Performance of Small Business Construction Firms in U.S. Federal Contracting: Fid-Bau Portal

Performance of Small Business Construction Firms in U.S. Federal Contracting

Stanford, M. Scott / Antoine, Arthur L. C. / Alleman, Douglas

Public agencies routinely design and promote procurement opportunities for small business interests, often by setting goals for a variety of certified small business categories to participate in procurement. The U.S. Federal Government alone awards over $100 billion annually in contracting opportunities to small businesses, often through structured programs. While such opportunities often promote the socioeconomic value of small business, they can also limit competition from larger and arguably more efficient firms and thus, have the potential to raise costs for the public owner. However, there have been few studies that have examined these claims or explore what differences, if any, are found in project performance of small business firms. This study examined the relationship between the use of small businesses and project performance in the context of federal construction contracting, examining both design-bid-build and design-build delivery. A statistical examination of 222 projects reveals nearly identical project performance between projects awarded to Small Business Administration (SBA) certified firms and comparable projects awarded to larger firms. The study’s findings contradict the narrative that small business contracting costs more. The results lay the groundwork for further research on small business contracting that can inform important public policy and procurement decisions.