Defense Act Passed – Contains Important Provisions for Small Businesses

The US Congress has passed a defense bill that contains important small business provisions to help small businesses win more government contracts and encourage small business participation in federal tenders.

Defense law passed with important provisions for small businesses

The bill was passed as part of the fiscal 2023 National Defense Authorization Act, which would allow $840.2 billion in national defense spending, after going through amendments and debate.

About how it will help small businesses, Nydia M. Velázquez, chairman of the House Small Business Committee, said: “If small businesses can compete for and win federal contracts, the entire economy benefits. Unfortunately, small contractors face a range of unique challenges that often prevent them from reaching their full potential.”

The accounts are intended to support government-wide targets to award 23% of the total value of all eligible small business contracts to small businesses. The bills include:

Expand HUBZone Capabilities

The measure clarifies that a small company can win a competitive tender even if its bid is up to 10% higher than an equally qualified large company. The Historically Underserved Business Zones (HUBZone) program provides opportunities for small businesses in low-income communities that hire low-income residents to compete in the federal market

Provide a longer runway for 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 business through personal mentoring, training workshops, and management and technical guidance. It also provides access to government contract opportunities, enabling them to become solid competitors in the federal market.

Improving Transparency in the Women-Owned Small Business Program

This provision creates a reporting requirement for the Women-Owned Small Business (WOSB) program to increase transparency and accountability when competing in federal programs.

Increasing Security for Veteran Owned Small Businesses

This provision extends the deadline for transferring the certification process for small businesses owned by veterans and service-disabled veterans from the Department of Veterans Affairs to the Small Business Administration (SBA), ensuring a smooth and seamless transition.

Coding the Small Business Scorecard

This measure codifies the Scorecard into the Small Business Act and requires additional information to understand the extent to which the SBA contract programs are being used.

Extension of the SBIR/STTR program

This measure extends the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs by two years. Through a competitive, award-based program, SBIR and STTR help small businesses participate in federal research/research and development with the potential for commercialization.

Why are these accounts important?

The federal government is considered the largest customer in the world, spending hundreds of billions of dollars on contracts with companies in the areas of supplies, infrastructure, healthcare, transportation and more. Last year, small businesses received $145.7 billion or 26.01% of federal contract dollars that went to small businesses. These bills are part of the federal government’s effort to make more small businesses eligible for federal government contracts.

In addition, in order to provide a level playing field for small businesses, the government restricts competition for certain contracts for small businesses. Those contracts are called “small business set-aside” and come in two forms: competitive set-aside and single-source set-aside.

Competing set-aside contracts allow at least two small businesses to do 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 single source contracts are contracts that can be issued without a competitive bidding process.

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