The General Services Administration has proposed relocating the ordering procedures for the Federal Supply Schedule (FSS) program from FAR subpart 8.4 into a new GSAR subpart 538.71 (GSAR Case 2026-G501, 91 Fed. Reg. 60063). The proposal is a companion to the FAR Council’s September 18 proposed rewrite of FAR Part 8 (FAR Case 2026-003), which removes FSS ordering procedures from the FAR and directs agencies to follow GSA’s own rules. Both are part of the Revolutionary FAR Overhaul (RFO) under Executive Order 14275.

For Schedule holders and for Alaska Native Corporation, tribal, and other 8(a) contractors, the immediate question is whether this changes the government’s obligation to set aside Schedule orders for small business. The short answer is that it does not change the legal baseline, but it removes regulatory language encouraging set-asides on Schedule orders, hands future control of the regime to GSA alone, and fits within a broader restructuring that is steering more federal spending toward vehicles where small business set-asides are optional and unreviewable.

What the proposed rule does

The rule condenses FAR 8.4 into GSAR 538.71, reorganized around dollar thresholds rather than order type. It largely codifies a class deviation that has been in effect since GSA moved the procedures into the GSAM/R earlier this year, so ordering activities have already been operating under this structure. Comments are due October 22, 2026; comments on the companion FAR Part 8 rule are due October 19, 2026.

Key provisions for small business:

• Proposed 538.7102(b) states that, unless otherwise prescribed, FAR Parts 5, 6, 14, 15, 16, and 19 do not apply to Schedule orders.
• Proposed 538.7103-1(b)(1) provides that ordering activities may set aside orders and BPAs for small business concerns identified in FAR 19.000(a)(3).
• Proposed 538.7104-1(a) preserves the ability to reserve one or more multiple-award BPAs for small business.

The Rule of Two: what does and does not change

The Rule of Two does not apply to Schedule orders. Current FAR 8.405-5 makes Part 19’s preference programs non-mandatory for FSS orders and treats order-level set-asides as discretionary.  As a result, GAO has consistently declined to review an agency’s decision not to set aside a Schedule order. SBA’s 2024 proposal to extend the Rule of Two to orders under multiple-award contracts expressly excluded the Schedules, and the FAR Council withdrew that effort in 2025.

The overhauled FAR Part 19 reinforces this approach. It frames the requirement to set aside contracts for small businesses in terms of “contracts” above the micro-purchase threshold, and the new FAR 19.111-2 provides that a contracting officer’s decision to set aside, or not set aside, an order is an exercise of discretion and not a basis for protest. Notably, 19.111-2(b) still requires Part 19 program eligibility rules to be followed when an order is set aside.

The proposed GSAR preserves the current approach that application of the Rule of 2 to orders under Federal Supply Schedules is discretionary and not mandatory.

What the proposed rule leaves out

The more consequential change is what disappears from the regulations. Current FAR 8.405-5 contains four provisions the proposed GSAR does not retain:

1. An explicit statement that the specific Part 19 program eligibility requirements, limitations on subcontracting, the nonmanufacturer rule, and 8(a) offer and acceptance apply when an order or BPA is set aside.
2. Rules on small business goal credit, including the condition that credit is available only where the awardee meets the size standard for the NAICS code assigned to the order.
3. Direction that ordering activities may consider socioeconomic status and, at a minimum, should consider at least one small business or socioeconomic-category Schedule contractor.
4. A preference for small business items when two or more items at the same delivered price satisfy the requirement.

These provisions were not mandates, but they were the only regulatory encouragement toward using small business set-asides on Schedule orders. In their place, the proposed GSAR uses a single “may” when encouraging contractor team arrangements and order-level materials, and expanding ordering-activity discretion in evaluating quotations.

GSA’s Regulatory Flexibility Act analysis concludes the rule has no significant impact on small entities because it merely relocates existing text, while noting that roughly 12,400 of 14,000 active Schedule contractors (89 percent) are small. It does not address the deletion of the small business provisions described above.

The broader context

Three developments outside the four corners of this rule bear on its practical effect:

Required-use routing. The Part 8 rewrite implements Executive Order 14240 by requiring agencies, when a commercial product or service is available on a governmentwide contract or BPA, to use vehicles that OFPP designates as “required use,” then consider “best in class” vehicles, then consider any existing vehicle, before establishing a new contract. Contract opportunities that move from stand-alone contracts, where the contract-level Rule of Two applies, to Schedule orders enter a procurement system where no set-aside is required and 8(a) sole-source awards are not available in the ordinary course.

Order-level discretion in Part 19. The overhauled Part 19 states that SBA has approved certain Governmentwide contracts, including the Schedules, for competition among 8(a) contract holders at any dollar value, and that below the competitive threshold, contracting officers are to first attempt a competitive 8(a) order before proceeding to an 8(a) sole source. The proposed GSAR is silent on 8(a) competition authority, leaving open how and when that provision will operate for Schedule orders.

Governance. Once the procedures sit in the GSAR, future changes to the small business rules governing Schedule ordering require only GSA action, without FAR Council rulemaking or SBA coordination. GSA characterizes the procedures as internal government processes and cites the flexibility to better manage the program as a principal benefit of the move.

Key takeaways

• The proposed rule does not create or eliminate any Rule of Two obligation for Schedule orders; those set-asides were and remain discretionary.
• It removes the regulatory language that encouraged contracting officers to consider small business on Schedule orders and to apply Part 19 eligibility rules when they do set aside.
• Combined with non-protestable order-level discretion under the new Part 19 and required-use routing under the new Part 8, the overall direction is toward a larger share of federal spending flowing through vehicles where set-asides are optional.
• Some elements are favorable to small Schedule holders: reduced order documentation, a three-quote standard above the micro-purchase threshold, retained BPA reserves, and the fact that non-protestability also shields set-aside decisions from challenge by large businesses.
• The rule largely codifies a deviation already in effect.

Comments on FAR Case 2026-003 are due October 19, 2026, and comments on GSAR Case 2026-G501 are due October 22, 2026.

This article summarizes aspects of the law and does not constitute legal advice. For legal advice for your situation, you should contact an attorney.