Agency Contract Spending on Small Disadvantaged Businesses’ Exceeds Goal Under Now Revoked Orders

Federal agencies are well above the new goals set by the SBA for “small disadvantaged businesses” which reflect a reduction to those specified in law rather than the higher ones set by the Biden administration, says a report for Congress.

The Congressional Research Service noted that two Biden administration orders on “advancing racial equity and support for underserved communities through the federal government,” had raised goals for contracting with so-called SDBs. Those are businesses with a net worth of less than $850,000 that are owned by individuals who are deemed to be “socially and economically disadvantaged.”

Those orders and subsequent guidance set an eventual goal of 15 percent of federal contract dollars—excluding work that reasonably cannot be performed by small businesses—going to such companies, with goals of 11 percent in fiscal 2022, 12 percent in fiscal 2023 and 13 percent in fiscal 2024.

However, a Trump administration executive order on “ending radical and wasteful government DEI programs and preferencing” revoked those two orders. While that order “did not define these terms and did not mention small business procurement goals,” the SBA has reduced the goals to the 5 percent set by law.

While the SBA “has not provided an explanation for its decision to revert back to the 5% goals,” the change was “potentially in response” to that order, it said.

The report noted that agencies have awarded at least 10 percent of contract dollars to SDBs for the last five years, and in 2022 and 2023 slightly exceeded even the goals set by the Biden administration, at 11.4 and 12.1 percent.

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