In recent years, the Small Business Administration’s small business contracting goals have been on an upswing, with the requirements growing beyond the statutorily required minimums in an effort to encourage federal agencies to increase awards to small businesses, especially disadvantaged businesses. That is, until now. With the current administration’s focus on “Ending Radical And Wasteful Government DEI Programs and Preferencing,” or Executive Order 14151, there has been a sharp decrease to the small disadvantaged business contracting goals set for federal agencies, but an increase to many of the agencies’ overall small business contracting goals. Read on to learn more about these changes, as well as some potential impacts of the new small business contracting goals.
As mentioned, EO 14151 aims to terminate, “to the maximum extent allowed by law,” all DEI and DEIA offices and positions, equity action plans, equity actions, initiatives, or programs, and equity related contracts. What, exactly, is the “maximum extent allowed by law?” That’s a great question and thankfully, 15 U.S.C. § 644(g)(1)(A) makes it easy to answer that question because it contains the statutory minimums for small business goals. The statutory minimums are as follows:
- Small Businesses Generally: 23%
- Service-Disabled Veteran Owned Small Business: 5%
- HUBZone Small Business: 3%
- Woman-Owned Small Business: 5%
- 8(a) Small Business: 5%
Thus, the statutorily required minimums are now the goal. Notably, this change does not affect the SDVOSB, HUBZone, and WOSB contracting goals, as they were already set at the thresholds set forth in 15 U.S.C. § 644. But it was a huge decrease for 8(a) Program participants, which the former administration had set to increase up to 15% starting in 2021.
It only stands to reason then that these decreases will have the greatest negative impact on contracts set aside for participants in the 8(a) Program. After all, between SBA’s socioeconomic programs, the Small Disadvantaged Businesses category (including the 8(a) Program), was the only category that shrunk. With lower contracting and subcontracting goals for small disadvantaged businesses, there will naturally be fewer contracts reserved specifically for 8(a) Program participants. This will, in turn, likely result in 8(a) Program participants having more competition for winning awards.
Does this foreshadow the future of the 8(a) Program? It’s hard to say. It’s well known that new administrations come with new policies and new areas of focus. Currently, that focus is on removing DEI-type initiatives. And the SBA’s 8(a) Business Development Program—a program exclusively reserved for small businesses owned by socially and economically disadvantaged individuals—could be viewed as related to the DEI focus.
Looking at the increases, many of the agencies that are subject to the small business procurement goals have slightly higher prime small business contracting goals in 2025 than they had in 2024. Many agencies’ goals have increased a small amount. For example, the General Services Administration’s small business contracting goal increased from 22.43% to 23.17%. The Department of Education’s goal increased from 16% to 17%. The Department of Health and Human Services’ goal increased from 23% to 24.5%. And the Department of Veterans Affairs’ goal increased from 27% to 29%. But other agencies, such as the Social Security Administration, National Science Foundation, and Department of State have had much more significant increases, increasing from 28% to 37%, 24% to 30.82%, and 26% to 34.5%, respectively.
These numbers tell us that agencies still see value in contracting with small businesses, even if there is a reduced focus on specific types of small businesses, as the small business contracting goals are a number that the SBA reaches with input from each agency. That said, it will be interesting to see how goals for 2026 shake out and whether general small business contracting goals continue to trend upward.
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