Update: The differences between the Senate and House bills have been resolved and the NDAA has gone to the president’s desk for signing in to law without the House’s increased small business contracting goals.
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Did the Senate kill some big increases to the federal government’s contracting goals for small businesses?
Looks like it.
The National Defense Authorization Act for Fiscal Year 2022 passed the House a few days ago and the Senate yesterday. It’s now off to the Oval Office, for President Biden’s signature. As it stands, there’s a big difference between the two versions that could mean the difference of hundreds of millions of dollars to small businesses.
Section 861 of the House version included some very good increases in it as far as governmentwide contracting goals go for all types of SBA recognized small businesses. But the Senate bill includes no such increases.
The House passed a version with governmentwide contracting goals for small businesses in general and the four Small Business Association recognized socioeconomic status type businesses all getting a boost, with the biggest bump going to 8(a) companies.
The goal for small business concerns in general would increase from 23 percent to 25 percent of the total value of all prime contract awards for the fiscal year.
The goal for small businesses that qualify for Service Disabled Veteran Owned status and the goal for small businesses that qualify for HUBZone status would both increase from 3 percent to 4 percent.
The goal for small businesses owned and controlled by women would increase from 5 percent to 6 percent this year and 7 percent in fiscal year 2024.
The biggest jump would have been in the 8(a) program. According to the House NDAA, the goal for contracts awarded to small businesses owned by socially and economically disadvantaged individuals (also known as those eligible to participate in the SBA 8(a) Business Development program) would go from 5 percent all the way to 11 percent. The House NDAA also pledged the government to increase the goal a percent each year until fiscal year 2025 when the total 8(a) contracting goal will be 15 percent.
All of these increases are absent from the Senate version. You might be saying, so what, these increases are pretty modest. But take the SDVOSB and HUBZone increases. From 3 percent to 4 percent might not sound like much, but that’s a 33 percent increase. And when we’re talking about the trillions the federal government spends in a fiscal year, that’s quite a bump.
My colleague Matt Schoonover (seen here working hard) was quick to point out that the jump to 11 percent for 8(a) probably wouldn’t be too difficult for agencies to hit. According to the SBA’s scorecard for fiscal year 2020, 10.54 percent of contracts already went to 8(a) companies.
A cynic might say the House wanted credit for setting a high goal that the government is already meeting. But we don’t see it that way. For one thing, 11 percent is an increase from where the government wound up in 2020 albeit a small one. But more important, the goal would increase all the way to 15 percent in the coming years.
If these increases were to make it to the president’s desk, that would be great news for small businesses of all types, but particularly 8(a)s, and an excellent sign that the government intends to focus on small business awards in the near future. We’re disappointed that the Senate seems to have nixed these important increases.
We’ll keep an eye on it and update this post when we know more.
There are many newsworthy items in this massive bill. Over the next few weeks we’ll discuss some of the more important aspects to federal contractors, particularly small business ones. Keep checking back and if you have any questions, please contact us.