There are loads of "small business" entities out there who get government business merely by being in existence and meeting the sizing requirements.
I however wouldn't quit my job to start one of these because these are really just people grazing on the federal acquisition process and provide in most cases little to no value, it is not much money either.
I know this because I have experience with working on government projects where you can easily have 20+ contractors involved and it is not clear what their roles or input are to the project.
are most of those small businesses partnered with larger entities on RFPs to win those contracts/money?
Some contracts require the prime contractor to be a small business. Often when this is the case and the contract is large the small business acts almost purely as a pass through to a larger contractor. Taking a percentage off the top and filling a couple of slots on the contract while the larger contractor does fills most of the slots and takes the majority of the money.