Federal Government Awards Record $145.7 Billion in Contracts to Small Business

In fiscal 2020, the federal government awarded a record $145.7 billion in initial contracts to small businesses. This is an increase of $13 billion over the previous fiscal year which represented 26.01% of all federal contracts. If that wasn’t impressive enough, there was also another $82.8 billion in subcontracts awarded to small businesses.

The federal government awards $145.7 billion in small business contracts

Supporting small businesses with federal contracts has incredible payoffs. And this past year proves this very point. This is because nearly a million jobs have been added to the US economy through the award of these contracts. This includes master contracts as well as sub-contracts. Given the challenges of the pandemic, the impact of government contracts cannot be overstated.

In percentage terms, there is a goal to award 23% in major contracts to small businesses. So this year’s 26.01% is a good trend for small business owners looking to secure a federal contract.

In the statement announcing the record and year of the pandemic, SBA Director Isabel Guzman said, “…Our nation’s entrepreneurs have used their brand ingenuity, determination, and determination to seal a record number of contracts—$145.7 billion—with the federal government. Thanks to the support of With countless dedicated government professionals, the federal government has exceeded its small business contracting target for fiscal year 2020 with an increase of $13 billion over the previous fiscal year.”

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Although the overall federal procurement scorecard showed some big numbers, there are still some challenges to achieving all of the goals.

  • It has exceeded the target for small businesses owned by service-disabled veterans (3%) and disadvantaged small businesses (5%).
  • It failed to meet the goals Congress established for a number of small women-owned businesses and HUBZone small businesses. However, financially, it’s up over $1 billion in spending each with $27 billion with women-owned small businesses and over $13 billion in the HUBZone business.
  • It was awarded $83 billion in subcontracts, exceeding targets for granting small businesses and small women-owned businesses.
  • Although the total value of small business awards increased in the initial contracts, the number of companies awarded contracts decreased.

Photo: Sheba

Small Business and Federal Contracts

According to Director Guzman, the US federal government is the world’s largest client. With hundreds of billions of dollars on the line every year, it’s imperative for small business owners to try and get some of that cash in. Guzman goes on to say, “Our goal this year, and every year, is to make sure that small businesses can be like the giants that they are in our economy, and to create the conditions to ensure their success.”

The key to getting these contracts is that small businesses need to be contract ready. This means identifying the contract you are bidding on and have the ability to deliver. Likewise, you don’t feel compelled to go it alone the first time. Find a company that already has a major federal contract and see if you can go as a subcontractor. This gives you invaluable experience when you are ready to bid on your own.

Photo: Depositphotos

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