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The US Congress has passed a defense bill that includes key small business provisions to support small businesses to gain more government contracts and boost small business participation in federal procurements.
Defense Bill Passed With Key Small Business Provisions
The bill passed as part of the fiscal 2023 National Defense Authorization Act, which would authorize $840.2 billion in national defense spending, after sifting through amendments and debate.
As to how it will help small businesses, Nydia M. Velázquez, Chairwoman of the House Small Business Committee, said, “When small businesses can compete for and win federal contracts, the entire economy benefits. Unfortunately, small contractors face a range of unique challenges that often keeps them from reaching their full potential.”
The bills are designed to support the government-wide goals of awarding 23% of the total value of all small business eligible contract awards to small businesses. The bills include:
Expanding HUBZone Opportunities
The measure clarifies that a small business can win a competitive procurement even if its bid is up to 10% higher than an equally qualified large firm. The Historically Underserved Business Zones (HUBZone) program provides small businesses in low-income communities that hire low-income residents opportunities to compete in the federal marketplace
Providing a Longer Runway to 8(a) Participants
The measure allows small businesses participating in the 8(a) program to extend their participation for an additional year. The 8(a) program helps small businesses develop and grow their businesses through one-to-one counseling, training workshops, and management and technical guidance. It also provides access to government contracting opportunities, allowing them to become solid competitors in the federal marketplace.
Enhancing Transparency in the Women-Owned Small Business Program
This provision creates a reporting requirement for the Women-Owned Small Business (WOSB) Program, to enhance transparency and accountability in competing in federal programs.
Increasing Certainty for Veteran-Owned Small Businesses
This provision extends the deadline for the transfer of the certification process for veteran-owned and service-disabled veteran-owned small businesses from the Department of Veterans Affairs to the Small Business Administration (SBA), ensuring a smooth and seamless transition.
Codifying the Small Business Scorecard
This measure codifies the Scorecard in the Small Business Act and requires additional information to understand the extent to which the SBA contracting programs are being used.
Extending the SBIR/STTR Program
This measure would extend the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs for two years. Through a competitive awards-based program, SBIR and STTR help small businesses to engage in Federal Research/Research and Development with the potential for commercialization.
Why are these Bills important?
The federal government is considered the largest customer in the world, spending hundreds of billions of dollars in contracts with businesses in the areas of supplies, infrastructure, health care, transportation, and more. Last year small businesses were awarded $145.7 billion or 26.01% of federal contract dollars that went to small businesses. These bills are part of the federal government’s efforts to make more small businesses eligible for federal government contracts.
In addition, to help provide small businesses with a level playing field, the government limits competition for certain contracts for small businesses. Those contracts are called ‘small business set-asides’, and come in two forms: competitive set-asides and sole-source set-asides.
With Competitive set-aside contracts at least two small businesses could perform the work or provide the products being purchased, the government sets aside the contract exclusively for small businesses for federal contracts under $150,000. While sole-source contracts are contracts that can be issued without a competitive bidding process.
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