Setting the Record Straight on Opportunities for Small Disadvantaged Businesses

Last month, the council that establishes regulations on federal acquisitions published a proposed rule to catch up its regulations on small disadvantaged businesses with changes in law. Some have asked whether this rule signals a pullback in our commitment to these businesses. Let’s be clear:  this “housekeeping” effort will have no impact on the government’s ability or commitment to drive contracting opportunities for small disadvantaged businesses – opportunities this Administration has pursued aggressively since day one.

Here are the facts. The proposed rule would eliminate the rule that permitted agencies to pay a price premium in contract awards made to SDBs. The logic here is pretty straightforward:  in 2008, a court ruled that this statutory authority was unconstitutional; the statute subsequently expired in 2009.   

The affected agencies – the Department of Defense, the National Aeronautics and Space Administration, and the Coast Guard – have not used price premiums to facilitate awards to SDBs for years. Even more importantly, the proposed rule in no way changes the fundamental policies, practices, or programs that agencies have been using in recent years to achieve strong SDB participation in the federal marketplace, including the goal of awarding 5 percent of federal procurement dollars to SDBs. The Administration remains committed to the 8(a) business development program and other federal programs that seek to level the playing field for SDBs.  

President Obama and his team have been hard at work helping America’s small businesses create and grow jobs. He signed the Small Business Jobs Act and established the White House Small Business Working Group, which meets regularly to exchange strategies and practices for increasing opportunities for small businesses, including SDBs. We have also been working with the Minority Business Development Agency to strengthen the bond between contracting, small business, and program offices at every agency. Improved communication and understanding between these offices is helping to promote greater consideration of SDBs and other small businesses to meet agencies’ needs. 

All of these efforts have led to real results. Since the beginning of FY 2009, agencies have awarded more than $85B in contracts to SDBs, exceeding the goal of awarding at least 5 percent of contract dollars to SDBs. In fact, in FY 2010, contract awards to SDBs accounted for 7.95 percent of all eligible contract dollars, well above the goal. 

Of course, there is more work to do. SDBs are an important engine of job creation and job growth across the country. That’s why the Administration remains committed to taking full advantage of SDBs, meeting and exceeding its goals for SDB participation, and strengthening the contributions these firms make to the economic health of our nation.


Daniel I. Gordon is Administrator of OMB’s Office of Federal Procurement Policy and Marie Johns is Deputy Administrator of the U.S. Small Business Administration