Federal tech buying evolving over the years has made it easier for government agencies to acquire new products and technologies from outside contractors. Yet experts argue that changes still need to be made to improve small and minority business access to federal contracts.
The federal government spent roughly $665 billion on federal contractors in fiscal year 2022, or 10% of the federal budget, said Darrell West, a senior fellow in governance studies at the Brookings Institution, during a webinar. Most of that funding went to large companies on defense contracts, while small and medium-sized businesses received about $154 billion in federal contracts.
The U.S. Small Business Administration (SBA) reported that in fiscal year 2021, only 1.6% of federal contracting went to Black-owned businesses, while 1.78% went to Latino-owned firms. Some of the barriers to small and minority-owned businesses include extensive application processes for federal contracting that small businesses often don't have the staff to handle as well as a lack of transparency among federal agencies when it comes to businesses they're contracting with, said Bibi Hidalgo, SBA associate administrator for the Office of Government Contracting and Business Development.
While applauding advances the federal government has made to the tech acquisition process, experts -- including Hidalgo -- proposed a handful of suggestions to continue improving federal contract access for small and minority businesses during the Brookings webinar.
"We have to figure out ways to ensure that we continue to create efficiencies but also always [ensure] we're creating opportunity," Hidalgo said. "That is a critical tension we need to balance to make sure we're always creating avenues for firms to compete and for firms to innovate and ultimately get their foot in the door."
Improving small, minority and underserved business access to federal contracts
The federal government has made improvements to its acquisition processes, including multiple award contracts, interagency contracting and streamlined acquisition procedures to help keep up with the "rapid pace of technological advancement," said Matthew Blum, associate administrator for the Office of Federal Procurement Policy in the Office of Management and Budget during the webinar.
However, Blum said agency collaboration still needs improvement, including aligning requirements within different acquisition teams. He also said greater equity needs to be instilled within acquisition activities to improve small and underserved businesses' access to federal contracts.
Bibi HidalgoAssociate administrator, office of government contracting and business development, U.S. Small Business Administration
Blum said the federal government also needs to strengthen acquisition data management.
"The federal government generates billions of data points on millions of contracts awarded annually, yet most of this data remains out of the reach of our workforce," he said.
In a paper on improving federal acquisition processes, West said the federal government should broaden the geographic distribution of federal contracts. He said 12 states currently get two-thirds of federal dollars. He also supported training of government procurement officers to ensure better understanding of contracting with small businesses and increasing transparency in the acquisition process.
One way small business contracting is already improving under President Joe Biden is through requirements for agency buyers to meet congressionally mandated goals for small business contracting as part of buyer performance evaluations, Hidalgo said. She believes tying performance evaluations to small business goals will help improve federal buyer connections to small firms.
Makenzie Holland is a news writer covering big tech and federal regulation. Prior to joining TechTarget, she was a general reporter for the Wilmington StarNews and a crime and education reporter at the Wabash Plain Dealer.