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Economic Warfare or Opportunity? Navigating the Three Biggest Shifts in Federal Contracting Now
For stakeholders in federal contracting, September 2025 feels like a critical moment, marked by what many perceive as a coordinated effort to conduct economic warfare on America’s small businesses through shifting federal procurement policy. While massive challenges are eliminating nearly $20 billion in small business opportunities, a silent revolution in funding presents new ways to thrive. Here is what you need to know about the three massive changes reshaping the federal marketplace.
1. The FAR Part 13 Rewrite: Writing Small Businesses Out
The administration and GSA have proposed changes to the Federal Acquisition Regulation (FAR) Part 13 rewrite that are poised to decimate the small business community.
The central mechanism for opportunity loss stems from the change to the Simplified Acquisition Threshold (SAT) and how set-asides are treated. Proposals issued to the 119th Congress seek to increase the SAT for commercial products and services from the previous $250,000 threshold to $10 million over the next five years. Furthermore, special simplified procedures for commercial items would jump from $5 million to $50 million.
While these increases seem beneficial overall, the proposal would limit the small business set-aside threshold to remain at $250,000. This means the utilization of simplified acquisitions could climb up to $10 million per contract action for everyone else, while small businesses are stuck at the lower limit.
Compounding this loss, the rewrite proposes increasing the micro purchase threshold to $100,000. This effectively cuts the previous small business set-aside range (currently $15,000 to $350,000) in half, leaving only the $100,000 to $250,000 range available, which accounts for about $4.5 billion in lost opportunities.
Beyond the dollar amounts, the spirit of simplified acquisition is being erased. The original FAR language specifically stated that simplified acquisition procedures were intended to “improve opportunities for small, small disadvantaged, woman-owned, veteran-owned, hub zone and service disabled veteran-owned small business concerns.” The new rewrite removes this key provision entirely. Additionally, the definition of simplified acquisitions is being reduced from covering commercial and non-commercial construction, R&D, and services to just non-commercial products and services. This specific definitional change alone reduced the small business take from $17.5 billion to $5.4 billion in FY24 spending data.
2. The Troubling Decline of the 8(a) Program
Simultaneously, the 8(a) program is the only socioeconomic program that is currently shrinking while others are growing. This systematic reduction in programs supporting communities of color and other disadvantaged groups is troubling, especially since the 8(a) program is historically the most complete and successful socioeconomic entry point for diverse companies.
Recent data highlighted that the program has dropped by 6% in its processing rate from May through mid-September 2025. This contrasts starkly with the 13.5% growth seen in the Service Disabled Veteran program during the same period. The negative trends affecting 8(a) firms, including those owned by Alaskan Native Corporations, tribes, and Native Hawaiian organizations, align directly with the broader effort to reduce small business opportunities, such as the FAR Part 13 rewrite which is poised to wipe out nearly $20 billion in opportunities.
3. The Silent Funding Revolution: New Opportunities
Despite the policy challenges, there is a glimmer of hope driven by changes in government funding dynamics—dubbed the silent funding revolution.
The expansion of multi-year funding has now fully encompassed the Department of Defense (DoD). With the addition of $155.5 billion in DoD multi-year funding, the grand total across the federal government is now $345.5 billion. This means roughly 45% of federal spending is operating without traditional fiscal cliffs.
For many DoD programs, funding that would have expired in September 2025 has been extended all the way to September 2029. This removal of the annual fiscal cliff means customers and buyers will behave differently. The urgency tied to the end of the fiscal year will lessen, allowing for new procurement cadences.
With procurement consolidation leading to fewer buyers, program-level relationships matter now more than ever. To differentiate your company in this shifting landscape, you must focus on deep relationships and proactive influence, rather than just contracting mechanics. Companies that stay ahead of the intelligence curve and adapt their sales strategies to these new, longer funding cycles will be the ones that thrive.
Tags: Federal Contracting, Small Business, FAR Part 13, Economic Warfare, 8(a) Program, DoD, Multi-Year Funding, Government Procurement, Acquisition Threshold, Fiscal Cliff, MarketUS, Guy Timberlake