HUBZone Program Updates and Clarifications: Technical Corrections Released
On June 4, 2025, the SBA issued a set of technical corrections to its final rule on the HUBZone program and related small business regulations, originally published December 17, 2024. These updates clarify regulatory citations, correct numbering errors, adjust definitions for employee eligibility, and refine HUBZone program elements to better align with the SBA’s intent.
Key Details:
- § 125.8(a) Citation Fix: Updates cross-references so mentor‑protégé affiliation exemptions now correctly point to § 121.103(b), not (h)(4).
- Renumbered § 125.12: Paragraph (g)(i)(ii) changed to (g)(1)(2) for size characteristic and program status recertification.
- ‘Employee’ Definition Enhanced (§ 126.103): Replaces incorrect 80‑hour/month metric with the correct 10‑hour/week minimum.
- Legacy HUBZone Employee Rule (§ 126.200): Removed outdated “recertification” wording; correctly references “certification anniversary date.”
- Residency Proof (§ 126.304): Deletes “voter registration cards” from acceptable documentation due to timing inconsistencies.
These amendments do not alter substantive policy, but they are important for ensuring clarity and accuracy in compliance. Contractors should verify that their joint venture documents, employee definitions, and HUBZone eligibility proofs adhere to the updated citations and thresholds. This particularly affects firms in the HUBZone or those partnering
under mentor‑protégé structures, helping them avoid misinterpretation or rejected certifications. While not changing core eligibility, these corrections prevent future compliance errors, ensuring smoother interactions with SBA program audits and certifications.
SBA Reinstates Rule to Return Federal Contractors to Work
On June 17, 2025, the SBA announced the reinstatement of the physical office requirement for participants in the 8(a) Business Development Program. The temporary suspension of this COVID-era moratorium ends September 30, with full enforcement effective October 1.
Key Details:
- Reinstated Requirement: 8(a) participants must maintain a bona fide office within the geographic area of their federal construction bids.
- Physical Presence: At least one full-time employee must be physically present at the office. Virtual or temporary units (e.g., trailers) are not allowed.
- Moratorium Ends: The COVID-era suspension is in effect through September 30, returning to full enforcement October 1.
- SBA Administrator Statement: Kelly Loeffler emphasized that “America is open for business” and underscored the need for on-the-ground presence in taxpayer-funded projects.
This reinstatement signals a return to stricter in-person location standards for 8(a) firms. Companies that adopted virtual or interim offices during the pandemic now must secure permanent, staffed offices within their bid areas to remain eligible. While this update may increase overhead, especially in rent and staffing, it also encourages long-term community presence and may enhance oversight and accountability. Contractors should identify compliant office spaces, update their 8(a) filings, and ensure staffing aligns with the renewed requirement before the October 1 deadline.
Protect Small Business Opportunities: “Rule of Two” Faces Potential Elimination
The FAR Council issued its first major deregulation initiative, targeting provisions in the FAR not explicitly mandated by statute. Among the provisions flagged is the “Rule of Two”, which directs contracting officers to set aside procurements for small businesses when at least two capable small vendors exist. Although this requirement is codified in the FAR and SBA regulations, it isn’t supported by overarching federal law—except within the Veterans Affairs context.
Key Details:
- Scope of Rule: Requires set-asides under FAR Part 19 and SBA regs when two or more small businesses can compete.
- Statutory Anchor: Only the VA’s Rule of Two (38 U.S.C. § 8127) is law; others lack congressional mandate.
- Legislative Response: H.R. 2804, the “Protecting Small Business Competitions Act of 2025,” aims to codify the Rule of Two nationwide.
- Advocacy Actions: Small business advocates are urged to contact Representatives and sign letters supporting H.R. 2804.
How It Affects Government Contractors or Small Businesses:
If the FAR Council follows through, this could remove a critical safeguard that helps small businesses compete against larger firms on federal contracts. Without explicit statutory backing, the Rule of Two may be dropped from the FAR, potentially reducing small business set-asides and limiting market access. Small businesses should closely watch H.R. 2804’s progress and consider engaging with lawmakers or trade groups to support codification efforts. If the rule is removed, contracting officers may be less inclined to prioritize small business offers, reshaping how opportunities are allocated.
Two New GSA Centralization & Cost‑Savings Initiatives Launch
In mid‑June 2025, the General Services Administration (GSA) unveiled two major initiatives aimed at centralizing the procurement of common goods and services across federal agencies. These efforts support broader Administration priorities to streamline acquisitions, reduce waste, and leverage agency-wide economies of scale. Source
Key Details:
- Establishment of Office of Centralized Acquisition Services (OCAS): GSA is recruiting contracting officers to staff a new OCAS, which will act as a hub for executing consolidated purchases of commonly procured items.
- Cross‑Agency Procurement Focus: The initiative targets standard goods and services across multiple federal sectors, including HHS, DoD, VA, DOE, DHS, and others, to reduce duplication and realize efficiencies.
- Data‑Driven Decision Making: GSA will gather data from value‑added resellers to assess current models and identify areas ripe for consolidation, aiming to eliminate unnecessary intermediaries.
These centralization initiatives will reshape federal procurement dynamics. For contractors, especially small businesses, the opportunities may shift significantly:
- Reduced Fragmentation, More Competition: Centralized buying may mean fewer duplicative procurements across agencies, prompting increased competition on fewer, larger solicitations.
