Industry Priorities

Small Business Participation

Allow Prime Contractors to Include All Participating Subcontractors to Determine Goal Achievement


  • Current Small Business Administration rules require set-asides for small business subcontractors, but prohibit prime contractors from truly accounting for the total amount of dollars flowing to small businesses. Under the current system, if an other-than-small business is included in first tier subcontractors, a prime contractor is disqualified from reporting further dollars going to small businesses. This happens regardless of whether small business subcontractors comprise other tiers or even the rest of the first tier.

AGC Message:

  • Demonstrate True Small Business Participation. Allowing prime contractors to report small business subcontracting at all tiers would demonstrate true small business participation on a federal contract. Accurately accounting for small business participation helps federal agencies better meet set-aside goals established by the Small Business Act and helps prime contractors get credit for small business participation in government contracts.
  • Ensure Best Match of Contractor Capacity and Procurement Requirements. The current system leaves prime contractors with inadequate subcontractor choices for larger projects that are beyond the capacity (especially bonding capacity) of small businesses. Changing the system lets prime contractors determine the best mix of large and small subcontractors according to capacity and availability.
  • Shift to Electronic Subcontractor Reporting System (ESRS) Provides A Potential Remedy. The coming shift to ESRS by the federal government provides a unique opportunity to correct this problem. The system has the capability to track and report small business subcontractors on multiple tiers, its just not integrated yet. Directing a change to the system through legislation, before the system becomes widespread, could potentially help all parties track the dollars flowing to small businesses.