Federal Government Eyes 5% Spending Goal for Veteran-Owned Small Businesses Starting in 2026

The federal government is one of the world's biggest customers, and a new bill called the Contract Our Veterans Act of 2026 wants to make sure veterans are getting a bigger slice of that pie. The core of this legislation is a new mandate: at least 5 percent of the total value of all federal prime and subcontracts must be awarded to veteran-owned small businesses every single year. To make this happen, the bill gives government contracting officers the green light to bypass the usual bidding wars and award contracts directly to these businesses—known as 'sole source' contracting—as long as the price is fair and the business is properly vetted.

Opening the Digital Rolodex

For a veteran running a construction firm or a tech startup, the biggest hurdle is often just getting a foot in the door. This bill tackles that by requiring veteran-owned shops to be listed in a specific federal database (per Section 2) to be eligible for these perks. It also puts 'Business Opportunity Specialists' to work, essentially acting as government-funded matchmakers to help these owners navigate the red tape. For a vet who just traded a uniform for a business suit, this means having a dedicated advocate in the room when big agencies are deciding where to spend their budgets.

Keeping the Work In-House

One common concern with government set-asides is the 'front company' problem—where a big corporation uses a veteran's name to snag a contract and then does all the work themselves. This bill includes a 'Limitations on Subcontracting' rule to prevent that. Specifically, for any contract awarded under these new rules, the veteran’s own team must perform at least 50% of the personnel costs. If you’re a veteran running a plumbing business, you can’t just sign the paperwork and hand the entire job off to a massive national chain; your crew has to actually be on the tools.

Tracking the Receipts

To ensure this isn't just a 'feel-good' policy without teeth, the bill introduces a Small Business Procurement Scorecard. Federal agencies will be graded on exactly how many contracts they give to veterans, including a breakdown of whether those were competitive or sole-source awards. While this is great news for veterans, it does mean that small business owners who aren't veterans might see more 'restricted competition' notices on government job boards, as agencies hustle to hit that 5% target. It’s a shift in the landscape that rewards service with a direct path to federal work, backed by a system designed to keep the process transparent.