Washington Wants to Redefine What Counts as a Small Business
The SBA's proposal could put half-billion-dollar companies in competition with 10-person veteran-owned firms. The final rule is still unwritten, and SDVOSBs should be in the room.
A $10 million service-disabled veteran-owned company could soon be bidding against firms approaching half a billion in revenue. That is what the Small Business Administration proposed in August: collapsing nearly 1,000 industry size standards into 338. In IT services, the small-business threshold would jump from $34 million to $531 million in average annual receipts.
What the numbers mean
SBA estimates 37,002 firms already in the federal market would newly qualify as small, holding roughly 105,000 contracts worth about $71 billion in FY2025. The comment period closed September 21 under Docket SBA-2026-0199. The final rule is pending. Until it lands, nobody knows exactly where the line will be drawn, but the direction is clear: the competitive field for set-aside work is about to get much more crowded.
Why veteran-owned firms feel this first
Set-aside programs exist so small and disadvantaged businesses get a fair shot at federal work. When the definition of small stretches to half a billion in revenue, the protection thins out. A 12-person SDVOSB does not have the bid-and-proposal machinery of a $400 million firm. It has mission focus, accountability, and people who have done the work. Those are advantages in performance. They are not advantages in a proposal shootout against a company fifty times its size.
The other side of the ledger
There is real momentum behind veteran contracting too. The FY2024 defense authorization raised the SDVOSB participation goal from 3% to 5%. The Contract Our Veterans Act of 2026 would set a 5% government-wide goal for veteran-owned small business contracting. And on October 2, the SBA announced $3.75 million over five years for the Veteran Institute for Procurement to train roughly 250 veteran-owned firms a year in finding opportunities, writing proposals, and pricing work. The pipeline of veteran firms is being built at the same time the definition of their competition is being rewritten.
AFIS is a service-disabled veteran-owned small business. We have a direct stake in where the line gets drawn, and so does every contracting officer who counts on SDVOSBs to deliver. Watch the final rule. Weigh in when the window opens. And keep building companies that win on performance, because that is the part no rulemaking can take away.
Sources: Army Times, September 10, 2026; Small Business Administration; FedBiz Access, October 2, 2026.