Key 2025 Updates for Small Business Government Contractors: SBA and FAR Changes

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The landscape for small business government contractors continues to evolve rapidly, with significant regulatory updates from the Small Business Administration (SBA) and Federal Acquisition Regulation (FAR) Council aimed at enhancing compliance, clarifying affiliation rules, and expanding opportunities. As we head into 2026, contractors should prioritize understanding these changes to avoid pitfalls in joint ventures, certifications, and contract performance. Below, we break down the most impactful developments from late 2024 and 2025.

SBA Final Rule (89 FR 102448, Issued December 17, 2024; Effective January 16, 2025)

This comprehensive rule consolidates and refines several key areas for small businesses, drawing from lessons post-Ultima Services Corp. v. USDA (E.D. Tenn. 2023), which eliminated the rebuttable presumption of social disadvantage in the 8(a) program.

• Recertification Requirements (§125.12): Recertification is now streamlined but stricter. Firms must recertify within 30 days of a change-of-control event (e.g., merger or acquisition). Impacts vary by contract type:
• Single-award set-asides: Continue performance, but lose socio-economic credit.
• Multiple Award Contracts (MACs): Ineligible for future orders or options (with a grace period until January 2026).
• Pending proposals: Eligible if submitted more than 180 days pre-transaction.
• GSA Schedules: No awards for pending/future set-aside orders or BPAs.
• A new provision addresses small-on-small acquisitions: If the combined entity exceeds size standards, it remains eligible for existing MAC set-aside orders/options but without socio-economic credit.
• Size Recertification and Protests (§121.1001): Contracting officers, MAC holders, and SBA can now initiate size determinations without deadlines, adding teeth to enforcement.
• Negative Control Affiliation (§121.103(a)(3)): Clarifies “safe harbors” for minority vetoes on extraordinary actions (e.g., dissolution, adding equity), making it easier for investors without triggering affiliation.
• Ostensible Subcontractor Rule (§121.103(h)): If a subcontractor performs vital work or the prime is unusually reliant, the arrangement is ineligible—no “deemed JV” workaround.
• 8(a) Program Changes (§124.105): Non-disadvantaged ownership thresholds increased to 30% (up from 20%) without SBA approval in certain stages. Social disadvantage must now be proven via detailed narratives (who, what, when, where, how, why) per SBA guidance.  Additionally, prior SBA approval is not required for ownership changes involving non-disadvantaged individuals owning >30% (both before and after the transaction) if the 8(a) firm has never received an 8(a) contract, provided the disadvantaged individual(s) upon whose eligibility the firm relies maintain(s) at least 51% unconditional ownership and control.
• HUBZone Updates (§126): Certification at offer time (not annual); reduced residency requirement to 90 days; minimum 10 hours/week work; 12-month grace for 35% residency compliance.
• SBICCT Initiative (§134.101 et seq.): Funded October 22, 2024; 13 funds licensed/approved to raise $2.8B+ in private capital, matched with up to $175M SBA-guaranteed loans per fund (e.g., Accrual Debentures). Focuses on investments in >1,000 small businesses developing critical technologies (e.g., advanced materials, AI, space) across 14 DoD areas. Applications accepted quarterly; check SBA for current deadlines.

These changes promote flexibility but demand proactive M&A planning to avoid contract disruptions.

Proposed SBA Size Standards Adjustments (Proposed August 22, 2025)

SBA proposes inflation-adjusted increases to monetary-based size standards for 263 NAICS codes, such as raising construction averages from $39M to $45M in annual receipts. This could qualify more firms for set-asides, boosting competition. Comments closed October 21, 2025; final rule expected soon. Employee-based standards are pending separate review.

FAR Council Updates

• Suspension and Debarment Alignment (90 FR 507, Issued January 3, 2025): Harmonizes FAR procedures with nonprocurement rules (2 CFR 180), creating unified scrutiny across contracts and grants. Small businesses should review compliance programs, as issues in one area could now impact others.
• FAR Part 19 Overhaul (Issued September 26, 2025): Part of the broader FAR “Revolutionary Overhaul,” this reinforces small business participation, resolves FAR/SBA inconsistencies (e.g., HUBZone/SDVOSB verification), and emphasizes SBA precedence in conflicts with outdated clauses.

Practical Implications for Contractors

• Joint Ventures: Ensure non-MPP JVs comply with ≥40% workshare (§125.8) and avoid negative control pitfalls. For MPP applications, use certify.sba.gov, which requires an active SAM.gov profile. The SBA is transitioning to a new system called MySBA Certifications (launched late October 2024 at certifications.sba.gov) for managing many of its programs, including other certifications like WOSB, HUBZone, and 8(a). For initial applications and ongoing management of MPP, continue using the certify.sba.gov portal. For other certifications, SBA is migrating to MySBA Certifications and will provide updates on future features. To get started with any SBA certifications, you need an active profile on SAM.gov.
• Past Performance: Leverage JV/affiliate experience proportionally in proposals (FAR 15.305), but document “meaningful involvement.”
• Certifications: Update SAM annually (§121.108) and align with SBA rules over FAR in discrepancies to prevent protests.

At Maynard Nexsen, our Government Solutions team is here to help navigate these changes. Contact us for tailored advice on compliance, M&A strategies, or protests.