NASA Expects to Increase Small Business and Subcontracting Opportunities

At the NASA 40th Small Business (SB) Alliance Conference in September, NASA representatives underscored the increasing role of small businesses as prime and subcontractors, particularly within the large mission-type contracts.

This renewed emphasis is driven by underperformance in meeting small business socioeconomic programs goals, particularly in HUBZone category. Over the next three fiscal years, NASA aims to expand its industrial base of contractors and subcontractors in achieving mission requirements.

NASA Small Business Challenges

Multiple ongoing agency challenges impacted small businesses during FY 2025. These include:

• Agency staff reductions
• NASA’s business portfolio restructuring
• Ongoing acquisition revisions under the Revolutionary Federal Acquisition Regulation (FAR) Overhaul (RFO).

Executive Order 14275-driven reorganizations and efficiency efforts led to a 50% reduction in NASA’s small business staff, requiring small business specialists to assume more widespread responsibilities and often support multiple centers. This resulted in delayed responses, scheduling difficulties for one-on-one meetings and reduced agency participation in industry events.

Additionally, NASA had previously transitioned from center-centric contracts for products and services to a Product Service Lines/ Enterprise Service Delivery Model. The consolidation of procurements into agency-wide acquisitions versus the center level reduced the number of small business opportunities.

Moreover, NASA is also integrating ongoing RFO revisions, including subcontracting procedures, into procurements as new solicitations are issued. While the revisions do not affect existing contracts or subcontracts, they have caused delayed recompetes and contract extensions.

Collectively, these factors contributed to NASA’s underperformance in meeting small business goals for FY 2025. Although the agency ended the year only slightly below its 18% SB contracting goal, three of the four socioeconomic categories fell significantly below the mark. Woman-Owned Small Businesses were at 3.9% and Service-Disabled Veteran-Owned Small Businesses at 1.4% of their 5% goals. HUBZone firms remained notably underutilized at only three-tenths of a percent toward a 3% goal for the second consecutive year. And, while Small Disadvantaged Business awards, which include 8(a) firms, exceeded the goal (5.9%), that goal had been reduced from 13% to 5% for FY 2025. 

NASA’s Small Business Administration’s subcontracting goal for FY 2025 was 40%. Although final performance data has not been released, reported obligations indicate about $1.6B (~7%) in subcontracts out of $22.2B total contract dollars for FY 2025. Small business subcontracts accounted for an estimated $474M.

To mitigate future impacts and increase its industrial base of contractors and subcontractors in achieving mission requirements, the agency’s Office of Small Business Programs (OSBP) developed a specific roadmap to expand outreach, enhance supplier readiness and strengthen partnerships with underserved and emerging small businesses

NASA’s Strategic Approach

NASA’s Small Business Strategic Priorities for FY 2026 – 2028 are to Reshape, Refocus, Redeploy and Redesign its small business programs. This includes aligning its supply chain efforts to the “Made in America” through increased small business supplier and manufacturer partnerships.

 

 

 

 

 

 

 

 

 

 

 

Source: NASA OSBP

To achieve this, the OSBP developed the Pathways to Novel Engagement focused on five key expansion areas:

• Collaborative models, including co-development and joint ventures with prime contractors
• Agile procurement through simplified and accelerated acquisition pathways
• Tech infusion by leveraging the Small Business Innovative Research (SBIR) and Small Business Technology Transfer program innovations in Artemis and Mars missions
• Cross-Industry Engagement by bringing in solutions from non-space sectors such as Artificial Intelligence, robotics and manufacturing
• Mission Alignment that directs small business capabilities toward the Artemis and Moon-to-Mars priorities.

The OSBP’s increased focus on subcontracting is also prompting greater attention to subcontract management practices. The objective is to ensure the prime contractors are making a good-faith effort to meet their goals and maintain open communication with their subcontractors. Center representatives repeatedly emphasized the importance of business-to-business partnerships, encouraging small businesses to research prime contractor pain points and then demonstrate how they can help achieve mission success.

Key Takeaways

NASA provides multiple avenues for small businesses to increase visibility and improve their chances of contract and subcontract awards. These are available on the OSBP website. And while the agency is taking strategic steps to address its small business program challenges will increase small prime and subcontracting opportunities, success is a two-way street. Small businesses must be proactive in networking, pursuing and forming partnerships. They must also remain informed about and understand evolving acquisition requirements to remain compliant and eligible to win awards.

Deltek’s Federal Market Analysis and GovWin IQ teams offer valuable insight through in-depth federal contracting and marketing analysis, agency profiles, industry webinars and tools to create and maintain procurement pipelines. Find out more here.

 Stay tuned for next week’s blog on NASA’s small business trends.