Barriers to Federal Contracting Participation Among U.S. Small Businesses: A Contracting Readiness Assessment Framework for Diagnosing Competitive Capacity

Small businesses received approximately $179 billion in federal prime contract awards in fiscal year 2025, nearly 28% of eligible federal prime contracting dollars. Earlier evidence raises a participation concern: at the Department of Defense, the number of small businesses receiving awards fell by 43% between fiscal years 2011 and 2020 while obligations to small businesses increased during that period. These observations concern different time windows and do not, alone, establish a continuous trend through 2025. This article asks how administrative, documentary, and operational difficulties influence the capacity of U.S. small businesses to participate in federal contracting. The study combines a targeted narrative literature review, documentary analysis of U.S. public sources, and a design-science orientation for building an artifact. The synthesis proposes three pathways for empirical testing: eligibility exclusion, loss of proposal responsiveness, and self-selection out of competitions when preparation costs and risks outweigh expected returns. The contribution is methodological: the resulting Contracting Readiness Assessment Framework (CRAF) assesses pre-bid preparedness in five dimensions: registration compliance, documentary capacity, operational capacity, proposal management, and risk management. It specifies 15 indicators, an evidence-based 0–4 scale, a provisional readiness classification with a non-compensatory ceiling, opportunity-specific checkpoints, and actions linked to assessed weaknesses.