FEDCON warns SBA size-standard rewrite could widen federal contracting competition

FEDCON is urging contractors to review a proposed Small Business Administration overhaul that would reshape how the government defines a small business. The comment period runs through Sept. 21, and the changes could expand the pool of firms eligible for set-aside work while intensifying competition for smaller vendors.

Why it matters: - The Small Business Administration’s proposed rewrite could change which firms qualify for federal small business set-aside contracts. - FEDCON says the shift could put traditional small businesses at a disadvantage by expanding access for larger and more experienced companies. - The proposal could reshape competition across federal contracting and affect business strategy, teaming and growth plans.

What happened: - FEDCON said it is concerned about new SBA guidelines published Aug. 20, 2026. - The proposal would consolidate nearly 1,000 industry-specific size standards into 338 standards tied to broader four- and five-digit North American Industry Classification System codes. - The SBA is proposing to move many industries to employee-based standards and shift 64 sectors away from revenue-based metrics. - The public comment period on the proposed rule runs through Sept. 21, 2026.

The details: - The SBA estimates the new methodology would add about 114,500 businesses to the pool of firms eligible as small businesses. - That total includes roughly 37,000 mid-sized firms that won more than $71 billion in federal contracts in fiscal 2025. - FEDCON argues that the change would remove growth penalties for some firms that outgrow current thresholds, but also crowd set-aside programs with larger competitors. - The proposal would eliminate historical maximum size caps and all 18 subindustry exceptions. - Size thresholds in professional services, information technology, engineering and logistics would rise under the new framework. - FEDCON said some multibillion-dollar public companies with low employee counts could qualify as small businesses. - The SBA would also eliminate the previous $47 million revenue cap for certain services.

Between the lines: - FEDCON’s core concern is that expanding eligibility could dilute the protection set-aside programs are meant to provide. - A broader definition of small business could squeeze margins for smaller contractors that rely on reserved federal work. - The rewrite could also change who firms view as direct competitors when bidding or forming teams for government contracts.

What's next: - FEDCON is urging contractors that work with the federal government to compare current sales and headcount against the proposed standards. - FEDCON is also telling small businesses to submit comments before the Sept. 21 deadline. - Contractors will need to assess how the new rules could affect pursuit strategies, teaming relationships and compliance planning. - More information is available at FEDCON.com.