Rep. Nick LaLota, a Republican from Long Island, is making a second push to simplify federal contracts so more small businesses can understand and compete for them.
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One barrier that keeps small businesses from chasing federal contracts might soon come down. And it’s not cost or competition. It’s the writing.
On Tuesday, the House passed the Plain Language in Contracting Act by voice vote. The bill, sponsored by Rep. Nick LaLota, a Republican from Long Island, now heads to the Senate. It calls on federal agencies to write all new small business contracts using “plain language” and keywords rather than legalese.
If the bill becomes law, it could help level the playing field for smaller firms that want to work with the government but get discouraged by contracts they can’t decipher. Many businesses say they need to hire outside legal help just to understand the requirements. That costs money upfront and makes bidding less attractive, especially for firms trying to win their first contract.
A 2021 report from the Bipartisan Policy Center found that the complexity of the federal procurement process is one of the top three reasons small businesses avoid bidding on government contracts. The maze of requirements and legal language acts as a barrier to entry, often favoring incumbent firms that already know how to navigate the system.
Still, for those that manage to break through, the payoff can be significant.
In fiscal 2024, 28.8% of federal contract dollars went to small firms, topping the government’s 23% target. That amounted to $183 billion in fiscal year 2024 (which ended on Sept. 30), a new record.
But fewer companies are seeing those dollars.
Even as total spending has gone up, the number of small businesses winning contracts has gone down. The same Bipartisan Policy Center report showed that between 2010 and 2019, the number of small businesses winning those contracts shrank by 38%. That trend has continued. According to GovSpend, a firm that tracks government procurement, the number of small businesses winning federal contracts fell from 79,116 in fiscal 2023 to 78,677 in 2024.
This is LaLota’s second attempt to pass the bill. A previous version cleared the House in April 2024 but failed to gain traction in the Senate.
If complex language is one of the reasons fewer firms are getting involved, this bill could help fix that. The contracts may still be long, but at least they won’t be impossible to read.