The Small Business Administration, as part of the Biden administration’s diversity, equity and inclusion work, is stepping up to increase the percentage of federal contracting dollars that go to small, disadvantaged businesses.
President Joe Biden set that goal in June, directing federal agencies to increase contracting spending on small, disadvantaged businesses by 50% over the next five years.
“Just imagine if, instead of denying millions of entrepreneurs the ability to access capital and contracting, we made it possible to take their dreams to the marketplace to create jobs and invest in our communities,” Biden said during a speech in Tulsa, Oklahoma.
Bibi Hidalgo, the associate administrator of SBA’s Office of Government Contracting and Business Development, said her office is taking steps to ensure that agencies make the president’s small business contracting goals a reality.
Hidalgo told Federal News Network in an exclusive interview that her office is working with the House and Senate small business committees to introduce legislation that would codify Biden’s new contracting goals into law.
This pending legislation would, as Biden announced, set a target for 15% of federal contracting dollars to go to small, disadvantaged businesses — up from the current goal of 10%.
Hidalgo said the administration’s goal to increase 8(a) small, disadvantaged business participation in the federal marketplace is one of the main reasons she accepted her role in the Biden administration.
As a senior White House policy adviser during the Obama administration, Hidalgo previously led a team of 70 staff across 20 federal agencies to develop a strategic framework for increasing small, minority, women-owned and veteran business reporting. She also developed a policy proposal for performance-based contracting measures 11 agencies adopted.
“To be able to come back around 10 years later and figure out ways that we can not only increase this goal but ensure that we’re reaching more of the presumed disadvantaged groups within 8(a) in a meaningful way is really significant,” Hidalgo said.
The administration’s focus on diversifying the federal marketplace comes as the Office of Management and Budget rethinks how the federal government, as the country’s largest employer and buyer of goods, measures public access to its services among certain demographics, and how agencies can include populations that may not benefit equally from their programs.
From a governmentwide view, agencies already surpass goals set by SBA’s small business procurement scorecard. Federal spending on small business contracts. Agencies spent more than $145 billion on contracts to small businesses in fiscal 2020. That’s more than 26% of all federal contracting spending, and exceeds a small business contracting goal of 23%.
Agencies, however, fell short on prime contracting goals for women-owned small businesses and HUBZone small businesses. And despite the increase in overall small business contract spending, the number of small businesses that receive government contracts is decreasing.
Hidalgo said she’s encouraged to see that 8(a) small business applications are now increasing significantly, an inflection point in what she said has been a steady decline in the number of 8(a) firms in recent years. However, she said the current level of 8 (a) small business participation in the federal marketplace doesn’t match levels from 10 years ago, when as many as 140,000 small businesses contracted with agencies.
“We want to get back to those historic levels. We realize it needs to be dispersed as well across the country, not just concentrated in certain geographic areas,” Hidalgo said.
To tackle this issue, SBA is holding regular strategy meetings with the White House’s Domestic Policy Council and OMB’s Deputy Director for Management Jason Miller to study options to increase small business diversity.
Hidalgo said talks between SBA and OMB staff in recent months have been focused around category management reform and ensuring the federal government’s 3,000 buying offices adhere to a “rule of two,” which directs agencies to set aside awards for small businesses if two or more small business can perform the work at a reasonable price.
While category management streamlines contracts within the federal government, she said it also has the inadvertent impact of making it more difficult for small businesses to compete for federal contracts.
Biden, in a July 28 speech focused on American manufacturing in Macungie, Pennsylvania, announced that SBA is standing up a new manufacturing contracting office to help small and medium-sized businesses bid on government contracts, while the Commerce Department is helping agencies connect with domestic suppliers in every state.
Biden said SBA’s office would help ensure a greater share of the nearly $600 billion agencies spend every year on goods and services would go toward companies with less experience in the federal marketplace.
“If American companies know that we’re going to be buying from them, they’re going to be more inclined to hire and make key investments in the future in their companies,” Biden said.
Hidalgo said Biden’s speech helped shine a spotlight on what her office had been working on for months.
“We were told that when he realized we were creating a manufacturing hub within our Office of Government Contracting and Business Development, he said, ‘I want to be able to talk about that. That’s something that’s really important for small businesses to hear,’” she said, adding that the program should help increase contract spending that goes to HUBZone businesses.
SBA, meanwhile, is also taking over the responsibility to certify veteran-owned small businesses and service-disabled veteran-owned businesses from the Veterans Affairs Department, starting in 2023.
As part of this transfer, mandated in the 2021 National Defense Authorization Act, SBA will start certifying small, disabled veteran-owned firms, which until this point have been self-certified through the VA.
To ensure the success of this transfer, SBA’s government contracting team is working with VA’s Office of Small & Disadvantaged Business Utilization (OSDBU). Hidalgo said she also recently met with VA Secretary Dennis McDonough to ensure a seamless transfer and that SBA meets the needs of the veteran community
“We have a timeline for how we want to integrate the systems, and also for testing it out well beforehand. We want to make sure all of that is really well in place before we need to launch in 2023,” Hidalgo said.