July 24, 2025 - OppyHound

The Big Beautiful Bill Act: What Government Contractors Must Know for 2026

Gaurav Mishra on July 24, 2025

A major shift is coming to federal procurement, and federal government contractors need to be ready. The One Big Beautiful Bill Act (OBBBA) is poised to transform how government dollars are spent in 2026, introducing new priorities, procurement pathways, and compliance expectations. While the headlines focus on its political impact, what’s flying under the radar is how deeply it could affect small and midsize businesses (SMBs) that rely on government contracts.

This blog breaks down the bill, what’s changing, and how your business can prepare to compete before the competition even knows what’s coming.

Companies working with federal agencies must understand how these changes will affect their operations. The OBBBA will transform everything from renewable energy projects to construction contracts, which creates new challenges and opportunities for government contractors as they prepare for 2026 and beyond.

What Is the Big Beautiful Bill Act?

The One Big Beautiful Bill Act (OBBBA) stands as one of the biggest policy changes in recent U.S. history. This groundbreaking legislation is the lifeblood of the current administration’s economic and infrastructure vision. It touches businesses of all sizes across the economy.

The landmark legislation passed with a tight margin of 218-214 votes and will reshape federal contracting in the coming years. President Donald Trump signed this historic bill on July 4, 2025, which changed the government’s spending priorities.

Breakdown of the Act

The OBBBA has five major parts that alter the federal government’s approach to spending, taxation, and procurement. The legislation focuses on infrastructure development, defense modernization, energy policy reform, tax restructuring, and small business support.

Infrastructure funding will help rebuild America’s aging roads, bridges, and public transportation systems. Defense modernization focuses on equipment upgrades, cybersecurity improvements, and military facility updates.

Energy policy reforms within the OBBBA include provisions for both traditional and renewable energy sectors:

Traditional energy producers get efficient permitting processes
Renewable energy contractors can access new funding pools
Nuclear energy initiatives receive dedicated research funding

The OBBBA also brings tax policy changes that boost economic growth. These changes will affect how businesses handle capital expenses, depreciation schedules, and tax liability calculations. Small businesses will see new set-aside categories and modified procurement rules. These changes aim to boost participation from businesses in underserved regions. Federal agencies will use these new contractor selection rules starting in 2026.

Why Contractors Should Pay Attention

The OBBBA will change federal procurement substantially. Government contractors need to review the bill’s provisions carefully. The Act brings new compliance rules, changes eligibility criteria, and updates how agencies review bids.

Contractors should know that the OBBBA:

Adds new mandatory certifications for certain contract types
Changes size standards for small business set-asides
Creates preference programs for domestic manufacturing
Updates labor and wage requirements for federal projects

Agency funding will change dramatically, too. Some departments will get bigger budgets while others face cuts. Competition will heat up in priority areas like defense modernization, border security infrastructure, and domestic energy production. The Act cuts funding for environmental programs, international aid initiatives, and several regulatory agencies.

The tax provisions in the OBBBA give contractors great planning opportunities. Take bonus depreciation for qualifying property as an example. These changes could affect equipment purchases, corporate structure, and long-term business plans.

Small contractors must learn these changes to stay competitive in the federal marketplace. Companies that adapt quickly to the OBBBA’s priorities will find new opportunities. Those who delay may struggle as full implementation begins in 2026.

Major Contracting Changes Coming in 2026

The One Big Beautiful Bill Act will fully take effect in 2026, marking a turning point for government contractors. Federal procurement officials are getting ready for what many call the biggest change in acquisition policies in decades.

New Spending Priorities and Funding Streams

The government’s spending priorities will change a lot in fiscal year 2026. The defense budget will grow by 13% to $1.01 trillion [1], creating new chances for defense contractors. The homeland security sector will get a record $175 billion investment [1], with most funds going to border security infrastructure.

But non-defense spending will see big cuts—about $163 billion or 22.6% below current levels [1]. This means agencies like the Department of Education will lose $12 billion [2], which will affect contractors in these areas.

On top of that, the bill creates new funding tools like the $2.9 billion America First Opportunity Fund [1]. This fund will support strategic investments that match national security priorities. The bill also sets up a $3 billion revolving fund for the U.S. International Development Finance Corporation [1]. This allows investments to be reused without needing more money.

