Empowering HBCU Business Schools Through SBA’s Proposed Rule on the “Rule of Two” and Small Business Set-Asides

The U.S. Small Business Administration’s (SBA) recent proposed rule on applying the "Rule of Two" to multiple-award contracts is an important shift that impacts the small business landscape, particularly for minority-owned and Black-owned enterprises that often have roots in Historically Black Colleges and Universities (HBCUs). As a network dedicated to supporting the growth and influence of HBCU business schools, the National HBCU Business Deans Roundtable recognizes this development as a key opportunity for HBCU business schools and their students to connect with procurement practices and support minority business success.

Understanding the “Rule of Two”

In brief, the “Rule of Two” requires federal agencies to set aside contracts specifically for small businesses if there is a reasonable expectation that at least two small businesses can fulfill the contract’s requirements in terms of price, quality, and delivery. This proposed rule would apply this principle more broadly to multiple-award contracts, which are used to fulfill ongoing government procurement needs. By ensuring that small businesses are considered first in these types of contracts, the SBA is creating more pathways for minority-owned businesses to access federal contracting opportunities.

Opportunities for HBCU Business Schools

1. Integrating Real-World Procurement Practices into Curriculum By studying the nuances of federal procurement practices, HBCU business schools can help students gain firsthand knowledge about government contracting. Incorporating case studies on the Rule of Two can provide students with a tangible understanding of how government policies affect small and minority-owned businesses.
2. Career Pathways for Business Students The government procurement field is extensive, offering potential careers for HBCU graduates in roles such as contract specialists, small business advocates, and procurement analysts. With this rule in focus, HBCU business schools can spotlight procurement careers as a viable path for students interested in supporting small businesses and promoting economic inclusion.
3. Encouraging Student and Alumni Business Ventures By raising awareness about this rule within the HBCU community, business schools can encourage their entrepreneurial-minded students and alumni to pursue government contracts. The additional support for small business set-asides under the Rule of Two can open doors for businesses founded by HBCU graduates, especially those who may benefit from guidance on navigating the federal procurement process.
4. Fostering Partnerships Between HBCUs and Small Business Programs With agencies now required to document and justify decisions not to use set-asides, there is increased transparency in the procurement process. HBCU business schools can leverage this change by connecting with local agencies, advocating for their alumni-owned businesses, and establishing partnerships with the SBA and other small business support organizations to provide mentorship and resources for entrepreneurs.

Strategic Insights for Business Leaders and Decision-Makers

For our network of business leaders, educators, and advocates, this rule is an opportunity to strengthen the connection between HBCUs and the business sector. It highlights the importance of equipping minority business leaders with the knowledge and skills to leverage federal procurement opportunities effectively. Additionally, this proposed rule aligns with broader goals for economic equity, such as President Biden’s Executive Order on Advancing Racial Equity, aiming for 15% of federal contract spending to go to small disadvantaged businesses by 2025.

Action Steps: Engage with the Proposed Rule

• Provide Feedback: The SBA is accepting public comments on the rule until December 24, 2024. This is an opportunity for HBCU leaders and stakeholders to voice their support and suggest additional measures to enhance the rule’s impact on small and minority-owned businesses.
• Promote Student Awareness: HBCU business schools can organize seminars or workshops around this rule and its implications, helping students understand how government policies can directly influence small business growth and economic development.
• Build Alumni Networks Around Procurement: Encouraging HBCU alumni who are active in government contracting to engage with students and offer mentorship can bridge the gap between policy and practical application, empowering the next generation of entrepreneurs and business leaders.

A New Era for Small Business Advocacy and HBCU Impact

The SBA’s proposed rule on the Rule of Two for multiple-award contracts represents a pivotal moment for small business advocacy. For HBCU business schools, this development is a chance to inspire students, empower alumni, and expand their role in shaping equitable economic growth. By integrating this rule into their educational offerings, HBCU business schools can prepare their students to become champions of minority-owned businesses in federal contracting, enhancing their impact on a national scale.