Highlights from the Small Business Administration FY 2025 Budget Request

The Biden Administration released its fiscal year (FY) 2025 budget request last month and the proposed FY 2025 Small Business Administration (SBA) budget request reflects ongoing agency priorities and efficiency efforts.

FY 2025 Total Discretionary Budget

The SBA has requested just under $1.0BM – $971M to be specific – in total discretionary budget authority for FY 2025. This represents a $71M (-7%) decrease from the FY 2024 final appropriated level, which was settled on by Congress weeks after the FY 2025 budget was released. The FY 2025 total request is $104M above the FY 2024 estimated level that was presented in SBA’s March budget documents, which was formulated while SSA was operating under Continuing Resolution (CR).

Funding highlights include:

• Requests $160.1M in total Contracting Programs (including 8A, HUBZone, Women’s and Prime/SubK), which is $2.8M above the FY 2024 Annualized Continuing Resolution (CR) level.
• Allocates $7.5M for agency-wide telecommunications, the same level as FY 2024.
• Proposes nearly $144M for the Office of the CIO, $2.4M below the FY 2024 Annualized CR level.
• Allocates $12.9M for Government Contracting and Business Development operations, a $5M decrease from the FY 2024 Annualized CR level.

Total Information Technology and New Development Budgets

OMB posted details of SBA’s IT portfolio investments to the IT Dashboard concurrently with the agency’s overall discretionary budget. For FY 2025, the SBA is seeking $328M for IT spending, a $23M (-7%) decrease from the FY 2024 enacted level, but $5M (+2%) above the final FY 2023 IT budget. In last year’s budget submission, SBA requested $408M for FY 2024 and at that time reported an FY 2023 enacted budget of $388M, so the FY 2023 and FY 2024 amounts shown below were adjusted downward by SBA in the latest budget request, by $65M and $56M, respectively. While these restatements or adjustments are common among federal agencies from one budget year to the next, in this case the downward restatements soften the relative projected cut for FY 2025.

Looking at how the SBA allocates their IT dollars across Development/Modernization/Enhancement (DME) efforts compared to Operations and Maintenance (O&M) presents a stark picture. For FY 2025, the SBA is seeking $36M in DME funding compared to $105M in FY 2024, reflecting a $69M (-65%) decline from the current FY. Further, this puts FY 2025 DME at $92M (-72%) below the final FY 2023 level of $128M, which was restated down by $70M from last year’s budget submission, underscoring the downward trend in SBA DME spending.

As for the details of the DME decreases, roughly $66M of the total $69M decrease for FY 2025 occurs within the Capital Access Financial Systems (CAFS) program in the Office of Capital Access. That initiative sees a slight increase to its total budget, so the work is now shifting to O&M. The remaining $3M in DME cuts are scattered across several other programs.

Noteworthy IT Programs

Delving into the specifics of the SBA’s IT investments and initiatives provides further insight into the agency’s immediate IT investment priorities and direction. Here are the six largest SBA IT initiatives.

• Capital Access Financial Systems (CAFS) – The CAFS initiative supports originating and servicing CARES Act, Disaster, 7a, and 504 loans as well as the Small Business Investment Company (SBIC) Program and surety bond guaranty. This budget line receives $104M for FY 2025, a $984K (1%) increase from FY 2024 and consists of 5.6% DME funding.
• Delivery Standard Investment – This investment includes costs to monitor, support, manage, and run IT operations and includes IT Service Management (ITSM), but excludes ITSM costs associated with the End User Standard IT Investment initiative below. This investment receives $36M for FY 2025, an increase of nearly $3.5M (+11%) from the FY 2024 level and consists entirely of O&M funding.
• End User Standard Investment – The End User investment captures capabilities for client computer desktops, laptops, and client related software used by SBA users to perform and achieve the SBA mission. The investment receives $31M for FY 2025, which is $5.8M (23%) above the FY 2024 level. This investment is 100% O&M funding.
• Data Center and Cloud Standard Investment – This program supports the SBA’s tiered data center facilities that house and protect critical IT equipment, including related space, power, racks and servers. This investment receives $26M for FY 2025, $4.7M more than FY 2024 and is completely O&M funding.
• IT Security and Compliance Standard Investment – The SBA’s IT Security Program consists of security solutions, operations, situational awareness and incident response, and training and FISMA requirements. The program receives $25M for FY 2025, which is $3.9M (-13%) below FY 2024 and is 100% O&M funding.
• Network Standard Investment – Network Standard Investment includes local area networks and landline voice phone capabilities as well as resources which enable or distribute voice services, such as physical and wireless local area network connecting equipment. This investment received $16M for FY 2025, down from $31M in FY 2024 and consists of 100% O&M funding.

These six largest IT budget lines together account for $238M, or about 72% of the SBA’s total FY 2025 IT budget request, compared to 69% in FY 2024 and 59% in FY 2023. This increasing proportion of budget held within six of the SBA’s overall 31 FY 2025 IT budget investment lines indicates a growing degree of concentration of resources centered around central IT infrastructure and core capabilities. (Note the frequency of “standard investment” in the top program names.)

The downward restatement of the current FY 2024 and previous FY 2023 IT budget amounts, combined with the further trimming of the requested FY 2025 budget, points to a tightening competitive environment for contracted IT products and services at the SBA. However, firms with strong offerings that align with the SBA’s priorities and requirements may still find significant contract opportunities going forward.

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For more analysis on the FY 2025 Federal Budget check out our report, FY 2025 Federal Budget Request: Priorities and Opportunities.