- Need to Align with GSA Vehicles: Contractors will need to align with GSA-managed acquisition vehicles, such as MAS or GWACs, or position themselves as key subcontractors to primes working under OCAS.
- Invitation for Specialized Sellers: Agencies aiming to consolidate volumes could open doors for vendors specializing in standardized goods and services—with an elevated emphasis on demonstrating scale, reliability, and pricing competitiveness.
- Increased Transparency & Data Requirements: Expect greater data-sharing requirements, such as transactional data reporting, which could burden smaller contractors. However, participation also offers visibility into purchasing patterns and contract opportunities.
Overall, centralization can lower administrative overhead for federal buyers, but contractors must adapt operations, marketing, and compliance strategies to remain relevant and competitive within larger, structured procurement vehicles.
VA Plans to Cut 1,000 IT Positions, Undoing Biden-Era Hiring Surge (June 3, 2025)
The Department of Veterans Affairs (VA) unveiled plans in its Fiscal Year 2026 budget proposal to eliminate approximately 1,000 positions within its Office of Information and Technology (OIT), effectively reducing its IT workforce from around 8,000 to 7,000 employees. This move marks a reversal of the aggressive IT hiring surge experienced under the Biden administration.
Key Details
- Budget Proposal Timing: Included in the FY 2026 budget request.
- Headcount Impact: OIT positions will drop by roughly 1,000 from a base of ~8,000.
- Broader Workforce Cuts: Reports also indicate cuts to the Veterans Benefits Administration, signaling larger restructuring across the VA.
- Spending vs Staffing: Despite a projected 4% increase in overall VA spending, the agency is choosing to reduce staff levels.
This staffing reduction at the VA presents both challenges and opportunities:
- Reduced Contract Demand: As the VA shrinks its internal IT workforce, demand for IT-related contracts (such as modernization, helpdesk support, and cybersecurity) could decline, impacting firms that have been servicing the VA.
- Budget Reallocation: With overall VA spending increasing, there may be a shift toward more contracting or re-prioritized IT spending, giving contractors room to pivot toward project-based or specialized services.
- Competitive Pressure: Firms will need to closely monitor where VA re-directed funds settle, whether in legacy system support, cloud migration, or infrastructure upgrades, to target service offerings accordingly.
- Small Business Opportunities: Smaller IT contractors should align their capabilities with potential “core vs mission-critical” priorities, and engage with VA’s acquisition teams to position themselves for new task orders aligned with the FY 2026 strategy.
SCORE Faces a Tough Road Ahead if SBA Budget is Cut
The White House’s FY 2026 “skinny” budget proposal significantly reduces funding for SBA’s entrepreneurial development programs, from $317 M in 2023 to $150 M, eliminating support for SCORE and Women’s Business Centers, while modestly boosting funding for Small Business Development Centers (SBDCs) by $10M.
Key Details:
- Proposed Budget Reduction: Funding for entrepreneurial development drops by more than 50%, eliminating SCORE and Women’s Business Centers.
- SBDC Funding Increase: SBDCs would receive a $10 M increase to absorb some of the eliminated programs’ functions.
- Program Consolidation: The administration plans to fold SCORE’s mentoring roles into the SBDC network.
- Leader Concern: SCORE CEO Bridget Weston warns its federally funded operations (70% SBA‑funded) could collapse without SBA support.
This proposed budget shift could significantly reduce mentoring and training resources available to small businesses, limiting access to critical guidance that helps firms successfully navigate federal contracting. Without the formal structure, small businesses may need to seek alternatives or fund support privately. For contractors, diminished entrepreneurial assistance may make it harder to transition into government markets or sustain growth. If enacted, the changes would require small firms to be more proactive in finding external guidance or relying on SBDCs, which may face capacity constraints. SCORE supporters are urging Congressional intervention before appropriations close.
DHS Secretary to Review All Contract & Grant Awards Over $100K
On June 18, 2025, Homeland Security Secretary Kristi Noem issued a directive requiring her office to personally review and sign off on all contracts and grant awards exceeding $100,000, with a mandatory minimum five-day front-office review period.
Key Details:
- Approval Requirement: Every contract or grant over $100K must now go through the Secretary’s office, with front office given at least five days for memo review.
- Volume Impact: Based on recent fiscal trends, this directive is expected to affect over 5,100 awards in the DHS’s busiest quarter.
- Threshold Change: This replaces an earlier threshold of $25 million, significantly expanding the scope of covered actions.
- Criticism: Industry experts describe the move as “absolutely nuts,” warning it could clog acquisition pipelines and shift staff from mission-critical tasks.
This policy adds a new bureaucratic checkpoint that could delay contract awards and grant disbursements, especially as DHS heads into its fourth-quarter procurement peak. Contractors may face longer approval timelines, potentially affecting project planning and resource allocation. While DHS frames this as a measure to combat waste, fraud, and abuse, industry professionals caution that it may divert acquisition staff away from essential operational duties and introduce unpredictability into award processes. Small and
mid-size contractors should closely monitor this policy’s implementation to anticipate scheduling shifts and consider contingency plans for time-sensitive procurements.
