Despite all the turmoil in federal contracting over the past year, agencies exceeded the government’s goal of 23% for awards to small businesses in fiscal year 2025.
The Small Business Administration said today that Agencies awarded 28% of all major contracts. to small businesses last year. While agencies met the overall goal, total dollars going to small businesses fell to $179 billion last year from $183.5 billion in 2024.
The drop in overall dollars also comes as agencies will spend more money on federal procurement in 2025. The Government Accountability Office said in June that the government spent about$793 billion in contracts in 2025compared to $755.1 billion in 2024.
The SBA typically calculates its total dollars and percentage based on the “addressable market” in which small businesses could bid. This may be why the total dollars earned by small businesses decreased even as procurement spending increased. Emails sent to the SBA seeking clarification were not returned.
“Over the past year, the president [Donald] “Trump’s SBA worked diligently to end Biden-era diversity, equity and inclusion (DEI) abuses, oust bad actors, and be a good steward of taxpayer dollars across the vast federal contracting system,” said SBA Administrator Kelly Loeffler. in a statement. “Our offensive is opening the door for small businesses to compete on merit, win on performance, and regain opportunities that inadequate and politicized practices once put out of reach. Now, as the SBA’s scorecard shows, a historic share of federal contracting dollars is reaching qualified American small businesses that are delivering for taxpayers, creating jobs, and driving economic growth. We will continue to work across the federal government to support these programs for legitimate small businesses, as we eradicate waste, fraud and abuse in government contracting.
The SBA says 16 agencies earned “A” grades on their individual scorecards, and the General Services Administration, the Department of Housing and Urban Development and the Department of Commerce earned the top grade of “A+” for achieving 120% of their goals.
Only three agencies, NASA, the National Science Foundation and the Social Security Administration, received “B” grades for not achieving at least 100% of their goal.
Declines in all socioeconomic categories
The agencies also met several of the government’s goals for business awards in socioeconomic categories, although all saw year-over-year declines in percentage and total dollars awarded.
For example, the SBA says agencies last year spent $32.5 billion, or just over 5%, of all prime contracts with small businesses owned by service-disabled veterans. In 2024, agencies spent $32.8 billion or 5.14%.
This drop occurred despite the SBA clearing its backlog of more than 2,700 veteran small business certification (VetCert) applications. The SBA says the number of SDVOSBs working in the federal market increased by 92 companies to 5,870.
For the first time in a decade, the amount of money and percentage of grants to disadvantaged small businesses decreased. Agencies, however, met the 5% goal, awarding 11.6%, or $75.3 billion, to SDBs, the SBA says. In 2024, agencies awarded $78.3 billion or 12.3% to SDBs.
the white house SDB goal lowered return to the 5% goal required by law in January. The Biden administration had set a policy goal of awarding at least 15% of all contracts to SDBs by 2025.
A major reason for this drop is the additional scrutiny SBA applied to the 8(a) program. The SBA says that after its audit, it removed nearly 800 8(a) companies from the program after they failed to meet program requirements or refused to provide financial documents for the agency to review.
The agency says awards to 8(a) companies decreased by $1.5 billion to $24.3 billion last year. This was, again, the largest decline in prime contracts for 8(a) companies in a decade.
This increased oversight by SDBs resulted in 1,143 companies leaving the federal market last year.
WOSB, HUBZone missed goals
The agencies missed their government target of 3% for HUBZone companies for at least the sixth year in a row, awarding 2.66% of all major contracts. In 2024, the agencies awarded 2.75% to HUBZone companies. The number of HUBZone companies in the federal market decreased by 80 to 2,619 in 2025.
Women-owned small businesses, the latest group to come under SBA scrutiny, also saw year-over-year declines. In 2025, WOSBs were awarded 4.2% of all major contracts, missing the government’s target of 5% and down from 4.97% last year.
The number of women-owned small businesses dropped in 2025 to 11,648, a decrease of 936 companies leaving the federal market.
The SBA did not provide total dollar figures for HUBZone or women-owned small businesses.
Earlier this month, the SBA started a new audit of small businesses owned by economically disadvantaged women, asking owners to respond to a survey and provide the agency with “personal and business tax returns for the past three years.”
The SBA data comes after Sen. Ed Markey (D-Mass.), ranking member of the Small Business and Entrepreneurship Committee, found that the federal sector is a much tougher environment for small businesses. markey’s report says from January 2025When President Donald Trump took office, agencies cut spending with small business contractors by $47 billion and more than 6,500 companies left the federal market.
It is unclear how the 2025 data will compare to 2026, as the SBA does. changing metrics around small business hiring. In March, the agency detailed new factors it will consider when rating the agency’s efforts to recruit small businesses. Among the major expected changes are a focus on hiring veterans, both service-disabled and non-service-disabled, fewer 8(a) sole-source contracts, renaming the category from disadvantaged small businesses to economically disadvantaged to include SDB as well as veteran-owned businesses, efforts to root out fraud and how the agency is providing “competitive value to the taxpayer.”
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