the 2025 Set-Aside Rollback: Trump Administration’s Reduction of SDB Contracting Goal to 5%
In early 2025, the Trump administration reversed a major Biden-era policy by reducing the governmentwide federal contracting goal for Small Disadvantaged Businesses (SDBs) from 15% back to the statutory baseline of 5%. Though no longer a recent development, the decision remains important for federal contractors still navigating the long-term consequences of this shift.
The 15% goal had been set by the Biden administration under Executive Order 14091 as part of its broader effort to embed equity and opportunity into federal procurement. That initiative aimed to increase participation by disadvantaged businesses—including firms participating in the SBA’s 8(a) program—by expanding access to prime contracting opportunities. The target was aspirational, not statutory, and thus could be rolled back without legislative action.
On January 20, 2025, President Trump issued an executive order rescinding EO 14091, eliminating the 15% goal and returning to the statutory minimum of 5% for SDB contracting. The administration justified this reversal by citing concerns about administrative burden and alleged imbalances that disfavored other categories of small businesses, particularly veteran-owned firms.
A few weeks later, on February 26, 2025, Trump signed Executive Order 14222, titled “Implementing the President’s ‘Department of Government Efficiency’ Cost Efficiency Initiative.” This order instructed federal agencies to review existing contracts and grants with a view toward cost-cutting, consolidation, and elimination of programs not aligned with the administration’s fiscal policy. While EO 14222 did not directly address SDB goals, it solidified the broader procurement strategy of the administration—favoring efficiency and centralized oversight over social equity goals.
Because the Small Business Act only mandates a 5% minimum goal for SDBs, the Trump administration’s rollback was legally permissible and required no Congressional approval. Nevertheless, it marked a substantial policy shift. Contractors who had structured their business development plans around the expanded 15% target—particularly minority-owned 8(a) firms—faced a contracting environment with fewer set-aside opportunities and potentially more aggressive competition for unrestricted contracts.
Now, in mid-2025, the effects of the rollback are clearer. Agencies have adjusted their acquisition planning accordingly, and small disadvantaged firms must reevaluate their federal market strategies. Some have doubled down on subcontracting and mentor-protégé opportunities, while others have pursued joint ventures or diversification into commercial markets.
Whether future administrations will restore or expand the goal remains uncertain, but the rollback illustrates the volatility federal contractors face when policies change with the political landscape. For firms operating in the SDB and 8(a) spaces, remaining agile, understanding statutory versus policy-based targets, and advocating for regulatory clarity will be essential in this evolving environment.
Disclaimer: This blog post is for informational purposes only and does not constitute legal advice. The information is based on publicly available sources and should not be relied upon without consulting legal counsel or official government documentation.
