal agencies reach their small business and socio-economic prime contracting and subcontracting goals,” to “provide accurate and transparent contracting data,” and “report agency-specific progress.” Congress sets annual goals for federal agencies to meet when awarding contracts and subcontracts to small businesses. These goals include governmentwide goals, as well as agency specific goals, which are determined pursuant to 15 U.S.C. § 644(g). The administration can also set or choose not to set agency-specific goals or exceed the statutory goals through things like executive orders.
To determine these goals, each included agency submits proposed goals based on SBA’s review of agency year-to-date performance prior to the beginning of the fiscal year. SBA then evaluates each agency’s proposal, and either notifies the agency that its proposal is acceptable, or negotiates with the agency to reach a goal that is acceptable. In total, there are 24 agencies. You can find a list of all included agencies as well as more detailed information on how the process works here. Following each fiscal year, SBA reviews information from the various agencies to determine whether goals were met and assigns each agency a “grade” based on how well it performed.
So, what did the federal small business contracting landscape look like in fiscal year 2024? Overall, $183.5 billion of federal contracting dollars were directed toward small business prime contractors. This exceeded the 2023 achievement by $4.9 billion, creating a new all-time high with 28.76% of all federal contracting dollars being spent on small business prime contracts. The 2024 small business contracting goal was set at 23%. This number includes all of the additional small business contracting programs, such as WOSB, VOSB, HUBZone, and 8(a), but it is encouraging to see over one quarter of all federal contracting dollars going to small businesses of any variety. Hats off to the federal government for exceeding its goal and setting a new record!
As for the smaller, more specific categories that fall under the small business category, the largest subcategory in both goal and prime contracting dollars is that of small disadvantaged businesses, including those in the 8(a) Program. The goal for this category in 2024 was 13%. Unfortunately, this year, the government missed the mark, only achieving 12.27% of its goal, with $78.3 billion. Regardless, that is an achievement to be noted.
Next up was service-disabled veteran owned small businesses (SDVOSB). Notably, 2024 was the first year that SDVOSB goals were set at 5%, as it had previously been set at 3%, and the goal was met with 5.14%, or $32.8 billion.
WOSBs, if you thought 2024 was your year to finally achieve the 5% goal for prime contracts, I’m sorry to tell you that did not happen…again. But, on the bright side, 2024’s achievement of 4.97%, or $31.7 billion just barely misses the mark.
The HUBZone prime contract goal was also missed. The HUBZone goal is set at 3% and Agencies awarded 2.75% of overall contracting dollars to HUBZone small businesses, or $17.6 billion. Not a huge difference, and in a dollar to dollar comparison with the 2023 numbers, the dollar amount had actually increased meaning more contracting dollars went to HUBZones, but it was a small portion of the overall contracting dollars spent.
Now, looking at small business subcontracting goals, small business, small disadvantaged business, and WOSBs all exceeded their goals, showing that although WOSBs didn’t quite meet the mark for prime contracts, the WOSB subcontracting business is going strong. In contrast, both SDVOSBs and HUBZones failed to meet their subcontracting goals, with each category receiving just a touch over their goals of 5% and 3%, respectively.
In general, the total number of small business prime contractors seems to be holding steady. Though there was a small decrease of 347 overall, that continues a trend of consolidation in the market.
Overall agency performance had another strong year, though not as strong as 2023. 2023’s lowest scoring agency came in at 97.95% and only two agencies received a score lower than 100%. In 2024, the highest score was achieved by the Department of Treasury, which achieved a score of 130.74%, and the lowest score was 87.44% for the U.S. Agency for International Development.
All in all, seven agencies received what is considered an A+, meaning they achieved 120% or more of their goal. An additional fourteen agencies received an A, which is defined as meeting 100% to 119% of their goal. Two agencies received a B, and one agency received a C.
Although 2024’s scores were lower than many of those from 2023, the contracts awarded to small businesses in general have grown showing a strong industry.
What is ahead for 2025? That’s a great question! As I blogged about recently, disadvantaged small business contracting goals were decreased by EO 14151 to their statutory requirement. This decreases the goals for small disadvantaged, meaning 8(a) participants and self-certified small disadvantaged businesses. WOSB and SDVOSB continue to be set at 5%, HUBZone at 3%, and the overall small business contracting goals continue to stay at 23%. It will be interesting to see how this change shapes the future of contracting for 8(a) Program participants.
To learn more, see the scorecard in full here, and the agency specific numbers here.
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