DGS Releases Mid-Year Small Business Reserve Report, Commonwealth Continues to Increase Small Business Contracting Opportunities

Following the Governor's Executive Order to increase opportunities for small and small diverse businesses to compete for state contracts, DGS releases mid-year data for each agency's total operational spend for SBR procurements.

The Commonwealth spent more than $22 million on small business prime contracts during the first half of the 2023-24 fiscal year, increasing total purchase orders with small businesses by nearly 45% and the number of small businesses who received prime contracts by nearly 20%.

Harrisburg, PA – Today, the Pennsylvania Department of General Services (DGS) released its mid-year Small Business Reserve (SBR) Report, announcing that the Commonwealth increased prime contracting opportunities for small businesses (SBs) during the first six months of the 2023-24 fiscal year.

The Commonwealth spent more than $22 million on SB prime contracts during the first half of the 2023-24 fiscal year, completing 462 purchase orders (POs) with 158 SBs. That's up from 321 prime POs made with 131 SBs during the first six months of the previous fiscal year, according to the report prepared by DGS's Bureau of Diversity, Inclusion and Small Business Opportunities (BDISBO).

SBR program POs focus exclusively on creating prime contracting opportunities for all classifications of small businesses, which, by definition, includes Small Diverse Businesses (SDBs) and Veteran Business Enterprises (VBEs).

“The growth of prime contracting opportunities outlined in the mid-year SBR report is a reflection of the Shapiro-Davis Administration's commitment to creating opportunity for small businesses," said DGS Secretary Reggie McNeil. “We know that we have more work to do, and DGS will continue to help small and small diverse businesses compete for Commonwealth contracts and work in collaboration with the Pennsylvania Advisory Council for Inclusive Procurement (PACIP) interagency working group to determine more creative solutions that will lead to even more positive outcomes toward this change in culture."

As part of the Executive Order the Governor signed in September 2023 to open up new opportunities for small and small diverse businesses, DGS is leading and coordinating efforts with other Commonwealth agencies and the PACIP to increase their total operational spend and participation in the Commonwealth's SBR program and must post semiannual data for each agency's total operational spend for SBR procurements as part of the Shapiro Administration's commitment to transparency and accountability.

The PACIP was also established under EO 2023-18 signed by Governor Shapiro in September 2023 to advise the Governor's Office and state agencies on ways to improve state contracting opportunities.

“The Shapiro-Davis Administration is committed to creating economic opportunity for all, which includes expanding the Commonwealth's contracting opportunities for small businesses and small diverse businesses," said Lieutenant Governor Austin Davis. “Our Administration recognizes that there is more work to be done – and the PACIP will continue to work with DGS and Commonwealth agencies to continue to increase prime contracting opportunities and create ladders of opportunity for every Pennsylvanian looking to do business with the Commonwealth and build generational wealth."

Following EO 2023-18, Secretary McNeil announced last month that DGS has updated the Commonwealth's definition of a SB by raising the revenue limit from $38.5 million to $47 million, increasing opportunities for SBs, SDBs, and VBEs to compete for state business contracts. The changes in revenue limit thresholds further align the Department of General Service's definition of small business with the U.S. Small Business Administration's, which accounts for inflation. The revenue limit threshold was last increased by DGS in 2018. By raising the revenue cap, more small businesses that have been priced out of qualifying for Commonwealth small business programs due to inflation qualify for these programs.

In December, DGS released its 2022-23 Small Business Opportunities Program Annual Report, announcing that for the first time in Pennsylvania's history, the Commonwealth spent more than $1 billion with SBs, SDBs, and VBEs during the 2022-23 fiscal year.

The report highlights record spending, including:

• Spending with SDBs and VBEs reached $690 million – an increase from the previous fiscal year's reporting of $536.6 million, or 29%. 
• SDBs received a record high $678 million, or 12.2 percent, of Commonwealth spending for goods and services during the 2022-23 fiscal year.
  
• SBs received $447 million, or 8 percent, of Commonwealth spending for goods and services during the 2022-23 fiscal year.
  

In 2022-23, state contract payments to small businesses supported more than 11,700 jobs, increasing from nearly 10,000 jobs in 2021-22. This demonstrates the Commonwealth's significant economic impact in Pennsylvania communities as a major purchaser of goods and services. These same state contract payments resulted in an estimated $220 million in taxes revenue at the federal, state, and local levels. 

“This Administration recognizes that small businesses are the engine that drives the Pennsylvania economy," said DGS Deputy Secretary for BDISBO Kerry L. Kirkland. “Our goal is to expand opportunities for these businesses through Commonwealth contracting to help them grow, prosper, and flourish."

Under the Shapiro-Davis Administration, DGS has also implemented several improvements to its programs and policies administered by BDISBO to enhance the overall experience of SBs, SDBs, and VBEs looking to do business with the Commonwealth and increase the number of opportunities available to them. These improvements include:

• Reducing the time it takes to certify a small business with DGS by 33 percent;​
  
• Implementing a prompt pay policy to ensure non-construction prime contractors pay subcontractors within 10 days of receiving payment from the Commonwealth;
• Conducting frequent Supplier Search workshops aimed at educating small minority-, women- and veteran-owned businesses on the available contracting opportunities within DGS's construction and commodities bureaus; and
• Notifying businesses of upcoming contracting opportunities monthly to allow for better resource planning and statewide outreach efforts to grow the pool of registered SBs/SDBs/VBEs.
• Establishing the PACIP chaired by Lieutenant Governor Austin Davis.