Washington has spent decades encouraging veterans to become entrepreneurs, and Congress backed that with contracting programs meant to give service-disabled veteran-owned small businesses a meaningful chance to compete. A new SBA proposal could unintentionally weaken that commitment.
On Aug. 20, SBA proposed replacing nearly 1,000 industry-specific size standards and exceptions with 338 broader ones.
In common IT services categories, the threshold would rise from $34 million in average annual receipts to $531 million. SBA estimates 37,002 firms already in the federal market would newly qualify, holding more than 105,000 contracts worth about $71 billion in fiscal 2025.
SBA has legitimate reasons to act. The system is complicated, inflation has eroded the thresholds and businesses need room to grow. But that raises a narrower question: Should a $10 million SDVOSB compete for the same set-asides as an SDVOSB approaching $500 million?
An SDVOSB must be small under the standard assigned to a contract, in addition to being veteran-owned and controlled. If these thresholds hold, veteran-owned companies at dramatically different stages will compete head-to-head, and they are not similarly situated.
A firm with hundreds of millions in revenue has more capital, deeper past performance, bigger proposal teams and more room to absorb delayed payments, protests and lost bids. Most newly eligible firms will be $40 million to $200 million companies, and the advantage is the same.
We should want veterans to build $500 million companies. But a program built for veteran entrepreneurs should not pretend that gap does not exist.
Nowhere is this more consequential than at the Department of Veterans Affairs, which by statute must set work aside for veteran-owned small businesses whenever two can perform it, and which awarded roughly a quarter of its prime dollars to SDVOSBs last year.
The veteran-owned IT firms that outgrew that program would walk back through the door and compete against the firm that won its first VA contract last year.
SBA acknowledges that a larger pool may reduce existing small businesses’ chances of winning, and says the greatest effect will fall on firms most similar in size to the new entrants.
In a set-aside decided on past performance, staffing depth and price, the firm most likely to lose is the one with the least of each: the emerging veteran-owned business the program exists to serve.
SBA also states it is “not possible for SBA to accurately predict which newly classified firms would be eligible for certification,” and expects firms near the threshold not to certify.
That may be true elsewhere. It is not true where certification is free, takes weeks and unlocks a category one agency funds at roughly $10 billion a year. And the data to test it already sit in SBA’s own systems: VetCert, SAM.gov and FPDS show every firm that has held or lost SDVOSB certification, its size and its awards.
Before finalizing, SBA should publish an analysis. How many larger firms would qualify on both size and ownership, what they already receive and where smaller SDVOSBs would face the most new competition?
Depending on the data, SBA should adopt an SDVOSB-specific safeguard. SBA already uses program-specific size definitions elsewhere, and Congress can settle any doubt about authority.
One option is a separate upper threshold for SDVOSB set-asides where the general standard would otherwise rise into the hundreds of millions. Something like $75 million, roughly twice today’s standard, would let a firm double before graduating. The principle matters more than the number.
Congress has a vehicle ready. The bipartisan Contract Our Veterans Act of 2026 would set a 5% government-wide goal for veteran-owned small business contracting. A goal is only as meaningful as the field it is measured against, and the same bill could define that field so the goal is met by veterans building companies, rather than by a few already large ones.
No soldier, sailor, airman, Marine, guardian or Coast Guardsman leaves the service and builds a $500 million company on day one. The SDVOSB program should be a working ladder to the open marketplace, not permanent shelter from competition. SBA can modernize and keep that ladder standing.
Comments are due Sept. 21, 2026, at regulations.gov, Docket SBA-2026-0199, and SBA must answer substantive comments in the final rule. If you own a veteran-owned business, tell SBA what this change would mean for you.
Justin Brown is CEO of The Nimitz Group, a Washington, D.C.-based government relations firm focused on veterans policy and federal procurement.
Read the full article here
