Why Hawai‘i’s Small Businesses Lose Out on Lucrative Federal Contracts

While mainland companies are awarded billions of dollars each year, most local ones don’t even apply. Here’s advice on how to compete.

The federal government is the single largest consumer of goods and products on the planet. In the 2021 fiscal year, it awarded $665 billion in contracts. Of that, $154.2 billion was set aside for small businesses, but only a tiny fraction was awarded to Hawai‘i small businesses.

Even though many local small businesses are capable of fulfilling government contracts and many corporate contracts as well, mainland companies often win them because most local companies are ineligible to bid.

These local companies lack the small business certifications required to apply.

For example, out of more than 44,000 female-owned businesses in Hawai‘i, only 36 are certified as Women Business Enterprises and therefore eligible to bid on billions of dollars a year in certain corporate contracts, according to the Women’s Business Enterprise National Council. And only 24 of those female-owned businesses are also certified as Women-Owned Small Busi-nesses and eligible to bid on federal government contracts.

Other federal small business certifications for government contracts include Veteran-Owned Small Business, Disadvantaged Business Enterprise, and 8(a) Business Development, which includes Native Hawaiian-owned companies.

Also, several national corporate small business certifications are available, including those for female-owned, minority-owned and veteran-owned businesses.

Before 1978, the overwhelming number of federal contracts went to large white male-led corporations. That year, Congress passed Public Law 95-507, which resulted in 23% of all federal contracts being set aside for individuals under-represented and underserved in federal contracting including minorities, women, veterans and other categories. But to access those contracts, small businesses had to be certified by federally approved agencies.

This set-aside program impacted many corporations doing business with the federal government. The corporations were required to set aside a portion of their own contracts for underrepresented and underserved groups. This created two parallel small business certification systems: one for federal contracts and one for corporate contracts.

Nationally, third-party certifiers that manage the certification processes include the Women’s Business Enterprise National Council, the National Minority Supplier Diversity Council and the U.S. Women’s Chamber of Commerce.

In addition to the federal and corporate set-aside programs, 42 states now have their own state, county or city-level certification programs. Hawai‘i does not have its own state or county certifications, but nationally certified Hawai‘i small businesses can get “fast tracked” certifications to bid on contracts in those states.

The certification programs provide businesses with the access, technical assistance, training and support needed to expand and market their goods and services to prospective government and corporate buyers. Once certified, many businesses significantly increase their revenue.

Villa Business Consulting has specialized in government and corporate small business certifications since being mentored by the Walt Disney Co. in 2008, prior to the construction of the Aulani Resort. Since then, it has helped small businesses across Hawai‘i become certified to pursue government and corporate contracts.