Volume VII—Investing in Small Businesses
Numerous government contracts programs support small businesses. There are prime contracts set aside for various categories of small business entities. Agencies have small business contracting goals and take them very seriously. Prime contractors often are incentivized, through evaluation factors, to propose significant small business participation. They can also face liquidated damages for failing to make good faith efforts to comply with their small business subcontracting plans. These programs promote economic growth by incentivizing investment in small business entities.
The primary obstacle to investing in small businesses, from a government contracts perspective, is that it is quite easy to lose small business size status as the result of a corporate transaction. The difficulties arise from the doctrine of “affiliation.”