The Small Business Administration is so central to federal contracting that it is easy to forget it is a relatively young agency with a history shaped by war, recession and decades of congressional debate about who should get a share of government business. Knowing where the programs came from helps explain why they work the way they do.
Wartime roots
The idea of helping small firms win government work predates the SBA. During World War II, Congress created the Smaller War Plants Corporation to help small manufacturers get defense production contracts and the loans to fulfill them. It was dissolved after the war, and its functions passed to other agencies. The Korean War brought a similar body, the Small Defense Plants Administration, with a similarly short life. Both proved a point lawmakers would return to: without a dedicated advocate, small firms tended to be shut out of large government buying.
The Small Business Act of 1953
The SBA itself was created in 1953 by the Small Business Act. Its charter declared that the government should aid, counsel, assist and protect the interests of small business and ensure that small firms receive a fair proportion of government contracts and sales of government property. Those words still appear in the statute and still define the agency’s mission. The original SBA combined lending, counseling and procurement assistance, a combination that remains in place today.
The programs most contractors know
The contracting programs arrived over time, each responding to a particular concern:
- Section 8(a). Named for the section of the Small Business Act that lets the SBA contract with agencies and subcontract the work to small firms, the 8(a) authority grew in the late 1960s into a program for socially and economically disadvantaged businesses. Major legislation in 1978 and again in 1988 turned it into the structured business development program that exists now, with a defined term of participation.
- HUBZone. Created by legislation in 1997, the program ties contracting preferences to location, directing work to firms based in and employing people from historically underutilized areas.
- Service-disabled veteran-owned small business. Laws in 1999 and 2003 established a government-wide goal and then set-aside and sole-source authority for firms owned by service-disabled veterans. Certification moved to the SBA in 2023.
- Women-owned small business. Authorized by Congress in 2000, the federal contract program for women-owned firms took effect in 2011 after a long rulemaking process.
Goals, size standards and advocacy
Two other pieces of the SBA’s role have histories of their own. Congress first set a government-wide small business contracting goal in the late 1980s and raised it to the current 23 percent in 1997. Size standards, the thresholds that define who counts as small in each industry, trace back to the agency’s earliest years and have been revised repeatedly as industries and the economy changed. The SBA also places procurement center representatives at major buying activities to advocate for set-asides, a function rooted in the agency’s original mandate.
Why the history matters now
Each program carries the assumptions of the era that created it, which is why the rules differ so much from one to the next. The 8(a) program emphasizes development and graduation; HUBZone emphasizes geography and employment; the veteran and women-owned programs emphasize ownership and control. Understanding those purposes makes the eligibility rules easier to follow and the policy debates easier to understand. Current program details, eligibility requirements and size standards are published at sba.gov.