WASHINGTON : The Department of Veterans Affairs is entering a period of significant fiscal and structural transformation. The agency said it is prioritizing budget growth, health care reorganization, and small business opportunities to meet the evolving needs of the veteran population. This article outlines 10 critical developments regarding veterans affairs news, government contracts, and the SDVOSB program.
1. Record Budget Request for FY 2026
The Department of Veterans Affairs (VA) announced a total budget request of $441.3 billion for the 2026 fiscal year. This figure represents a $42.2 billion increase over the 2025 enacted level. The department said the funding will support expanded medical care and the administration of veteran benefits.
The discretionary funding portion of the request is $134.6 billion. This is a 4% increase compared to the previous year. The VA said this funding is necessary to manage rising health care costs and a growing patient base.
Mandatory funding for disability compensation and other benefits makes up the remainder of the request. The department said it expects to process a record number of claims in the coming years. This increase is largely driven by recent legislative expansions.
2. Cost-of-Living Adjustment (COLA) Increases
Veterans receiving disability compensation will see an increase in their monthly checks starting in early 2026. The VA said a 2.8% Cost-of-Living Adjustment (COLA) went into effect on December 1, 2025. This adjustment is tied to the Social Security Administration’s annual inflation calculations.
The increase applies to disability compensation, clothing allowances, and dependency and indemnity compensation. The VA said the adjustment ensures that benefits maintain their purchasing power against inflation. No legislative cuts to existing disability checks have been enacted for the 2026 period.
Officials said they are also reviewing proposed changes to the VA rating schedule for specific conditions. These potential updates involve sleep apnea, tinnitus, and mental health ratings. The VA said these changes would affect future initial ratings rather than reducing existing benefits for current recipients.
3. Transition to SBA VetCert for SDVOSB Firms
The process for certifying Service-Disabled Veteran-Owned Small Businesses (SDVOSB) has undergone a fundamental shift. The Small Business Administration (SBA) said it has assumed full control of the "VetCert" program from the VA. This change was mandated by the 2021 National Defense Authorization Act.
To compete for government contracts set aside for veterans, firms must now be certified through the SBA. The VA said it no longer accepts self-certification for set-aside work. This unified certification is now recognized across all federal agencies.
Businesses must maintain strict ownership and control documentation to remain eligible. The SBA said it conducts regular reviews of operating agreements and bylaws. This ensures that veterans retain at least 51% ownership and manage daily operations.
4. Veterans Health Administration (VHA) Reorganization
The Veterans Health Administration is undergoing a multi-year reorganization intended to streamline operations. The VA said the new structure will clarify lines of authority between the central office and local facilities. Implementation is expected to conclude in early 2026.
The reorganization creates distinct operations centers and Veterans Integrated Services Networks (VISNs). The VA said these centers will convert national policies into operational standards. This approach is intended to improve consistency in care delivery across approximately 1,300 facilities.
Contractors and vendors should expect changes in procurement management. The VA said the reorganization will centralize some policy and funding decisions. However, operational buying will remain focused at the VISN and facility levels.
5. Infrastructure and Medical Facility Modernization
The VA said it is investing heavily in physical infrastructure to replace aging facilities. The department announced nearly $600 million in infrastructure improvements during the second quarter of 2026. These projects include clinical expansions and seismic retrofitting.
The 2026 budget request includes significant funds for major and minor construction projects. The VA said many of its medical centers are over 50 years old and require modernization. This creates ongoing opportunities for government contracts in the construction and architecture sectors.
Investment is also directed toward "green" building initiatives. The VA said it aims to reduce the environmental footprint of its medical campuses. These projects often prioritize vendors on the GSA schedule that offer sustainable materials and energy-efficient systems.
6. PACT Act and Toxic Exposure Fund Growth
The Sergeant First Class Heath Robinson Honoring our Promise to Address Comprehensive Toxics (PACT) Act continues to drive VA activity. The VA said it requested $52.7 billion for the Cost of War Toxic Exposures Fund in FY 2026. This fund supports care for veterans exposed to burn pits and other environmental hazards.
The department said the PACT Act has led to a surge in health care enrollment and disability claims. Over one million veterans have filed claims related to toxic exposure since the law was enacted. The VA said it is hiring additional personnel to manage this increased workload.
The toxic exposure fund also supports research and toxicological studies. The VA said it is working to identify additional presumptive conditions. This expanded mandate requires significant support from clinical research organizations and laboratory suppliers.
7. Workforce and Staffing Realignment
The VA is implementing a strategic shift in its workforce size and composition. The department said it is targeting a health care workforce of approximately 372,000 employees. This represents a 10% decrease from the staffing levels seen in 2024.
The VA said this is not a traditional reduction-in-force. Instead, the agency is eliminating thousands of unfilled positions, many of which were created during the COVID-19 pandemic. The department said this realignment will not negatively impact veteran care.
This reduction may lead to an increased reliance on outsourced services. The VA said it will continue to utilize staff augmentation and contract health care providers to fill critical gaps. SDVOSB firms in the clinical staffing and professional services sectors are positioned to support these needs.
8. GSA Schedule and "Vets First" Policy
The VA continues to operate under the "Vets First" policy regarding procurement. The department said it must prioritize SDVOSB and VOSB firms for all contracts when the "Rule of Two" is met. This rule requires a reasonable expectation that at least two veteran-owned firms will compete at a fair price.
This policy applies even when the VA utilizes the GSA schedule. The department said it must consider veteran-owned small businesses before purchasing from large businesses on GSA contracts. This requirement distinguishes VA procurement from other federal agencies.
Maintaining a position on the GSA Multiple Award Schedule (MAS) can facilitate faster acquisitions. The GSA said it has consolidated legacy schedules into a single MAS structure to simplify the process. SDVOSB firms with both SBA VetCert and a GSA contract are highly competitive for VA task orders.
9. EHR Modernization and Health IT Contracts
The modernization of the Electronic Health Record (EHR) system remains a primary focus. The VA said it is continuing the rollout of the Oracle Health platform at select facilities. The department said the new system is essential for seamless data sharing with the Department of Defense.
The 2026 budget allocates substantial funding for IT modernization and cybersecurity. The VA said it must protect the sensitive medical and personal data of millions of veterans. This creates a steady demand for government contracts in software development and data management.
Vendors are being held to high performance standards regarding system uptime and usability. The VA said it will pause deployments at sites where the system does not meet safety benchmarks. This cautious approach emphasizes the need for robust technical support and training services.
10. Expanded Telehealth and Mental Health Services
The VA is expanding its digital health footprint to reach veterans in rural areas. The department said it has increased funding for telehealth infrastructure and mobile health units. These services allow veterans to receive care without traveling long distances to a VA medical center.
Mental health and suicide prevention remain the VA’s top clinical priorities. The department said it is expanding the Veterans Crisis Line and community-based intervention programs. Funding is also directed toward "justice-involved" veteran programs and housing assistance.
The VA said it is seeking innovative solutions to combat veteran homelessness. This includes contracts for transitional housing, vocational rehabilitation, and employment services. The department said its goal is to ensure every veteran has access to safe housing and supportive resources.
For more information on federal developments, readers may visit the USGov.News homepage for daily updates. Businesses interested in government contracts can monitor SAM.gov for active VA solicitations.
