Editor’s Note: This analysis of the Revolutionary FAR Overhaul is based on our review of FAR deviation documents, practitioner guidance, and multiple expert interpretations of these complex, evolving changes. Given the significance and scope of these reforms – and their current status as temporary deviations subject to formal rulemaking – interpretations may vary. If you spot any inaccuracies or have clarifications to offer, please reach out to HSToday. We’re committed to keeping the contracting community accurately informed as these historic changes develop.
The Federal Acquisition Regulation (FAR) Part 19, which governs how the federal government contracts with small businesses, just underwent its most significant reform in 41 years. While the “Revolutionary FAR Overhaul” (RFO) brings substantial improvements and preserves important protections, it also includes a significant change that could increase competition for small businesses on many federal contracts.
According to the Practitioner Album: FAR Part 19 – Small Business, FAR Part 19 reinforces that it is the government’s policy to provide maximum practicable opportunities in its acquisitions to small business, 8(a) participants, and other small business socioeconomic categories (i.e., service-disabled veteran-owned small business (SDVOSB), Historically Underutilized Business Zone (HUBZone) small business, small disadvantaged business, economically disadvantaged women-owned small business (EDWOSB), and women-owned small business (WOSB) concerns).
What’s Happening
The government is streamlining federal contracting by:
- Removing over 1,600 burdensome requirements
- Rewriting rules in plain language
- Eliminating non-essential requirements not mandated by law
- Creating a two-phase implementation (currently in Phase 1 with “deviations” that agencies adopt temporarily)
The Mixed News on the Rule of Two
The “Rule of Two:“ A cornerstone protection for small businesses has been both preserved and limited in important ways.
What’s Preserved: For new contract awards, the rule of two remains intact. When contracting officers have a reasonable expectation of receiving competitive offers from at least two responsible small businesses, they must set aside the contract exclusively for small businesses (for contracts between the micro-purchase threshold (MPT) and the simplified acquisition threshold (SAT)).
What’s Changed: For task and delivery orders under multiple-award contracts, the rule of two no longer applies. This includes orders under:
- GSA Multiple Award Schedule (MAS)
- Government-wide acquisition contracts (GWACs) like OASIS+
- Agency-specific multiple-award vehicles
- All indefinite delivery/indefinite quantity (IDIQ) contracts
For these orders, set-asides are now discretionary and non-protestable: Contracting officers “may” set them aside but it isn’t required. This ends a 2024 effort by OMB and SBA to extend the rule of two to these orders.
Why This Split Matters
A substantial portion of federal contracting dollars flow through task and delivery orders on existing multiple-award contracts. Losing mandatory set-asides here means small businesses will face increased competition from large businesses on many opportunities where they previously had protection.
Major Changes for Small Businesses
Improvements and Benefits
- Dramatically Reduced Red Tape
- One-third fewer boilerplate requirements for commercial work
- 1,600+ burdensome requirements eliminated
- Simpler SAM registration and maintenance
- Lower administrative costs to pursue contracts
- Faster Contract Awards
- Increased use of simplified acquisition procedures
- Shorter time from solicitation to award
- Reduced carrying costs while waiting for decisions
- Better Access to Large Contracts
- Easier access to government-wide contracts through “on-ramps”
- Opportunities to join existing contracts without waiting for full recompetes
- Recognition of these vehicles as “essential tools to sound procurement”
- Improved Competition Feedback
- Greater emphasis on post-award debriefings
- Better insight into why you didn’t win
- Actionable information to improve future proposals
- Practical Demonstration Opportunities
- Shift toward technical demonstrations over written proposals
- Show capabilities as you would to private sector customers
- Reduces expensive proposal writing contests
- 8(a) Program Fundamental Changes
- Competition First: Contracting officers must first attempt competitive 8(a) acquisitions below the competitive threshold (increasing from $7M to $8.5M for manufacturers; increasing from $4.5M to $5.5M for all other baselines as of October 1, 2025) using SBA-approved vehicles before considering 8(a) sole source awards
- Automatic Release for Follow-ons: Follow-on requirements can be automatically released from the 8(a) program to be set aside for HUBZone, SDVOSB, or WOSB programs without formal SBA release
- This bypasses traditional SBA oversight and may conflict with existing SBA regulations at 13 C.F.R. § 124.503(d)(1)
- Impact: Creates potential legal uncertainty during implementation but government’s objective is to broaden participation across various socioeconomic programs.
