GSA sets new target to increase contract awards to disadvantaged businesses 

The General Services Administration (GSA) Headquarters building. (SAUL LOEB/AFP via Getty Images)

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The General Services Administration has announced a new target intended to increase the volume of government contracts awarded to small, disadvantaged businesses.

The department on Thursday said it was expecting that 21% of agency-wide prime contracts awarded go to small, disadvantaged businesses during fiscal 2022. This represents a 16 percentage point increase from the prior year target of 5%.

Civilian agencies spent a total of $188.2 billion on service contracts during fiscal 2020, of which $10.6 billion went to IT and telecommunications, according to an analysis by the Government Accountability Office.

Federal acquisition regulations create a specific category for small, disadvantaged businesses that is intended to boost the volume of government contracts that go to entrepreneurs subjected to racial or ethnic prejudice or cultural bias.

Under federal acquisition regulations, a small, disadvantaged business (SDB) is defined as company that is 51% or more owned and controlled by one or more disadvantaged person. The disadvantaged person must be socially and economically disadvantaged. In addition, it must adhere to the Small Business Administration’s small size standards.

Using the spending power of the federal government to boost support for underserved individuals and communities is a priority for the Biden administration. 

An executive order on advancing racial equity and support for underserved communities was among the first orders signed by President Biden after taking office last year. This was followed in December by a memorandum by the Office of Management and Budget, which mandated that 15% of governmentwide contracts should be held with SDBs by 2025. 

The treatment of SDBs, and cooperation agreements that are often struck with larger federal contractors, has received additional scrutiny in recent governmentwide procurement contracts.

In November, the Government Accountability Office partially sustained a bid protest brought in relation to how experience between larger companies and their mentees may be considered by federal contracting officers.

Earlier this month, GSA created six new additional small business acquisition categories for federal contractors as part of the Services Multi-Agency Contract solicitation, and the agency said it would award extra IDIQ contracts in the following areas: 8(a) small business, HUBZone small business, service-disabled veteran-owned small business, total small business, woman-owned small business and unrestricted.

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General Services Administration (GSA), Government Accountability Office (GAO), Office of Management and Budget (OMB)
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