In 2025, the U.S. Small Business Administration fundamentally changed how size and small business status recertifications affect government contractors following mergers, acquisitions, or sales. While much of the rule became effective in early 2025, a critical portion related to post-M&A size recertifications for set-aside Multiple Award Contracts (MACs) was delayed until January 17, 2026. The substance of the rule is expected to impact merger and acquisition activity in the federal contracting market.

For decades, SBA permitted a contractor that was acquired or merged into a larger entity — and thus recertified as other than small — to continue competing for task orders and exercising options on MACs set aside for small businesses. This created a situation where large companies could essentially enjoy small business contract advantages by acquiring small business contractors. The SBA’s new rule closes that gap by conditioning future eligibility for small-business set-aside task orders on a contractor’s post-transaction size status — with significant implications for buyers, sellers, and investors in the government contracting sector.

Starting January 17, 2026, if a contractor undergoes a merger, acquisition, or sale that results in a recertification to “other than small”, the firm will no longer be eligible to receive task orders or exercise options on small-business-set-aside MACs going forward. This applies even if the underlying MAC contract was originally awarded when the firm was small.

If the merger or acquisition occurred before January 17, 2026, the firm remains eligible for future MAC orders and options even after the rule’s effective date. However, agencies cannot count those orders toward small business contracting goals. A disqualifying recertification also makes a small business contractor ineligible for future small business set-aside FSS orders and blanket purchase agreements under those schedules.

There are two meaningful exemptions. First, if there is a M&A transaction between two small businesses, the resulting entity can continue to compete for small-business set-aside MAC orders and options even if the combined size exceeds the size standard. However, agencies may not count those awards toward their small business contracting goals. This preserves flexibility for small businesses combining forces, while maintaining the integrity of goal reporting.

Second, if a contractor has single-award set-aside contracts, even once the contractor recertifies as other than small post-M&A, it can retain eligibility for task orders and option exercise on these contracts. This is a contrast with MACs and reflects SBA’s judgment that single-award vehicles present lower competitive integrity concerns.

Finally, the final rule also clarifies the procedural requirements surrounding size recertifications. Sellers and buyers must file recertification within 30 days after a change of control.