For most of my career, I’ve believed that one of the smartest things a small business can do is figure out where it has an advantage.

You don’t have to compete with everyone. You do have to find the places where your size, experience, relationships, certifications and ability to move quickly actually matter.

For government contractors like my company, small-business programs have historically been one of those places. But some of those traditional pathways are changing—and changing quickly. The lesson isn’t to find the next protected lane. It’s to build a business capable of competing as the lanes keep changing.

When $531 Million Is “Small”

We have spent considerable time developing opportunities within the federal small-business market. Small-business set-asides create an environment where companies like ours aren't necessarily competing against the largest systems integrators and consulting firms in the world.

That doesn't make the competition easy. Far from it. But at least there were limits on who could join the race.

That may be about to change.

For our primary NAICS code, 541512, Computer Systems Design Services, the Small Business Administration (SBA) has proposed increasing the size standard from $34 million in average annual receipts to $531 million.

Yes. $531 million. Small business. Really?

The SBA has legitimate reasons for reconsidering its standards. Existing thresholds can create a “benefit cliff,” where successful small businesses graduate from programs that helped them grow and suddenly find themselves competing against much larger companies. The proposed rule is intended, in part, to address that problem and expand the federal supplier base.

But there's another side to that equation.

SBA estimates that 1,663 companies with existing federal contracts under 541512 would become newly eligible to compete as small businesses under the proposed standard.

That means a company generating $5 million a year, and one generating $500 million could potentially compete for the same “small business” set-aside.

A $500 million company can bring marketing, capture, proposal, research and recruiting resources that look very different from those available to a $5 million or $20 million company.

The small business pond may be getting bigger, but the number of contracts isn't necessarily growing with it. There are going to be a lot more fish competing for them, and some of those fish are whales. (I know. Mammals. You get the point.)

DBE Is Changing Too

The federal Disadvantaged Business Enterprise program is going through its own transformation. The U.S. Department of Transportation's Interim Final Rule eliminated the presumptions of social and economic disadvantage based on race and gender. Firms must now demonstrate disadvantage individually through a personal narrative describing their disadvantages, without mention of race or gender.

The effect in Pennsylvania has been dramatic. Before reevaluation, the Pennsylvania Unified Certification Program had 1,408 certified DBE/ACDBE firms. Afterward, 478 had successfully completed reevaluation and remained eligible.

PennDOT describes that as a 66% decrease in available DBE firms.

That doesn't mean DBE opportunities have disappeared. But it does mean another familiar pathway for small contractors changed almost overnight.

Meanwhile, Local Is Getting Interesting

As we've expanded our business development beyond the federal government, I've noticed something else.

Some cities and public enterprises are asking a much simpler question:

Are you small, and are you local?

Philadelphia is a good example. In 2025, Mayor Cherelle Parker established a new Small and Local Business Program, explicitly connecting City procurement with keeping dollars in Philadelphia, creating jobs and growing local companies.

Philadelphia isn't alone. SEPTA recently raised its small-business set-aside threshold from $3,000 to $250,000. Bostonhas simplified purchasing for qualifying contracts up to $250,000 with certified businesses. And Washington, D.C.established a $1.5 billion FY2026 spending goal with small businesses and Certified Business Enterprises.

Different programs, same underlying idea:

Public procurement can buy a service while also building the economy that paid for it.

For small businesses, that's another lane worth watching.

Don't Chase the Certification

Government contractors can become a little obsessed with acronyms.

SBE. DBE. MBE. WBE. LGBTBE. LBE.

Collect enough of them and your email signature starts looking like you earned a second graduate degree. Certifications matter. They can open doors. But certifications are market-access tools, not competitive strategies.

Regulations change. Administrations change. Size standards change. Procurement priorities change. The advantage you have today may not be the advantage you have five years from now.

The better strategy is to build a portfolio of advantages—and understand which one matters to the buyer in front of you.

A federal agency may want to broaden its supplier base. A transportation agency may want greater participation by disadvantaged businesses. A city may want more of its procurement dollars creating jobs in its own neighborhoods.

The opportunity is where your customer's objectives intersect with yours.

For us, that means continuing to pursue federal work while developing deeper relationships with state and municipal governments. It means paying closer attention to small- and local-business programs. It means partnering when someone else is better positioned to lead.

And sometimes it means walking away.

Agility isn't a substitute for scale. There are competitions where resources simply matter more. The trick is knowing which battles reward your advantages—and which ones don't.

Small Businesses Will Adapt

Fortunately, adaptability happens to be one of the things small businesses are pretty good at.

Smaller doesn't mean unsophisticated. There is a lot of space between two people and a laptop and a half-billion-dollar corporation. Established small businesses can be large enough to handle complex projects while remaining small enough to pivot quickly, customize a contract or reshape a team around what a client actually needs.

We can operate without millions of dollars in corporate infrastructure that ultimately gets built into billable rates. There are fewer layers between the customer, the people doing the work, and the person who can make a decision. Sometimes that person is the owner.

That's a real competitive advantage—but only when we're smart enough to compete where it matters.

The SBA may redefine what “small” means. The federal government may redefine what “disadvantaged” means. Cities and public enterprises may increasingly decide that being “local” matters more.

Fine.

Small businesses have never had the luxury of assuming the market will remain the same. When one channel gets crowded, we look for another. When regulations change, we change our strategy. When customers change how they buy, we change how we sell.

We don't get to spend too much time complaining about it. We have payroll to make.

So small businesses will do what we've always done: understand the market, adapt to it and find the opportunities where our advantages still matter.

Then we'll go win them.