Changes in Procurement Processes

The new law will revolutionize procurement. The simplified acquisition threshold for commercial products and services will rise from $250,000 to $5 million over five years [3]. Agencies can now use simpler buying procedures for bigger purchases—up to $50 million for commercial items [3].

The micro-purchase threshold will also jump from $10,000 to $100,000 [3]. This lets agencies buy more with less paperwork, often using government purchase cards.

The bill also has provisions to:

Make the Commercial Solutions Openings authority permanent for GSA and DHS [3]
Change task and delivery order processes under indefinite delivery contracts [3]
Speed up the recalculation of acquisition-related dollar thresholds from every five years to every three years [3]

These changes will cut down paperwork and speed up buying, which could mean faster deals for many contractors.

Possible Changes in Set-Asides and Eligibility

Small business contractors will see big changes to set-aside programs starting January 17, 2026 [4]. The SBA’s new rules will affect contractors’ eligibility for set-aside orders after mergers and acquisitions.

When a large business buys a small business after this date, the small business can’t get future small business set-aside orders under existing multiple award contracts [4]. Deals done before January 17, 2026, will follow the old rules [4]. This creates a key planning window for small companies.

The rule has one big exception: if both merging businesses are small when they join, the new company can still compete for set-aside orders under existing contracts—even if it grows too big after merging [4].

This change will alter the M&A landscape for government contractors and might make small business acquisitions less valuable after the new rules start [5].

Compliance Expectations for New Contracts

The bill changes compliance rules for contractors in key ways. The threshold for Cost Accounting Standards will jump from $2 million to $35 million [3]. This frees about half of the currently covered companies while keeping 90% of contract dollars under oversight.

The threshold for bid protests of civilian agency task orders will also rise from $10 million to $35 million [3], matching the Department of Defense’s current threshold.

Large contractors won’t need to publicly report their top five executives’ names and total pay [3], which cuts down on paperwork.

GSA Schedule contracts won’t get the delayed start that other multiple award contracts receive [5]. Small businesses that merge or get bought out will lose their chance at future set-aside orders under GSA Schedules starting January 16, 2025 [5].

Government contractors need to look at these changes carefully and adjust their plans to succeed in the new federal marketplace of 2026.

Who Will Be Most Affected?

The OBBBA directs federal dollars toward new priorities, creating clear winners and losers in the contracting world. Some industries will grab much of this newly directed spending, marking a departure from previous spending bills.

Industries Set to Gain the Most:

Defense, construction, energy, and critical supply chain contractors will benefit the most from this bill. The Department of Defense has asked for $1.01 trillion in FY2026, with $1.3 billion going to small business innovation programs [6]. Companies in these sectors should get ready for huge growth opportunities.

Construction and Civil Engineering Firms

Contract opportunities for civil engineering and construction companies will boom through 2026. The U.S. Army Corps of Engineers has started giving out big contracts for infrastructure projects. A recent example is the $26.3 million firm-fixed-price contract to restore Holt Lock Monolith in Tuscaloosa, Alabama [7].

ASRC Builders-Caddell LLC won a $290.3 million firm-fixed-price contract to build the Joint Integrated Test and Training Center flight simulator facility [7]. These projects show the start of a multi-year construction surge that the OBBBA will propel.

Defense & Cybersecurity

Money will pour into defense contractors, especially those working in cybersecurity. Cyber Command gets the biggest single chunk of funding under the OBBBA; $250 million for ‘artificial intelligence lines of effort’ [8].

The Defense Department will receive $90 million that includes ‘cybersecurity support for non-traditional contractors’ [8]. Companies like Agile Decision Sciences LLC are already winning big. They got a $29.2 million option exercise modification to support Defense Counterintelligence and Security Agency Cybersecurity Services [9].

Logistics and Supply Chain Providers

Securing critical supply chains takes center stage in this legislation. Maritime logistics gets $29 billion to boost DoD domestic shipbuilding resources [10].

Critical minerals supply chains will receive $7.5 billion in funding [10]. This creates huge opportunities for logistics and supply chain companies across the board.

Energy Contractors (Oil, Gas, Renewables)

The bill creates a mixed picture for energy contractors. The FY 2026 Budget gives $595 million to the Office of Fossil Energy. This restores its role in supporting fossil energy production, including coal, oil, gas, and critical minerals [11].

