Give small businesses a piece of the pie. That is the thrust of the U.S. federal statutory goal of awarding 23 percent of prime contract dollars to small businesses. Unfortunately, the Small Business Administration (SBA) reported earlier this month that the federal government missed its goal again in FY 2012, earning a "B" for its efforts.

By achieving 22.25 percent, the 0.75 percent shortfall appears inconsequential at first. However, when one considers the massive scale of federal contracting in America, coming up a little short means small companies losing big. In FY 2012, the U.S. federal government spent $517 billion on contracts. That is a $3.8 billion piece of pie that was left sitting on the counter.

Here is a simplified version of the SBA's report card:

Strong Small Business
2012 Goal: 23.00%
Achieved: 22.25%

Women-Owned Small Business
2012 Goal: 5.00%
Achieved: 4.00%

Small Disadvantaged Business
2012 Goal: 5.00%
Achieved: 8.00%

Service Disabled-Veteran-Owned Small Business
2012 Goal: 3.00%
Achieved: 3.03%

HUBZone:
2012 Goal: 3.00%
Achieved: 2.01%

As you can see, the federal government met some goals but not others. The numbers on the report card alone do not reveal whether this is a failure of government or something symptomatic of government contractors. It is probably some combination of the two.

Some agencies underperform and have greater difficulty meeting these goals. The same agencies complain there is a dearth of women-owned or small business contractors operating in their field. However, this May, the SBA announced in an interim final rule (PDF) that it would implement section 1697 of the National Defense Authorization Act for FY 2013, which removes the statutory limitation on the contract award size for which women-owned and economically disadvantaged women-owned small businesses could compete. With removal of the caps limiting the size of the contracts available to WOSB and EDWOSB companies, there should be more agency spending on that front. Nevertheless, federal contractors would do well to educate themselves on these set-aside programs and ensure that they are not leaving money on the table.

This article is presented for informational purposes only and is not intended to constitute legal advice.