Growth Expected in Federal Small Business Contracting Despite Market Uncertainty

The State of Small Business Spending

The federal contracting landscape is currently facing many uncertainties, creating an atmosphere of apprehension, particularly for resource-stricken small businesses. Economic fluctuations, changes in political priorities, and global challenges all contribute to a sense of instability. And with cuts to small business spending requirements from the Trump Administration, many small businesses are worried about competing directly with larger vendors.

Yet history has shown that federal small business contracting has exhibited remarkable resilience and growth trajectory over the past decade. Despite spending cuts, small businesses are critical to the success of the public sector. This blog will review small business spending trends over the past decade to showcase the stability in this space and explain how small businesses can leverage GovWin IQ to make informed pursuit decisions with small business-friendly agencies to meet their growth goals.

A Look Back: Historical Growth in Federal Small Business Contracting

Over the past 12 years, federal small business contracting has nearly doubled, demonstrating a continued commitment to supporting small enterprises. This growth has occurred consistently across various presidential administrations’ differing priorities and agendas. Whether under a focus on bolstering national security, transforming healthcare, or advancing technological innovation, small businesses have continued to secure a significant portion of federal contracts and should expect to continue to do so.

This trend underscores the federal government's recognition of the vital role that small businesses play in driving economic growth, fostering innovation, and ensuring diverse and competitive markets. The dedicated support for small business contracting is a testament to the value placed on these organizations, which are often the foundation of local economies and viable sources of job creation.

By the Numbers: Federal Small Business Contracting Growth

Despite administration changes, budget caps, delays, and policy changes, federal business contracting has increased year over year for over a decade. Federal small business contracting has almost doubled (91%) since 2013 with the average annual growth rate in small business contracting coming in at a healthy 6%.

Federal Small Business Spending Since 2013

Reach Your Growth Goals: Top Small Business Strategic Initiatives

Many small businesses run on lean teams and long to-do lists, which can make it difficult to know how to best prioritize strategic initiatives and workflows needed to make the most of what’s available. In government contracting, this can be compounded with short bid response times putting additional pressure to work quickly. The most successful small businesses take steps to be strategic in prioritizing their initiatives to support their short- and long-term growth goals.

From a short-term perspective, small businesses are often worried about where their next contract is coming from and how they can make sure they manage their cashflow effectively. This involves managing a pipeline of best-fit contracting opportunities across their markets. Market intelligence solutions, like GovWin IQ, can help small businesses find leads across the federal market from a single source. Without the need to monitor multiple sites, small businesses can be more thorough in how they qualify their leads to make sure they’re only using their proposal budget on leads they have a chance of winning.

Moving to a long-term planning, small businesses should work to develop a proactive sales strategy. This will help break the reactive cycle of rushing to respond when a solicitation is released. This strategy begins long before an opportunity is released to the public, and is anchored in the priorities, budgets, and spending trends of government agencies. Priorities define what’s going to be important for the agencies to invest in, which is how their budgets get allocated. Once budgets are allocated, it’s only a matter of time before the solicitation is posted. If small businesses were to follow priorities that their solutions support, they can then watch for budgeted leads and begin targeting the right buyers and partners to be competitive at the time of pursuit. With more time to influence buyers or partners, prior to the cone of silence, small businesses can clearly articulate their differentiated value and increase their competitive edge in the marketplace.

How Small Businesses Can Maximize Efficiency and Focus on Driving Growth

Many small businesses open shop to bring their specialization into the world. But often, just because a small business is an expert in their field, doesn’t mean they’re an expert in navigating the public sector. To close knowledge gaps quickly, small businesses should perform market research, take advantage of free resources (i.e. SBA.gov, GovWin Small Business Resource Center, GovWin First 100 Days Resource Center), attend industry events online and in-person, and explore mentor/protégé relationships with teaming partners.

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In addition to being a student of the industry, small businesses should structure internal processes to reduce the manual burden on their staff so they can focus on things that only they can do. This can include:

• Integrating their software investments: By connecting software your team uses, you can reduce the amount of time your team spends on manual, error-prone data transfers between workstreams.
• Bring AI into their workflows: Whether you use a free solution or implement AI features in software your teams use, AI can have profound impacts on time savings. BD teams in the public sector benefit from using AI to find best-fit opportunities, identify win themes or even draft proposal text, which can be a force-multiplier to some of the most critical growth activities.
• Outsource tedious activities: Small business teams are often stretched thin so it’s important to know when to keep something in-house and when to outsource it to an expert. Popular services small businesses might outsource can include bookkeeping, IT services, administrative tasks, proposal writing, and even market research.

By taking on the heavy lifting of tedious tasks, small businesses can focus on what they do best – driving innovation and delivering exceptional products and services.

Supporting Small Business Success with GovWin IQ

Winning government contracts isn’t just about bidding—it’s about being seen as the right choice. GovWin IQ helps small businesses build credibility with buyers and primes by providing analyst-validated intelligence on upcoming opportunities and key decision-makers. Our platform helps small businesses find the right teaming partners, get ahead of competitors, and put their business in the best position to win now and plan strategically for the future. With nearly ¾ of our customer base being small businesses, we recognize the importance of being a true partner to small business growth and aim to support them with actionable insights.

Most notably, GovWin IQ provides access to research support, ensuring that small businesses’ most pressing questions are answered with clarity and precision. Each request receives up to two hours of dedicated analyst support. Upon completion, our research team delivers timely and relevant insights that help our small business customers make informed decisions, enhance their competitive edge, and ultimately achieve greater success in the federal marketplace. Common research support requests include but aren’t limited to:

• Anonymous question submittal to government agencies
• FOIA Requests
• I heard about a project—can you find out if they’re releasing it?
• We’ve heard a project was canceled or contested; can you determine?
• Can you pull and organize a data set for me?
• I am looking for potential teaming partners, please provide a list.

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We take pride in supporting small businesses because when they win, we all benefit. But don’t take our word for it, we keep a pulse on our small business metrics to make sure we’re delivering consistent value:

• In 2024, the average federal award value to GovWin IQ small business customers was $69M.
• The median small business increased their prime contracting by 334% two years after signing on with GovWin IQ ($25M used as SB measure).
• On average, small businesses saw a 91% increase in their federal prime contracting 2 years after signing with GovWin IQ ($25M as SB measure).

In conclusion, while current market conditions may seem daunting, the historical growth in federal small business contracting provides a reassuring perspective. With the support of platforms like GovWin IQ, small businesses can confidently continue to navigate the federal contracting landscape, leveraging our resources and expertise to achieve their goals. By partnering with GovWin IQ, small businesses can remain resilient, competitive, and poised for success in an ever-changing market environment.

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