The federal government has increased the prime contracting goal for Service-Disabled Veteran-Owned Small Businesses (SDVOSBs) to 5% of all federal prime and subcontract dollars. This change follows the National Defense Authorization Act (NDAA) for Fiscal Year 2024, which raised the threshold from the previous 3% target.
Agencies are now required to meet these higher quotas by awarding more government contracts to certified veteran-owned firms. To participate, businesses must navigate a mandatory certification process managed by the Small Business Administration (SBA). Self-certification is no longer accepted for federal goaling purposes as of late 2024.
The 2026 Regulatory Landscape for Veteran Contracts
The SBA Veteran Small Business Certification (VetCert) program is now the sole federal authority for certifying veteran-owned firms. The Department of Veterans Affairs (VA) previously managed a separate verification system, but this has been consolidated into the SBA’s central portal. The Congressional Research Service (CRS) noted that this consolidation aims to streamline the application process for veterans.
SBA officials said the agency cleared significant backlogs in 2025, bringing the average processing time for VetCert applications down to approximately 12 days. This efficiency allows new firms to enter the market faster than in previous years. Businesses must maintain an active status in the System for Award Management (SAM) to remain eligible for set-aside awards.
Statutory goals for other small business categories have also seen adjustments. While the SDVOSB goal rose to 5%, the Small Disadvantaged Business (SDB) statutory floor remains a priority for the administration. Contracting officers said they prioritize SDVOSBs to ensure agencies do not fall short of the new 5% mandate.
Core Eligibility Requirements for SDVOSB Status
To qualify as an SDVOSB in 2026, a firm must meet strict criteria regarding ownership and control. A veteran with a service-connected disability must own at least 51% of the business directly and unconditionally. SBA regulations state that ownership cannot be held through other entities or subject to conditions that shift control away from the veteran.
The veteran must also manage the day-to-day operations and make all long-term strategic decisions. This includes holding the highest officer position, such as CEO or President. Documentation must prove the veteran has the authority to control bank accounts and hiring decisions without being overridden by non-veteran managers.
Veterans affairs news sources indicated that the VA continues to determine the disability status used for certification. A service-connected disability rating from 0% to 100% is sufficient to qualify for the SDVOSB designation. The veteran must have been discharged under honorable conditions to be eligible for the program.
The Certification Process Step-by-Step
The first step for any veteran-owned firm is to obtain a Unique Entity ID (UEI) through SAM.gov. An active SAM registration is a prerequisite for the SBA VetCert application. Business owners must ensure their SAM profile accurately reflects their North American Industry Classification System (NAICS) codes and small business status.
Once registered in SAM, firms must gather supporting documentation for the SBA portal. This includes the DD-214 form, VA disability rating letters, and proof of U.S. citizenship. Business-related documents such as articles of incorporation, operating agreements, and three years of tax returns are also required.
SBA representatives said the application must be submitted through the MySBA Certifications portal. After submission, the agency reviews the evidence for ownership, control, and business size. Once approved, the certification is typically valid for three years, though firms must report any material changes in ownership within 30 days.
Navigating the GSA Schedule and Federal Portals
The GSA Schedule, also known as the Multiple Award Schedule (MAS), remains a primary vehicle for SDVOSB success. GSA officials said the agency is actively working to help other federal departments hit the 5% SDVOSB target. By holding a GSA Schedule contract, veterans can simplify the buying process for federal procurement officers.
Large agencies like the Department of Defense (DoD) and the VA often use veteran-focused vehicles such as the VETS 2 Governmentwide Acquisition Contract (GWAC). These vehicles are designed specifically for SDVOSBs to provide information technology services. Participation in these specialized contracts can lead to long-term revenue streams and stable government contracts.
Firms should also monitor the "Contract Our Veterans Act of 2026," a piece of proposed legislation. If passed, it would create a government-wide 5% goal for all Veteran-Owned Small Businesses (VOSBs), not just those with service-connected disabilities. This would significantly expand the market for all veteran entrepreneurs in the coming years.
Strategies to Win More Government Contracts
Winning SDVOSB contracts requires more than just certification; it requires active market engagement. Successful firms often respond to Sources Sought notices and Requests for Information (RFIs) on SAM.gov. Contracting officers said these responses help them determine if a solicitation can be set aside specifically for SDVOSBs.
Teaming agreements and Mentor-Protégé relationships are also effective strategies for growth. The SBA Mentor-Protégé Program allows small businesses to partner with larger, experienced firms to gain technical expertise and past performance. These partnerships can be crucial for winning complex technical or construction contracts.
Business owners should also engage with Agency Small Business Offices (OSDBUs). These offices are dedicated to helping small firms find opportunities within specific agencies. Networking with OSDBU representatives can provide insights into upcoming projects that have not yet been publicly listed.
Compliance and Maintenance of Status
Maintaining compliance is vital to avoid decertification or legal penalties. The SBA periodically audits certified firms to ensure the service-disabled veteran still maintains 51% ownership and full control. Any changes in the management structure must be updated in both SAM and the VetCert portal immediately.
Legal experts said firms should avoid "front company" arrangements where a non-veteran actually runs the business. Such arrangements can lead to suspension or debarment from federal contracting. The government has increased its scrutiny of socio-economic status claims to protect the integrity of the SDVOSB program.
Firms are encouraged to stay updated with the latest veterans affairs news to track changes in procurement law. Regular reviews of SBA and VA policy updates can prevent administrative errors that might jeopardize a contract award. Consistent communication with the SBA ensures the business remains in good standing for future competitions.
Leveraging Data and Search Tools
Modern government contractors use digital tools to find and track opportunities. Using a magnifying glass approach to SAM.gov data can reveal which agencies are struggling to meet their 5% SDVOSB goals. These agencies are more likely to issue set-aside solicitations or consider sole-source awards.
Sole-source awards for SDVOSBs are currently capped at approximately $5 million for services and $8.5 million for manufacturing. Agencies can award these contracts directly to a certified firm without full and open competition under specific conditions. SBA officials said these thresholds are reviewed periodically to keep pace with inflation and market trends.
Conclusion and Future Outlook
The 2026 fiscal year presents a historic opportunity for veteran entrepreneurs. With the SDVOSB goal now at 5% and the certification process more streamlined, the barrier to entry has never been lower. Firms that secure their SBA VetCert status and maintain active SAM profiles are positioned to lead in the federal marketplace.
For more information on current procurement trends and government news, readers can visit the USGov.News articles page. Staying informed is the first step toward securing a competitive edge in federal contracting. Interested parties can also subscribe to the newsletter for daily updates on military contracts and VA developments.
The shift toward mandatory certification ensures that legitimate veteran-owned businesses receive the preferences they earned through their service. As agencies strive to meet their statutory requirements, the demand for high-quality SDVOSB partners will continue to grow across all sectors of the US government.
