The FAR Council is undertaking a systematic approach to revising the FARs. On September 26, 2025, it released its revisions to FAR Part 19, Small Business Programs.

Redlines showing the additions and deletions to this section of the FAR:

• • PART 19

The following is a summary of major changes. A more detailed analysis will be forthcoming.

Rule of Two: The revisions preserve the Rule of Two. Revised FAR 19.104 states:

(a) A “set-aside for small business” is the limiting of an acquisition exclusively for ‎participation by small business concerns. For contracts above the micro-purchase threshold, ‎the contracting officer must set the contract aside for small business if there is a reasonable ‎expectation of obtaining offers—‎

(1) From two or more responsible small business concerns; and

(2) That are competitive in terms of fair market prices, quality, and delivery.‎

(b)

1. 1. 1. 1. The contracting officer makes the determination to do a small business set-aside ‎under paragraph (a). The contracting officer must document the reason when a contract ‎is not set aside for small business as required.‎
         2. If the contracting officer rejects a recommendation by SBA to do a small business ‎set-aside, see 19.102(f).‎

(emphasis added). The FAR Companion Guide for the FAR Part 19 revisions also states that:

For contracts, it keeps the rule of two (meaning when there are two or more small businesses identified who can provide the supplies or service) above the micro-purchase threshold (MPT).

• • • • The rule of two is required by statute between the MPT and the Simplified Acquisition Threshold (SAT).
      • The FAR Council retained the rule of two above the SAT as essential to sound procurement.

For orders, FAR part 19 reaffirms that the rule of two does not apply. Contracting officers may, at their discretion, set aside orders placed under multiple-award contracts.

The deviated text clarifies that a contracting officer’s decision to set-aside or not set-aside an order placed under a multiple-award contract is an exercise of discretion and not a basis for a protest.

Accordingly, the FAR Council has retained the Rule of Two for solicitations and contracts, including the award of multiple award contracts, but confirmed that it does not apply to task order solicitations issued pursuant to a multiple award contract. This is consistent with the existing regulations and approach and therefore does not indicate a significant deviation from current small business contracting requirements.

8(a) Awards: The revisions to FAR Part 19 retain references to the SBA’s 8(a) program and awards, including sole source awards. While the FAR Council made substantial revisions to the wording of FAR Part 19 in regards to 8(a) awards, the revisions recognize the role of the 8(a) program and the process for making awards to 8(a) entities.

The FAR Council did include new language regarding competitive and sole source awards and emphasized a desire for competitive 8(a) procurements. The FAR Companion Guide states:

Where an acquisition is below the competitive threshold (see 19.108-7(a)(2)), contracting officers must first try conducting the acquisition as a competitive 8(a) order using SBA-approved government-wide contracts before proceeding with a sole source 8(a) award. (emphasis added).

The new language states:

‎19.108-7 Competitive 8(a) and sole source 8(a) policy.‎

Competitive 8(a) policy. An acquisition offered to the SBA under the 8(a) program must be ‎awarded on the basis of competition limited to eligible 8(a) participants when—‎

There is a reasonable expectation that at least two eligible and responsible 8(a) ‎participants will submit offers and that award can be made at a fair market price; and

The anticipated total value of the contract, including options, will exceed $7 million for ‎acquisitions assigned manufacturing North American Industry Classification System ‎‎(NAICS) codes and $4.5 million for all other acquisitions.‎

Above competitive thresholds. Where an acquisition exceeds the competitive threshold (see ‎paragraph (a)(2) of this section), the SBA may accept the requirement for a sole source 8(a) ‎award only after the contracting officer has complied with the requirements for other than full ‎and open competition in accordance with 6.103.‎

Prohibition on splitting requirements. A proposed 8(a) requirement with an estimated value ‎exceeding the applicable competitive threshold amount shall not be divided into several ‎requirements for lesser amounts in order to use 8(a) sole source procedures for award to a single ‎firm.‎

Below competitive thresholds. To ensure fair market pricing and to prepare 8(a) participants for ‎competition, SBA has approved certain government-wide contracts for competition amongst the ‎‎8(a) contract-holders (see 19.111-2) at any dollar value, including below the competitive ‎thresholds. Where an acquisition is below the competitive threshold (see paragraph (a)(2) of this ‎section), contracting officers must first try conducting the acquisition as a competitive 8(a) ‎order using these government-wide contracts before proceeding with a sole source 8(a) award. ‎To determine whether SBA has provided approval for a particular government-wide contract, ‎refer to the ordering procedures for that contract.‎

The SBA Associate Administrator for Business Development may approve a contracting ‎office’s request for a competitive 8(a) award below the competitive thresholds when not ‎using the contracts referenced in paragraph (d)(1). Such requests will be approved only ‎on a limited basis and will be primarily granted where technical competitions are ‎appropriate or where a large number of responsible 8(a) participants are available for ‎competition. In determining whether a request to compete below the threshold will be ‎approved, the SBA Associate Administrator for Business Development will, in part, ‎consider the extent to which the contracting activity is supporting the 8(a) program on a ‎noncompetitive basis. The agency may include recommendations for competition below ‎the threshold in the offering letter or by separate correspondence to the SBA Associate ‎Administrator for Business Development.‎

This language therefore, provides that an agency award a sole source 8(a) contract in excess of $4.5 million if there are two or more eligible 8(a) companies to perform the work, only if “the contracting officer has complied with the requirements for other than full ‎and open competition in accordance with 6.103.”

