A new bill introduced in the U.S. House of Representatives seeks to formalize a key safeguard for small businesses competing for federal contracts. The Protecting Small Business Competitions Act of 2025, introduced by Rep. Nydia Velázquez (D-NY) on April 9, would codify the “Rule of Two” into the Small Business Act.
Under current Federal Acquisition Regulation (FAR) 19.502-2(b), the Rule of Two mandates that certain contracts be set aside for small businesses if there is a reasonable expectation that at least two responsible small businesses will submit offers and that the contract can be awarded at a fair market price. However, this requirement is regulatory, not statutory, which has left room for interpretation, inconsistency, or waiver in some federal acquisition decisions.
Velázquez’s bill would embed the Rule of Two into law by amending Section 15(j) of the Small Business Act. If enacted, federal contracting officers would be required by statute to set aside contracts, task orders, or delivery orders above the simplified acquisition threshold—currently $250,000—for small businesses, provided two or more qualified firms are expected to compete and pricing is fair.
The bill has been referred to the House Committee on Small Business for further review.
(AI was used in part to facilitate this article.)
