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Congress Increases SDVOSB Prime Contracting Goal to Five Percent

Congress has increased the prime contracting goal for service-disabled veteran-owned small businesses from three percent to five percent of total prime contract spending. Together with this major increase, Congress will prohibit the government from counting awards to self-certified SDVOSBs toward its prime and subcontracting goals.

These changes are implemented in the final version of the 2024 National Defense Authorization Act. The 2024 NDAA "conference report," which is a negotiated compromise between the House and Senate over the terms of the 2024 NDAA, was recently agreed upon, and will become law as soon as it is signed by the President.

Section 863 of the 2024 NDAA is titled "INCREASE IN GOVERNMENTWIDE GOAL FOR PARTICIPATION IN FEDERAL CONTRACTS BY SMALL BUSINESS CONCERNS OWNED AND CONTROLLED BY SERVICE-DISABLED VETERANS." Section 863 simply deletes the term "3 percent" in the underlying goaling statute, 15 U.S.C. 644(g)(1), and replaces it with "5 percent".

Congress has not included any grace period or other delay in Section 863's effectiveness, meaning--in theory, at least--the new five percent goal will take effect immediately upon the President's signature. Whether the SBA applies the goal to the ongoing fiscal year remains to be seen, but it appears that the five percent goal will be effective, at the latest, in the fiscal year beginning on October 1, 2024.

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