Evaluation of the Small Business Procurement Goals Established in Section 15(g) of the Small Business Act

Henry B. R. Beale, June 2014

Overall Findings

• Procurement is highly concentrated in a few industries, and the small business procurement rate is relatively low in some of these industries (See Table 1.)
• Procurement rates for socioeconomic sub- classes of small business generally reflect patterns of small-business procurement rates. However, variations among industries and sub-classes make these patterns too complex to summarize briefly.
• Many industries with very low small-business procurement rates have an average share of potential small business contractors as measured by businesses registered in the System for Award Management (SAM).
• Shortfalls of small-business procurement dollars (relative to goals) tend to occur in industries with a high level of procurement, a very low small-business procurement rate, and a high concentration of procurement dollars going to a small number of firms.
• Setting procurement goals is a complex process. Procurement goals balance two criteria—a quantitative target (23 percent for the government as a whole) and a qualitative concept (maximum practicable opportunity of using small contractors).
• The SBA has recently introduced a methodology for estimating opportunity for expanding small-business procurement. The methodology addresses the difficulties of making direct inter-agency comparisons by first breaking procurement down by industry and agency office and then using national and agency procurement rates as benchmarks to estimate opportunities industry by industry. Table 2 shows the top industries in which each federal agency procures goods and services.