The United States government is the largest buyer of various goods and services from businesses across the globe. However, only 10% of the government’s eligible contracting budget currently goes to small disadvantaged businesses (SDBs).
On December 2, 2021, the Biden-Harris Administration announced that it will be taking steps to increase the number of federal contracts awarded to small disadvantaged businesses. Here’s how this growing focus on SDBs will impact underserved businesses and change how SDBs do business with the federal government.
How the government is helping underserved small business owners
The current Administration is encouraging agencies to make the necessary changes that will allow 11% of the government-wide procurement dollars for the Fiscal Year 2022 to be spent on SDBs. Currently, the existing statutory goal for SDB spending is at 5%.
The White House’s announcement also indicates a goal of increasing SDB spending from 9.8% in the past five years to 15% by Fiscal Year 2025. Additionally, within the next five years, the administration is looking to provide an additional $100 billion to SDBs.
What qualifies as a small disadvantaged business?
Before your business can become certified as an SDB, ensure your business is qualified through the Small Business Administration’s criteria. A business qualifies as an SDB when over half of the business (51%) is owned or controlled by a disadvantaged person. As a definition, this disadvantaged person must be:
- Socially disadvantaged: Individuals who have been subject to racial prejudice or bias within American society or systems.
- Economically disadvantaged: Socially disadvantaged individuals who have limited access to capital and credit opportunities through a diminished ability to compete in a free market.
Additionally, your business’s size must be in adherence to the SBA’s size standards as a small business. Size standards are dependent on the industry your business is in, how many employees you have and your business’s yearly income.
Before your business can become certified as an SDB, ensure your business is qualified through the Small Business Administration’s criteria.
Additional government programs SDBs might qualify for
If you find your business qualifies as an SDB, you may also qualify for one or more of the following government contracting programs:
- SBA's 8(a) Business Development Program. Businesses that qualify as an SDB may be eligible to enroll in SBA’s 8(a) Business Development Program. Qualified businesses will receive training and resources that can help them be competitive in the U.S. marketplace.
- SBA's HUBZone Program. This program is designed for businesses that are based in certain rural and urban areas, also known as HUBZones. Certified HUBZone businesses will have special access to exclusive federal procurement opportunities.
- Women-Owned Small Business Federal Contract Program. This program allows certain federal contracts to be set aside specifically for the businesses enrolled within this program.
- The Service-Disabled Veteran-Owned Small Business Concern Procurement Program. Through this program, eligible businesses are able to exclusively bid among contracts set aside for small businesses owned by service-disabled veterans.
[Read more: How to Get Certified as a Minority-Owned Business]
How to get certified as a small disadvantaged business
While small businesses are able to self-certify that they qualify as an SDB, they must register their business on the System for Award Management (SAM). Before you register, there are a few additional steps to take:
- Receive a DUNS number: This number is a unique entity identifier (UEI) provided by Dun & Bradstreet. Once you have requested a DUNS number, you can expect to receive it within one to two business days.
- Gather applicable data: Before registering, put together all the required information on your business, including the Taxpayer Identification Number, banking information and general entity information. You’ll also need to fill out a few questionnaires and forms that will allow you to bid on federal contracts.
- Get a login.gov account: A login.gov account gives your business the chance to find government services, benefits and other applications. The username and password you create with this account can be utilized during your registration for SAM.gov.
Once you’ve completed the above steps, begin the registration process with SAM.gov. After you’ve successfully submitted your registration request, you can track your progress through the SAM Status Tracker. Allow up to 10 business days for the registration process to activate in SAM as well as up to 24 hours after that for the information to be available on other government systems.
Learn more about small business certification programs in our guide.
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
Follow us on Instagram for more expert tips & business owners’ stories.
CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.
