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INSIGHTi
Service-Disabled Veteran-Owned Small
Business Contracting Program Changes
January 8, 2024
Annual Contracting Goal Increase
The National Defense Authorization Act (NDAA) for Fiscal Year 2024 (P.L. 118-31), enacted December
22, 2023, increased the federal government’s annual goal for contract awards to Service-Disabled
Veteran-Owned Small Businesses (SDVOSBs). Per Section 863 of the new law, “not less than 5 percent”
of the dollar value of prime contract and subcontract awards must now be awarded to SDVOSBs each
year. Previously, this goal had been set at 3% by Section 502 of the Veterans Entrepreneurship and Small
Business Development Act of 1999 (P.L. 106-50). The SDVOSB goal is just one of five goals for
contracting with small businesses set by Congress (see Table 1).
Table 1. Statutory Contracting Goals
Type of Firm
Goal Measure of Contract Awards
Small Businesses
23% Dol ar value of prime contract awards
Small Disadvantaged Businesses (SDBs)
5%a Dol ar value of prime and subcontract awards
Women-Owned Small Businesses (WOSBs)
5% Dol ar value of prime and subcontract awards
Service-Disabled Veteran-Owned Small Businesses (SDVOSBs)
5%b Dol ar value of prime and subcontract awards
HUB (Historically Underutilized Business) Zone Small Businesses
3% Dol ar value of prime and subcontract awards
Source: 15 U.S.C. §644(g)(1)(A); P.L. 118-31.
Notes: Prime contracts are made directly to a business from an agency. Subcontracts are made between prime
contractors and businesses. Some federal prime contracts require a contractor to subcontract with small businesses to
create more opportunities for those firms.
a. Executive action increased the statutory SDB goal. In FY2024, agencies must col ectively award at least 13% of
contract spending to SDBs, per Office of Management and Budget Memorandum M-24-01, in order to increase this
share of award dol ars to 15% by 2025.
b. P.L. 118-31, the National Defense Authorization Act for Fiscal Year 2024, increased the SDVOSB goal from 3% to 5%.
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The prior 3% SDVOSB contracting goal was met for the first time in FY2012 and federal agencies have
continued to meet it every year since. In FY2022, the most recent year for which goal achievement data
has been released, agencies collectively awarded 4.57% of prime contract dollars and 2.16% of
subcontract dollars to SDVOSBs. Since FY2017, the government has awarded at least 4% of prime
contract dollars to SDVOSBs (see Table 2).
Table 2. SDVOSB Contract Awards, FY2015-FY2022
($ in billions)
Amount of Federal
Percentage of Prime
Percentage of
Fiscal Year
Contract Award Dollars
Contract Awards
Subcontract Awards
2022
$28.1
4.57%
2.16%
2021
$25.0
4.41%
2.14%
2020
$23.7
4.23%
2.14%
2019
$21.8
4.34%
1.95%
2018
$20.6
4.27%
2.10%
2017
$17.9
4.05%
1.90%
2016
$16.3
3.98%
1.60%
2015
$13.8
3.93%
1.80%
Sources: U.S. General Services Administration (GSA), “Sam.Gov Data Bank, Static: Smal Business Goaling Report
[FY2015-FY2022],” at https://sam.gov/reports/awards/static; Small Business Administration (SBA), “Small Business
Procurement Scorecard [FY2015-FY2022],” at https://www.sba.gov/document/support-small-business-procurement-
scorecard-overview.
Notes: SBA excludes certain contracts when procurement data is unavailable or because the work cannot realistically be
performed by small businesses. According to the SBA’s Goaling Guidelines, most excluded contracts are acquisitions on
behalf of foreign governments, awarded to mandatory and directed sources, or funded with non-appropriated, agency-
generated funds. Purchases valued at less than $10,000 are also excluded because they are not tracked in the Federal
Procurement Data System. The value of contracts with these exclusions is referred to as the “small business eligible”
value.
The Small Business Administration (SBA) oversees small business procurement goal-making for
individual agencies and consults with them to establish annual goals that collectively add up to
government-wide goals, as required by Section 15(g)(2) of the Small Business Act. Agency goal
attainment is an aspirational pursuit without punitive consequences for failure to meet goals. The SBA
creates annual Small Business Procurement Scorecards and the GSA produces annual reports, both of
which can attract scrutiny of contracting practices. Any agency that does not achieve a goal must submit a
“corrective action report” to the SBA, denoting the reasons it failed to achieve the goal and proposing a
“corrective action plan.”
For more information on small business contracting goals, see CRS Insight IN12018, Federal Small
Business Contracting Goals, Federal Small Business Contracting Goals.
Certification of Firms
Coinciding with the increase in the SDVOSB contracting goal is implementation of a government-wide
SDVOSB certification process, and the end of SDVOSB self-certification. Section 862 of the FY2021
NDAA (P.L. 116-283) required the SBA to establish this certification (and periodic recertification)
process, transferring firm certification duties to the SBA from the Department of Veterans Affairs (VA).
The VA will nevertheless continue to determine whether an individual qualifies as a veteran or
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service-disabled veteran. The SBA has issued regulations for certification, available at 13 C.F.R. Part 128.
In order to be eligible for SDVOSB contracting preferences such as contract set-asides and sole-source
awards, a firm must be certified through the new SBA certification platform at
https://veterans.certify.sba.gov/.
Although the FY2021 NDAA required SBA to establish a new SDVOSB certification process by January
1, 2023, SBA provided a one-year grace period to businesses. SDVOSBs were allowed to continue to
self-certify during that period, which ended January 1, 2024. Some firms effectively have a longer grace
period before certifying with SBA. According to the final rule implementing the new process, firms that
had been “verified” by the VA’s former certification system prior to January 1, 2023, could be deemed
“certified by SBA during the time that remains in the firm’s three-year term of [program] eligibility.”
With the start of 2024 and the recently increased SDVOSB contracting goal, agencies could face
headwinds in pursuing the new SDVOSB goal while SDVOSBs adapt to the new certification process and
attain necessary certification and recertification. For more information on the SDVOSB contracting
program, see CRS Report R47226, Federal Contracting by Veteran-Owned Small Businesses: An
Overview and Analysis of Contemporary Issues.
Author Information
R. Corinne Blackford
Analyst in Small Business and Economic Development
Policy
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