SBA Proposes Sweeping Overhaul of Small Business Size Standards
The U.S. Small Business Administration (SBA) has published a proposed rule in the Federal Register that would fundamentally restructure the size standards used to determine small business eligibility. The proposal consolidates nearly 1,000 existing six-digit NAICS size standards into 338 broader industry groups, eliminates all subindustry exceptions, and heavily shifts toward employee-based standards rather than revenue-based measures.
GovCon Takeaway: Small business contractors must immediately audit their active NAICS codes and calculate their size status under the proposed rules. While these changes will classify an estimated 114,000 new businesses as small, the elimination of subindustry exceptions and the shift to employee counts may inadvertently graduate some current small businesses into the mid-tier market.
White House Looks to Revamp Cyber Supply Chain Security Data Calls
The White House is working on a new strategy to revamp and streamline how federal agencies issue cybersecurity supply chain data calls to contractors. The initiative aims to reduce the overlapping, fragmented compliance requests that industry partners frequently receive from different agencies, moving toward a more standardized, centralized reporting mechanism for cyber incidents and supply chain vulnerabilities.
GovCon Takeaway: IT and defense contractors should welcome this push for standardization, which promises to reduce the administrative burden of redundant security audits. However, you must ensure your internal supply chain visibility tools and Software Bill of Materials (SBOM) tracking are robust enough to meet these newly standardized federal benchmarks.
VA Raises Oracle Health EHR Contract Ceiling to Nearly $27 Billion
The Department of Veterans Affairs (VA) is massively expanding its Electronic Health Record Modernization (EHRM) contract with Oracle Health, increasing the ceiling from its original $10 billion to nearly $27 billion. Driven by “unanticipated complexities” and extensive site-specific customizations, this modification will add three one-year optional ordering periods, extending the massive IT integration effort through May 2031.
GovCon Takeaway: This expansion illustrates the extreme costs and lock-in associated with highly complex, enterprise-wide legacy IT modernizations. Subcontractors and health IT vendors should look for downstream teaming opportunities, as the prime will need massive continuous support to meet the extended 2031 rollout schedule.
Revised GSA AI Clause Fails to Fully Calm Industry Concerns
Despite the General Services Administration (GSA) revising its proposed AI acquisition clause to address industry feedback, major tech firms including Palantir, Microsoft, and Nvidia are still pushing back. During the recent public comment period, industry leaders warned that the rule’s vague definitions regarding “unbiased AI,” overly aggressive data rights assertions, and tight compliance windows conflict heavily with standard commercial software practices.
GovCon Takeaway: AI developers and integrators selling through GSA schedules are facing serious regulatory friction. If the GSA implements this rule without further aligning it with commercial standards, contractors may be forced to renegotiate data licensing terms or heavily modify their SaaS architectures just to remain compliant on federal vehicles.
GSA OneGov AI Deals for ChatGPT, Gemini, and Claude Set to Expire Next Month
Three widely used federal AI agreements providing discounted, enterprise access to OpenAI’s ChatGPT, Google’s Gemini, and Anthropic’s Claude are set to expire at the end of September. Managed under the General Services Administration’s (GSA) OneGov initiative, these deals allowed thousands of civil servants and government contractors to integrate generative AI tools directly into daily operations. The GSA is currently scrambling to negotiate extensions or transition agencies to new procurement frameworks before access cuts off.
GovCon Takeaway: Contractors and agency teams relying on OneGov-subsidized AI accounts must prepare for potential pricing shifts or access disruptions. As initial bulk-discount pilot phases end, agencies will be forced to transition to formal, long-term enterprise software contracts—opening up significant opportunities for AI integrators, security consultants, and VARs to capture upcoming procurement awards.