Nuclear energy contractors will see plenty of opportunities. The Office of Nuclear Energy gets $1.37 billion, while the Loans Program Office receives $750 million in credit subsidy to speed up commercial nuclear technologies [11]. Federal contractors remain crucial for “infrastructure upgrades, IT modernization and construction,” despite broader budget cuts [12].

Renewable energy faces more challenges under this bill. Green energy incentives have dropped, but companies that blend with traditional infrastructure and modernization efforts might still grow [6]. Nuclear energy companies will benefit from money to “design and develop small modular reactors” using artificial intelligence [12].

How Small Businesses Can Prepare

Small businesses can make all the difference with proper preparation to capture contracts with changes stemming from this act. GSA Multiple Award Schedules saw government buyers spend more than $72 billion last fiscal year [13]. Correct positioning by small businesses now will create great chances once implementation starts.

Government Contracting Tips for 2026

Small businesses should broaden their contract approach. They need to watch procurement trends in SAM.gov, federal acquisition forecasting tools such as the Acquisition Gateway site (https://acquisitiongateway.gov/forecast?_a%5Eg_footer=gsa), and agency forecasts to spot emerging opportunities [14]. A GSA Schedule or IDIQ contract gives a valuable edge since agencies prefer pre-vetted vendors [14].

Small businesses must utilize their socio-economic certifications effectively. Qualifications for 8(a), SDVOSB, WOSB, or HUBZone designations help access set-aside contracts [14]. Additionally, small businesses should build relationships with contracting officers and prime contractors before the bill’s changes take place [14].

Update Your Capability Statement

Your capability statement serves as your business resume for government agencies. A well-crafted capability statement includes:

Company branding and summary description
Core capabilities and major services offered
Federal small business certifications and contract vehicles
Past performance with major clients
NAICS codes, staff certifications, and company information [15]

The statement needs customization for each agency or prime contractor chance rather than using a “one size fits all” or a “shotgun approach” [16]. A concise document of one page front and back with clear, professional language works best to show your unique value [15].

Get Pre-Registered for New NAICS Codes

NAICS codes are the foundations of federal contracting. These six-digit codes determine your business size status and affect eligibility for small business set-asides [17]. SAM.gov registration allows multiple NAICS codes, but you must pick a primary one [17].

The right NAICS codes help you grasp government spending in your category. You will learn which agencies spend the most in your area and which companies win these contracts [17]. A review of your codes now makes you visible to agencies that plan procurement under the OBBBA.

Is Your Business Ready?

The OBBBA marks a turning point for government contractors in the United States. This detailed legislation will transform federal procurement practices, spending priorities, and compliance requirements starting in 2026. Contractors who grasp these changes early will have a clear edge as the start date gets closer.

The OBBBA’s funding priorities will give a big boost to defense, construction, cybersecurity, and energy sectors. Some non-defense agencies will see their budgets cut by up to 22.6%, which creates tough conditions for their contractors. Companies need smart positioning to do well under these new rules.

Small businesses should watch the new set-aside rules carefully. The deadline of January 17, 2026 brings major changes to acquisition-related eligibility. Of course, companies looking at mergers or acquisitions need this timeline in their planning.

New procurement thresholds will change how agencies buy goods and services. Higher simplified acquisition and micro-purchase thresholds make government buying easier, which opens up faster opportunities for quick-moving contractors.

Now is the time to review your contracting strategy. Get your capability statements up to date, check your NAICS codes, and keep an eye on agency spending patterns. The permanent 100% bonus depreciation might also affect your equipment purchases and financial plans.

The OBBBA creates winners and losers in the federal marketplace, but good preparation gives you the best shot at success. The best opportunities will go to contractors who match the bill’s priorities, know the compliance changes, and position themselves strategically in this new contracting landscape.

Using OppyHound to Stay Ahead

Modern government contractors need sophisticated tools to compete effectively. Advanced opportunity tracking systems can help you:

Monitor funding shifts by agency and program
Identify emerging contract vehicles before competitors
Analyze historical data to predict future opportunities
Receive personalized alerts based on your specific capabilities

The contractors who thrive in 2025-2026 will be those who combine strategic thinking with tactical execution, leveraging technology to stay ahead of market changes. Learn more about OppyHound.