Blog | 01.23.20

Why More Small Businesses Will Be Competing for Government Contracts Between Now and 2022

On January 6, 2020, the Small Businesses Administration’s final rule to implement the 2018 Small Business Runway Extension Act went into effect, giving several businesses that are bidding on government contracts the advantage of being classified as a “disadvantaged business enterprise” or DBE for two more years. That’s because the way by which a business’ size is calculated is changing a bit – at least in the short term.

Before now, government procurement officials would determine whether or not a business was eligible for small business set-asides by calculating “an entity’s average annual revenue over the past three tax years (along with the average annual revenue of the business’ affiliates over the same period).”

Technically, this calculation method is not changing. You may still opt to use the three-year calculation to confirm your small business eligibility if that’s most advantageous for you.

However, if your business has been growing recently, you may find you now exceed the annual revenue average for a “small business” in the categories for which you compete for government contracts. If that’s the case, the SBA will now allow you to average your annual revenue over the last five years instead – at least until January 6, 2022.

That means that many “borderline” businesses will be able to retain their small business eligibility for government procurement purposes for at least two more years. Great news, right?!

Of course, it’s entirely possible that your company’s growth will push you above the small business threshold no matter which receipt calculation method you use. If that’s the case, we recommend exploring other DBE certification opportunities that may exist for your business at the federal, state and local government levels. For example, are you…

A minority-owned business? As noted in this blog, “Many recognize Minority Business Enterprise/Entity (MBE) within the terms of their set-aside programs – which federal agencies do not – and the non-FAR agencies may sometimes boast a higher set-aside contract ’minimum’ than federal agencies.”
A veteran-owned or service-disabled veteran-owned business? Every public sector entity wants to do business with veteran-owned businesses. But, it’s not enough to submit DD214 documentation with your bid/proposal. Learn what it takes to prove your eligibility here.
A locally-owned business? This can be a big boon when bidding on state or local government contracts.
An LGBTQ-owned business? Did you know that California became the first state to establish a legal precedent for LGBTQ-inclusive contracting processes? Or that Massachusetts became the first state to include LGBT-owned businesses in its supplier diversity program in 2015? Many states and cities have since followed suit.
An environmentally-preferred company or selling “green” products or services? As explained in this post, companies that produce green goods or embrace sustainable business practices remain in great demand by the public sector as government agencies’ green buying goals increase.

If you answered yes to one or more of these questions, do your due diligence with each agency that you would like to do business with to learn how they certify these types of DBEs. The competitive advantages you can gain from completing these steps could be enormous.

If not, follow these tips and tricks to help strengthen your proposals when bidding on government contracts and position your business as “best value” or “best in class” depending on the agency’s preferences: