The Market Opportunity For SMB Government Contractors

Posted by Deltek on May 8, 2019

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Small businesses, businesses that are eligible for 8(a) set-aside contracts, and businesses that fit into other socioeconomic set-aside categories (like women-owned businesses and service-disabled veteran-owned small businesses), have a great deal of opportunity to win more contracting opportunities from the government.

Deltek knows how important every lead and every sales opportunity is when you’re a small business, so we are constantly putting together resources and insights that may help empower your small business with the tools to succeed. Below, we’ve compiled a quick snapshot of the current status of the government contracting market for small business contractors, including both the federal and the state, local, and education areas.

Federal Government Contracting Market for Small Businesses

The federal government contracting market is in flux, but remains full of government sales opportunities for small businesses. Organizations like the U.S. Small Business Administration (SBA) set goals with other federal departments and agencies to award 23 percent in prime contract dollars to small businesses. Companies who have qualified for the 8(a) business development program have access to more and more resources and contracts set specifically aside for them – and as Deltek’s Kathleen Sievers writes, a recent SBA report has indicated it may be easier for agencies to move traditionally 8(a) set-asides to other procurement set-aside types.

“There are fewer active 8(a) companies than there were in the past year – potentially less competition. However, fewer 8(a)s could translate into opportunities traditionally solicited as an 8(a) set aside, now opening up to other socioeconomic categories.”

-Kathleen Sievers, Deltek Senior Manager, Research

What does that mean in terms of the federal government contracting market opportunity? For small businesses and for firms currently holding 8(a) status, the door is open to win more government business – but picking the right opportunities remains crucial.

Here are a few numbers for SMB government contractors to know as they prepare to do business with the government. This data was pulled directly from Deltek’s GovWin IQ platform of government contracting intelligence, and represents opportunities found over a recent one-year period that were categorized either as an 8(a) set-aside, a partial small business set-aside, or a full small business set-aside.

  • 2,674 Opportunities Found
  • $138B Total Value of Opportunities Found
  • $52M Average Value of Opportunities Found

While the entire federal government contracting marketplace is vast, and covers products and services of all types, three industry categories stand out in particular, as they made up approximately 86% of the entirety of 8(a) federal contract spending for the 2018 fiscal year: Professional, Scientific and Technical Services; Construction; and Administrative and Support, Waste Management and Remediation Services.

State and Local Government Contracting Market for Small Businesses

Small businesses looking to get into government contracting aren’t just tied to the federal marketplace. A great way for these companies to improve their government sales is by targeting state, local, and education government agencies.

"Many will incorrectly assume that smaller firms lack the ability to effectively win state and local government business. But this is a good business option for them for several reasons: 1) It is a massive $1.5 trillion market, 2) there are many opportunities to sell in smaller amounts based on relationships or convenience and avoid a competitive bid process, and 3) for actual bids there are often preferences for hiring small or disadvantaged businesses that can offset any natural advantage that larger companies can offer."

- Paul Irby, Deltek Principal Research Analyst

While state and local government contracts can be found in nearly any industry, there were three industry categories in particular that made up the majority of state and local government contracting bids and RFPs in the 2018 fiscal year. Those categories were:

  • Transportation
  • Maintenance
  • Construction

Those three categories combined to account for more than 350,000 total bids and RFPs over the 2018 fiscal year. A decent number of those bids and RFPs were specifically reserved for firms meeting the small business standards of those states and local government agencies – as are many bids and RFPs in nearly every industry. Plus, as Irby notes, small firms are also often in an excellent position to win smaller orders or deals that fall “below threshold” and don’t require a formal bid.

One important factor for small businesses to keep in mind is that different regions and states often have different requirements for their small business or economically disadvantaged business set-aside programs and qualification standards. It’s worth taking the time to consult a reliable source of government market intelligence to see what the rules and regulations are for the states you are planning on doing business in.


So what’s the main takeaway from all of this information? There is no shortage of ways for smart and proactive small businesses, 8(a) businesses, and businesses from a wide range of socioeconomic groups to maximize their sales to the government, in a broad range of industry groups.

If you’re a small business interested in selling to the government, the outlook for your future is a positive one. Your team just needs to be looking at the right markets, and be arming yourselves with the right advanced information from a trusted source, to best prepare your organization to capitalize on the government contracting market opportunity and grow your sales pipeline.