Challenges and Concerns
- Loss of Mandatory Set-Asides on Task Orders
- Contracting officers have discretion rather than obligation
- Increased competition from large businesses
- Requires stronger relationships with contracting officers
- Implementation Uncertainty
- Current rules are “deviations” subject to change
- Formal rulemaking process still to come
- Final rules could be different based on public comments or Congressional action
Most Important Takeaways for Small Businesses
Top 5 Critical Points
- Two-Tier Protection System: You maintain rule of two protection for new contracts but lose it for task/delivery orders under multiple-award vehicles, a significant portion of federal spending.
- Discretion Becomes Key: Success on multiple-award contracts now depends more on contracting officer relationships and agency culture than regulatory requirements.
- Substantial Administrative Relief: Despite the set-aside changes, you’ll face significantly less paperwork and faster procurement timelines.
- Strategic Positioning Essential: Getting onto multiple-award contracts as a prime becomes critical since you can’t rely on rule of two protection for subsequent orders.
- Window for Influence: These are temporary deviations; formal rulemaking provides opportunity to advocate for stronger protections.
Strategic Adjustments Needed
Immediate Actions:
- Relationship Building: With discretionary set-asides, cultivate stronger relationships with contracting officers
- Prime Position Focus: Prioritize getting on multiple-award contracts as prime contractors
- Agency Research: Identify which agencies frequently use discretionary set-asides and focus efforts there
- Capability Development: Invest in technical demonstration capabilities over proposal writing alone
Advocacy Opportunities:
- Public Comment: Prepare to engage during formal rulemaking process
- Document Impact: Track how discretionary set-asides affect your win rates
- Coalition Building: Join with other small businesses to advocate for mandatory set-asides
- Congressional Outreach: Contact representatives about the importance of the rule of two for task orders
The Practical Impact
Scenario Before RFO:
- You identify a task order opportunity under a GWAC
- Another small business can also perform the work
- Contracting officer must set it aside for small business only
Scenario After RFO:
- Same opportunity exists
- Contracting officer may choose whether to set it aside
- You might compete against large businesses even when small businesses are capable
Implementation Timeline and Next Steps
Current Phase (Now)
- Agencies adopt FAR “deviations” temporarily
- New rules in effect immediately
- Small businesses should adapt strategies now
Phase 2 (Coming)
- Formal rulemaking under Administrative Procedure Act
- Public comment period
- Potential for changes based on feedback
- Final rules published
What to Watch
- Federal Register for proposed rules
- SBA updates to align their regulations
- Agency-specific implementation guidance
- Congressional action that could override changes
Bottom Line
The Revolutionary FAR Overhaul delivers a mixed bag for small businesses. While it significantly reduces administrative burden and preserves the rule of two for new contracts, the elimination of mandatory set-asides for task and delivery orders represents a substantial reduction in small business protections where much federal contracting occurs.
The Win: Less paperwork, faster awards, preserved rule of two for new contracts, and improved access to contracting opportunities.
The Loss: Discretionary rather than mandatory set-asides on the growing portion of federal spending through task and delivery orders. Additionally, 8(a) firms lose some sole source advantages, as contracting officers must now attempt competitive 8(a) acquisitions first.
The Opportunity: These changes aren’t final. The formal rulemaking process provides a critical window to advocate for stronger small business protections, particularly regarding task and delivery order set-asides.
Small businesses should prepare for a more competitive environment on multiple-award contracts while taking advantage of the streamlined processes and reduced administrative burden. Most importantly, they should engage actively in the rulemaking process to potentially restore mandatory set-asides where they’ve been lost.
Resources
The White House official statement: “The Office of Federal Procurement Policy and the Small Business Administration Reinforce Small Business Participation in Federal Contracting”
Revolutionary FAR Overhaul (RFO) Key Resources
FAR Part 19 – Small Business Deviation Guide
Practitioner Album: FAR Part 19 – Small Business