There’s a big shift happening right now in federal contracting that small businesses need to understand. Secretary Hegseth just announced that the Pentagon is taking a “sledgehammer” to one of the oldest diversity, equity, and inclusion contracting programs in the federal government, the SBA’s 8(a) Business Development program. The announcement came via social media and has quickly sparked debate across government and industry circles.
If you have not been watching every federal policy shift this year, here’s the backdrop. In early 2025 President Trump signed an Executive Order that ended many DEI initiatives across federal agencies under the banner of Executive Order 14151. That order effectively eliminated longstanding diversity and inclusion practices that government contractors and departments had relied on for years. One of the most far-reaching effects has been on federal contracting vehicles that focus on expanding opportunity to disadvantaged firms.
With that context, Secretary Hegseth is now signaling that the Pentagon is reviewing and potentially winding down the 8(a) program as it applies to defense contracts. He described the action as taking a sledgehammer to what he called the “oldest DEI program in the federal government.” While details remain limited, the intent is to curb spending tied to the program and to reassess whether it aligns with the Pentagon’s mission priorities.
What This Means for 8(a) Companies
This news can create a lot of uncertainty for small disadvantaged businesses and 8(a) participants focused on Department and defense contracting. But it also opens the door to strategic positioning and engagement. Here are practical steps 8(a) companies should consider:
1. Stay Informed and Engage Early
The Pentagon has a formal channels process for policy review and industry engagement. Make sure your team is plugged into Defense Contract Management Agency (DCMA), Army, Navy, and Air Force small business offices. These offices often get early sightlines into policy shifts.
2. Participate in Industry Days and Listening Sessions
As the Pentagon rolls out this assessment, it is likely to host briefings and listening sessions with industry partners. Showing up and articulating how your 8(a) capability aligns with defense mission priorities builds visibility and trust.
3. Document and Communicate Value
One of the core rationales behind this review is scrutiny of cost and value. 8(a) firms that can demonstrate how they deliver measurable mission outcomes at competitive cost can make a strong case for continued inclusion in defense procurement opportunities.
4. Expand Beyond 8(a) If Needed
Even if the 8(a) program changes, many pathways still exist for small and disadvantaged firms to win defense work. Consider pursuing HUBZone, WOSB, SDVOSB, and unrestricted set-aside contracts. This diversification can buffer against policy shifts.
5. Partner Strategically
Teaming arrangements, joint ventures, and mentor-protege relationships can help 8(a) companies qualify for more complex work while aligning with prime contractors who have deep Pentagon relationships.
The Bigger Picture
What we are seeing now is part of a broader narrative around defense acquisition reform. Secretary Hegseth has been vocal about cutting bureaucracy and pushing the Pentagon toward what he calls a more mission-focused, cost-effective approach. That was evident in other recent Pentagon initiatives to accelerate AI and advanced technology integration.
For small businesses, the takeaway is clear. The landscape is shifting, but opportunities remain abundant for companies that are proactive, mission-aligned, and engaged in shaping the conversation.
Stay tuned to Defense Federal Acquisition Regulation Supplement (DFARS) updates, Small Business Administration guidance, and Pentagon small business outreach events. These developments matter for both your current 8(a) contracts and future pursuits.
