Trends and Issues Impacting Small Business IT Contracting

Increasing small business opportunity within the federal contracting market is a major Biden Administration priority, spurring efforts to lower barriers to market entry and to create opportunities for all socioeconomic small businesses. Federal initiatives to increase small business utilization continue to ramp up, as agencies develop strategies to meet White House small business equity targets.

Deltek’s Small Business: IT Contracting Trends and Issues report examines the trends, challenges, and initiatives impacting the small business federal IT contracting environment.

Key Findings in the report include:

• Shrinking Industrial Base. Small business IT spending is increasing; however, the declining number of small business participants continues to drive scrutiny of contributing factors such as inflation, contract financing, compliance costs and competition.
• Diversifying Options. Small businesses are diversifying their set-aside options through multiple certifications. Many small business IT contractors have had more success winning set-asides other than those associated with their primary socioeconomic group.
• Concentrated IT Spending. Agencies are under additional pressure to expand overall small business opportunities, however most agency small business IT spending is concentrated within five contract vehicles (including SEWP IV, GSA MAS and CIO-SP3 Small Business), making positioning on Best-in-Class contract vehicles especially critical for small IT vendors.
• Equity Action Plans. Agency equity action plans and SBA 8(a) program initiatives ramping up in 2023 are designed to attract new entrants, which will increase competition.
• Category Management Challenges. Category management continues to challenge small business participation, spurring GSA’s IT category leadership to continue to assess the impact on small business opportunities.
• DOD Small Business Focus. DOD small business IT lags behind civilian agencies. Increasing small business contract awards has become so important to the DOD that the department has waived the mandatory use of Best-in-Class (BIC) contract vehicles to make an award if a small business that does not hold a BIC contract is found to work the requirement.

Agency efforts to improve the ability of small businesses to compete, attract and retain small businesses to the market, and increase the share of contract dollars awarded to small disadvantaged businesses (SDBs) all contribute to a dynamic environment for small businesses to navigate.

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To learn more, check out our report, Small Business: IT Contracting Trends and Issues.