The United States excludes procurement that is subject to preferences for U.S. small and minority businesses from its commitments under the WTO Government Procurement Agreement (GPA) and free trade agreements (FTAs). This post provides background on the preferences, which have garnered significant attention from GPA and FTA parties.
The small business preferences arise from a variety of measures enacted by the U.S. Congress, beginning with the Small Business Act of 1953, to promote federal contracting and subcontracting with small businesses. A 2012 report (Legal Authorities Governing Federal Contracting and Subcontracting with Small Businesses) by the Congressional Research Service describes the measures as:
- declaring a congressional policy of ensuring that a “fair proportion” of federal contract and subcontract dollars are awarded to small businesses;
- establishing government-wide and agency-specific goals for the percentage of prime contract and subcontract dollars to be awarded to small businesses;
- requiring or authorizing agencies to conduct competitions in which only small businesses may compete (i.e., set-asides), or make noncompetitive awards to them; and
- directing the Small Business Administration (SBA) and procuring agencies to maximize opportunities for small businesses.
- 5% of the total value of prime contracts and subcontracts for small businesses owned by socially and economically disadvantaged individuals;
- 5% of the total value of prime contracts and subcontracts for women-owned small businesses;
- 3% of the total value of prime contracts and subcontracts for small businesses in Historically Underutilized Business Zones (HUBZones); and
- 3% of the total value of prime contracts and subcontracts for service-disabled veteran-owned small businesses.