The FAR Council previously revised FAR 6.103, specifically FAR 6.103-5, to state:

6.103-5 Authorized or required by statute.

(a) Authority. 10 U.S.C. 3204(a)(5) or 41 U.S.C. 3304(a)(5).

(b) Authorized or required by statute. Agencies may contract without providing for full and open competition when—

(1) A statute expressly authorizes or requires that the acquisition be made through another agency or from a specified source; or

(2) The agency’s need is for a brand-name commercial product for authorized resale (e.g., commercial products for resale through commissaries). This authority does not include other uses of brand name descriptions that generally preclude full and open competition and are required to be addressed in accordance with 6.103-1(d).

(c) Application. This authority may be used when statutes expressly authorize or require that acquisition be made from a specified source or through another agency. Examples include, but are not limited to:

(1) Sole-source awards of certain socioeconomic small business concerns (see 15 U.S.C. chapter 14A); and

(2) Sole-source awards under the SBIR or STTR programs for Phase III (see 15 U.S.C. 638(r)(4)) or Phase II, when directly following a competitively awarded initial Phase II award (see 15 U.S.C. 638(ff)).

(d) Limitations.

(1) Do not use this authority when a provision of law requires an agency to award a new contract to a specified non-Federal Government entity unless the provision of law specifically—

(i) Identifies the entity involved; and

(ii) States that award to that entity must be made despite the merit-based selection procedures in 10 U.S.C. 3201(e) for armed services acquisitions or 41 U.S.C. 3105 for civilian agency acquisitions.

(2) This limitation does not apply—

(i) When the work provided for in the contract continues the work performed by the specified entity under a preceding contract; or

(ii) To any contract requiring the National Academy of Sciences to investigate, examine, or experiment upon any subject of science or art of significance to an executive agency and to report on those matters to the Congress or any agency of the Federal Government.

(e) With the exception of sole-source 8(a) contracts over $25 million (section 811 of Public Law 111-84, 41 U.S.C. 3304 note), contracts awarded using this authority do not require written justifications and approvals described in 6.104.

Section 811 of Public Law 111-84‎ restricted 8(a) sole source awards without a justification and approval. However, Section 823 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2020 (Pub. L. 116-92) increased the threshold for requiring a justification and approval to award a Department of Defense sole source contract to a participant in the 8(a) program to actions exceeding $100 million. And a recent federal rule increased the justification and approval threshold for 8(a) direct awards by civilian agencies to $30 million. This means that civilian agencies can make directed awards to 8(a) companies of up to $30 million without having to go through the justification and approval process.

Therefore, while the reference to $25 million cap the revised FAR 6.103-5(e) may be confusing, the legal impact of the changes is that the ability of DoD agencies to make sole source awards to 8(a) companies of up to $100 million, and for civilian agencies to make sole source awards to 8(a) companies of up to $30 million, has been recognized by the FAR Council and included in the revised FAR Part 19.

Commitment to Small Business Contracting

The FAR Council has reiterated the federal government’s commitment to small business contracting, stating in its FAR Companion Guide to FAR Part 19 that:

The part 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. veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns). (emphasis in original)

Provisions That Have Been Moved Or Deleted

The revisions deleted the following provisions from the former FAR Part 19 as they were “moved to the FAR Companion to support best practices and sound procurement applications”:

• • Set-asides for orders under multiple-award contracts (former 19.504)
  • Determining the appropriate NAICS code for the solicitation (former 19.102)
  • Office of Small Business Disadvantaged Business (OSDBU) (former 19.201)
  • Encouraging small business participation in acquisitions (former 19.201-1)
  • Identification of manufacturers (former 19.505)
  • Price evaluation preference for HUBZone small business concerns (former 19.1307)

The following sections were deleted because, in the FAR Council’s view, they were “outdated, redundant, or otherwise unnecessary”:

• • Section 19.203, Relationship among small business programs, is removed because it is not statutorily required or essential for sound procurement.
  • Section 19.502-5, Insufficient reasons for not setting aside an acquisition, has been deleted. The principles it contained are implicit within the mandatory nature of the set-aside requirements (new section 19.104).
  • Section 19.602-3, Resolving differences between the agency and the SBA, is removed because it is not statutorily required or essential to sound procurement, and it has potential to cause confusion.
  • Section 19.706, Responsibilities of the cognizant administrative contracting officer, is removed because it is not statutorily required or essential to sound procurement.
  • Section 19.707, The Small Business Administration’s role in carrying out the program, is removed because it is not statutorily required or essential to sound procurement.
  • Section 19.707, The Small Business Administration’s role in carrying out the program, is removed because it is not statutorily required or essential to sound procurement.
  • 219-32 (Clause), Orders Issued Directly Under Small Business Reserves, is removed as it is not required by statute or essential to sound procurement.

The opinions expressed herein are solely those of the author. This article does not constitute legal advice. For legal advice for your situation, you should contact an attorney.