Every year the Small Business Administration grades federal agencies on how much of their contracting went to small businesses. The grades make headlines in the contracting press, and they drive behavior inside agencies in ways that directly affect small firms. Understanding where the goals come from and how the scorecard works explains why a small business specialist’s phone call can carry so much weight.
The statutory goal
The Small Business Act sets a government-wide goal: at least 23 percent of prime contract dollars each fiscal year should go to small businesses. Congress set that figure in 1997, raising an earlier target. The law also establishes government-wide goals for prime contracting with specific categories: small disadvantaged businesses, women-owned small businesses, HUBZone firms and service-disabled veteran-owned small businesses. The percentages for these categories have been adjusted by Congress over time, so the current figures are best checked at sba.gov. Separate goals apply to subcontracting dollars flowing through large primes.
How agency goals are set
The government-wide number is not applied uniformly. Each year the SBA negotiates goals with individual agencies, taking into account what they buy and how much of it small businesses can realistically supply. An agency that buys mostly aircraft carriers will have different goals from one that buys mostly professional services. The agency goals are meant to add up to the government-wide targets. Within agencies, goals are often pushed down further to major buying commands and offices, where contracting officers and small business specialists feel them most directly.
The scorecard
After each fiscal year closes, the SBA compiles contracting data from the federal procurement data system and publishes a scorecard for each of the large agencies and for the government as a whole. The scorecard assigns letter grades based primarily on performance against prime and subcontracting goals, with additional credit for progress and for plans and participation in small business programs. The results are public and are reviewed by Congress, by agency leadership and by the press. A poor grade is uncomfortable for an agency’s leadership, and that discomfort is transmitted downward.
What this means in practice
- Agencies that are behind on a category goal late in the fiscal year look for requirements that can be set aside for that category
- Small business specialists have standing to push for set-asides and to challenge decisions to compete requirements openly
- Procurement center representatives from the SBA review acquisitions at major buying activities and can recommend set-asides
- Contracting officers document their market research on small business capability, which is why sources sought responses matter
- Large primes feel the same pressure through their subcontracting plans, since agency subcontracting achievement is graded too
How a small firm can use this
Know which categories your firm qualifies for and make sure the certifications are current and visible in SAM.gov and the SBA’s databases. Learn which of your target agencies struggle with which goals; the scorecards are public and show it. Time your outreach to the periods when agencies are deciding set-aside strategy, typically the second and third quarters. And when you respond to market research, say clearly which socioeconomic categories your firm holds, since that is often the question the contracting officer is trying to answer.
Goals are policy targets, not entitlements. No firm is owed a contract because an agency is behind on a goal, and a set-aside still has to be won on merit against other eligible firms. What the goals do is create a structural incentive for agencies to look for small businesses that can do the work. The firms that benefit are the ones that make themselves easy to find and easy to trust when the search begins.