FAIR Vets Act Quadruples Manufacturing Sole-Source Threshold for Veteran-Owned Businesses

The new FAIR Vets Act is designed to give service-disabled veteran-owned small businesses (SDVOSBs) a bigger slice of the federal contracting pie by raising the limits on what the government can buy from them without competitive bidding. Specifically, this law significantly increases the dollar thresholds for sole-source contracts—contracts awarded directly without a full competition process—to SDVOSBs, amending Section 36(c)(2) of the Small Business Act. The changes are substantial: for non-manufacturing contracts, the limit jumps from $7 million to $10 million, and for manufacturing contracts, the limit nearly triples, going from $3 million to $8 million. Federal agencies, including the Department of Defense, must update their acquisition rules within 180 days to put these new limits into effect.

The Veteran Entrepreneur Advantage

Think of this change as leveling up the size of the contracts a veteran-owned business can land without the headache of a massive, drawn-out competition process. For a veteran running a small IT consulting firm (a non-manufacturing service), they can now secure a contract up to $10 million directly, where before they topped out at $7 million. For a veteran-owned company that manufactures specialized equipment for the military, the jump from $3 million to $8 million is huge. This is intended to boost the revenue and capacity of these businesses, making it easier for the government to quickly award necessary contracts while fulfilling its goal of supporting veteran entrepreneurs. The clear benefit here is increased stability and growth potential for SDVOSBs, allowing them to take on larger projects and hire more people.

Why Higher Limits Matter to Everyone

When the government uses sole-source contracts, it’s usually because the need is urgent, the item is specialized, or the pool of qualified vendors is small. By raising these thresholds, the government is essentially saying, “We trust qualified veteran businesses to handle bigger, more expensive jobs quickly.” This can streamline the acquisition process for agencies needing, say, a $9 million specialized component manufactured by a veteran-owned firm, bypassing months of competitive solicitation. However, this move does raise the stakes: anytime you raise a sole-source limit, you reduce the requirement for full competition, which means contracting officers need to be extra diligent to ensure the government is still getting a fair price, even without a bidding war.

The Implementation Timeline

This isn't an instant change. Section 2 of the Act clearly requires the Federal Acquisition Regulatory Council and the Secretary of Defense to update the Federal Acquisition Regulation (FAR) and the Defense Federal Acquisition Regulation Supplement (DFARS) within 180 days of the law's enactment. The new, higher thresholds only apply to contract solicitations issued after that 180-day period. So, if you are an SDVOSB owner, you should expect these new opportunities to start rolling out roughly six months after the bill becomes law. This mandated timeline provides a clear, non-negotiable deadline for the bureaucracy to catch up to the legislative intent, which is a good sign for timely implementation.