Who’s Got Your Back? The Most Small-Business-Friendly Federal Agencies in FY2025
If you’re a small business chasing federal contracting dollars, it pays—literally—to know which agencies are most likely to award you a contract. Spoiler: not all federal buyers are created equal. Some go out of their way to engage and support small businesses through targeted set-asides, outreach, and accessible contracts. Others? Not so much.
Let’s cut through the noise. Based on FY2025 data (through Q3), here’s who’s really putting money where their mouth is when it comes to small business procurement—and how you can capitalize.
The Agencies Leading the Pack
Several agencies stood out by meeting or far exceeding the government’s 23% small business spending goal—and doing it with intention. Here's a quick hit list:
Department of Homeland Security (DHS): 38.21% of contract dollars went to small businesses in FY2023. DHS continues to be a powerhouse in FY2025, particularly strong in 8(a) and HUBZone awards. Think cybersecurity, IT support (NAICS 541512), and guard services (561612).
Department of Veterans Affairs (VA): Dominates the SDVOSB space thanks to its Veterans First Contracting Program. Medical services (NAICS 621111), facility construction (236220), and IT support are key areas.
Department of Agriculture (USDA): High utilization through decentralized buying. Forest management, conservation, and rural development projects often go to small or HUBZone businesses.
Department of Defense (DoD): Hands down the largest dollar value, with $80–90B going to small businesses annually. Most small business action is in construction, R&D (541715), and IT.
General Services Administration (GSA): While not the biggest spender, GSA’s small business vehicles (like 8(a) STARS III) ensure major dollars flow to small firms.
Department of Health and Human Services (HHS): Big spender with improving small business share, especially in R&D, professional services (541611), and emergency supplies.
So What? Why It Matters to Your Business
These “friendly” agencies aren’t just hitting numbers—they’re actively shaping their procurement strategies to engage small firms. Here’s why that’s a game changer:
Set-aside programs are in play more than ever. From 8(a) contracts to HUBZone awards, agencies are leveraging every tool available to meet goals. That means more chances for you to land work—sometimes even sole-source, no competition required.
Smaller contracts are being intentionally carved out. Especially at places like USDA and DHS, contracting officers are breaking up large buys into manageable awards that small firms can realistically compete for.
There’s a push for new entrants. Agencies like the Air Force are under pressure to expand their small business base. They’re looking for fresh vendors—and might be more open to working with you even if you're not yet a household name.
What You Should Do About It
If you’re not already building relationships at the top small-business-friendly agencies, it’s time to pivot. Here’s where to start:
Focus your outreach. Instead of chasing every RFP on SAM.gov, concentrate on the agencies that consistently support small business. Subscribe to their OSDBU mailing lists. Attend their industry days.
Tailor your capability statement. Match your NAICS codes and past performance to the agency’s top contracting needs. (Hint: IT and construction are always hot, but so are R&D, logistics, and facilities support.)
Use your certifications strategically. If you're 8(a), SDVOSB, HUBZone, or WOSB certified, align your BD efforts with the agencies that rely on those categories to hit their goals. VA and DoD for SDVOSB? No-brainer. DHS and Army for 8(a)? Absolutely.
Don’t overlook subcontracting. If getting a prime slot with DoD or DOE feels out of reach, partner with a larger contractor on one of their major vehicles. You’ll build past performance and relationships that pay off later.
Watch for new thresholds and policy shifts. The government is raising sole-source award limits and cracking down on unnecessary contract bundling. These changes could open doors for your small business—if you’re ready to walk through them.
Final Thoughts: Play the Odds, But Play Smart
FY2025 is shaping up to be a strong year for small business contracting, despite a slight dip in overall procurement spending. Agencies are exceeding goals, and set-asides are on the rise. But don’t just rely on luck—target the players who want to work with you.
DHS, VA, USDA, and a few others are waving you in. Meet them halfway with the right certifications, smart outreach, and a clear value proposition tied to their mission. This isn’t just about winning one contract. It’s about building a repeatable strategy to grow your government contracting business.
Looking for more guidance on which NAICS codes to align with these top agencies? Check out our post on The Most Competitive Federal Contracting NAICS Codes of 2024 (and How Small Businesses Can Still Win) to make sure your capabilities match what buyers are actually purchasing.
If you aren't a Squared Compass partner, what are you waiting for? From getting your business set up with specific government set aside programs at both the State and Federal level, to being empowered by a Fractional Capture team to win government contracts, to receiving tailored government contract opportunities Squared Compass delivers immense value which helps propel our partners to success. Schedule a chat with our team today.
