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Revenue limit shift allows more small businesses to seek state contracts

By: Cris Collingwood, lvb.com

The Pennsylvania Department of General Services (DGS) has updated the state’s definition of small businesses allowing more businesses to qualify for state contracts. 


DGS Secretary Reggie McNeil Tuesday said the revenue limit was raised from $38.5 million to $47 million effective Jan. 1, ensuring more small businesses can qualify and increasing opportunities for small businesses (SBs), small diverse businesses (SDBs), and veteran business enterprises (VBEs). 

The move comes after Executive Order 2023-18 was signed by Gov. Josh Shapiro in September, McNeil said. 


The changes in revenue limit thresholds will 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 who have been priced out of qualifying for state small business programs because of inflation will now be able to qualify for these programs, according to McNeil. 


 “With Executive Order 2023-18 taking effect, the commonwealth can continue building on the steps that the Shapiro-Davis Administration has already taken to open new doors of opportunity for small, small diverse, and veteran-owned businesses,” McNeil said. “Being able to accept more small businesses is instrumental to increasing their participation in state contracts, and providing assistance to them is key to retaining their business. We have been taking the steps to fully implement the Executive Order and now we can move at full speed to put it to work.” 


The Executive Order also directs DGS to lead and coordinate efforts with other state agencies to grow their total operational spend and participation in the Commonwealth’s Small Business Reserve (SBR) program; increases opportunities for SBS, SDBs, and VBEs to secure prime contracts; and instructs DGS, PennDOT, and other state agencies to provide key technical and capital access support to small and small diverse businesses.  


To track and ensure spending growth with SBs, SDBs, and VBEs, DGS said it will post semiannual data for each agency’s total operational spend for SBR procurements. 


The order also established the Pennsylvania Advisory Council for Inclusive Procurement (PACIP) to advise state agencies on ways to make state contracting opportunities more inclusive. The PACIP is chaired by Lt. Gov. Austin Davis, with McNeil and PennDOT Secretary Mike Carrol serving as co-vice chairs. Davis convened the first meeting of the PACIP last month. 


Last month, DGS released its Small Business Opportunities Annual Report, highlighting that for the first time in Pennsylvania history, the state spent more than $1 billion with SBs, SDBs, and VBEs during the 2022-2023 fiscal year and other program improvements that increased small business participation in state contracting opportunities. 


Shapiro has also advocated for Pennsylvania to update the definition of who is considered a small business to match the federal SBA’s guidelines, as small businesses in Pennsylvania currently cannot have more than 100 employees, while the cut-off for the federal government is over 500 employees.  


 

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