Why it Matters

The U.S. Small Business Administration (SBA) released its fiscal 2025 procurement scorecard Thursday, June 25, showing federal agencies awarded nearly 28 percent of prime contracts to small businesses, exceeding the 23 percent statutory goal for a third straight year. Combined prime and subcontract awards to small businesses reached nearly $273 billion, even as total federal contract spending climbed to about $793 billion for the fiscal year, according to the Government Accountability Office.

The results are uneven, however. Women-owned small businesses continue to fall short of their statutory targets even as the government tops its overall goal. At the same time, the administration is reshaping federal procurement policy through a series of executive orders that could affect how small businesses compete for government work going forward, according to a Congressional Research Service report that examined federal small business contracting policy

The Big Picture

Congress established government-wide goals for the percentage of federal contract and subcontract dollars awarded to small businesses each fiscal year. Beyond the 23 percent statutory goal for small businesses generally, lawmakers created four additional targets: 5 percent for small disadvantaged businesses, 5 percent for women-owned small businesses, 5 percent for service-disabled veteran-owned small businesses, and 3 percent for Historically Underutilized Business Zone (HUBZone) firms.

In fiscal 2025, service-disabled veteran-owned small businesses exceeded their 5 percent prime contracting goal, receiving $32.5 billion in awards. Small disadvantaged businesses also topped their goal, capturing 11.6 percent of prime contracts, or $75.3 billion, though that share declined from 12.27 percent in fiscal 2024 amid the administration's scrutiny of the 8(a) Business Development Program.

Women-owned small businesses received about 4.2 percent of prime contracts, short of the 5 percent goal. The government has met the women-owned small business prime contracting goal only twice since Congress authorized it in 1994. HUBZone businesses fared worse, capturing about 2.6 percent of prime contracts against a 3 percent target, a shortfall attributed in part to the relatively small number of HUBZone firms, roughly 4,600, compared with the roughly 44,000 service-disabled veteran-owned small businesses registered in the System for Award Management.

The Bottom Line

The federal government is hitting its overall small business contracting target by a wide margin, but the administration's parallel push to consolidate procurement and strip back acquisition regulations adds real uncertainty to how durable that success will be. Congress will likely face pressure to weigh in, either by codifying protections for small business set-asides or by letting the executive branch's overhaul run its course.

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