Even with all the upheaval in federal contracting over the past year, agencies managed to exceed the 23% governmentwide target for small business awards in fiscal 2025.
The Small Business Administration reported that agencies directed 28% of all prime contracts to small firms last year. Although agencies hit the overall benchmark, the total dollar amount flowing to small businesses fell to $179 billion, down from $183.5 billion in 2024.
This decline in total dollars also comes as agencies ramped up their federal procurement spending in 2025. Back in June, the Government Accountability Office reported that the government spent roughly $793 billion on contracts in 2025, an increase from $755.1 billion in 2024.
SBA generally calculates its total dollars and percentages based on the “addressable market” — the pool of contracts that small businesses could realistically compete for. That methodology may explain why the total dollars small firms received dropped even as overall procurement spending climbed. SBA did not respond to requests for clarification.
“Over the past year, President Trump’s SBA worked hard to dismantle Biden-era diversity, equity and inclusion (DEI) abuses, weed out bad actors, and serve as a responsible steward of taxpayer dollars across the sprawling federal contracting system,” SBA Administrator Kelly Loeffler said in a statement. “Our enforcement efforts are leveling the playing field so that small businesses can compete on merit, win on performance, and recapture opportunities that improper, politicized practices had previously shut them out of. Now, as the SBA scorecard reflects, a historic share of federal contracting dollars is reaching qualified American small businesses that are delivering results for taxpayers, generating jobs, and fueling economic growth. We will keep working across the federal government to bolster these programs for legitimate small businesses, while we continue to root out waste, fraud, and abuse in government contracting.”
SBA reports that 16 agencies earned “A” grades on their individual scorecards, with the General Services Administration, the Department of Housing and Urban Development, and the Department of Commerce each securing the top rating of “A+” by hitting 120% of their respective goals.
Just three agencies — NASA, the National Science Foundation, and the Social Security Administration — received “B” grades for falling short of the 100% threshold.
Declines across every socio-economic category
Agencies also met several of the governmentwide targets for awards to firms in socio-economic categories, though every category experienced year-over-year declines in both percentage share and total dollars awarded.
For instance, SBA says agencies directed $32.5 billion, or slightly more than 5%, of all prime contracts to service-disabled veteran-owned small businesses last year. In 2024, agencies spent $32.8 billion, or 5.14%.
This dip occurred even though SBA cleared a backlog of over 2,700 veteran small business certification (VetCert) applications. SBA says the number of service-disabled veteran-owned small businesses active in the federal market grew by 92 firms, reaching 5,870.
For the first time in ten years, both the dollar amount and the percentage of awards to small disadvantaged businesses declined. Even so, agencies met the 5% goal, directing 11.6%, or $75.3 billion, to SDBs, according to SBA. In 2024, agencies awarded $78.3 billion, or 12.3%, to SDBs.
The White House reduced the SDB goal back to the legally mandated 5% benchmark in January. Under the Biden administration, the policy target had been set at a minimum of 15% of all contracts to SDBs for 2025.
A major driver of this decline is the heightened scrutiny SBA brought to bear on the 8(a) program. SBA says that following its audit, it removed close to 800 8(a) firms from the program because they either failed to satisfy program requirements or declined to submit financial documents for the agency’s review.
The agency says awards to 8(a) firms fell by $1.5 billion, landing at $24.3 billion last year. Once again, this marked the steepest annual drop in prime contracts to 8(a) firms in a decade.
This tighter oversight of small disadvantaged businesses led to 1,143 firms exiting the federal market last year.
WOSB and HUBZone goals fall short
Agencies missed their governmentwide 3% target for HUBZone firms for at least the sixth consecutive year, awarding 2.66% of all prime contracts. In 2024, agencies awarded 2.75% to HUBZone firms. The number of HUBZone firms participating in the federal market shrank by 80, dropping to 2,619 in 2025.
Women-owned small businesses — the latest group to face increased SBA scrutiny — also saw year-over-year declines. In 2025, WOSBs captured 4.2% of all prime contracts, falling short of the governmentwide 5% goal and down from 4.97% the previous year.
The count of women-owned small firms declined in 2025 to 11,648, reflecting a loss of 936 companies from the federal market.
SBA did not release total dollar figures for HUBZone or women-owned small businesses.
Earlier this month, SBA launched a new audit of economically disadvantaged women-owned small businesses, requesting that owners complete a survey and furnish “personal and business tax returns covering the last three years.”
SBA’s data arrives after Sen. Ed Markey (D-Mass.), the ranking member of the Small Business and Entrepreneurship Committee, determined that the federal marketplace has become a significantly tougher environment for small firms. Markey’s report found that since President Donald Trump’s inauguration in January 2025, agencies have cut small business contractor spending by $47 billion, and more than 6,500 firms have exited the federal market.
It remains to be seen how the 2025 figures will compare to 2026, as SBA is revising the metrics it uses to evaluate small business contracting. In March, the agency outlined new factors it will weigh when grading agencies’ efforts to contract with small businesses. Among the most significant anticipated changes are a heightened emphasis on contracting with veterans — both service-disabled and non-service-disabled — a reduction in sole-source 8(a) contracts, a rebranding of the small disadvantaged business category to “economically disadvantaged” to encompass both SDBs and veteran-owned firms, stronger anti-fraud measures, and a focus on how the agency delivers “competitive value to the taxpayer.”
Copyright
© 2026 Federal News Network. All rights reserved. This website is not intended for users located within the European Economic Area.
